Medicare and Medicaid Programs; CY 2026 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program evel of information alone is not sufficient to support CMS’ goal of providing enough information for a manufacturer to submit a Suggestion of Error, if necessary. For Part B rebatable drugs, it is necessary to provide the proportion of ASP-reported units in addition to providing the total HCPCS units (as required by statute) so that the manufacturer has sufficient information to understand the total rebate amount calculated. CMS acknowledges that by providing the proportion of ASP-reported units, a manufacturer could estimate the proportion of ASP-reported units for another drug(s) included in the same HCPCS code. However, CMS believes that providing this information is necessary to carry out the rebate program because it enables manufacturers to submit a potential Suggestion of Error, which promotes accuracy in the calculation of the rebate amount. ii. Rebate Report for Applicable Calendar Quarters in CY 2023 and CY 2024 (§ 427.502) As stated in the CY 2025 PFS final rule (89 FR 97710), we codified at § 427.502 the option afforded to CMS in section 1847A(i)(1)(C) of the Act to delay sending the information required by section 1847A(i)(1)(A) of the Act for applicable calendar quart ), we codified at § 427.502 the option afforded to CMS in section 1847A(i)(1)(C) of the Act to delay sending the information required by section 1847A(i)(1)(A) of the Act for applicable calendar quarters in calendar years 2023 and 2024 until not later than September 30, 2025. Specifically, per § 427.502, CMS will issue one report for the 4 applicable calendar quarters in CY 2023 and one report for the 4 applicable calendar quarters in CY 2024. Additionally, CMS will send a reconciled rebate amount for the four applicable calendar quarters in CY 2024 9 months after the Rebate Report, to allow for 12 months of claims run-out for each applicable calendar quarter. We stated in the CY 2025 PFS proposed rule (89 FR 61959) that this approach aligns claims and payment data run-out with the run-out used during a regular reconciliation cycle. However, CMS finalized the regulatory text specifying the time periods for regular reconciliation cycles at § 427.501(d) with text that provides CMS with operational flexibility as to the exact date the report with the reconciled rebate amount will be provided to each manufacturer of a Part B rebatable drug by including the word ‘‘within’’ prior to the perational flexibility as to the exact date the report with the reconciled rebate amount will be provided to each manufacturer of a Part B rebatable drug by including the word ‘‘within’’ prior to the specified date. We propose to amend § 427.502(c)(2)(ii) to add the word ‘‘within’’ prior to ‘‘nine months’’ to be consistent with the regulatory text and cadence for regular reconciliation cycles as well as to provide operational VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00287 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32638 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules flexibility on the timing of the release of the report with the reconciled rebate amount. 3. Medicare Part D Drug Rebates for Certain Drugs and Biologicals With Prices That Increase Faster Than the Rate of Inflation a. Clarification Regarding the Payment Amount Benchmark Period for Certain Subsequently Approved Drugs In the CY 2025 PFS final rule (89 FR 98280), CMS finalized policies to identify the payment amount benchmark period as set forth in § 428.202(c). At § 428.202(c)(2), we finalize quently Approved Drugs In the CY 2025 PFS final rule (89 FR 98280), CMS finalized policies to identify the payment amount benchmark period as set forth in § 428.202(c). At § 428.202(c)(2), we finalized that for a subsequently approved drug, the payment amount benchmark period is the first calendar year beginning after the drug’s first marketed date. At § 428.202(c)(4), we finalized that, notwithstanding § 428.202(c)(2), for a subsequently approved drug for which there are no quarters during the first calendar year beginning after the drug’s first marketed date for which AMP has been reported under section 1927(b)(3) of the Act for the NDC–9, including information as set forth in § 428.202(d)(3), the payment amount benchmark period is the first calendar year in which such NDC–9 has at least 1 quarter of AMP reported. At § 428.202(c)(3), we specified that the payment amount benchmark period must be no earlier than calendar year 2021 for a Part D rebatable drug first approved or licensed by the FDA on or before October 1, 2021, for which there are no quarters during the period beginning on January 1, 2021, and ending on September 30, 2021, for which AMP has been reported under section by the FDA on or before October 1, 2021, for which there are no quarters during the period beginning on January 1, 2021, and ending on September 30, 2021, for which AMP has been reported under section 1927(b)(3) of the Act for the NDC–9, including information as set forth in § 428.202(d)(3). At