(a) General rule. For each performance year, CMS determines whether the estimated average per capita Medicare expenditures under the ACO for Medicare fee-for-service beneficiaries for Parts A and B services are above or below the updated benchmark determined under Sec. 425.602. In order to qualify for a shared savings payment under Track 3, or to be responsible for sharing losses with CMS, an ACO's average per capita Medicare expenditures under the ACO for Medicare fee-for-service beneficiaries for Parts A and B services for the performance year must be below or above the updated benchmark, respectively, by at least the minimum savings or loss rate under paragraph (b) of this section.
(1) Newly assigned beneficiaries. CMS uses an ACO's HCC prospective risk score to adjust for changes in severity and case mix in this population.
(2) Continuously assigned beneficiaries. (i) CMS uses demographic factors to adjust for changes in the continuously assigned beneficiary population.
(i) CMS uses demographic factors to adjust for changes in the continuously assigned beneficiary population.
(ii) If the prospective HCC risk score is lower in the performance year for this population, CMS adjusts for changes in severity and case mix for this population using this lower prospective HCC risk score.
(3) Assigned beneficiary changes in demographics and health status are used to adjust benchmark expenditures as described in Sec. 425.602(a). In adjusting for health status and demographic changes CMS makes separate adjustments for each of the following populations of beneficiaries:
(i) ESRD.
(ii) Disabled.
(iii) Aged/dual eligible Medicare and Medicaid beneficiaries.
(iv) Aged/non-dual eligible Medicare and Medicaid beneficiaries.
(4) To minimize variation from catastrophically large claims, CMS truncates an assigned beneficiary's total annual Parts A and B fee-for-service per capita expenditures at the 99th percentile of national Medicare fee-for-service expenditures as determined for each performance year.
(5) CMS uses a 3-month claims run out with a completion factor to calculate an ACO's per capita expenditures for each performance year.
(6) Calculations of the ACO's expenditures will include the payment amounts included in Part A and B fee-for-service claims.
(i) These calculations will exclude indirect medical education (IME) and disproportionate share hospital (DSH) payments.
(ii) These calculations will take into consideration individually beneficiary identifiable payments made under a demonstration, pilot or time limited program.
(7) In order to qualify for a shared savings payment, the ACO's average per capita Medicare expenditures for the performance year must be below the applicable updated benchmark by at least the minimum savings rate established for the ACO under paragraph (b) of this section.
(b) Minimum savings or loss rate. (1) As part of the ACO's application for, or renewal of, program participation, the ACO must choose from the following options for establishing the MSR/MLR for the duration of the agreement period:
(1) As part of the ACO's application for, or renewal of, program participation, the ACO must choose from the following options for establishing the MSR/MLR for the duration of the agreement period:
(i) Zero percent MSR/MLR
(ii) Symmetrical MSR/MLR in a 0.5 percent increment between 0.5-2.0 percent.
(iii) Symmetrical MSR/MLR that varies, based on the number of beneficiaries assigned to the ACO under subpart E of this part. The MSR for an ACO under Track 3 is the same as the MSR that would apply in the one-sided model under Sec. 425.604(b) and is based on the number of assigned beneficiaries. The MLR under Track 3 is equal to the negative MSR.
(2) To qualify for shared savings under Track 3, an ACO's average per capita Medicare expenditures for the performance year must be below its updated benchmark costs for the year by at least the MSR established for the ACO.
(3) To be responsible for sharing losses with the Medicare program, an ACO's average per capita Medicare expenditures for the performance year must be above its updated benchmark costs for the year by at least the MLR established for the ACO.
(c) Qualification for shared savings payment. To qualify for shared savings, an ACO must meet the minimum savings rate requirement established under paragraph (b) of this section, meet the minimum quality performance standards established under Sec. 425.502, and otherwise maintain its eligibility to participate in the Shared Savings Program under this part.
(d) Final sharing rate. An ACO that meets all the requirements for receiving shared savings payments under Track 3 will receive a shared savings payment of up to 75 percent of all the savings under the updated benchmark, as determined on the basis of its quality performance under Sec. 425.502 (up to the performance payment limit described in paragraph (e)(2) of this section).
(e) Performance payment. (1) If an ACO qualifies for savings by meeting or exceeding the MSR, the final sharing rate will apply to an ACO's savings on a first dollar basis.
(1) If an ACO qualifies for savings by meeting or exceeding the MSR, the final sharing rate will apply to an ACO's savings on a first dollar basis.
(2) The amount of shared savings an eligible ACO receives under Track 3 may not exceed 20 percent of its updated benchmark.
(f) Shared loss rate. The shared loss rate--
(1) For an ACO that is required to share losses with the Medicare program for expenditures over the updated benchmark, the amount of shared losses is determined based on the inverse of its final sharing rate described in Sec. 425.610(d) (that is, 1 minus the final shared savings rate determined under Sec. 425.610(d));
(2) May not exceed 75 percent; and
(3) May not be less than 40 percent.
(g) Loss recoupment limit. The amount of shared losses for which an eligible ACO is liable may not exceed 15 percent of its updated benchmark as determined under Sec. 425.602.
(h) Notification of savings and losses. (1) CMS notifies an ACO in writing regarding whether the ACO qualifies for a shared savings payment, and if so, the amount of the payment due.
(1) CMS notifies an ACO in writing regarding whether the ACO qualifies for a shared savings payment, and if so, the amount of the payment due.
(2) CMS provides written notification to an ACO of the amount of shared losses, if any, that it must repay to the program.
(3) If an ACO has shared losses, the ACO must make payment in full to CMS within 90 days of receipt of notification. [80 FR 32842, June 9, 2015]