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Final ACO Rule Expands Participation Tracks in Shared Savings Programs

July 31, 2015:

The final rule on accountable care organizations (ACOs) and the Medicare Shared Savings Program modifies the two risk-sharing models ACOs can participate in as part of the savings program and adds a third model with greater rewards. The rule was published June 9, 2015.

One of the problems with the current two-track risk model system is that very few participants want to share in downside risk. Of the 404 ACOs participating in both tracks in April 2015, 401 had opted for track 1, which has only upside risk sharing. With the final rule, the Centers for Medicare and Medicaid Services has tried to make sharing in losses more palatable, while recognizing that some ACOs are not ready to move from track 1 to tracks 2 or 3.

The rule allows ACOs that signed on for the one-sided risk sharing model (track 1) as their first agreements to renew the agreements at the same risk-sharing rate (50 percent of savings). Previously, ACOs could participate in track 1 for only the first three-year agreement, after which time they had to graduate to track 2, two-sided risk. In one-sided risk, ACOs share a portion of the savings they realize as compared with a benchmark. In two-sided savings, ACOs share a greater portion of the savings but also share in losses when they overshoot the cost benchmark.

CMS’s new track 3 option has a higher potential shared savings rate of 75 percent (as opposed to 60 percent under track 2); prospective assignment of beneficiaries; a waiver of the three-day skilled-nursing facility rule, which requires an inpatient stay of at least three days before a patient’s SNF care is covered by Medicare; and symmetrical minimum savings rate (MSR) and minimum loss rate (MLR) options. The MSR and MLR are buffer zones—a few percentage points—around the benchmark within which the ACO does not share in savings or losses. It is when the buffer zones are exceeded that the ACO stands to gain or lose. There will be several options for the ACO to choose from to establish their symmetrical MSR/MLR. This must be selected prior to the start of each agreement and may not be changed during the course of the agreement period.

To encourage ACOs to opt for the two-sided risk in tracks 2 and 3, CMS is allowing the benchmark to be reset in the second three-year agreement to take into account past financial performance. It also promises to:

  • Change the assignment method holding ACOs accountable for beneficiaries who designate ACO practitioners as providing their care
  • Waive the geographic requirement for telehealth services

CMS estimates that, with the changes in the final rule, 90 percent of ACOs participating in track 1 of the Medicare Shared Savings Program will renew their agreements. The hope is that the remaining 10 percent will opt for the potentially more rewarding, but riskier, tracks 2 and 3.


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