Table 1.

ACO shared savings program financial overview

Shared Savings ModelShared Savings/Losses Model
BenchmarkEstimate of what the total Medicare fee-for-service Part A and Part B expenditures for ACO beneficiaries would otherwise have been in the absence of the ACO, even if all of those services were not provided by providers in the ACO. The benchmark will take into account beneficiary characteristics and other factors that may affect the need for health care services. The benchmark will be updated for each performance year within the agreement period
Case-mix adjustmentAnnual adjustment using the CMS hierarchal condition category prospective risk adjustment model that has been used under the Medicare Advantage program. Demographic factors will be used to adjust for severity and case mix for the continuously assigned population relative to the historical benchmark
Other adjustmentsGeographic payment adjustments and hospital value-based purchasing adjustments
Maximum sharing rateUp to 50% based on the maximum quality scoreUp to 60% based on the maximum quality score
Quality sharing rateUp to 50% based on quality performanceUp to 60% based on quality performance
Minimum savings rate+2.0%–3.9% versus benchmark to qualify for shared savings+2.0% versus benchmark to qualify for shared savings
Minimum loss rate−2.0% versus benchmark to qualify for shared savings−2.0% versus benchmark to qualify for shared savings
Performance payment limit10% of the organization’s Part A and Part B expenditure target15% of the organization’s Part A and Part B expenditure target
Shared savingsFirst dollar once the minimum savings rate is met or exceeded
Shared loss rateNoneOne minus final sharing rate applied to first dollar losses once minimum loss rate is met or exceeded; the shared loss rate cannot exceed 60%
Loss sharing limitNoneDollar amount limited to 5% of the updated benchmark in the first year, 7.5% in the second year, and 10% in the third year. Losses in excess of this limit are not shared
  • ACO, accountable care organization; CMS, Centers for Medicare and Medicaid Services.