CMS Considers Overhaul to ACO Benchmarks

The federal government has rolled out an important proposal to revamp how Accountable Care Organization (ACOs) financial targets are set upon program renewal. The change influences whether an ACO, a health care entity composed of health care providers and hospitals coming together to coordinate care care for fee-for-service Medicare beneficiaries, may earn shared savings under program guidelines.

The rule, proposed by The Centers for Medicare and Medicaid Services (CMS), would shift from a national to a regional comparison model, readjusting the ACO’s benchmark from the prior performance period to reflect trends in fee-for-service costs for the ACO region. This is a departure from the current practice of updates based on national Medicare FFS spending for parts A and B Medicare.  The comment period for the rule closed March 28, 2016.

The benchmark is a reference point an ACO is measured against to determine whether Medicare fee-for-service costs were higher or lower than previous spending levels. It is a critical factor for calculating whether the ACO qualifies for shared savings.

National Rural ACO (NRACO) heard from its ACO participants that they are supportive of moving to the regional comparison model, arguing it will better reflect the health care environment in which the ACO operates.  The organization is seeking clarity from CMS regarding how its model of geographically-dispersed ACO participation would be evaluated under this model.  Read NRACO’s comment letter here.

This proposed rule is the latest of several program revisions since the program was enabled under the Affordable Care Act in 2010.   As of Jan. 1, 2016, there were are more than 400 ACOs participating in the Medicare Shared Savings Program, according to CMS, including the 23 that joined the program in 2015 through National Rural ACO’s participant network. The final rule is expected to be published this summer.