the time of development for rulemaking on the CY 2025 PFS, we did not believe it was necessary to clarify in § 428.202(c)(2) or (c)(4) that the payment amount benchmark period for a subsequently approved drug also must be no earlier than calendar year 2021, since a subsequently approved drug is by definition a Part D rebatable drug first approved or licensed by the FDA after October 1, 2021. However, we have identified rare instances in which a subsequently approved drug’s first marketed date precedes the FDA approval date reported under section 1927(b)(3)(A)(v) of the Act. It is therefore possible that a subsequently approved drug could have a first marketed date prior to 2020; in other words, the first calendar year beginning after the drug’s first marketed date could precede 2021. The definition of the payment amount benchmark period at section 1860D–14B(g)(3) of the Act and the descripti the first calendar year beginning after the drug’s first marketed date could precede 2021. The definition of the payment amount benchmark period at section 1860D–14B(g)(3) of the Act and the description of a subsequently approved drug at section 1860D–14B(b)(5)(A) of the Act suggest that a Part D rebatable drug should not have a payment amount benchmark period prior to 2021. As such, we propose to clarify in this rule that the payment amount benchmark period identified under § 428.202(c)(1) through (c)(5) for a Part D rebatable drug will be no earlier than 2021 in all instances. CMS also proposes to clarify that the payment amount benchmark period set forth in § 428.202(c)(3) or (c)(4) cannot precede the payment amount benchmark period set forth in § 428.202(c)(1) or (c)(2), as applicable, for a Part D rebatable drug. b. Clarification Regarding Calculation of the Benchmark Period Manufacturer Price or AnMP in Instances of Quarters With Monthly Units but no Quarterly AMP In the CY 2025 PFS Final Rule (89 FR 98287), CMS established policies for calculating the benchmark period manufacturer price and AnMP, as applicable, in situations in which certain data are missing but CMS still ha PFS Final Rule (89 FR 98287), CMS established policies for calculating the benchmark period manufacturer price and AnMP, as applicable, in situations in which certain data are missing but CMS still has sufficient data to complete the calculations. At § 428.202(g)(1), we finalized that if there is 1 or more quarter(s) in the payment amount benchmark period or applicable period for which a manufacturer has not reported units under section 1927(b)(3)(A)(iv) of the Act but has reported AMP under sections 1927(b)(3)(A)(i)(I) and (ii) of the Act, CMS will calculate the benchmark period manufacturer price or AnMP, as applicable, using data only from quarter(s) with units. In this proposed rule, we are clarifying that we are taking the same approach for the inverse scenario. That is, if there is 1 or more quarter(s) in the payment amount benchmark period or applicable period for which a manufacturer has not reported AMP under sections 1927(b)(3)(A)(i)(I) and (ii) of the Act but has reported units under section 1927(b)(3)(A)(iv) of the Act, CMS will calculate the benchmark period manufacturer price or AnMP, as applicable, using data only from quarter(s) with AMP. In other words, when a manu its under section 1927(b)(3)(A)(iv) of the Act, CMS will calculate the benchmark period manufacturer price or AnMP, as applicable, using data only from quarter(s) with AMP. In other words, when a manufacturer has not reported AMP for a quarter but has reported units for months in that quarter, CMS will not use the units from that quarter in the calculation of the benchmark period manufacturer price or AnMP, as applicable. To the extent that a manufacturer reports a quarterly AMP value of zero for a given quarter, CMS will not consider zero to be a valid value and will instead consider AMP to be missing for that quarter.276 CMS will monitor this approach and may modify our policy in the future. We also remind manufacturers of their reporting obligations under section 1927(b) of the Act and § 447.510 of this title and that failure to provide timely information required under those authorities may result in penalties as detailed in section 1927(b)(3)(C)(i) of the Act. c. Exclusion of 340B Acquired Units From Part D Rebatable Drug Requirements (§ 428.203(b)(2)) Section 1860D–14B(b)(1)(B) of the Act requires that beginning with plan year 2026, CMS shall exclude from the total number of Acquired Units From Part D Rebatable Drug Requirements (§ 428.203(b)(2)) Section 1860D–14B(b)(1)(B) of the Act requires that beginning with plan year 2026, CMS shall exclude from the total number of units for a Part D rebatable drug, with respect to an applicable period, those units for which a manufacturer provides a discount under the 340B Program. Because this requirement starts after the first quarter of the applicable period that begins on October 1, 2025, the exclusion of 340B units will only apply for the last three quarters of this applicable period. That is, CMS will