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ACO Changes for 2023

In November 2022, the Centers for Medicare and Medicaid Services (CMS) issued the Calendar Year 2023 Physician Fee Schedule final rule.  The final rule includes proposed changes to various Medicare Shared Savings Programs (SSPs). Below are summaries of some of the changes.

Advance Payments

To address inequities resulting in low enrollment of low income and dual eligible patients in SSPs, CMS will provide advance incentive payments to new Accountable Care Organizations (ACOs) which are identified as low revenue and are inexperienced with Medicare ACO performance-based risk. The initial payment will be $250,000 with additional quarterly payments for up to two years, based on the patient mix that the ACO serves.

CMS will recoup the payments from the ACO once the ACO starts realizing savings, during the initial agreement and its next agreement period. While CMS will not recoup the payments if the ACO does not realize savings, CMS will seek repayment if the ACO terminates participation during its initial agreement.

ACOs must use the payments to improve health care provider infrastructure, to provide staffing or to provide care for underserved beneficiaries, which may include addressing social needs.

Longer Upside Only

In response to comments from smaller providers that the push to two-sided risk models is a barrier to participation, CMS will now allow ACOs, starting January 2024, to enroll in the BASIC track and stay at Level A for all five years of their first agreement, with an opportunity for an additional two years at Level A in the next agreement.

This will allow an ACO to participate with only upsided risk for seven years while the ACO adjusts to participating in a value-based care model.

ACOs that are currently participating in the BASIC track at Level A or B will have the opportunity to remain at those levels for the remaining period of their agreement.


CMS adopted several changes to its benchmarking methodology starting January 2024 to address complaints about how the current benchmarking methodology creates unrealistic goals for participating providers by forcing providers to beat their own savings each performance period.

The changes will reduce the effect of an ACOs performance on ACO historic benchmarks by incorporating a prospective external factor, including a “prior savings adjustment” in historical benchmarks for renewing ACOs, and reducing the impact of the negative regional adjustment.

Sliding-Scale Shared Savings

CMS is changing from an “all or nothing” model to a sliding-scale shared savings model. This will allow an ACO that fails to meet all of the quality measures but still achieves a certain minimum quality measure to share in savings at a lower rate than if the ACO had met its full quality measure goals.

CMS explains that this will create a more predictable shared savings for providers and prevent small errors from resulting in disqualification from any shared savings.

Health Equity Adjustment

The final rule also awards bonus points to ACOs that meet high quality measure performance goals and provide care for a higher proportion of underserved or duly eligible beneficiaries.

This is the first incentive of this kind in value-based care models that typically rely on risk-adjustment or lower quality standards for underserved populations, both strategies that harm those populations. The final rule instead rewards providers who render excellent care for these populations and incentivize providers to provide care to these underserved populations.

Reduced Administrative Burdens

CMS is also reducing the administrative burden for ACOs by reducing the frequency of notices to attributed participants, reducing the narrative requirements in certain ACO applications, and removing the requirement that ACOs submit its marketing materials to CMS for prior review.

A version of this article was published on April 20, 2023 by The Daily Record.



December 30, 2022




Smith, Darci M.


Health Care