Final Medicare Shared Savings Program Rule Released

June 6, 2015

On June 4,  the Centers for Medicare and Medicaid Services (CMS) "issued a final rule that will update and improve policies governing the Medicare Shared Savings Program (Shared Savings Program). ... The Shared Savings Program encourages providers of services and suppliers (e.g., physicians, hospitals and others involved in patient care) to create a new type of health care entity, an ACO. ACOs agree to be held accountable for improving the quality of care for patients they serve while reducing the rate of growth in health care spending. If the ACOs are successful in improving quality and reducing spending, they receive a share of the savings achieved." Originally, ACOs could follow one of two tracks. Track One would not expose providers to any financial risk if they failed to meet savings, but it provided a lower level of potential shared savings than Track Two. Under Track Two, providers faced possible penalties if they did not achieve savings, but provided higher levels of shared savings. The original proposed rule would have allowed providers to stay in Track One for a second contract period but would reduce the potential level of shared savings. That option was opposed by many, because the lower shared savings percentage could encourage a substantial number of ACOs to drop from the program. CMS changed course in the final rule, and elected to allow ACOs to continue under the original risk-free model for another 3-year contract term. Additionally CMS has added a "new performance-based risk model (Track 3) for ACOs to participate in the Shared Savings Program. Track 3 offers a higher sharing rate than Tracks 1 and 2 and beneficiaries will be prospectively assigned to the ACO rather than preliminarily assigned to ACOs with a retrospective reconciliation."