CMS finalizes rules for Shared Savings ACOs, will account for regional benchmarks

Accountable care organizations in Medicare's Shared Savings program will now be held to regional spending benchmarks and not national ones, the Centers for Medicare and Medicaid Services said Monday, responding to criticism that the earlier rules made it too difficult for strong-performing providers to see savings.

CMS had first proposed those changes in January.

[Also: CMS pivots on Comprehensive Primary Care Plus model to allow Shared Savings ACOs]

In the final rule, CMS said participating ACOs will see their spending benchmarks adjusted on a regional basis once they wrap up their first three-year agreement period, which for many of them would come at the beginning of 2017.

"In response to commenters' suggestions, for those ACOs determined to have spending higher than their region, we are finalizing an approach that will apply a lower weight in calculating the regional adjustment the first and second time that their benchmark is rebased under the revised rebasing methodology."

CMS said it will lower the weight placed on regional adjustment to 25 percent for these ACOs in their first agreement period, 50 percent in their second agreement year and 70 percent in the third year.

[Also: Study finds shared savings accountable care organizations saved less year-to-year]

The federal agency also said it will update its regional benchmarks annually to account for any changes in fee-for-service spending.

In determining regional benchmarks, CMS said it will include any county where the ACO has beneficiaries in the calculations and will apply the same benchmarks across all Medicare beneficiary types, including patients with end-stage renal disease and dual eligibles.

The Shared Savings ACO program is one of the federal agencies banner innovation models, encouraging providers to form these networks as a way to improve care coordination and ultimately slash fee-for-service spending. As ACOs progress, they take on risk in the form of either higher or lower Medicare reimbursements based on how well they perform compared to spending and quality benchmarks.

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The program has come under criticism because many thought the benchmarking made it too difficult for ACOs to see savings. In 2014, the last year reported, only 92 out of the 333 ACOs in the program earned a shared savings payout.

The final rule will give participating ACOs in Track 1, where they can receive savings payments for strong performance but will not be held accountable to payment cuts over low scoring, the option to extend their participation in that track for another year if they sign up to take part in Track 2. CMS hopes that will encourage more ACOs to move on to the risk-sharing track.

Lastly, CMS said the final rule sets timeframe limits for ACOs that are contesting those fines or payments over possible errors or fraud. ACOs will have no longer than four years to have performance years reevaluated.

Twitter: @HenryPowderly