United States: CMS Releases New Proposal To Improve Accountable Care Organizations

Last Updated: December 23 2014
Article by Robert M. Wolin

The Centers for Medicare and Medicaid Services (CMS) recently released a proposed rule aimed at revitalizing accountable care organizations (ACOs) under the Medicare Shared Savings Program (MSSP). Given the low level of ACOs receiving shared savings payments in their first year, CMS is making several proposals to adjust participants' risk levels to encourage continued participation. As a result, the proposed rule will impact the 330 ACOs currently participating in the MSSP, as well as any new ACOs. Whether the impact will be sufficient to encourage more ACO participation remains to be seen.

Increased ACO Ramp-up Period

Current regulations require that ACOs participating in Track 1 (sharing savings, but not losses) may continue in the program after their initial three-year agreement period only if they enter a Track 2 performance risk-based agreement (sharing savings and losses). The proposed rule would permit some ACOs to continue in Track 1 for one additional three-year period but at a lower sharing rate than under the initial agreement period (a 40-60 sharing ratio instead of the current 50-50). The lower rate is intended to encourage ACOs to progress along the performance risk continuum. The additional one-sided risk period will be available to ACOs that have met CMS's quality performance standard in at least one of the first two years, and have not generated losses exceeding the negative minimum savings rate in both of their first two years under the initial Track 1 agreement period.

Establishment of a Third Track

A third track, offering a higher share of savings to ACOs (up to 75 percent as compared to Track 1 and 2 which allow savings to be shared up to 50 and 60 percent, respectively) is now being proposed. Minimum savings and loss hurdles would remain at 2 percent as under the current Track 2 model. The performance payment limit would be 20 percent. Under this model, beneficiaries would be prospectively assigned to the ACO. The shared loss rate will range from 40 to 75 percent, as compared to 60 percent or less under the current Track 2 model. The loss sharing limit would be set at 15 percent under Track 3, as compared to 5 percent in year one to 10 percent in year three under the Track 2 model.

Two-sided Risk Model – Enhanced Savings and Loss Rates

The minimum savings and loss hurdles under Track 2 would change from the current flat 2 percent hurdle (the amount by which the ACO's average per capita Medicare expenditures for the performance year must be above or below the applicable benchmark in order to share in savings or losses) to a variable amount from 2 percent to 3.9 percent, in an effort to make the risk assumption more attractive.

CMS is also seeking comments to help it understand what other incentives would be necessary to encourage ACOs to assume greater financial risk.

Savings Participation Financial Benchmarks

CMS is requesting input on a number of alternative methodologies for establishing, updating and resetting ACO financial benchmarks for determining shared savings, including: (1) using regional beneficiary fee-for-service (FFS) expenditures as a benchmark against which savings are determined in lieu of the current national FFS expenditures, and (2) "transitioning to using regional FFS cost data to make ACO benchmarks gradually more independent of the ACO's past performance and gradually more dependent on the ACO's success in being more cost efficient relative to its local market, resetting the ACO's benchmark in subsequent agreement periods such as equally weighting the three benchmark years and/or accounting for shared savings payments received by an ACO in its prior agreement period." The agency is also seeking comments on related changes to the benchmark calculations in support of the foregoing options, "including changes to risk adjustment normalization and coding intensity adjustments, comparison group definitions, adjustments for ACO composition changes, the timeline for transition to regional FFS costs, and other adjustments."

Beneficiary Assignment to an ACO

Beneficiaries are assigned to an ACO based upon where they receive the plurality of their primary care. CMS proposes to include recognition of primary care services provided by nurse practitioners, physician assistants and clinical nurse specialists under this rubric. Another proposal would remove certain physician specialties unlikely to be indicative of primary care from the assignment protocol. CMS is also deliberating assignment based on beneficiary attestation. Advocates believe giving beneficiaries the opportunity to voluntarily ''align'' with the ACO in which their primary healthcare provider participates will result in improved patient centeredness.

Program Requirement Waivers

CMS is considering whether to waive certain FFS requirements for ACO participants to encourage greater cost savings, including qualifying hospital stays for SNF admission, telehealth limitations, qualifications for home health services and qualifications for post-acute referrals.

ACO Requirement Amendments

  • The proposed rule also provides for the following amendments and requirements relating to ACOs participating in the MSSP:
  • Requires public reporting of additional data (sometimes using a specific format) and identification of key ACO clinical and administrative leaders.
  • Establishes a process for terminating ACO participation (whether voluntarily or by CMS) and allows shared savings in an ACO's termination year if the termination is effective as of December 31.
  • Amends the requirements for ACO participant agreements.
  • Requires that the ACO and the legal entity that is the ACO share the same governing body. In the case of an ACO that is comprised of multiple participants, requires that the governing body be separate and unique to the ACO and not the same governing body of any ACO participant. CMS also proposes to explicitly prohibit an ACO provider/supplier from being the beneficiary representative on the governing body.
  • Offers additional flexibility regarding the qualifications of an ACO's medical director. CMS also proposes to eliminate a provision that permits some ACOs to participate without satisfying certain requirements for operations and clinical management.
  • Requires that ACOs, in their application for participation, describe how they intend to encourage and promote the use of enabling technologies for improving beneficiary care coordination.

ACO Renewal Process

A process for renewing an ACO's existing participation agreement, rather than requiring the ACO to submit a new or condensed application for continued program participation, is being considered by CMS. Renewal determinations will be based on an evaluation of whether the ACO (1) satisfies the criteria for operating under the selected risk model; (2) has a history of compliance with eligibility and other requirements of the MSSP, including the ability to repay losses, if applicable; (3) met the quality performance standards during at least one of the first two years of the previous agreement period; and (4) if participating under a two-sided model, has repaid losses owed to the program. In addition, CMS will conduct a program integrity screening of the ACO, its participants and providers/suppliers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions