Beginning in 2019, CMS will allow At-Risk ACOs, including Track 1+ and NextGen ACOs, to buy Stop-Loss independent from CMS’ own mandatory Stop-Loss. So what does this mean to your At-Risk ACO and your bottom-line and profits? This new CMS policy allows ACOs to buy stop-loss protection apart from CMS and its truncated (built in stop-loss) Benchmark which is normally more costly to the ACO. This allows ACOs the freedom to buy “provider stop-loss” coverage protection from reinsurers in the open reinsurance marketplace.
Financial Reinsurance – Impact and Outline
If you examine the ACO Benchmark before and after CMS’ “stop-loss” truncation charge there is a vast benchmark difference and savings to the ACO. So much so that most ACOs are financially advantaged in buying their own stop-loss independent of CMS.
ACO Benchmark without CMS Stop-Loss = $12,000 PMPY (per member, per year)
ACO Benchmark with CMS Stop-Loss = $11,300 PMPY (per member, per year)
CMS Charge for Stop-Loss Truncation = $ 700 PMPY (per member, per year)
The above example illustrates that CMS is charging the ACO roughly $700 PMPY on their Stop-Loss coverage. With CMS Stop-Loss the ACO has to manage the overall population to less than $11,300 before sharing in the savings with CMS.
Buy Direct – A Better Alternative
Your ACO can benefit by buying Stop-Loss direct from the reinsurer while gaining the higher non-truncated Benchmark and save the difference by receiving the higher CMS Benchmark of $12,000 PMPY. Non-government and private reinsurers in virtually every case will have a lower cost than the more expensive CMS Stop-Loss. This gives the ACO greater profits and greater control over the Stop-Loss since the policy protection is negotiated and customized for added benefits. This mutual alignment with the reinsurer allows the ACO to manage high cost claims with better outcomes and lower cost results thereby increasing the ACO’s ability to share in the financial results and increased cost savings with the reinsurer.