Latest ACO Rule Ignores Industry Recommendations, Group Says

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By Michael D. Williamson

June 7 — A final rule on accountable care organizations left an industry group disappointed after the CMS ignored several recommendations on regional benchmarking, the head of a trade group for ACOs said June 7.

The National Association of ACOs (NAACOS) supports some facets of the rule, such as applying different regional weights for certain ACOs. The rule, issued by the Centers for Medicare & Medicaid Services June 6, is designed to measure certain ACOs against regional, not national, performance benchmarks (109 HCDR, 6/7/16).

The benchmarks in the rule are financial goals set by the CMS to determine whether an ACO will receive shared savings payments or be liable for losses. Moving to regional benchmarking recognizes that health cost trends vary in communities across the country, the CMS said when it released the proposed rule (81 Fed. Reg. 5,824) in January (19 HCDR, 1/29/16).

NAACOS, however, is disappointed the CMS chose to ignore a recommendation to exclude ACO beneficiaries when determining regional rates, Clif Gaus, the president and chief executive of the group told Bloomberg BNA.

That means, under the rule, ACOs will be compared against one another and not solely against other Medicare fee-for-service providers in a particular area, Gaus said in an e-mail.

Also, comparing ACOs to one another for benchmarking is against the original intent of the program, which was to compare ACO performance against fee-for-service providers, he told Bloomberg BNA.

ACOs are groups of doctors, hospitals and other health-care providers who work together to provide better, more coordinated care.

Other Issues

In addition, NAACOS is disappointed the CMS discontinued an accounting policy, made final in 2015, that prevented a continued “spiraling down” of benchmarks for ACOs that were creating savings, according to Gaus. That policy prevented the CMS from holding ACOs to increasingly lower, more stringent savings benchmarks.

Reversing the policy is “[o]ur biggest disappointment” with the rule, Gaus told Bloomberg BNA.

“To give in one year and take back in the next is very disappointing to the 25 percent of ACOs that achieved savings,” he said.

NAACOS and Premier Inc., a group purchasing organization, also lamented the timeline to rollout regional benchmarking.

In particular, Premier is disappointed that the CMS won't allow regional benchmarks for ACOs renewing their participation agreements (which last three years) in 2016 until 2019, Blair Childs, the organization's senior vice president of public affairs, said in a June 6 statement.

These participants should be able to qualify for these positive changes, and shouldn't be penalized by having to wait three years until their benchmarks gain parity with all other program participants, according to Childs.

“This decision puts the inaugural class of ACOs at a distinct disadvantage to those that applied later,” Childs said.

NAACOS also urged the CMS to allow ACOs renewing in 2016 to use the regional benchmarks before 2019 and is disappointed the suggestion wasn't implemented, Gaus told Bloomberg BNA.

Some Support

NAACOS, however, applauded a few aspects of the rule. For example, the group is pleased that ACOs with high benchmarks in low regional cost areas will be given a more gradual phase-in to the regional benchmarks, Gaus said.

In response to comments on the proposed version of the rule, which were due in March (61 HCDR, 3/30/16), the CMS reduced the weighted regional benchmarks it will place in some ACOs' overall benchmarks.

For higher spending ACOs, the weight placed on the regional adjustment will be reduced to 25 percent (compared to 35 percent for other ACOs) in the first agreement period in which the regional adjustment is applied, and 50 percent (compared to 70 percent for other ACOs) in the second agreement period in which the adjustment is applied, a June 6 agency fact sheet on the rule said.

“Using a 25 percent regional weighting instead of a 35 percent weighting in the first contract term is reasonable as is using 50 percent instead of 70 percent in the second contract term,” Gaus said.

Moreover, NAACOS is pleased the CMS will allow the optional fourth year in Track One for ACOs moving to Track Two or Three, Gaus told Bloomberg BNA.

ACOs may enter a three-year agreement period for a particular participation track—either under the one-sided shared savings model (Track One) or a two-sided shared savings and shared losses model (Track Two or Track Three)—and remain under that track for the duration of the agreement period.

Currently, eligible ACOs that participated under the one-sided model for their first agreement period may apply to continue in Track One for a second agreement period, or apply to a two-sided model.

Third Option

However, the CMS is adding a third option for Track One ACOs who are renewing their participation. Under the final rule, Track One ACOs may apply to be in a program that starts as a one-sided model but then transitions to a two-sided program in the same agreement period. If the ACO’s renewal request is approved, the ACO may request that its initial participation agreement under Track One be extended for an additional year (that is, the ACO would enter a fourth performance year under Track One), the fact sheet said. As a result of this deferral, the CMS will also defer rebasing the ACO’s benchmark for one year, according to the fact sheet. At the end of this fourth performance year under Track One, the ACO will transition to the selected performance-based risk track for a three-year agreement period. This option will become available beginning with the 2017 application cycle.

While NAACOS supports the general parameters of this third option, “we recommended they allow ACOs to transition to a higher risk track at the start of any calendar year rather than solely at the end of their agreement periods,” Gaus said. Though the CMS didn't incorporate that suggestion into the final rule, “[w]e will continue to advocate for this flexibility,” he added.

The rule is slated for June 10 Federal Register publication.

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

To contact the editor responsible for this story: Brian Broderick at

For More Information

The final rule is at

The CMS's fact sheet is at

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