On December 8, 2014, CMS published a proposed rule that would revise the regulations governing the Medicare Shared Savings Program, which is intended to encourage physicians, hospitals, and certain other types of providers and suppliers to form Accountable Care Organizations (ACOs) to provide cost-effective, coordinated care to Medicare beneficiaries. The Shared Savings Program now includes more than 330 ACOs in 47 states and serves more than 4.9 million Medicare fee for service (FFS) beneficiaries.

Under current rules, ACOs can participate in two tracks: Track 1, a “one-sided” risk model under which ACOs qualify to share in program savings but are not responsible for losses; and Track 2, a “two-sided” model under which ACOs may qualify to share in savings with an increased sharing rate, but also must take on risk for sharing in losses. The proposed rule would revise the schedule for ACOs to transition to performance-based risk arrangements and make other changes in program regulations to emphasize primary care services, reduce the administrative burden on participants, and improve program function and transparency. Specifically, the proposed rule would, among other things:

  • Allow ACOs participating in “Track 1” that meet specified standards to continue to participate in one additional agreement period under Track 1 after their initial 3-year agreement period, but at a lower sharing rate, to encourage progression along the performance risk continuum.
  • Modify Track 2 to make the minimum savings and loss rates variable.
  • Implement a Track 3 performance risk-based model that would offer a higher sharing rate than Tracks 1 and 2 and would prospectively assign beneficiaries to the ACO.
  • Revise the methodology used to assign beneficiaries to ACOs to remove certain specialty types (e.g., surgeons and radiologists) whose services are not likely to be indicative of primary care services, and to recognize the primary care delivered by nurse practitioner, physician assistant, and clinical nurse specialists.
  • Streamline the process for ACOs to access beneficiary claims data necessary for health care operations, while continuing to allow beneficiaries to decline to have their claims data shared with the ACO.

CMS also is seeking comments on alternative methodologies for establishing, updating, and resetting ACO financial benchmarks, such as using regional FFS expenditures (rather than national FFS expenditures), and resetting the ACO’s benchmark in subsequent agreement periods to account for any shared savings payments received. In addition, CMS invites comments on various options for encouraging organizations to consider taking on greater financial risk, including waiving certain FFS payment and regulations related to qualifying hospital stays for skilled nursing facility admission, telehealth, qualifications for home health services, and qualifications for post-acute referrals. While application or implementation dates may vary, CMS anticipates that the final policies and methodological changes generally would be applied for the 2016 performance year for participating organizations.  CMS will accept comments on the rule until February 6, 2015.