Participants in Accountable Care Organizations expect to be rewarded based on the success or failures of their clinical initiatives. However, a recent report in the New England Journal of Medicine suggests that the geographic adjustment factors apply by CMS may have a significant effect on ACO financial results. This article, entitled Implications for ACOs of Variations in Spending Growth describes situations in which the geographic region in which the ACO is located has a significant effect on its financial results. The article states: “Because of geographic variation in spending growth, Medicare's use of national growth factors to set targets could cause ACOs in any HRR to gain or lose financially without altering their delivery of care.”
This effect is similar to that that described in the Single Tracks Risk Scoring and the Luck of the Draw blog, which highlighted the results of the Physician Group Practice demonstration and the suggestion that the risk adjustment methodology played a significant part in the success or failure of participants.
Our objective is not to suggest that providers should not participate in these organizations, but rather that they should consider all the factors implicit in the various adjustment methodology that are applied to their results, and attempt to estimate the effects of those adjustments on the organization's financial results.