Yesterday, the Centers for Medicare and Medicaid Services (CMS) released a final rule on Medicare Accountable Care Organizations (ACOs). The 592-page final rule is an update of the proposed rule released in December, and provides more time for ACOs that are not ready to take on more risk to be able to continue in the less risky “track one” program for an additional three-year term. Unlike the proposed rule, these one-sided ACOs will be able to keep the same 50% sharing rate following the end of the first three-year term, instead of being reduced to 40%. ACOs will be able to renew their three-year contract under the one-sided model only once. Of the current ACOs, the Administration believes that 90% will renew. The Administration agreed to provide more time for ACOs to operate under the one-sided model at the same rate in the belief that it will help them to eventually transition to performance-based risk better than if they had slashed their sharing rate or forced them into the shared risk model before they were ready.
The two-sided model will have an alternative plan (“track three”), which will have a higher sharing rate of 75% in exchange for taking on more risk. The track three ACOs will be able to apply for a waiver that requires covering nursing home stays. Medicare requires beneficiaries to meet a three-day inpatient hospital stay requirement before covering care in a skilled nursing facility. ACOs will be able to waive this requirement if they can demonstrate that they can manage patients who would be admitted to a nursing home or admitted following an inpatient hospital stay of fewer than three days. CMS contends that this will improve quality and lower costs for beneficiaries in the ACO. Only ACOs in track three are eligible for a waiver of this rule.