Accountable Care Organizations (ACOs):The Basics

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CMS issues interim final rule to mitigate adverse financial and quality performance for MSSP ACOs impacted by 2017 natural disasters 

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  • For what timeframe do these policies apply? The 2017 performance and reporting period (Jan. 1, 2017 - March 31, 2018). 
  • Who is impacted? Any MSSP ACO with at least 20% of beneficiaries or its legal entity residing in one of the counties identified by CMS. In total, CMS expects approximately 22% of MSSP ACOs to qualify. 
  • How will this impact my quality score for shared savings payments? Impacted ACOs would automatically earn the mean 2017 performance score for all MSSP ACOs, but could choose to submit data and score higher. Those that do not report would be ineligible for bonus points awarded for performance improvement. 
  • What about my MIPS score? ACOs that do not submit complete data would receive a MIPS quality score of zero. 
  • Will there be any changes to financial benchmarks? No, but CMS will monitor closely for an impact.
  • Will shared losses be impacted for Tracks 2 and 3? CMS will reduce shared losses based on the percentage of an ACO's beneficiaries in impacted counties and percentage of total months of the performance year impacted. For instance, if one fifth of beneficiaries were impacted and the disaster lasted for 3 months of the performance year, the owed losses would be reduced by 20%, then 25%.

For more of the latest health care news, visit the MGMA Washington Connection archive. 


What are the different types of ACOs?

Expanding Item - View MoreMedicare Shared Savings Program (MSSP)

  • Total number of participants: 480
  • Status: 2018 applications under review
  • 2016 performance at a glance: MSSP ACOs achieved $652 million in gross savings to Medicare and achieved $691.3 in shared savings payments, netting a $39.3 million loss to Medicare. ACOs who were in the program longer tended to perform better. ACOs who started in 2012 or 2013 were responsible for over three quarters of total savings. 
  • Overview:

The MSSP is the largest of Medicare’s ACO Programs, accounting for 480 of 564, or over 85% of total Medicare ACOs at the start of 2017. In 2017, the MSSP features three distinct "Tracks," which will expand to four in 2018 with the addition of Track 1+, which features a level of risk and reward that falls between Track 1 and Track 2, and is the MSSP model with the lowest risk that qualifies as an Advanced Alternative Payment Model (APM). Once an ACO enters Track 1+, they may not revert to Track 1, and once they enter Tracks 2 or 3, they many not revert to Track 1 or Track 1+.

For all Tracks, a spending benchmark is established based on a risk-adjusted, weighted average of Medicare Parts A and B spending for attributed beneficiaries over the three-year period directly preceding the start of the ACO contract. In order to share in savings with Medicare, ACOs must meet a minimum savings rate (MSR). MSSP Track 1+, Track 2 or 3 ACOs are also subject to pay Medicare if they spend above a minimum loss rate (MLR), which is calculated in the same fashion as the MSR. Track 1 MSSP ACOs face no downside risk and are thus not responsible for paying back Medicare for spending more than their targets, but are also eligible for less reward than the other tracks in the form of shared savings payments. The final sharing/loss rate, or percentage of total dollars spent under the MSR or over the MLR that the ACO receives from or pays Medicare, will depend on which track they have selected to participate in, along with performance on quality metrics. Final losses or shared savings are then capped at a percentage of the total benchmark, which is known as the performance payment limit and again varies on the track. See below for more specific details on each track.

CMS Resources:


Expanding Item - View MoreNext Generation (“Next Gen”) ACO Model

  • Total number of participants: 44
  • Status: 2018 applications under review
  • 2016 performance at a glance: In total, Next Gen ACOs achieved $48 million in gross savings and $63 million in net savings.
  • Overview: The Next Generation, or “Next Gen” Model, was first established in 2015. It is based on an initial 3-year agreement period with the option to extend for two additional years. At this time the Model does not accept applicants on an annual basis, but on Dec. 15, 2016, CMS announced it will be reopening applications for an additional round of participants to start in the 2018 performance year. It differs from the MSSP in a number of ways, most notably in that it features prospective beneficiary assignment, higher levels of risk and reward (up to 100%) and a selection of payment mechanisms from which participants may choose.

CMS Resources:


Expanding Item - View MoreComprehensive ESRD Care Model

  • Total number of participants: 37
  • 2018 status: Not currently soliciting new applicants
  • 2016 results at a glance: Achieved $75 million in savings, and after $51.1 million in shared savings payouts, the demonstration yielded a net savings of $23.9 million.
  • Overview: The Comprehensive ESRD Care Model is an ACO model designed specifically to improve care for Medicare beneficiaries with End-Stage Renal Disease (ESRD) through enhanced care coordination between providers and patients. Groups of dialysis clinics, nephrologists and other providers join together to create ESRD Seamless Care Organizations (ESCOs) and are collectively held accountable for clinical quality outcomes and financial outcomes measured by Medicare Part A and B spending, including all spending on dialysis services for their aligned ESRD beneficiaries. Non-large dialysis organizations (Non-LDOs) (e.g. chains with fewer than 200 dialysis facilities, independent dialysis facilities, and hospital-based dialysis facilities) have the option of participating in a one-sided track or a two-sided track with a higher sharing rate. Large Dialysis Organizations (LDOs), which have 200 or more dialysis facilities, must participate in a risk-bearing model.

CMS Resources: 

ACOs and MACRA: Do all ACOs count as Advanced APMs?

Under the Medicare Access and CHIP Reauthorization Act (MACRA), a number of incentives are available to practices who join APMs, including permanent exclusion from the new all-encompassing federal quality reporting program known as the Merit-Based Incentive Payment System, a 5% annual lump-sum bonus of total Medicare reimbursements from 2019 through 2023, and a 0.5% higher annual payment update starting in 2026. In the final MIPS/APMs regulation, released in October 2016, CMS codified the Next Generation Model, Comprehensive ESRD Care Model, and MSSP Tracks 2 and 3 as Advanced APMs.As a result of MGMA advocacy, the agency also established the MSSP Track 1+ model as an Advanced APM beginning with the 2018 performance year.

Check back to this page for additional developments. For more information on APMs and MACRA in general, visit mgma.org/MACRA.


MGMA Advocacy:

  • MGMA joins coalition supporting ACO Improvement Act
  • MGMA signs on to letter calling for CMS to modify the repayment mechanism requirements for two-sided ACOs so that they may participate in Track 1+.
  • MGMA encourages quick development of new MSSP Track 1+ ACO Model and makes several design recommendations
  • MGMA, along with 22 other organizations, urges CMS to modify the ACO benchmarking methodology and further refine the MSSP to ensure greater participation
  • MGMA joins coalition recommending changes to the Shared Savings ACO Program
  • MGMA submits formal comments on the 2011 Medicare Shared Savings (ACO) proposed rules

To see all of MGMA's advocacy efforts, view our Advocacy Archive.


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