NAACOS Comments on Accountable Care Organizations Benchmarks

Last month, the National Association of ACOs (NAACOS) submitted comments for the Health Care Payment Learning & Action Network (LAN) Financial Benchmarking Draft White Paper. NAACOS takes on the largest portion of accountable care organizations that are participating in the Medicare Shared Savings Program.

According to a letter NAACOS sent to the HCPLAN Guiding Committee, the member organization includes a variety of different accountable care organizations including Next Generation ACOs and Pioneer ACOs. NAACOS works to improve Medicare delivery, create more cost-efficient strategies for healthcare services, and boost population health management as well as patient health outcomes.

Financial benchmarks and ACO’s spending history

The white paper from the HCPLAN Guiding Committee discussed financial benchmarks targeting population-based payment systems. The key comments from the association of accountable care organizations discusses how financial benchmarks should not be tied solely to an ACO’s expenditure history. Essentially, this nearly penalizes accountable care organizations on performing well in the past and requires them to take on more complex requirements in future contracts.

This could even lead some accountable care organizations to rethink participating in this program with their payers.

“Reset financial benchmarks should not be based exclusively on an ACO's historical expenditure data. That approach penalizes ACOs for performing well in the past and forces them to chase increasingly more challenging benchmarks in subsequent agreement periods,” the letter stated.

“Under this flawed methodology, ACOs face difficult decisions about whether to continue participating with payers as ACOs because their success is punished when reset benchmarks are reduced based on lower spending in prior agreement periods. This policy also reduces the incentive for ACOs to invest in efforts that would reduce spending, a result which is detrimental to the ACO as well as the Medicare Trust Funds.”

Should ACOs retain their cost savings?

Also, NAACOS commented that accountable care organizations should be allowed to retain their savings. Essentially, the letter stated that payers include financial benchmarks to ensure providers serve patients through high-quality care and those healthcare providers who are successful should be rewarded with the monetary savings that they created.

“Payers use financial benchmarks to hold providers accountable for delivering efficient care and should reward successful providers with the savings they generate,” according to the letter.

“The success of population-based payment models depends on providers delivering high-quality, efficient care. Successful ACOs plan and invest heavily in reducing inefficiencies, coordinating care and preventing adverse outcomes. This includes significant start-up costs and considerable investments in health IT, care coordination and prevention efforts. Further, successful ACOs improve quality of care and outcomes, leading to reduced healthcare spending and foregone revenue for ACOs paid based on fee-for-service (FFS). Therefore, ACOs should be rewarded with the maximum amount of savings they generate.”

Regional cost data needed for benchmarks

Additionally, the letter recommends for the HCPLAN Guiding Committee to base benchmarks on regional data. Essentially, it is beneficial to gradually incorporate regional fee-for-service cost data to modify the current benchmarks, the NAACOS letter explained.

However, relying solely on regional cost data is also not recommended, as historical costs also play a role. When it comes to the regional population, it is best not to include ACO-assigned beneficiaries because the performance of accountable care organizations should be compared to the fee-for-service payment system.

This will allow for a clearer comparison, the letter states. Benchmarking trending should also be based on regional data analytics. Following these guidelines may help improve these population-based benchmarks. In addition, the Centers for Medicare & Medicaid Services (CMS) is working toward improving the Medicare Shared Savings Program and reimbursement for accountable care organizations.

As public and private payers continue to push forward value-based care reimbursement, it is expected that accountable care organizations will play a vital role in bringing alternative payment models to the healthcare industry.