The Centers for Medicare & Medicaid Services (CMS) Innovation Center recently announced the development of a new incentive program—the ACO Investment Model. Through the ACO Investment Model, CMS is offering up to $114 million in incentives to encourage the formation of as many as 75 Accountable Care Organizations (ACOs) in rural and otherwise underserved parts of the country. The ACO Investment Model was specifically developed by CMS in an effort to respond to concerns and available research suggesting that some providers lack adequate access to the capital needed to invest in infrastructure necessary to successfully implement population care management.

1.  Eligibility/Selection for Participation in the ACO Investment Model. 

An ACO must meet the following criteria to be eligible for the ACO Investment Model:

  • The ACO must be accepted into and participate in the Medicare Shared Savings Program (MSSP). The ACOs first performance period in the MSSP must have started in 2012, 2013 or 2014 or will start in 2016.
  • The ACO has completely and accurately reported quality measures to the MSSP in the most recent performance year, if the ACO started in the MSSP in 2012, 2013 or 2014, excluding ACOs that will start in 2016. The ACO has a preliminary prospective beneficiary assignment of 10,000 or fewer beneficiaries for the most recent quarter, as determined in accordance with the MSSP regulations.
  • The ACO does not include a hospital as an ACO participant or an ACO provider/supplier (as determined by the MSSP regulations), unless the hospital is a critical access hospital (CAH) or inpatient prospective payment system (IPPS) hospital with 100 or fewer beds.
  • The ACO is not owned or operated in whole or in part by a health plan.
  • The ACO did not participate in the Advance Payment Model.

Throughout the selection process, the ACO Investment Model will target both (i) new ACOs serving rural areas and areas of low ACO penetration, and (ii) existing ACOs committed to moving to higher risk tracks. CMS will also give preference to ACOs that provide high quality of care, ACOs that achieved their financial benchmark, ACOs that demonstrate exceptional financial need, and those that submit compelling proposals for how they will invest both their own funds and CMS funds.

2.  Payments Under the ACO Investment Model. 

Under the ACO Investment Model, ACOs that will begin participating in the MSSP on January 1, 2016 will receive three (3) types of payments:

  • An upfront, fixed payment: Each ACO receives a fixed payment of $250,000.
  • An upfront, variable payment: Each ACO receives a payment (i.e., $36 per assigned beneficiary) based on the number of its preliminary prospectively-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO: Each ACO receives a monthly payment (i.e., $6 per beneficiary per month) based on the number of its preliminarily prospectively-assigned beneficiaries.

On the other hand, ACOs that began participating in the MSSP on April 1, 2012, July 1, 2012, January 1, 2013, or January 1, 2014 will receive two (2) types of payments:

  • An upfront, variable payment: Each ACO receives a payment (i.e., $36 per assigned beneficiary) based on the number of its preliminary prospectively-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO: Each ACO receives a monthly payment (i.e., $6 per beneficiary per month) based on the number of its preliminary prospectively-assigned beneficiaries.

3.  Recovery of ACO Investment Model Payments. 

For ACOs already participating in the MSSP, CMS will recover the ACO Investment Model payments through an offset against an ACOs earned shared savings. If the ACO does not generate sufficient savings to repay the ACO Investment Model payments as of the first settlement for the MSSP, CMS will continue to offset shared savings in subsequent performance years and any future agreement period, or pursue recovery where appropriate.

For ACOs new to the MSSP in 2016, CMS will recover payment from earned shared savings for as long as the participant remains in the MSSP ACO. Should an ACO not earn sufficient shared savings in the first MSSP agreement period to fully repay pre-payments, and should the ACO not enter a second MSSP agreement period, then CMS will not pursue full recovery of remaining pre-payments from the ACO. CMS will recover all pre-payments up to the total shared savings earned by the ACO, but will not pursue amounts in excess of the earned shared savings. CMS will pursue full recovery of pre-paid shared savings from any ACO that does not complete its initial MSSP agreement period or the full term of the ACO Investment Model agreement.

 4.  Application Deadline for Participation in the ACO Investment Model. 

The first application period for the ACO Investment Model begins October 15th, for qualifying MSSP ACOs with start dates in 2012 or 2013. Applications are due on or before December 1st. Awardees will be selected and notified in early first quarter 2015 with the goal of beginning payments at the beginning of second quarter 2015. The second application period for MSSP ACOs with start dates in 2014 or 2016 will open in the summer of 2015.