For claims-based aligned beneficiaries, regional expenditures are blended into the benchmark for Standard ACOs to better account for the ACO’s efficiency relative to its region. In PY 2024, the benchmark for Standard ACOs was a blend of 55% historical baseline expenditures and 45% regional expenditures. In PY 2025, the benchmark was previously scheduled to comprise 50% historical baseline expenditures and 50% regional expenditures.

In PY 2025, CMS will not increase the percentage of expenditures comprising the benchmark blend rate as scheduled. The rate for Standard ACOs will be held at a blend of 55% historical baseline expenditures and 45% regional expenditures.

In ACO REACH, CMS currently limits the maximum upward (ceiling) and downward (floor) adjustments that can result from blending regional expenditures into the benchmark. Currently, the ceiling is equal to 5% of the adjusted fee-for-service (FFS) United States Per Capita Cost (USPCC) for the performance year.

In PY 2025, CMS will reduce this ceiling from 5% of the adjusted FFS USPCC to 3% of the adjusted FFS USPCC for Standard ACOs.

ACOs participating in the Global risk-sharing option (100% risk sharing) are subject to a benchmark discount. Savings can only be earned by ACOs in the Global risk-sharing option if total cost of care is below the discounted Performance Year Benchmark. In PY 2024, there is a 3% discount applied to the Performance Year Benchmark. In PY 2025 and PY 2026, the discount was scheduled to increase to a 3.5% discount applied to the Performance Year Benchmark. A discount is not applied to the Performance Year Benchmark for ACOs participating in the Professional risk-sharing option.

In PY 2025, CMS will maintain the planned discount at 3.5% and will increase the discount to 4% in PY 2026. 

The revised Part C risk adjustment model that is applied under the Medicare Advantage Program is applied to Standard and New Entrant ACOs. In PY 2024, risk scores are blended using 67% of the risk scores under the 2020 risk adjustment model (V24) and 33% of the risk scores under the revised 2024 risk adjustment model (V28). For Standard and New Entrant ACOs, the model-wide Coding Intensity Factor (CIF) is capped at 1% for PY 2024.

In PY 2025, CMS will continue with implementation of the 2024 (V28) model. PY 2025 risk scores will be blended using 33% of the 2020 (V24) model and 67% of the 2024 (V28) model. For Standard and New Entrant ACOs, the model-wide CIF will remain capped at 1%.

All REACH ACOs have the option of participating in a stop-loss reinsurance arrangement, which is designed to reduce the financial uncertainty associated with infrequent but high-cost expenditures for aligned beneficiaries.

In PY 2025, CMS will apply a uniform multiplier adjustment at Final Reconciliation to stop-loss payouts so that model-wide payouts equal model-wide stop-loss charges to ensure that the model’s stop-loss reinsurance is budget-neutral.

Currently, the High Needs Population ACO and New Entrant ACO benchmark methodology uses 100% regional expenditures. In PY 2025, the benchmark was scheduled to be a blend of 50% historical baseline expenditures and 50% regional expenditures. CMS limits the maximum upward (ceiling) and downward (floor) adjustment that can result from blending regional expenditures into the benchmark. Currently, this ceiling is equal to 5% of the adjusted FFS USPCC for the given performance year.

Upon further analysis, the USPCC population is not representative of the High Needs population and the 5% ceiling is not an accurate adjustment for High Needs Population ACOs. Therefore, in PY 2025, CMS will set the ceiling at 9% of the adjusted FFS USPCC to better represent the spending of High Needs beneficiaries. The New Entrant ceiling will remain at 5% of the adjusted FFS USPCC.

In PY 2025, rather than using actual historical alignment, CMS will use a simulated historical alignment with performance year provider lists as the historical beneficiary year baseline for High Needs Population ACOs and New Entrant ACOs to be consistent with Standard ACO policy and create less variability in the benchmark. In both PY 2025 and PY 2026, CMS will continue to use 2021-2023 as the historical base years for High Needs Populations ACOs and New Entrant ACOs rather than rebasing in PY 2026 for consistency with Standard ACO policy and for benchmark stability.

