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Medicare redesigns shared savings ACOs

January 15, 2019

The Centers for Medicare & Medicaid Services (CMS) is redesigning its largest accountable care organization program to require ACOs to share in downside financial risk much sooner than previously required. In exchange, CMS is giving them additional flexibility to use telehealth and other care management tools.


The CMS redesign of its Shared Savings program, which currently encompasses 561 ACOs and 10.5 million beneficiaries, went into effect in January 2019, and affects ACOs that apply or reapply for a new agreement with CMS starting in July 2019.




  • ACOs are groups of doctors, hospitals, and other health care providers that join together to provide coordinated care for patients. They are held accountable for the total cost of care and quality of outcomes.
  • Under the current Medicare Shared Savings program, ACOs are allowed to share in savings if they meet quality performance metrics, but do not have to share in any risks for potential financial losses for 6 years.


 2019 Medicare Changes:


  • CMS is eliminating Tracks 1, 1+, and 2 of the current Shared Savings program and replacing them with a new BASIC track. CMS is revising Track 3 of the current program to create a new ENHANCED track. 
  • In the BASIC track, ACOs will be able to use a shared-savings-only model for 2 years.
    • In years 3 – 5, they must also assume risk for financial losses, with the degree of risk growing incrementally and automatically each year. As the level of financial risk grows, so does the level of potential financial reward.
    • In year 5, Basic Shared Savings ACOs will share in up to 50% of potential savings and up to 30% of potential losses. At that point, they also qualify as Advanced Alternative Payment models (AAPM), which, under the current MACRA law, means that physicians can qualify for 5% annual pay incentives. 
  • In the ENHANCED track, ACOs that are experienced in sharing financial risk will be able to share in savings and losses at an even higher rate than those in the BASIC track—up to 75% for savings and losses. 


Regulatory Flexibility:


  • Once ACOs take on financial risk in either the BASIC or ENHANCED track, they will receive greater regulatory flexibility and additional benefits:
    • They can offer payment incentives to encourage patients to get primary care services.
    • Physicians in certain ACOs will receive payment for telehealth services without geographic limitations, even when the beneficiary’s home is the originating site.
    • CMS will waive the requirement that patients must stay in a hospital 3 days before being transferred to a skilled nursing facility.


An entirely separate category of Medicare ACOs, called Next Generation ACOs, would not be affected by these changes.

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