Barclay Damon
Barclay Damon

Legal Alert

Medicare Shared Savings Program Version 2.0: Will the Carrot-and-Stick Approach Increase ACO Participation?

CMS overhauled the Medicare Shared Savings Program (MSSP) on December 31, 2018, hoping to accelerate the pace of implementation of a two-sided model for accountable care organizations (ACOs). In light of the fact that only 88 out of a total of 649 Medicare ACOs operated with a two-side model last year, CMS’s final rule requires ACOs to move more quickly to the two-sided model. With the two-sided model, ACOs are not only eligible to receive shared savings but also responsible for shared losses.

In the prior rule, ACOs were permitted to share savings for a longer time period without accepting risk for shared losses. Under the new rule, the amount of time an ACO can remain in the upside-only model has been reduced from six years to two years for new ACOs and three years for new “low-revenue” (physician-led) ACOs. This accelerated track for ACOs may prove to be problematic given the amount of time it takes for ACOs to acquire the necessary IT infrastructure, to change providers’ clinical approaches, and to implement robust care management.

The carrot being offered by CMS is higher rates for shared savings than what was originally proposed, to 40 to 50 percent of the actual savings. The new rule also offers five-year agreement periods and greater ease in obtaining waivers for telehealth and skilled nursing facility stays.

Provider participation in the MSSP is voluntary, and CMS acknowledged that its version 2.0 may discourage new ACO participation. Nonetheless, CMS believes the two-sided model offers greater potential to promote accountability for patient populations, encourages investment in redesigned care processes, and induces more systematic change in health care delivery. In a statement to the public, CMS offered that “Medicare can no longer afford to support programs with weak incentives that do not deliver value.”

ACOs that wish to participate in the MSSP are required to submit a notice of intent to apply to CMS by January 18, 2019, and an application by February 19, 2019. The start date is July 1, 2019.


If you have any questions regarding this alert, please contact Susan Benz, Health Care & Human Services Practice Area co-chair and partner, at, or contact another member of the firm’s Health Care & Human Services Practice Area.