Currently, ACO REACH’s Health Equity Benchmark Adjustment uses an equity score that is a blend of 1/3 National ADI scores, 1/3 State ADI scores, and 1/3 Dual-Eligibility or Low-Income Subsidy status. The State ADI was included in PY 2024 to better identify underserved people living in high-cost-of-living areas.

In PY 2025, CMS will remove the National/State blended ADI and replace it with an area-level socioeconomic deprivation measure that uses standardized variables. This will ensure the ADI accurately captures deprivation in areas with high housing values.  More information on the methodology will be forthcoming.

Provisional Settlement allows ACOs to settle part of their Performance Year Shared Savings/Shared Losses on an earlier timeline, with some estimation error. Currently, Provisional Settlement reflects only Shared Savings/Losses and does not include TMO.

In PY 2025, CMS will modify Provisional Settlement to reflect the calculation of TMO rather than solely Shared Savings/Losses. At Final Financial Settlement, CMS will adjust the Provisional calculation of TMO to account for additional claims-run out and final quality and risk scores and the CIF.

Due to the decreased risk from including TMO in the Provisional Settlement process, in PY 2025, CMS will reduce the Financial Guarantee requirements from 4.0% to 3.75% of benchmark for ACOs electing Enhanced Primary Care Capitation and/or Advanced Payment Option.

Currently, the benchmark methodology for voluntarily aligned beneficiaries uses 100% of regional expenditures. Starting in PY 2025, the benchmark was planned to switch to a blend of 50% historical baseline expenditures and 50% regional expenditures to make the benchmark consistent with benchmark methodology for claims-based aligned beneficiaries regardless of the size of the voluntary alignment population.  

In PY 2025, CMS will align the benchmark methodology for voluntarily aligned beneficiaries with the claims-based aligned benchmark methodology for Standard and New Entrant ACOs with more than 500 or more voluntarily aligned beneficiaries in at least one of the historical base years (2021-2023). For High Needs Population ACOs, the claims- aligned benchmark methodology will be used if the High Needs Population ACO has 250 or more voluntarily aligned beneficiaries in at least one of the historical base years (2021-2023). The 100% regional benchmark methodology will remain in place for ACOs with voluntarily aligned beneficiaries under the minimum thresholds.

CMS is establishing an amendment to the PY 2024 participation agreement to address SAHS billing activity observed in 2023. For 2023 Final Financial Settlement, CMS will adjust performance year expenditures for SAHS billing activity. Generally, SAHS billing means a given HCPCS or CPT code that exhibits a level of billing that represents a significant claims increase either in volume or dollars (e.g., dollar volume significantly above prior year or claims volume beyond expectations) with national or regional impact (e.g., not only impacting one or few ACOs) and represents a deviation from historical utilization trends that is unexpected and is not clearly attributable to reasonably explained changes in policy or the supply or demand for covered items or services. The billing level is significant and represents billing activity that would cause significantly inaccurate and inequitable payments and repayment obligations in the ACO REACH model if not addressed.

In PY 2023, CMS has identified two HCPCS codes (A4352 and A4353) associated with intermittent urinary catheter supplies as meeting the SAHS criteria. This SAHS billing will be excluded from PY 2023 expenditures, and the retrospective trend adjustment and stop-loss will be re-calculated without the SAHS billing. However, these codes will contribute to the calculation of Historical Base Year Expenditures used to construct the financial benchmark for PY 2023 (claims incurred during 2017 – 2019). For PY 2024 – PY 2026, CMS will exclude these codes from contributing to the calculation of the historical baseline expenditures used to construct the financial benchmark when 2023 is used as a base year.

CMS plans to release future guidance regarding how SAHS billing activity will be addressed generally for PY 2024 – PY 2025.

Currently, payments made under the GUIDE Model for beneficiaries receiving services under both models (overlapping beneficiaries) are not included in the expenditures used to calculate ACOs’ Shared Savings/Losses.

Beginning in PY 2025, certain GUIDE Model payments, such as the Dementia Care Management Payment (DCMP), for overlapping beneficiaries, will contribute to ACOs’ total cost of care expenditures included in the calculation of Shared Savings/Losses. Overlapping providers will follow forthcoming GUIDE billing guidance. ACO REACH claim reductions will not apply to DCMP. ACO REACH will include DCMP expenditures for purposes of alignment calculations. No changes will be made to the benchmark methodology.