CMS Proposes Changes to ACO Benchmark Methodology - McDermott+Consulting

CMS Proposes Changes to ACO Benchmark Methodology

On January 28, 2016 the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update the methodology used to calculate the benchmarks of Accountable Care Organizations (ACOs) that continue their participation in the Medicare Shared Savings Program (Shared Savings Program) after an initial three-year agreement period. Comments on the proposed rule are due 60 days from publication in the Federal Register.


Benchmarks are used to assess an ACO’s performance in the program. CMS has been using national spending trends to set benchmarks. Recognizing health costs trends vary locally, CMS proposes to use regional rather than national spending growth trends when establishing and updating an ACO’s rebased benchmark. In addition this and other technical changes to the benchmark methodology, CMS is also addressing the following in the proposed rule:

  • Availability of data to allow stakeholders to model proposed changes
  • One year deferment for those ACOs renewing agreements who are currently in a one-sided risk model (Track One) but wish to transition to a two-sided risk model (Track Two) but may desire more time to make that transition (that is, the ACO would enter a fourth performance year under Track One)
  • Limited circumstances where CMS may reopen a final financial reconciliation of the amount of shared savings due to the ACO or the amount of shared losses owed by the ACO resulting from an error determined through an inspection, evaluation or audit.

The proposed rule is available here.

A fact sheet on the proposed rule is available here.