CMS Proposes 3-Year Penalty Delay for Accountable Care Organizations & New ACO Model

Accountable Care Organizations (ACO) are voluntary organizations that providers may choose to participate in which are comprised of doctors, hospitals, and other health care providers. The Centers for Medicare and Medicaid (CMS) created Accountable Care Organizations with the goal of coordinating care to ensure that patients get the right care at the right time while avoiding unnecessary duplicaiton of services an preventing medical errors. Currently Medicare offers the Medicare Shared Savings Program that allows ACOs to share in the savings it achieves for the Medicare program. ACOs may also be penalized for poor performance. 

Penalty Delay
However, CMS recently proposed that health care systems experimenting with a new way of being paid by Medicare would have three extra years before they could be punished for poor performance. This three-year delay is in addition to the three-year extension currently in place, for a total of six years. The proposal can be found here. The new rule applies to both new and existing ACOs. 

While ACOs wouldn't face penalties for an additional three years, any ACO that chose to avoid penalties after the initial delay period of three years would be limited to 40-percent of the money they save Medicare. There is a 50-percent maximum cut off of savings ACOs are able to keep during the first three years. 

Track Three ACO Model
The new ACO model, known as "Track Three," allows ACOs to keep up to 75-percent of the money they save Medicare. Track Three ACOs would be responsible for 15-percent of any excess spending they cost Medicare. This is higher than the 10-percent limit to the other models of ACOs that are in place now.