The HealthEC Blog

2020 Shared Savings Benchmarks – Does your Organization Meet the Mark?

Back in June we conducted a webinar titled Power Over Uncertainty – Five Steps for ACOs to Take Now, where we outlined five steps we suggested ACOs take to improve quality outcomes, while also ensuring organizational sustainability. With CMS’s release of the 2020/2021 Shared Savings Quality Measure Benchmarks this month, I wanted to share some of my insights around how ACOs could be impacted on the cost benchmarking from a historical respective, the regional adjustment and the few benchmarking methods utilized by the commercial payers. 

Pertaining to MSSP and other CMMI programs:

  • The benchmarking aspect for the CMII programs as defined in the regulations, start off with a three year look back where the weighting is lowest for year 1 and progressing to year 3, with a regional adjustment, which is dependent on the performance of the beneficiaries in the county of the attributed beneficiaries of the ACO. In its simplest form the higher the spend by the residents on the county relative to the ACO, the greater the increase of the benchmark for an ACO. As an ACO enters the renewal year the weighting for the benchmark years equalizes and is adjusted for the shared savings achieved by the ACO as it is trended.
  • As the overall expenditure during the pandemic slows, claim files are providing evidence that there may be as large as a 35% reduction in overall expenditures, one can expect a smaller impact of the regional adjustment to the historical benchmark of an ACO, probably by a similar reduction.
  • ACOs should start measuring their performance against their historical benchmark and not rely on the regional adjustment. The downward (regional) adjustment, from the historical benchmark, only occurred for 9 of the 476 ACOs, while the largest increase was 21% with an average increase of over $1,000, the highest reduction was 12%. All except for one of the ACO’s that had a reduction of their benchmark, also had shared savings, which is a true indicator of improved objectives of Triple Aim.
  • An increase in the benchmark does not guarantee shared savings, as evidenced by the fact that of the 36 ACO that had an increase of 15% or more of their benchmark, 16 did not have any shared savings. 

Pertaining to Commercial ACOs:

  • Commercial benchmarking is pegged to the premium collected by the MCO and depends on the coverage type (patient type and plan).
  • There are a few factors that the payers take into consideration when they establish a benchmark:
    • Performance on the PMPM at a percentage of the premium called Medical Loss Ratio (MLR)
    • An individual stop loss or cap on expenditure per beneficiary that is age and sometimes risk score dependent, trended over time and finally compared to the plan’s performance across their entire book of business.
  • Unlike the MSSP program where the methodology is written in stone, commercial agreements can be negotiated. Negotiating strategy must be initiated by analyzing the current performance of the beneficiaries. Elements that can be negotiated and a sample strategy for each point are:
    • MLR: attempt to achieve an MLR benchmark of over 85%
    • High Cost Cap: Between $100,000 to $150,000 where lower is better as all expenditures over the Cap are not included in the MLR calculations
    • Market Comparison: Like sized and ACO with a similar population as the ACO with respect to Socio Economic status, Plan type, Age distribution, Risk score or the performance of the beneficiaries within a 5-10 mile radius with the similar characteristics. 

Fully understanding the intricacies of these benchmarks and how they can impact your organization is critical to being successful in the MSSP. HealthEC’s advisors are here to help ensure your organization meets the mark.

Sanjay Seth
Author: Sanjay Seth
Date of Publishing : 10/29/20 8:03 AM
Sanjay Seth, is executive vice president at HealthEC. With over 30 years of clinical, administrative and consulting experience, Dr.Seth is uniquely positioned to develop population health management strategies that support healthcare providers and organizations.