exclude 340B units starting on January 1, 2026. As we stated in the CY 2025 PFS final rule (89 FR 98289), data on which units dispensed under Part D and covered by Part D plan sponsors were purchased under the 340B Program is unavailable from the data sources specified at section 1860D–14B(d) of the Act (that is, information submitted by manufacturers, States, and Part D plan sponsors), and we do not currently have access to this data through other means. We understand that the 340B status of a Part D drug is usually not known by the dispenser at the point-of-sale, and that 340B covered entities (hereinafter ve access to this data through other means. We understand that the 340B status of a Part D drug is usually not known by the dispenser at the point-of-sale, and that 340B covered entities (hereinafter ‘‘covered entities’’) typically identify the 340B status of a Part D drug retrospectively. Because the covered entity and CMS do not exchange dispensed Part D drug information confirming the 340B status of a Part D rebatable drug, we are unable to precisely identify 340B units at the claim-level based on claims information reported to CMS by the covered entity. For these reasons, in this rule we are proposing a claims-based methodology to exclude 340B units starting on 276 See CMS instructions for reporting AMP when a zero or negative value occurs. For example: https://www.medicaid.gov/medicaid-chip-program- information/by-topics/prescription-drugs/ downloads/rx-releases/mfr-releases/mfr-rel-038.pdf and https://www.medicaid.gov/sites/default/files/ medicaid-chip-program-information/by-topics/ prescription-drugs/downloads/rx-releases/mfr- releases/mfr-rel-080.pdf. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00288 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O cs/ prescription-drugs/downloads/rx-releases/mfr- releases/mfr-rel-080.pdf. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00288 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32639 January 1, 2026. Additionally, we are proposing to establish a voluntary 340B repository for data from covered entities about 340B units that we anticipate will allow for CMS to identify 340B units at the claim-level in future applicable periods. i. Summary of Policies Discussed in the CY 2025 PFS Final Rule In the CY 2025 PFS proposed rule (89 FR 62245), to fulfill the statutory requirement to remove 340B units from rebate calculations beginning on January 1, 2026, we proposed at § 428.203(b)(2)(i) to exclude from the total number of units determined under § 428.203(a), units for which a manufacturer provided a discount under the 340B Program (‘‘340B units’’). At § 428.203(b)(2)(ii), we proposed to determine the total number of 340B units by using data reflecting the total number of units of a Part D rebatable drug for which a discount w m (‘‘340B units’’). At § 428.203(b)(2)(ii), we proposed to determine the total number of 340B units by using data reflecting the total number of units of a Part D rebatable drug for which a discount was provided under the 340B Program and that were dispensed during the applicable period. In the preamble discussion (89 FR 61969), we proposed a new policy in accordance with proposed § 428.203(b)(2) to remove units from the total number of units dispensed of a Part D rebatable drug for each applicable period based on a calculated percentage that reflects the portion of 340B purchasing relative to total sales. We proposed the percentage (hereinafter, ‘‘estimation percentage’’) to equal the total number of units purchased by covered entities under the 340B Program for an NDC–9, divided by the total units sold of that NDC–9. We stated that the estimation policy is consistent with CMS’ authority under sections 1860D–14B(b)(1)(B), 1102(a), and 1871(a)(1) of the Act, the latter of which provide the authority to make rules and regulations as necessary for the efficient administration of programs, including the Medicare Part D Drug Inflation Rebate Program. Because the statutory requirement t the authority to make rules and regulations as necessary for the efficient administration of programs, including the Medicare Part D Drug Inflation Rebate Program. Because the statutory requirement to remove 340B units from rebate calculations does not begin until January 1, 2026, for the applicable year that begins on October 1, 2025, we proposed to apply the estimation percentage only to those units associated with claims with dates of service in the last 3 quarters of the applicable period (that is, January 1, 2026, through September 30, 2026). To identify the numerator of the estimation percentage (that is, the total number of units purchased under the 340B Program for an NDC–9), we proposed to use data from the Health Resources and Services Administration’s (HRSA) 340B Prime Vendor Program (PVP). To identify the denominator of the estimation percentage (that is, the total units sold of an NDC–9), we proposed to use existing manufacturer reporting under the MDRP of AMP unit sales. Specifically, we proposed to use the total