On June 9, 2015, CMS published a final rule revising 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. According to CMS, the Shared Savings Program now includes more than 400 ACOs serving more than 7 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 final rule revises the schedule for ACOs to transition to performance-based risk arrangements and makes other changes in program regulations to emphasize primary care services, reduces the administrative burden on participants, and improves program function and transparency. Specifically, the final rule, among other things:

  • Allows 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, with the same sharing rate (50 percent) as was available under the first agreement period. CMS estimated that without this modification, fewer than 15% of ACOs would continue to participate under Track 2.
  • Modifies Track 2 to allow ACOs to choose from a number of symmetrical options for setting their minimum savings rate (MSR) and minimum loss rate (MLR).
  • Creates a new Track 3 performance risk-based model that offers a higher sharing rate than Tracks 1 and 2 and prospectively assign beneficiaries to the ACO. ACOs in Track 3 may apply for a programmatic waiver of the skilled nursing facility (SNF) 3-day hospital stay rule, which would permit payment for otherwise-covered SNF services when a prospectively assigned beneficiary is admitted to a SNF without a prior 3-day inpatient stay. ACOs in Track 3 also have the choice of several symmetrical MSR/MLR options.
  • Revises 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.
  • Revises the methodology for resetting the ACO’s benchmark at the start of its second or subsequent agreement period.
  • Streamlines 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.
  • Modifies the requirements for an ACO’s governing body and participation agreement between an ACO and an ACO participant or ACO provider/supplier.

CMS also announced its intention to propose additional improvements to the benchmark basing methodology later this year, which would take into account trends in regional FFS costs. In addition, CMS discussed its plans to develop policies for beneficiaries to voluntarily align with ACOs participating in a track with two-sided performance risk, and to waive the geographic requirement for use of telehealth services. The rule has various applicability and effective dates.