(a) Computing per capita Medicare Part A and Part B benchmark expenditures. In computing an ACO's fixed historical benchmark that is adjusted for historical growth and beneficiary characteristics, including health status, CMS determines the per capita Parts A and B fee-for-service expenditures for beneficiaries that would have been assigned to the ACO in any of the 3 most recent years prior to the agreement period using the ACO participants' TINs identified at the start of the agreement period. CMS does all of the following:
(1) Calculates the payment amounts included in Parts A and B fee-for-service claims using a 3-month claims run out with a completion factor.
(i) This calculation excludes indirect medical education (IME) and disproportionate share hospital (DSH) payments.
(ii) This calculation considers individually beneficiary identifiable payments made under a demonstration, pilot or time limited program.
(2) Makes separate expenditure calculations for each of the following populations of beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries and aged/non-dual eligible Medicare and Medicaid beneficiaries.
(3) Adjusts expenditures for changes in severity and case mix using prospective HCC risk scores.
(4) Truncates an assigned beneficiary's total annual Parts A and B fee-for-service per capita expenditures at the 99th percentile of national Medicare fee-for-service expenditures as determined for each benchmark year in order to minimize variation from catastrophically large claims.
(5)(i) Using CMS Office of the Actuary national Medicare expenditure data for each of the years making up the historical benchmark, determines national growth rates and trends expenditures for each benchmark year (BY1 and BY2) to the third benchmark year (BY3) dollars.
(i) Using CMS Office of the Actuary national Medicare expenditure data for each of the years making up the historical benchmark, determines national growth rates and trends expenditures for each benchmark year (BY1 and BY2) to the third benchmark year (BY3) dollars.
(ii) To trend forward the benchmark, CMS makes separate calculations for expenditure categories for each of the following populations of beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries and aged/non-dual eligible Medicare and Medicaid beneficiaries.
(6) Restates BY1 and BY2 trended and risk adjusted expenditures in BY3 proportions of ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries and aged/non-dual eligible Medicare and Medicaid beneficiaries.
(7) Weights each year of the benchmark for the initial agreement period using the following percentages:
(i) BY3 at 60 percent.
(ii) BY2 at 30 percent.
(iii) BY1 at 10 percent.
(8) The ACO's benchmark will be adjusted in accordance with Sec. 425.118(b) for the addition and removal of ACO participants or ACO providers/suppliers during the term of the agreement period.
(b) Updating the benchmark. CMS updates the historical benchmark annually for each year of the agreement period based on the flat dollar equivalent of the projected absolute amount of growth in national per capita expenditures for Parts A and B services under the original Medicare fee-for-service program.
(1) CMS updates this fixed benchmark by the projected absolute amount of growth in national per capita expenditures for Parts A and B services under the original Medicare fee-for- service program using data from CMS' Office of the Actuary.
(2) To update the benchmark, CMS makes expenditure calculations for separate categories for each of the following populations of beneficiaries:
(i) ESRD.
(ii) Disabled.
(iii) Aged/dual eligible Medicare and Medicaid beneficiaries.
(iv) Aged/non-dual eligible Medicare and Medicaid beneficiaries.
(c) Resetting the benchmark. (1) An ACO's benchmark will be reset at the start of each subsequent agreement period.
(1) An ACO's benchmark will be reset at the start of each subsequent agreement period.
(2) When resetting the ACO's benchmark for a subsequent agreement period--
(i) Each benchmark year will be weighted equally
(ii) An adjustment will be made to account for the average per capita amount of savings generated during the ACO's previous agreement period. The adjustment will be limited to the average number of assigned beneficiaries (expressed as person years) under the ACO's previous agreement period. [76 FR 67973, Nov. 2, 2011, as amended at 80 FR 32842, June 9, 2015]