Hospital Groups Outline Concerns About ACO Proposal

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By Michael D. Williamson

March 29 — Hospital industry groups raised concerns about a CMS proposal that would update accountable care organization performance measures.

The proposal should be modified so that ACOs participating in the Medicare Shared Savings Program (MSSP) are able to obtain higher payments after generating savings, the American Hospital Association (AHA) said in a March 28 letter to the Centers for Medicare & Medicaid Services.

In addition, the AHA remains skeptical that the proposal would encourage ACOs in the MSSP to accept shared savings and losses (two-sided risk), the group said. Some MSSP participants only receive shared savings payments (so-called Track 1 providers) and do not have to pay the CMS if they experience losses.

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 proposed rule (81 Fed. Reg. 5,824), published Feb. 3, would modify the process for resetting the benchmarks used to determine 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.

Comments on the proposal (CMS–1644–P) were due March 28.

Competing Against Themselves?

Another hospital group, the Federation of American Hospitals (FAH), which represents for-profit facilities, called on the CMS to carefully monitor regional benchmarking.

The FAH said in a March 25 letter regional benchmarking could reduce the incentive for ACOs to control spending.

“For example, if an ACO becomes dominant in a region and is successful in reducing costs, it would limit the rate of spending growth in a region, leading to the problem of ACOs competing against themselves,” the FAH said, adding, “We suggest that CMS carefully monitor this change and understand the implications of switching to a regional growth factor.”

Praise for Proposal

However, a joint letter from 20 health-care organizations dated March 25 praised the move to regional benchmarking. Signers of the letter include the National Association of ACOs; Premier Inc., a group purchaser; and several medical societies.

The current method of basing benchmarks solely on ACO-specific historical spending penalizes ACOs for performing well in the past, and forces them to chase increasingly more challenging benchmarks in subsequent agreement periods, the organizations said. By blending historical and regional cost data, the 20 health-care organizations said the CMS will improve the long-term viability of the ACO program by attracting new providers, while also improving the odds of retaining current participants.

For its part, the FAH did praise some aspects of the rule. For example, the FAH said it supported the CMS's decision to extend the Track 1 program for certain providers for one additional year.

The CMS only allows MSSP providers to be in the Track 1 program for two agreement periods, with each agreement period lasting three years, before entering a two-sided risk model. Providers would have their first agreement period extended by one year, for a total of four years, under the CMS proposal.

To contact the reporter on this story: Michael D. Williamson in Washington at

To contact the editor responsible for this story: Janey Cohen at

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