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(ACO) regulations - American Society of Anesthesiologists

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CMS-1345-P 271<br />

a result <strong>of</strong> normal year-to-year variations in Medicare beneficiaries' claims expenditures<br />

in addition to the <strong>ACO</strong>'s activities. This concern is heightened in the one-sided model,<br />

because absent initial accountability for losses, <strong>ACO</strong>s have less motivation to eliminate<br />

unnecessary expenses and may be more likely to be rewarded as a result <strong>of</strong><br />

methodological requirements. Sharing only in savings which exceed the MSR is<br />

consistent with the design <strong>of</strong> the original PGP demonstration and would reduce the<br />

probability that shared savings are earned as a result <strong>of</strong> chance or lower pre-existing<br />

expenditure trends due to existing efficiencies, and not newly enhanced care coordination<br />

and/or redesigned delivery <strong>of</strong> care. Further, such a requirement would encourage <strong>ACO</strong>s<br />

to strive to generate greater levels <strong>of</strong> savings.<br />

A third option we considered would be to require all <strong>ACO</strong>s to exceed the MSR to<br />

be eligible for savings, but only share savings in excess <strong>of</strong> a certain threshold. <strong>ACO</strong>s<br />

meeting certain criteria could be exempted from this provision and be allowed to share in<br />

first dollar savings. This option would balance the need to have assurance that savings<br />

are not a result <strong>of</strong> random variation with the need to provide critical financial support for<br />

under-funded <strong>ACO</strong>s, particularly <strong>ACO</strong>s that serve a smaller population, safety net<br />

providers, or physician-only participants. Additionally, we have experience with this<br />

model through the PGP demonstration.<br />

We are proposing the third option, that is, we propose that once an <strong>ACO</strong> has<br />

surpassed its MSR, the <strong>ACO</strong> would share in savings beyond a certain threshold. We<br />

further propose that, unless exempted, <strong>ACO</strong>s that exceed the MSR would be eligible to<br />

share in net savings above a 2-percent threshold, calculated as 2 percent <strong>of</strong> its benchmark<br />

(updated according to statute). The sharing rate (earned quality performance sharing rate

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