CMS Releases New Proposal to Improve ACOs Medicare Shared Savings Program Structure

January 2, 2015 Inovalon

Proposed Changes to Promote Continued Participation and Growth

On Dec. 1, 2014, the Centers for Medicare and Medicaid (CMS) issued proposed changes to the Medicare Shared Savings Program (MSSP) to promote continued participation and growth. The proposed changes are intended to further support and incentivize ACOs to achieve the triple aim in improving patient satisfaction, quality and reducing the cost of care.

Within the 429-hundred-page document there are numerous proposed changes. Here, we examine three key changes that could impact ACOs regarding payment tracks and beneficiary assignment.

The first two changes we review below address payment options. ACOs have initially been given two payment options when entering the Medicare Shared Savings Program: Track 1 and Track 2. Track 1 is a one-sided risk model with no downside risk; moreover, ACOs have the opportunity to earn 50 percent of shared savings if they meet qualified criteria Track 2 is a two-sided risk model that allows ACOs to share in both losses and savings. The two-sided model is designed to incentivize ACOs to accept downside risk while offering a potentially higher return.

Change 1: Addition of Track 3 to Help Manage Increased Risk
CMS proposed the addition of a third track. Track 3 would allow for ACOs to share in a higher percentage of shared savings and losses and includes prospective beneficiary assignment. Assigned beneficiaries would be set at the start of the performance year and would not change to allow ACOs to better manage risks against benchmark costs while improving patient care. ACOs could earn up to 75 percent of shared savings provided that the loss rate is less than 40 percent and does not exceed 75 percent.

Change 2: Proposed Rule Changes Governing Existing Tracks
Proposed changes also include new rules governing Track 1 and Track 2. Currently, if an ACO chooses Track 1 he or she must move to track 2 at the end of his or her third-year agreement. The proposed rule changes would allow ACOs to remain in Track 1 for a second term.  However, instead of a shared savings rate of 50 percent, the shared savings rate would be reduced to 40 percent. To incentivize ACOs to select Track 2, requirements for minimum savings and loss rates would be based on enrollment figures instead of the previous flat two percent value.  The proposed rule was developed to address some ACOs’ concerns for increased risks associated with the two-sided model, and their expressed preference to remain in Track 1.

Change 3: Changes to Beneficiary Assignment
CMS made changes regarding the beneficiary assignment in order to improve patient attribution to a given ACO. CMS modified the two-step assignment process to exclude certain physician specialties whose services are not likely to be indicative of primary care services.  The proposed changes, instead, identify nurse practitioners, physician assistants and clinical nurse specialists in the first step of the primary care services assignment process. 

Other Proposed Changes to Note

  • CMS is requesting feedback from ACOs regarding the transition to the use of regional Fee-for-Service (FFS) cost data to determine ACO benchmarks. The proposed change would allow ACOs to gradually transition from benchmarks based on past performance to benchmarks based on cost-efficiencies, relative to its local market.
  • CMS proposed to give ACOs more flexibility to use reimbursable telehealth services. However, the proposed changes are limited and do not waive certain Medicare telehealth rules. CMS’s proposed rule discusses how the use of remote access technologies may improve the accessibility and timeliness of needed care, increase communication between providers and patients, enhance care coordination, and improve the efficiency of care.

Improvements to the Medicare Shared Savings Program are ever-evolving efforts. Although other changes may still need to be addressed, the proposed rule demonstrates CMS’s commitment to the MSSP and its willingness to provide flexibility to providers to incentivize them to take on greater responsibility for risk-sharing initiatives. As CMS stated in the proposed rule, “This program is a key component of the Medicare delivery system reform initiatives included in the Affordable Care Act and is a new approach to the delivery of health care.” Stakeholders should continue to participate in the dialogue with CMS to help ensure the success of this program.

To submit comments to CMS relating to the proposed regulations, visit 

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