Medicare Eases ACO Rules

June 7, 2016


The Center for Medicare & Medicaid Services is making it easier for its Shared Savings Accountable Care Organizations (ACOs) to profit from lower-cost care they provide, as well as to take-on greater financial risk and reward.


The agency said it made the adjustments in its primary ACO program—which includes 430 ACOs serving 7.7 million beneficiaries—to encourage more physicians to join ACOs and to better reward current participants for quality and cost improvements.


The changes were made by CMS in a final rule published June 6, 2016, and will begin to go into effect in January, 2017.


Key changes occurred in two areas:


  • Payments: CMS will now base part of its decision about how much it pays an ACO on how well the organization performed in comparison to other providers in the region, rather than just evaluating the ACO against its own past performance. This means top-performing ACOs that have already made gains in quality or cost-improvement are no longer forced to compete against themselves.

  • Financial Risk-Sharing: Most Medicare ACOs share only in potential savings, not losses. But for ACOs that are still in their first three-year agreement period and want to switch to a payment track offering greater financial risk and reward, CMS will ease the transition. It will give them one additional year in which they are still required to share only in savings. Previously, ACOs wanting to make the leap had to begin sharing financial losses in their fourth year.


View CMS press release and fact sheet.