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Breaking News: CMS publishes Final ACO Regulations

October 20, 2011 | Comments Off on Breaking News: CMS publishes Final ACO Regulations
Posted by Beth Christian

Today was a busy day indeed for CMS.  The agency has released the following: (1) the final Shared Savings Program regulations for ACOs; (2) a solicitation for participation in a new Advanced Payment Model designed to provide upfront payments to certain ACOs to assist with upfront infrastructure costs; and (3) a proposed rule implementing reforms to the Medicare Conditions of Participation for Hospitals.

The CMS press release announcing the publication of the Shared Savings Program regulations included the following statement by CMS Administrator Donald Berwick, M.D.:

“We listened very carefully to the more than 1,300 comments we received on the proposed rule released this spring, and this final rule includes a number of improvements suggested by those comments that will strengthen the program…….the final rule will increase the incentives and streamline the Shared Savings Program, extending the benefits of the new program to a broader range of beneficiaries.”

As we pointed out in our May 12, 2011 and May 20, 2011 blog posts, the draft rules published earlier this year had been criticized because they did not appear to contemplate how providers would obtain the capital needed to properly fund up front infrastructure costs for initiating ACO operations. Under the newly announced Advanced Payment ACO Model, participating ACOs will receive three types of payments:

  • An upfront, fixed payment.
  • An upfront, variable payment based on the number of its historically-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO.

Note that the upfront, advanced payments will be recovered from future shared savings payments to the ACO.

The new Advanced Payment ACO Model is open only to two types of entities:

  • ACOs that do not include any inpatient facilities AND have less than $50 million in total annual revenue.
  • ACOs in which the only inpatient facilities are critical access hospitals and/or Medicare low-volume rural hospitals AND have less than $80 million in total annual revenue.

Only those ACOs that enter the Shared Savings Program in April 2012 or July 2012 will be eligible for participation in the Advanced Payment model.  ACOs that are co-owned with a health plan will be ineligible.  Other parties who do not qualify for the Advanced Payment Model may still form an ACO and participate in the Shared Savings Program, but they will not be eligible for the upfront, fixed payments.


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