Defining Value in Health Care: CMS Releases Updated Benchmarks for ACOs

December 1, 2020

By Travis Broome

We have a principle at Aledade that drives everything we do: good for patients, good for doctors, and good for society. This nearly magical combination ensures that we create value and are not just shifting money around between constituencies in the health care system. It also demands balance. Balance is what CMS is striving for in this new regulation on how Medicare will compensate ACOs. Reading the 199 pages, it is abundantly clear that a lot of study and thought went into the proposals and I want to take a moment to applaud CMS for their efforts.

We define ACO value as “did people in the ACO get better care than people not in the ACO,” a “difference in difference” approach. In today’s health care system, better care leads to lower costs. Financial models like the Medicare Shared Savings Program (MSSP) create a way to reward doctors for that better care and resulting lower costs. But better care is hard. Creating a financial model that rewards lower costs due to better care, but not due to avoiding care (stinting) is hard. In this regulation, CMS gets closer to rewarding value as measured by the ACO success in delivering better care so let’s dive into the details.

CMS introduces the concept of regional benchmarking and blends it over time with historical benchmarking in an effort to strike the right balance – an approach we support and advocated for. In plain English, a regional benchmark means beating your neighbor and a historical benchmark means beating yourself. Currently, the MSSP requires continual improvement as measured against yourself. CMS recognizes that this has a limited shelf life as improvements get harder and harder and lower costs get dearer and dearer over time. Yet a pure regional benchmark is obviously not good for society. Doctors above the regional benchmark have no incentive to join the program and doctors below the regional benchmark have little incentive to continually improve. This creates the need for balance. The balance CMS struck is to blend the two to create a path for long-term sustainability for an ACO. The first 3 years continues to be 100 percent historical benchmark, years three through six is 65 percent reset historical benchmark and 35 percent regional benchmark and years six through nine is 30 percent reset historical benchmark and 70 percent regional benchmark. This blend requires continual improvement from the ACO, but at the same time rewards the ACO more and more for the true measure of value in a difference in difference approach.

It is impossible to get those percentages precisely right, but getting it as close as possible is critical to the future of health care in our nation, and we will be working hard with CMS, other ACOs and other stakeholders to do our part to making that decision as informed as possible. Overall, this regulation is a huge step forward to creating a system that rewards value – and is good for patients, good for doctors, and good for society.