CMS releases final rule for Medicare Shared Savings Program ACOs

The Centers for Medicare & Medicaid (CMS) earlier this month released its much- anticipated Final Rule updating the Medicare Shared Savings Program. The whole concept behind the program, created by the Affordable Care Act (ACA), is to encourage participation among providers through the use of accountable care organizations (ACOs).

ACOs are groups of providers that contract with the Medicare program under a single entity to offer services with little or no co-pay. These ACOs agree to be held accountable for improving the quality of care, while at the same time achieving cost savings for the Medicare program. To date, more than 400 ACOs are participating. CMS reported in January that savings from both the Medicare ACOs and Pioneer ACOs exceeded $380 million.

CMS points out in its latest announcement that ACOs have shown “early, but exciting program in improving quality of care, while providing more patient-centered care at a lower cost.”

The modifications were made after CMS took into consideration more than 270 comments. The nearly 600-page document is a lot to digest, but there are some highlights. Most notably, the new rule creates a third track that allows ACOs to obtain greater financial rewards in exchange for taking on more risk. These Track 3 ACOs are now eligible for a shared savings rate of up to 75 percent in exchange for accepting risk for up to 75 percent of all losses, depending on performance quality. Those ACOS with high quality performance would be subject to a shared loss rate of 40 percent.

Track 1, designed for those just coming on board the ACO model, allowed participants to share in up to 50 percent of the savings that they generated, but did not require them to assume any risk for losses. Those ACOs that graduated to Track 2 could share in a greater percentage of shared savings, but also would be responsible for a percentage of any shared losses.

The final rule also allows those on Track 1 to renew their Track 1 participation agreement for one additional three-year period, so long as they meet their quality performance standard in at least one of the first two years of the initial three-year agreement. Previously, all Track 1 ACOs were required to transition to Track 2 after the end of the initial three-year participation.

Among other things the final rule:

  • Increases the emphasis on primary care services in the beneficiary assignment methodology.
  • Streamlines data sharing to provide improved access to data necessary for Accountable Care Organization (ACO) health care operations such as quality improvement and care coordination, while maintaining beneficiary protections.
  • Provides ACOs choice of symmetric threshold for savings and losses under performance-based risk tracks.
  • Addresses participation agreement renewals including allowing eligible ACOs to continue participation under the one-sided model (Track 1) for a second agreement period.
  • Establishes a waiver of the 3-day stay SNF rule for beneficiaries that are prospectively assigned to ACOs under Track 3.
  • Refines the methodology for resetting benchmarks to help ensure that the program remains attractive to ACOs and continues to provide strong incentives for ACOs to improve the efficiency and quality of patient care, and generate savings for the Medicare Trust Funds.
  • Refines eligibility and other requirements.

With the exception of amendments to 425.312, 425.704, and 425.708, the provisions take effect Aug. 5. The amendments to 425.312 and 425.708 take effect Nov. 1 and the amendments to 425.704 take effect Jan. 1, 2016.


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The Health Law Offices of Anthony C. Vitale