CMS Issues Proposed Rule Addressing Changes to Medicare Shared Savings Program

December 4, 2014 | By Lawrence J. Tabas

The Centers for Medicare and Medicaid Services (“CMS”) issued a proposed rule (the “Proposed Rule”) on December 1, 2014 regarding certain changes to the Medicare Shared Savings Program (the “Program”). The Proposed Rule, spanning 429 pages, discusses proposed changes to various aspects of the Program such as beneficiary assignment, data sharing, available risk models, eligibility requirements, participation agreement renewals, and compliance and monitoring.

The Program, which was established as a result of the Patient Protection and Affordable Care Act, has been in effect since 2011. The goal of the Program is to encourage health care providers and suppliers to form Accountable Care Organizations (“ACOs”), in which the ACO participants work collaboratively to coordinate care for consumers and reduce the cost of health care. If an ACO successfully reduces the cost of health care, it shares in the savings.

Currently, ACOs may either participate in one of two Program tracks. Track 1 is a one-sided model, in which participants receive a share of savings only. They do not assume risk. Track 2 is a two-sided model, in which participants share both savings and losses. Under the existing regulations, ACOs participating in Track 1 must transition to Track 2 after their first three year agreement period in the Program.

The Proposed Rule proposes to modify the existing tracks. By doing so, CMS hopes to promote the continued participation of organizations in the Program. More specifically, the Proposed Rule suggests removing the requirement that Track 1 ACOs must transition to Track 2 ACOs after the first three year agreement period. Instead, CMS would allow ACOs that are participating in Track 1 to enter into another three year agreement period in Track 1. According to CMS, this option would only be available to ACOs that: (1) have met quality performance requirements in at least one of the first two performance years of the previous agreement period; and (2) in at least one of the first two performance years of the previous agreement period, the ACO did not generate losses in excess of the negative minimum savings rate (“MSR”).

CMS also proposes to implement incentives to encourage ACOs to move from Track 1 to Track 2, rather than staying in Track 1 indefinitely. For example, CMS proposes to reduce the sharing rate by 10% for a subsequent agreement period. Therefore, if an ACO chooses to continue in Track 1 after its first three year agreement period, the ACO would only be eligible for a maximum sharing rate of 40%. CMS states in the Proposed Rule that many organizations often choose to leave the Program after their first agreement period rather than transitioning to Track 2. Therefore, it hopes these modifications will aid organizations with continued participation in the Program by allowing organizations more time to gain experience before accepting performance-based risk.

CMS Administrator, Marilyn Tavenner, stated in a CMS press release: “This proposed rule is part of our continued commitment to rewarding value and care coordination – rather than volume and care duplication. We look forward to partnering with providers and stakeholders to continuously refine and improve the Medicare Shared Savings Program.”

CMS is requesting public comment on the Proposed Rule. The comment period closes on February 6, 2015.

This post is only a brief summary of some of the main changes in the Proposed Rule. For more detailed information, CMS has released a fact sheet, which provides a helpful chart and summary of the Proposed Rule.

To read the fact sheet, click here.

To see the entire Proposed Rule, click here.

To read the CMS press release, click here.

About the Authors

Lawrence J. Tabas


Lawrence is the Chair for Obermayer’s Health Care Law Department and Election Law Practice Group. Lawrence’s Health Care Law legal experience includes the representation of Pennsylvania County governments in Behavioral Health Managed...

Read More by Author