An ACO with 50,000 beneficiaries just completed its first year of a 3-year contract where the final scores were quality 90%; expected costs were $50…

The Accountable Care Organization (ACO) will expect to pay back money because its actual costs ($52 million) exceeded its expected cost benchmark ($50 million), resulting in a $2 million loss. In a two-sided risk model, which is common for established ACOs, the organization shares financial responsibility for losses. Even with a high-quality score, no shared savings can be generated when costs are over budget. Therefore, the ACO is liable for a portion of the losses, requiring a payment back to the payer (e.g., CMS).

A. The ACO cannot receive shared savings because its actual costs were higher than its expected costs, meaning no savings were generated.

C. Eligibility for shared savings is determined annually based on performance for that year, not deferred to a future year.

D. Reconciliation for shared savings or losses in programs like the Medicare Shared Savings Program (MSSP) occurs annually, not at the end of the multi-year agreement.

1. Centers for Medicare & Medicaid Services (CMS). (2023). Shared Savings Program. Official CMS documentation details that financial reconciliation is performed annually. An ACO with actual expenditures exceeding its benchmark would not be eligible for shared savings and may be responsible for shared losses.

2. McWilliams, J. M., Hatfield, L. A., Chernew, M. E., Landon, B. E., & Schwartz, A. L. (2016). Early performance of accountable care organizations in Medicare. New England Journal of Medicine, 374(24), 2357-2366. https://doi.org/10.1056/NEJMsa1600142. This study discusses the financial models of ACOs, including the mechanisms for shared savings and losses based on annual performance against benchmarks.