Summary of the Final Medicare ACO Regulation

Medicare ACO Regulation Summary

In late 2011, the Centers for Medicare and Medicaid Services (CMS) released the Shared Savings Program: Accountable Care Organizations final rule.

This final rule differs significantly from the earlier proposal and reflects several AAFP-recommended changes. It largely recognizes that small- to medium-sized physician practices cannot convert their administrative procedures and health record systems overnight, and the final rule is designed to provide both time and resources to make the program more attractive.

CMS accepted the AAFP suggestions to finalize policies that:

  • Allow Medicare ACO participants to avoid penalties if they do not meet savings targets by eliminating all down-side risk for low-risk ACOs participating in the Track 1 option.
  • Eliminate the proposed retrospective beneficiary assignment method and instead use a preliminary prospective assignment method with beneficiaries identified quarterly.
  • Significantly reduce the number of individual quality measures used to determine if an ACO qualifies for shared savings from 65 to 33 (as well as provide quality reporting requirements for years two and three of the program).
  • Technically allows primary care physicians to participate in more than one Medicare ACO (tax identification numbers remain exclusive to a single ACO, while National Provider Identifiers may be associated with more than one ACO).
  • Require only a pay-for-reporting approach to quality measure reporting for Performance Year 1 and phase in over three years the number of pay-for-performance measures used to calculate the Medicare ACO's performance score.
  • Encourage greater use of electronic health records, for overall Medicare ACO scoring purposes, by double-weighting a quality measure that represents the percent of primary care providers who successfully qualify for the EHR Incentive Program payment.
  • Allow Federally Qualified Health Centers, Rural Health Clinics, and Critical Access Hospitals to participate in the program.
  • Give physicians access to up-front capital through an advanced payment program.
  • Eliminate indirect medical education (IME) and direct graduate medical education (DGME) payments from spending estimates, as requested by the AAFP and the Council of Academic Family Medicine.
  • No longer require Medicare ACOs to face a mandatory antitrust review from either the FTC or Department of Justice.
  • Offer multiple start dates within 2012.

CMS envisioned the final rule would help create as many as 270 Medicare ACOs, significantly more than the 75 to 150 Medicare ACOs that CMS had estimated in conjunction with the proposed regulation. This voluntary program was implemented on January 1, 2012.