number of AMP units that are used to calculate the monthly AMP and which manufacturers are required to report to CMS for each covered outpatient drug (COD) Specifically, we proposed to use the total number of AMP units that are used to calculate the monthly AMP and which manufacturers are required to report to CMS for each covered outpatient drug (COD) in accordance with section 1927(b)(3)(A)(iv) of the Act. We believed that using these AMP unit data to calculate an estimation percentage would be consistent with the use of these same data to calculate the AnMP at § 428.202(b) and the benchmark period manufacturer price at § 428.202(d). In the CY 2025 PFS proposed and final rules, we acknowledged certain limitations with the proposed data sources. For instance, the numerator of the proposed estimation percentage (PVP data) represents 340B units dispensed in multiple settings, whereas the denominator (unit sales used to calculate AMP) represents units typically dispensed only in the retail community pharmacy setting. Additionally, the proposed estimation percentage would represent the total number of 340B units dispensed as a proportion of total units dispensed, irrespective of insurance/payor type. Further, we noted that certain 340B purchases may not be reported to the PVP if those purchases were made through alternative distribution total units dispensed, irrespective of insurance/payor type. Further, we noted that certain 340B purchases may not be reported to the PVP if those purchases were made through alternative distribution models. Many commenters agreed with these data limitations, strongly objected to the proposed estimation methodology, and suggested CMS not finalize this approach. In the CY 2025 PFS proposed rule, CMS also solicited comments on a Medicare Part D Claims Data 340B Repository (hereinafter, ‘‘340B repository’’). This approach would require that covered entities submit certain data elements from Part D 340B claims to the 340B repository on a retrospective basis. In response to this comment solicitation, many commenters expressed strong support for a 340B repository. In the CY 2025 PFS final rule (89 FR 98593), CMS finalized the proposal at § 428.203(b)(2)(i) to exclude from the total number of units determined under § 428.203(a) units for which a manufacturer provided a discount under the 340B Program (‘‘340B units’’), as well as the proposal at § 428.203(b)(2)(ii) to determine the total number of 340B units by using data reflecting the total number of units of a Part D rebatable drug for B Program (‘‘340B units’’), as well as the proposal at § 428.203(b)(2)(ii) to determine the total number of 340B units by using data reflecting the total number of units of a Part D rebatable drug for which a discount was provided under the 340B Program and that were dispensed during the applicable period. However, after consideration of the data limitations of the proposed estimation methodology and public comments, CMS did not finalize the proposed estimation methodology for the applicable period that begins on October 1, 2025. Instead, CMS stated that it would explore avenues to implement section 1860D– 14B(b)(1)(B) of the Act, which requires the exclusion from the total number of units for a Part D rebatable drug those units for which a manufacturer provides a discount under the 340B Program starting January 1, 2026, through the establishment of a 340B repository. CMS is not reproposing the estimation methodology proposed in the CY 2025 PFS proposed rule, but did consider this estimation percentage as an alternative to the proposal this year, as described in section III.E.3.c.iii. of this proposed rule titled ‘‘Alternative Policy Considered’’. Rather, we are proposing to implem mation percentage as an alternative to the proposal this year, as described in section III.E.3.c.iii. of this proposed rule titled ‘‘Alternative Policy Considered’’. Rather, we are proposing to implement § 428.203(b)(2) using a claims-based methodology to remove 340B units beginning January 1, 2026. We also propose the establishment of a Part D claims data 340B repository to receive voluntary submissions from covered entities of certain data elements from Part D 340B claims to allow CMS to assess such data for use in identifying 340B units for removal in a future applicable period. ii. Claims-Based Methodology to Remove 340B Units from Rebate Calculations We are proposing to implement § 428.203(b)(2) using a claims-based methodology277 to remove 340B units from the Part D drug inflation rebate calculations by evaluating whether a Prescription Drug Event (PDE) record is potentially 340B-eligible based on (1) the affiliation of the National Provider Identifier (NPI) of the prescriber associated with that PDE record with a registered 340B covered entity, and (2) the designation of the dispensing pharmacy associated with that PDE as a 340B contract pharmacy (hereinafter ‘‘Prescriber-Ph ociated with that PDE record with a registered 340B covered entity, and (2) the designation of the dispensing pharmacy associated with that PDE as a 340B contract pharmacy (hereinafter ‘‘Prescriber-Pharmacy Methodology’’). CMS is proposing to use the described methodology unless and until a different method to remove 340B units is proposed and finalized. CMS acknowledges that the 340B OPAIS database may not list all pharmacies 277 The 340B claims-based methodology described herein uses elements of the 340B simulation described in the published work: Nikpay, S., Bruno, J. P., & Carey, C. (2024). Recent court ruling could increase the size and administrative complexity of the 340B program. Health affairs scholar, 2(12), qxae157. https:// doi.org/10.1093/haschl/qxae157. