(a) For its initial agreement period, an ACO may elect to operate under one of the following tracks:
(1) Track 1. Under Track 1, the ACO operates under the one-sided model (as described under Sec. 425.604 of this part) for the agreement period.
(2) Track 2. Under Track 2, the ACO operates under a two-sided model (as described under Sec. 425.606), sharing both savings and losses with the Medicare program for the agreement period.
(3) Track 3. Under Track 3, the ACO operates under a two-sided model (as described under Sec. 425.610), sharing both savings and losses with the Medicare program for the agreement period.
(b) ACOs may operate under the one-sided model for a maximum of two agreement periods. An ACO may not operate under the one-sided model for a second agreement period unless the--
(1) Immediately preceding agreement period was under the one-sided model; and
(2) The ACO meets the criteria established for ACOs seeking to renew their agreements under Sec. 425.224(b).
(c) An ACO experiencing a net loss during a previous agreement period may reapply to participate under the conditions in Sec. 425.202(a), except the ACO must also identify in its application the cause(s) for the net loss and specify what safeguards are in place to enable the ACO to potentially achieve savings in its next agreement period. [76 FR 67973, Nov. 2, 2011, as amended at 80 FR 32841, June 9, 2015]