CMS Unveils New Plan to Provide Infrastructure Capital to ACOs

30 October 2014 Health Care Law Today Blog


The Center for Medicare & Medicaid Innovation introduced the ACO Investment Model, on October 15, 2014, through which CMS will provide newly-formed ACOs in rural and underserved areas access to capital necessary for investment in the infrastructure necessary to successfully implement care management and assist existing ACOs to prepare to assume greater financial risk. Through the ACO Investment Model, CMS will provide up to $114 million in up front investments to a maximum of  75 ACOs. The ACO Investment Model was developed in response to concerns and research suggesting that some Medicare Shared Savings Program (MSSP) ACOs lack adequate access to the capital needed to invest in infrastructure necessary to implement population care management successfully. The new model builds on the Advanced Payment Model and aims to encourage ACO formation in areas of low ACO penetration in order to produce better care and lower costs for Medicare fee-for-service beneficiaries.

Under the ACO Investment Model, ACOs will receive payments up front in order to help them make investments in necessary infrastructure. CMS then intends to recover the payments made from earned shared savings while the ACO remains in the MSSP. ACOs who first participated in the MSSP in 2012, 2013, or 2014 will be required to obtain a financial guarantee to cover at least 50% of the total anticipated payments in the event that the ACO leaves or is terminated from the ACO Investment Model or MSSP. CMS will not seek recovery of amounts paid to ACOs beginning participation in the MSSP in 2016 that do not earn sufficient shared savings in the first MSSP agreement period to fully repay prepayments and do not enter a second MSSP agreement. 

Eligibility for participation in the ACO Investment model will be assessed in two rounds. In the initial round, the ACO Investment Model is available to ACOs who began participating in the Medicare Shared Savings Program on April 1, 2012, July 1, 2012, or January 1, 2013. Applications for this round will be accepted through December 1, 2014. A future round of the ACO Investment Model will be available to ACOs who began participating in the MSSP on January 1, 2014, or will begin on January 1, 2016. Eligibility will be limited to ACOs that do not include hospitals (other than critical access hospitals) as ACO participants or providers/suppliers and are not owned or operated by health plans. Once eligible, applicants will be scored and selected based on certain criteria, including but not limited to, demonstration of exceptional need and whether the ACO will serve rural or low ACO penetration areas.

CMS will evaluate the success of the ACO Investment Model in order to determine whether the payments:

  1. Increase MSSP participation by ACOs that meet the eligibility criteria;
  2. Sustain ACO participation; and
  3. Move ACOs to greater levels of risk.
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