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00289 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32640 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules that dispense 340B eligible drugs, including covered entities that have ‘‘in- house’’ pharmacies that are not registered in the 340B OPAIS database No. 134 / Wednesday, July 16, 2025 / Proposed Rules that dispense 340B eligible drugs, including covered entities that have ‘‘in- house’’ pharmacies that are not registered in the 340B OPAIS database or 340B-eligible Aids Drug Assistance Programs (ADAPs) that collect rebates to receive 340B discounts instead of receiving such discount at the time of purchase from a contract pharmacy registered in the 340B OPAIS database. CMS is soliciting comments on whether and how to account for this limitation in the identification of 340B dispenses in the Prescriber-Pharmacy Methodology. For the Prescriber-Pharmacy methodology, once a PDE record is identified as potentially 340B-eligible, the units associated with that PDE record would be removed from the rebate calculation. We understand that the determination of potential 340B- eligibility of a PDE record using the methodology described herein does not necessarily mean that the covered entity replenished (or can in the future replenish) the units at the 340B price, and we therefore believe the proposed claims-based methodology may overestimate the number of units that are potentially 340B-eligible. Examples of PDE records that would be identi at the 340B price, and we therefore believe the proposed claims-based methodology may overestimate the number of units that are potentially 340B-eligible. Examples of PDE records that would be identified as being potentially 340B-eligible by the claims-based methodology, but for which the covered entity may not be able to make a corresponding purchase of the accumulated units at the 340B price, include those for which: (1) a drug manufacturer placed restrictions on the contract pharmacy that resulted in a non-340B price; (2) the NDC dispensed on the claim was discontinued, in shortage, or generally unavailable from the pharmaceutical wholesaler; (3) the covered entity did not accumulate enough units to replenish a full bottle of the drug; or (4) the prescription was subsequent to care provided outside of a 340B covered entity. The approach described in this section would identify PDE records as potentially 340B-eligible based on two criteria: (1) the prescriber with the NPI listed on the PDE record provides care at a 340B covered entity, and (2) the pharmacy NPI on the PDE record is a contract pharmacy for that same 340B covered entity. To establish a list of providers considered the PDE record provides care at a 340B covered entity, and (2) the pharmacy NPI on the PDE record is a contract pharmacy for that same 340B covered entity. To establish a list of providers considered to be 340B-affiliated providers, we propose to first create a list of prescriber NPIs from PDE records with dates of service within each applicable period. This file would be generated at the prescriber-month level and capture prescriber NPIs with active billing histories for specific months within the applicable period. CMS would then crosswalk this list of prescriber NPIs and months to the provider fields278 on Medicare Fee-For- Service (FFS) Part A inpatient claims and Part B outpatient claims and professional claims to identify the Medicare Provider Numbers (MPNs)279 through which each prescriber NPI billed for each month they were active in the PDE data. The resulting file would include prescriber NPI, MPN, and month combinations within the applicable period. We then propose to filter the collated list of prescriber NPI and MPN combinations using the 340B Office of Pharmacy Affairs Information System (OPAIS) database,280 which records the available MPNs for covered entities that a the collated list of prescriber NPI and MPN combinations using the 340B Office of Pharmacy Affairs Information System (OPAIS) database,280 which records the available MPNs for covered entities that are actively participating in the 340B program during the applicable period. Each prescriber NPI affiliated with an MPN that was also an active 340B covered entity listed on the OPAIS database for that particular month would be considered a 340B-affiliated prescriber for the month within the applicable period. CMS acknowledges that