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(ACO) regulations - American Society of Anesthesiologists

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CMS-1345-P 306<br />

as evidenced by a letter <strong>of</strong> credit that the Medicare program can draw upon, or<br />

establishing another repayment mechanism, such as those previously discussed. This<br />

proposal assures operational simplicity without establishing eligibility requirements that<br />

might discourage <strong>ACO</strong>s with limited risk-bearing experience from entering Track 2.<br />

We considered several options for determining the adequacy <strong>of</strong> an <strong>ACO</strong>'s<br />

recoupment mechanism. One option would be to require <strong>ACO</strong>s to demonstrate an ability<br />

to repay the maximum amount <strong>of</strong> possible losses, for example 5 percent <strong>of</strong> the<br />

benchmark in the first performance year for an <strong>ACO</strong> entering Track 2 , or for a Track 1<br />

<strong>ACO</strong> entering its third performance year <strong>of</strong> its initial agreement period. Such a<br />

requirement could be prohibitively burdensome given that <strong>ACO</strong>s may need to<br />

demonstrate their ability to repay a large amount <strong>of</strong> capital and potentially excessive<br />

given that <strong>ACO</strong>s' loss rates would be reduced to account for quality performance and<br />

inclusion <strong>of</strong> FQHCs and/or RHCs and <strong>ACO</strong>s have a limited probability <strong>of</strong> incurring the<br />

maximum possible losses. Another option, potentially equally as effective as the first but<br />

less onerous, would be to require <strong>ACO</strong>s to demonstrate their ability to repay losses,<br />

defined as a percentage <strong>of</strong> the benchmark but below the annual loss cap. Either option<br />

would require the <strong>ACO</strong> to estimate anticipated losses, and for CMS to confirm this<br />

amount against the <strong>ACO</strong>'s benchmark (once available). Given the anticipated variation in<br />

<strong>ACO</strong> composition and regional variations in cost, there may be numerous ways <strong>of</strong><br />

accurately estimating an <strong>ACO</strong>'s maximum potential downside risk. We further recognize<br />

that an <strong>ACO</strong>'s assigned number <strong>of</strong> beneficiaries may vary from year to year. Given the<br />

potential for fluctuation in the size <strong>of</strong> an <strong>ACO</strong>'s assigned population, and the increase in<br />

the cap on shared losses in the second and third years under Track 2, the sufficiency <strong>of</strong>

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