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Medicare Shared Savings Program (“MSSP”) Track 1+, Track 2 and Track 3 ACOs, and NextGen ACOs, have two-sided risk. CMS requires these ACOs to provide a repayment mechanism to assure that shared losses can be repaid.
Depending on its track, an ACO’s repayment mechanism equals 1% or 2% of the ACO’s total per capita Medicare Parts A and B fee-for-service expenditures for its assigned beneficiaries, as determined based on expenditures used to establish the ACO’s benchmark.
CMS accepts letters of credit (LOC), cash held in escrow, and/or surety bonds for this purpose. While LOCs are an acceptable form of collateral, LOCs are costly and inflexible, and ACOs often struggle to find the capital to place into escrow funds. The better, more cost-effective option for ACOs is using a surety bond.