CMS proposes changes to Shared Savings ACO model

December 3, 2014

ACOs in Medicare’s Shared Savings Program (SSP) will have three more years before they are liable for losses if rules proposed by the Centers for Medicare and Medicaid Services (CMS) on December 1 are adopted.

Accountable Care Organizations (ACOs) in Medicare’s Shared Savings Program (SSP) will have three more years before they are liable for losses if new rules proposed by the Centers for Medicare and Medicaid Services (CMS) on December 1 are adopted.

ACOs are provider-led groups in which payments are linked to quality improvements for a defined population.  If providers reduce expected spending while meeting quality metrics, they receive a portion of the savings. In certain models, they are also liable for losses if benchmarks aren’t met.

The new rules would extend the time under which ACOs would have to pay penalties in the form of losses, to six years from the current three years.

Shared Savings ACOs offer two options: Track 1, a one-sided model, in which organizations agree to share in savings up to 10% of the benchmark for a given year, but not losses, and Track 2, a two-sided model, in which ACOs share in both savings and losses. ACOs in the two-sided model can receive up to 15% of the benchmark for a given year and are liable for losses of up to 5% of the benchmark in the first performance year, 7.5% in the second performance year, and 10% in the third performance year, according to CMS.

Under the current rules, organizations must transition from a one-sided to a two-sided model within three years. Many ACOs enter under the one-sided model, CMS said in a written statement.

CMS is proposing to give ACOs the option of a longer lead time to transition to a two-sided performance risk model after the first agreement period. ACOs would also be able to renew under the one-sided model for one additional agreement period, or three additional years. ACOs that enter the Shared Savings Program under the two-sided performance risk model would see no change, according to CMS.

CMS is also proposing a new two-sided model known as Track 3 which would allow ACOs to keep up to 75% of the money they save Medicare. They would also be responsible for up to 15% of loses if benchmarks aren’t achieved.

The organization is also looking to place more emphasis on primary care, employ alternative methodologies for benchmarks, and streamline data sharing and reduce administrative burden.

ACO formation is gaining momentum, but some providers have expressed concern about the start-up investment and downside risk that they pose.

The SSP now includes more than 330 ACOs in 47 states. In 2012, 58 SSP ACOs held spending below their benchmarks by a total of $705 million and earned shared savings payments of more than $315 million. Another 60 ACOs had expenditures below their benchmark, but not by a sufficient amount to earn shared savings.

In a written statement, CMS said it is “seeking comments on a number of care coordination tools that would make two-sided performance risk models more attractive to ACOs such as expanded use of telehealth, beneficiary attestation, and more flexibility around post-acute care referrals to help ACOs better coordinate care for beneficiaries using these services. These tools could all help encourage participating providers to improve quality and care coordination for Medicare beneficiaries, which in turn would result in better patient experiences and greater shared savings for both the ACO and the Medicare program.”