The report looked at Pioneer ACOs and concluded that those in low population growth, low-spending regions are positioned to gain the most, while ACOs in high population growth and, high-spending areas have more to lose because Medicare uses national growth factors to determine ACO spending targets. Medicare determines ACO spending targets on the basis of baseline Medicare spending for assigned populations, and annually increases spending targets using national Medicare spending trends.
The NEJM study concludes that using local growth factors to set initial spending targets “may better align savings for ACOs with savings for Medicare and reduce the financial uncertainty involved in participation.” The study also suggests initial evaluations of ACOs should compare performance of local control groups using “quasi-experimental designs.”
The report suggests CMS ultimately use a blend of local national growth rates to measure Medicare ACO performance, especially as accountable care expands nationwide.
CMS’ rationale for using national growth factors when setting Medicare spending targets is to put more pressure on ACOs in high-spending regions and permit greater savings in regions with low spending to support organizational investments in infrastructure.
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