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ACOs Want Risk Adjustment, Benchmark Tweaks

By John Commins  
   November 03, 2017

Medicare ACOs generated $843 million in savings in 2016 and demonstrated strong quality scores. ACO advocates believe those numbers could improve if CMS provides some flexibility on financial benchmarks and risk.  

With four years of returns in the books, Medicare’s accountable care initiative has demonstrated savings for the federal government and improved care quality for beneficiaries, advocates say.

However, the Centers for Medicare & Medicaid Services’ reluctance to tweak financial benchmarks, or adjust risk scores upward for aging beneficiaries holds ACOs to a different standard than other Medicare programs, according to the National Association of Accountable Care Organizations.

“With risk adjustment, unlike the approach CMS takes for other initiatives, including Medicare Advantage, risk scores for beneficiaries who are assigned to the ACO over a number of years are never allowed to increase. They can only go down,” says Allison Brennan, NAACOs vice president of policy.

“That holds ACOs to a much higher standard and is unfairly penalizing them for beneficiary risk scores for an aging population that often has multiple chronic conditions,” Brennan says. “It is unrealistic to expect those risk scores to never increase, and that affects the abilities of ACOs to meet their financial benchmarks.”

In addition, Brennan says ACOs are often the victims of their own success. Their efforts to reduce costs and improve care mean they set the bar higher for themselves every year, which makes identifying new savings all the more difficult.

“As ACOs continue with the program they feel more prepared to tackle additional issues which will allow them to have continued success,” she says. “However, we need to see changes with financial benchmarks for the long-term because if they keep getting progressively harder and harder there won’t be opportunities for ACOs to out-perform their previous performance.”  

Despite those hurdles, ACOs in the Medicare Shared Savings Program, the Next Generation Model, the Pioneer ACO program and the Comprehensive End Stage Renal Disease Care Model are collectively delivering on the savings, Brennan says.

John Commins is a senior editor at HealthLeaders.

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