ACOs: Five Tips for the Medicare Shared Savings Program

April 5, 2013

An Accountable Care Organization (ACO) seeks to reduce healthcare costs and improve patient quality of care by aligning financial incentives for healthcare providers. The ACO model was introduced as an option for Medicare when the Centers for Medicare and Medicaid Services (CMS) established the Medicare Shared Savings Program (SSP). Under the SSP an ACO that (i) provides better care for patients, (ii) provides better health for populations and (iii) has lower growth in expenditures under Medicare Parts A and B may share in the savings it achieves for Medicare. An ACO must satisfy specific criteria in order to participate in the SSP. Below are tips for compliance with several of the requirements:

1. The ACO must be willing to be accountable for the quality, cost and overall care of the Medicare fee-for-service (FFS) beneficiaries assigned to it.

Tip : An executive of the ACO must certify in the ACO’s SSP application to CMS that the ACO providers are willing to take responsibility, be accountable and report on the quality, cost and overall care of the ACO’s patients.


2. The ACO must have a formal legal structure that would allow the ACO to receive and distribute payments for shared savings to participating providers of services and suppliers.

Tip : The key is to establish and maintain common governance among all the ACO’s providers. To participate in the SSP an ACO must be a legal entity under state law and authorized by such state to conduct business within the state. Existing legal organizations that are eligible to be an ACO may participate in the SSP under their current legal structure; however, if the entity adds providers that are not currently part of the organization, a new legal entity will need to be created to establish an ACO to participate in the SSP.


3. The ACO shall include primary care ACO professionals that are sufficient for the number of FFS beneficiaries assigned to the ACO.

Tip: An ACO must have at least 5,000 beneficiaries assigned to it during the term of the participation agreement. Assignment of patients to an ACO is dependent on the ACO’s utilization of primary care services provided by ACO providers; therefore, an ACO may need to consider whether it has a sufficient number of primary care physicians to satisfy the demand for such services. Failure to have a minimum of 5,000 beneficiaries assigned to it may result in the ACO being terminated from the SSP. If an ACO is not able to meet the 5,000 beneficiary threshold, the ACO may be able to enter relationships with a sufficient number of specialists to cure the deficiency through CMS’s stepwise approach to patient assignment.


4. The ACO shall provide CMS with such information as CMS determines necessary to support the assignment of FFS beneficiaries to an ACO, the implementation of quality and other reporting requirements and the determination of payments for shared savings.

Tip: The ACO must maintain, update and annually give the list of ACO participants and the list of ACO providers/suppliers to the CMS at the beginning of each performance year and at other times as specified by CMS. During the term of the participation agreement, an ACO may add or remove ACO participants or ACO provider/suppliers. An ACO must notify CMS within 30 days of such an addition or removal.


5. An ACO must have a leadership and management structure that includes clinical and administrative systems.

Tip : An ACO must have a governing body that is responsible for the oversight and strategic direction of the ACO, is accountable for the ACO’s actions and has the authority to execute the duties of the ACO. CMS does not prescribe specific board positions or require a specific number of committee members but rather allows the ACO to set up a governing body that best suits its needs. Key leadership members must be identified in the ACO’s SSP application to CMS.


If you have any questions about compliance with the above SSP requirements or for information on additional SSP requirement compliance, please contact one of the authors.