1. (a) Calculating county expenditures. For agreement periods beginning on January 1, 2024, and in subsequent years, CMS does all of the following to determine risk adjusted county fee-for-service expenditures for use in calculating the ACO's regional fee-for-service expenditures:

   1. (1)

      1. (i) Determines average county fee-for-service expenditures based on expenditures for the assignable population of beneficiaries in each county in the ACO's regional service area. The assignable population of beneficiaries is identified for the relevant benchmark or performance year using the assignment window or expanded window for assignment that is consistent with the beneficiary assignment methodology selected by the ACO for the performance year according to § 425.400(a)(4)(ii).

      2. (ii) Makes separate expenditure calculations for each of the following populations of beneficiaries:

         1. (A) ESRD.
         2. (B) Disabled.
         3. (C) Aged/dual eligible Medicare and Medicaid beneficiaries.
         4. (D) Aged/non-dual eligible Medicare and Medicaid beneficiaries.

   2. (2) Calculates assignable beneficiary expenditures using the payment amounts included in Parts A and B fee-for-service claims with dates of service in the 12-month calendar year for the relevant benchmark or performance year, using a 3-month claims run out with a completion factor. The calculation—

      1. (i) Excludes IME and DSH payments, and the supplemental payment for IHS/Tribal hospitals and Puerto Rico hospitals; and
      2. (ii) Considers individually beneficiary identifiable final payments made under a demonstration, pilot or time limited program.
   3. (3) Truncates a 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 for assignable beneficiaries identified for the 12-month calendar year that corresponds to the relevant benchmark or performance year, in order to minimize variation from catastrophically large claims.

   4. (4) Adjusts fee-for-service expenditures for severity and case mix of assignable beneficiaries in the county using prospective HCC risk scores. The calculation is made according to the following populations of beneficiaries:

      1. (i) ESRD.
      2. (ii) Disabled.
      3. (iii) Aged/dual eligible Medicare and Medicaid beneficiaries.
      4. (iv) Aged/non-dual eligible Medicare and Medicaid beneficiaries.

2. (b) Calculating regional expenditures. For all agreement periods beginning on January 1, 2024, and in subsequent years, CMS calculates an ACO's risk adjusted regional expenditures by:

   1. (1) Weighting the risk adjusted county-level fee-for-service expenditures determined under paragraph (a) of this section according to the ACO's proportion of assigned beneficiaries in the county, determined by the number of the ACO's assigned beneficiaries in the applicable population (according to Medicare enrollment type) residing in the county in relation to the ACO's total number of assigned beneficiaries in the applicable population (according to Medicare enrollment type) for the relevant benchmark or performance year for each of the following populations of beneficiaries:

      1. (i) ESRD.
      2. (ii) Disabled.
      3. (iii) Aged/dual eligible Medicare and Medicaid beneficiaries.
      4. (iv) Aged/non-dual eligible Medicare and Medicaid beneficiaries.
   2. (2) Aggregating the values determined under paragraph (b)(1) of this section for each population of beneficiaries (according to Medicare enrollment type) across all counties within the ACO's regional service area.

[87 FR 70246, Nov. 18, 2022, as amended at 88 FR 79549, Nov. 16, 2023]