not all covered entities have an MPN or report their MPN in the 340B OPAIS database, which may result in an inability for CMS to designate claims affiliated with such covered entities as being potentially 340B-eligible using this methodology. Notably, we understand that hospitals are required to report their MPN in the 340B OPAIS database if they intend to use 340B drugs for their Medicaid patients281, and that hospitals make up the significant majority of 340B volume. To address the missing MPN scenarios, we are soliciting comments on a methodology to augment the prescriber NPI and MPN file described above by using NPI when the NPI is listed in the 340B OPAI olume. To address the missing MPN scenarios, we are soliciting comments on a methodology to augment the prescriber NPI and MPN file described above by using NPI when the NPI is listed in the 340B OPAIS database, but MPN is not. We would use additional data sources such as CMS’ Integrated Data Repository to map 340B OPAIS provided organizational NPIs to corresponding individual NPIs and MPN, when possible, to establish a supplemental list of prescriber NPIs that are associated with covered entities. Each prescriber NPI that is determined 278 Provider field types include billing, rendering, attending, operating, other, and referring. 279 There exist inconsistencies between how MPN is described in the 340B OPAIS database and the 2007 CMS System Manual, which states ‘‘In order to avoid confusion with the NPI, the Medicare/ Medicaid Provider Number (also known as the OSCAR Provider Number, Medicare Identification Number or Provider Number) has been renamed the CMS Certification Number (CCN).’’ For the purpose of this discussion, CMS uses MPN interchangeably with CCN. See:https://www.cms.gov/Regulations-and- Guidance/Guidance/Transmittals/downloads/ r29soma.pdf. 280 See: https://340bopai .’’ For the purpose of this discussion, CMS uses MPN interchangeably with CCN. See:https://www.cms.gov/Regulations-and- Guidance/Guidance/Transmittals/downloads/ r29soma.pdf. 280 See: https://340bopais.hrsa.gov/home. 281 See: https://www.hrsa.gov/opa/registration. to be associated with a covered entity NPI, as listed in the 340B OPAIS database, would be considered a 340B- affiliated prescriber for the month within the applicable period. The resulting augmented 340B-affiliated prescriber NPI file would help to ensure a broader possible combination of prescriber-covered entity pairings than using the covered entity’s organizational NPI from the 340B OPAIS database alone. CMS is soliciting comments on the benefits of using this augmented 340B-affiliated prescriber NPI approach to address covered entities that do not have MPN’s listed in the 340B OPAIS database, as well as alternative methods to consider for how CMS could address the described scenario. Next, we propose to use the 340B OPAIS database to identify registered contract pharmacies that have an active agreement with a 340B covered entity in the 340B OPAIS database during months within the applicable period and develop a list IS database to identify registered contract pharmacies that have an active agreement with a 340B covered entity in the 340B OPAIS database during months within the applicable period and develop a list of 340B contract pharmacy names, addresses, and active months for each associated covered entity. We would then merge pharmacy NPIs onto this file using the name and address fields reported to the National Council for Prescription Drug Programs (NCPDP). We understand that matching the list of contract pharmacy names and addresses to the NCPDP database will not rely on the use of a single discrete data field and may require CMS to utilize a methodology that includes: (1) cleaning addresses to account for variations in spelling, abbreviations, punctuations, etc. between the pharmacy names and addresses from both sources; (2) geocode matching between the pharmacy addresses contained in each source; and (3) fuzzy string matching on pharmacy name and address fields after cleaning these fields. Specifically, CMS may conduct a cartesian join to generate potential matches between pharmacies from each data source located in the same state, limit these potential matches to pharmacies estimated Specifically, CMS may conduct a cartesian join to generate potential matches between pharmacies from each data source located in the same state, limit these potential matches to pharmacies estimated to be within 0.2 miles of one another,282 and select a final match for each HRSA OPAIS pharmacy based on fuzzy string matching between the pharmacy name and address fields in each database.283 282 The 0.2 mile threshold was previously adopted in Nikpay, S., Bruno, J. P., & Carey, C. (2024). Recent court ruling could increase the size and administrative complexity of the 340B program. Health affairs scholar, 2(12), qxae157. https:// doi.org/10.1093/haschl/qxae157. 