Among the rejected requests was an appeal to open the new model to entities that operate more-advanced ACOs.

Jan. 11—The Obama administration recently released more details on the newest accountable care organization (ACO) model, which retained elements that some had said should be changed.

The Centers for Medicare & Medicaid Services (CMS) initially announced details of the Medicare ACO Track 1+ model on Dec. 20. The new ACO aims to test a payment design with less downside risk than is used in Tracks 2 and 3 of the Medicare Shared Savings Program (MSSP). CMS specifically designed the latest ACO to encourage more practices, especially small practices, to move into performance-based risk, while also allowing hospitals to participate.

The new model will qualify—starting in 2018—as an advanced alternative payment model (APM), meaning participating physicians will qualify for a 5 percent annual Medicare bonus payment i under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

Physician advocates had requested creation of such an ACO, according to CMS officials, and it was designed based on their feedback.

The new ACO option was launched amid ongoing struggles of the high-profile MSSP, in which only 119 out of 392 ACOs earned shared savings in Performance Year 2015. Additionally, only two-thirds of ACOs that launched in 2012 or 2013 remained in the program and renewed their agreements in 2016.

New Details

CMS issued additional details in a fact sheet this week about how the Track 1+ model would function, featuring the use of prospective beneficiary assignment, less downside risk , and an option for skilled nursing facilities to request a waiver to the 3-Day Rule that limits when Medicare beneficiaries can qualify for coverage of post-acute care.

The new model will allow ACOs to keep up to 50 percent of savings based on their quality performance. The model will use a fixed 30 percent loss-sharing rate. Physician-only ACOs and those that include small rural hospitals may qualify for lower levels of risk.

Track 1+ ACOs will have a choice of symmetrical thresholds from which to start sharing in savings or losses, mirroring the options offered in Tracks 2 and 3.

The new ACOs, which will launch in 2018, may choose to enter into either a revenue- or benchmark-based risk arrangement if they include small rural hospitals. Otherwise, the ACO will be designated for one arrangement or the other based on established criteria and would have a loss-sharing limit of either 8 percent of a participant’s Medicare fee-for-service (FFS) revenue or 4 percent of the updated historical benchmark.

That nominal risk level was seen as being unnecessarily greater than the MACRA limit of 3 percent of an APM’s total expenditures.

“For health systems that by and large will rely on the total cost of care threshold for nominal risk, we continue to believe that this level of risk is excessive and will discourage many qualified providers from moving into advanced APMs,” Blair Childs, senior vice president for Premier, said in a written statement.

The National Association of Accountable Care Organizations (NAA COS) had urged a limit of 1 percent of total costs as the maximum downside.

Track 1+ ACOs that use a revenue-based loss-sharing limit would need to accept higher risk in 2019 and 2020 to remain in the Advanced APM track of MACRA.

A coalition of provider advocates, including the American Hospital Association, had urged CMS to maintain the same revenue-based threshold for the duration of the first three-year Track 1+ agreement period “to ensure stability for program participants.”

Prospective Track 1+ ACOs can apply during the annual MSSP application cycle. CMS plans to release additional application process information at a later date. However, interested organizations have been told to submit the required Notice of Intent to Apply in May 2017.

Rejected Requests

ACO and provider advocates had urged CMS to widen the eligibility for the new models beyond new ACOs and those participating in Track 1. But CMS maintained that restriction in the latest description of the new program.

An ACO “would not be eligible to participate in this Model if 40 percent or more of its ACO participants had participant agreements with an ACO that was participating in one of these performance-based risk ACO initiatives in the most recent prior performance year,” CMS officials noted in the fact sheet, referring to MSSP Tracks 2 and 3 and the Pioneer and Next Generation models.

The provider-group coalition warned that some higher-level ACOs would benefit from switching to Track 1+ because they are facing higher-than-expected losses.

“Should they conclude they are unable to continue in their current ACO track/model, allowing them to participate in Track 1+ would be more beneficial for the ACOs and Medicare rather than requiring them to remain in an unsustainable situation,” the coalition wrote. “Faced with this dilemma, many ACOs would likely drop out of the program.”

CMS’s focus on Track 1 came as 95 percent of MSSP ACOs remain in that category, in which the growth rate has been four times higher than in the two-sided risk models. However, ACOs may remain in Track 1 only for two three-year agreement periods before they are required to move to a two-sided risk model or drop out of the program.

CMS also rejected calls to extend the duration of the Track 1+ model beyond one three-year agreement period.

“We view Track 1+ as a long-term pillar of the Medicare ACO program,” NAACOS leaders wrote.

Track 1 ACOs that shift to the new model during an ongoing agreement period will be allowed to renew for a full three-year Track 1+ agreement.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, January 11, 2017