The final Medicare Shared Savings/ACO rule is a lot more flexible than what was initially proposed, showing that public comment certainly swayed officials at the Centers for Medicare and Medicaid Services.

"CMS decided it was more important to get broader participation in this program," says Chas Roades, chief research officer at The Advisory Board Company, a research and consulting firm. "They clearly were concerned with all the comment they got from the provider community that the requirements were too onerous."

With the changes, CMS now expects about 270 ACOs to participate in Shared Savings, about double its previous estimate. And they'll hit the higher number, Roades believes. He thinks 270 may be a conservative figure because the program is far more attractive in its final form.

The most important changes relate to the sharing of savings, which are more generous in the final rule. CMS initially proposed that providers would share in savings once they reached a 2 percent threshold, meaning once they achieved savings at least 2 percent below their targeted spending level. But Medicare in the proposed rule planned to keep that 2 percent and share any additional savings.

Under the final rule, there's still a 2 percent threshold before shared savings, but providers can get "first dollar" cost savings, meaning the sharing starts with the 2 percent. "So, there's more available sharing in the final rule," Roades says.

Another big difference in the final rule is the elimination of downside risk, he adds. "No one will have to write a check to Medicare if they spend more than expected. They can't get a bonus payment, but they won't have to pay a penalty."

CMS also significantly lowered the quality reporting requirements from 65 measures to 33 measures. "The quality standard is still high, but at least it's not overly complex," Roades says. "It's certainly doable."


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