On June 6th, the Centers for Medicare & Medicaid Services (CMS) released a final rule shifting how Medicare pays Accountable Care Organizations (ACO) in the Medicare Shared Savings Program. CMS said the final rule aims to help more ACOs participate in the Medicare Shared Savings Program by improving the payment methodology and providing them with a new participation option to move into the more advanced tracks of the program. Under the final rule, Medicare will factor ACOs’ ability to deliver higher-quality care at lower cost relative to other local providers in ACOs’ reimbursements. Prior to the final rule, CMS based payment on the evaluation of an ACO’s past performance.

Regarding the changes, CMS Acting Administrator Andy Slavitt said they will “encourage more physicians to improve patient care by joining ACOs, while also refining how the program measures success, so that current participants are better rewarded for quality.” Mr. Slavitt said the changes will also help physicians prepare for the new Quality Payment Program, which will hold providers to unprecedented levels of accountability not just for reporting, but also, among large physician groups, for their performance on a broad range of behaviors.

The agency will release yearly data reports on county-level risk scores and expenditures as well as ACO-specific data for the same counties, according to a CMS fact sheet. CMS will also develop an option for ACOs in the first track to extend their participation for another year under the same terms before taking on more financial risk under the more advanced tracks.

The agency said the changes will help build on the progress ACOs made in 2014, when they generated $411 million in total savings but few qualified for bonuses. “Today’s changes build on that progress, so that more patients benefit from coordinated care and Medicare pays for what works to help doctors, nurses, and other clinicians focus on the quality of care, not the quantity of services,” Slavitt said in the announcement. The changes are also part of Medicare’s broader strategy to “improve the healthcare system by paying providers for what works, unlocking healthcare data, and finding new ways to coordinate and integrate care to improve quality.”