CMS Proposes New ACO Evaluation Method

Health care providers in the most common type of Accountable Care Organization (ACO) may see their payments based on new criteria, including adjustments based on region. The potential changes are meant to increase participation in ACOs, and follow some stakeholder recommendations.

The Centers for Medicare & Medicaid Services (CMS) on Thursday proposed a rule that would effectively update the way it evaluates ACOs’ performance in the Medicare Shared Savings Program.

Currently, ACO performance is measured through a multi-step process that involves assessing how effective an ACO is at lowering expenditures for a group of beneficiaries against a historical cost benchmark, according to CMS. Under the proposal, regional fee-for-service costs would be included to more accurately establish, adjust and update an ACO’s historical benchmark for its second or subsequent agreement period.


The Medicare Shared Savings program includes 434 ACOs serving over 7.7 million Medicare beneficiaries across the country, according to CMS. Based on how well the ACOs meet cost and quality benchmarks, participating providers can share in the savings they achieve for Medicare.

“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,” Andy Slavitt, acting administrator for CMS, said in a news release. “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.”

Right now, CMS sets an average per capita historical benchmark at the beginning of an ACO’s first three-year agreement period based on spending over the course of the three years prior to the agreement start date.


Further modifications proposed by CMS include efforts to streamline how ACO benchmarks are adjusted for composition changes, encourage ACOs to take on performance-based risk, codify existing guidance, reduce administrative burden and improve program function and transparency.

The proposal is now under a 60-day public comment period, which closes March 28.

Written by Kourtney Liepelt

Companies featured in this article: