CMS Issues Proposal on ACO Performance Measures

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By Brian Broderick

Jan. 28 — The Medicare program issued a proposal Jan. 28 that would update how accountable care organization performance is measured.

The Centers for Medicare & Medicaid Services said the proposal would strengthen the incentives for the ACOs to improve performance. Under the Medicare Shared Savings Program, 434 ACOs serve more than 7.7 million Medicare beneficiaries nationally, a CMS fact sheet said. 

The proposal would modify the process for resetting the benchmarks used to determine ACO performance for ACOs renewing their participation agreements for a second or subsequent agreement period.

Among the changes, the agency said, is recognizing that health cost trends vary in communities across the country by using regional, rather than national, spending growth trends when establishing and updating an ACO's rebased benchmark.

The proposal also would give ACOs time to prepare for benchmarks that incorporate regional expenditures by phasing in implementation.

The ACOs are groups of providers that share in rewards by lowering growth in Medicare Parts A and B fee-for-service costs while, at the same time, meeting performance standards on quality of care.

The proposal (CMS-1644-P; RIN 0938-AS67) will be published Feb. 3 in the Federal Register. Comments are due March 28.

A group representing ACO providers said it was pleased to see the rule is out for comment, but questioned a savings number presented by the Medicare agency.

Goal: Growing the Number of ACOs

In a statement, Andy Slavitt, the acting administrator of the CMS, said, “This proposal allows ACOs in all parts of the country to be successful by recognizing both their achievements and improvements in how they provide care. This should have the effect of growing the number of ACOs, and making ACOs and the coordinated care they provide to patients, more of a standard in all parts of the country.”

In terms of explaining benchmarks, the CMS's fact sheet said ACO performance “is currently measured using a multi-step process that evaluates an ACO's effectiveness in lowering expenditures for a group of assigned beneficiaries against a benchmark reflective of the ACO's historical costs.” Among the proposal's changes would be an annual update of the rebased benchmark to account for changes in regional fee-for-service (FFS) spending, “replacing the current update, which is based solely on the absolute amount of projected growth in national FFS spending.”

Through the proposed changes to the methodology for determining the ACO's rebased historical benchmark, the CMS said it's “seeking to reflect an ACO's performance against providers in the same market, rather than just evaluating the ACO against its own past performance.” The agency said it believes this proposal “will improve the program's incentives for ACOs by recognizing an ACO's efficiency relative to its region and limiting the link between an ACO's performance and its future benchmarks.”

According to the regulatory agenda website of the White House Office of Management and Budget, the proposal was set to be published in November 2015.

In its Jan. 28 press release, the CMS said the proposal is the product of extensive stakeholder input. The agency said it “sought comment on the methodology used to reset ACO benchmarks in a proposed rule released in December 2014,” and in June 2015, the CMS indicated it would pursue future rulemaking on this issue.

Question About Savings

Clif Gaus, president and chief executive officer of the National Association of ACOs, told Bloomberg BNA in an e-mail the group is pleased to “finally see the rule,” which will take time to analyze.

Gaus said the CMS's proposal moves the ACO benchmarking model more toward Medicare Advantage—the Medicare managed care program—“but the devil is always in the detail which we will be carefully examining.”

At first glance, Gaus said, some elements are consistent with what the ACO trade group had been advocating. “We like defining the region by the county of residence of the assigned beneficiaries, but are not sure we agree with counting the ACO beneficiaries in that reference population,” he said. “That adds an element of comparing yourself to a group where you are also part of the group.”

Gaus also said his group is a “little puzzled by how CMS can achieve an increased savings of $120 million. Is that because the overall benchmarks will be lower or they will be higher and CMS will share in a greater amount of savings with the ACOs?”

—With assistance from Michael D. Williamson.

To contact the reporter on this story: Brian Broderick in Washington at

To contact the editor responsible for this story: Steve Teske at