283 CMS proposes to use a fuzzy-matching approach that matches the similarity between the names and addresses. This approach first counts the characters that match. Next, it examines how close those characters are, accounting for transpositions in each name or address. Accounting for VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00290 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2 PO 00000 Frm 00290 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32641 Using a targeted analysis, CMS intends to conduct a manual review of this matching algorithm to identify and correct errors or omissions. CMS acknowledges that this matching algorithm may result in an inability to associate a small percentage of contract pharmacies with NPIs. The output of the two preceding processes would be: (1) a month-level file containing 340B-affiliated prescriber NPIs and their associated MPNs, and (2) a month-level file containing pharmacy NPIs for contract pharmacies of 340B covered entities and the MPNs of these covered entities. CMS would join these two files by MPN and month to create a month-level file containing 340B- affiliated prescriber NPIs and pharmacy NPIs for contract pharmacies associated with these 340B covered entities. Based on preliminary analyses of this claims- based methodology, for most Part D drugs, CMS expects to remove about 10 percent to 35 percent of the total number of units 284 determined under § 428.203(a sed on preliminary analyses of this claims- based methodology, for most Part D drugs, CMS expects to remove about 10 percent to 35 percent of the total number of units 284 determined under § 428.203(a) used to calculate the total rebate amount determined under § 428.201(a). We emphasize that this approximation is preliminary and may vary significantly across different Part D rebatable drugs. CMS notes that a prescriber NPI may have multiple affiliated covered entities, and that a 340B covered entity may have multiple contract pharmacies. Using this set of prescriber and pharmacy pairings, CMS would identify PDE records during the applicable period that have prescriber ID, service provider ID, and claim date fields that match one of the paired combinations of 340B- affiliated prescriber NPI, pharmacy NPI, and month. For PDE records that match against these pairings, the units associated with those PDE records would be considered 340B units and would be removed from the total number of units dispensed under Part D (as determined under § 428.203) used to calculate the total rebate amount. CMS has considered an alternative methodology to the Prescriber-Pharmacy Methodology (hereinafter nits dispensed under Part D (as determined under § 428.203) used to calculate the total rebate amount. CMS has considered an alternative methodology to the Prescriber-Pharmacy Methodology (hereinafter, ‘‘the Beneficiary-Pharmacy Methodology’’). In contrast to the Prescriber-Pharmacy Methodology, the Beneficiary-Pharmacy Methodology would identify potentially 340B-eligible units (that will be treated as 340B units for purposes of effectuating the exclusion at § 428.203(b)(2)) associated with PDE records that are: (1) dispensed by a transpositions addresses common typing mistakes such as entering the right characters in the wrong order. 284 See: https://www.cms.gov/files/document/ medicare-part-d-inflation-rebate-program-initial- guidance.pdf. pharmacy currently under contract with a 340B covered entity, and (2) for beneficiaries who receive care from a 340B covered entity affiliated with that pharmacy. To implement this methodology, CMS would create beneficiary-pharmacy pairs that meet the defined criteria by combining two files: (1) the same monthly file used in the Prescriber-Pharmacy Methodology that links 340B covered entities (identified by MPN or NPI) with pharmacy NPIs for th the defined criteria by combining two files: (1) the same monthly file used in the Prescriber-Pharmacy Methodology that links 340B covered entities (identified by MPN or NPI) with pharmacy NPIs for those covered entities, and (2) a monthly file containing beneficiaries associated with PDE records from the applicable year and the MPNs of providers from which those beneficiaries received care. CMS would generate this latter file by identifying beneficiary-month combinations based on the date of dispense on the PDE record, then determining the MPNs (or NPIs) where those beneficiaries received services during those months. The identification of MPNs (or NPIs) where beneficiaries receive care would rely on inpatient, outpatient, and professional claims within both Medicare FFS and Medicare Advantage claims data. To establish beneficiary-pharmacy pairs, CMS would merge the two files described above by MPN and month, producing month-level combinations that link beneficiaries to contract pharmacies. These combinations would reflect the universe of beneficiaries who receive services at a 340B covered entity and the associated contract pharmacies for those covered entities. To identify assoc acies. These combinations would reflect the universe of beneficiaries who receive services at a 340B covered entity and the associated contract pharmacies for those covered entities. To identify associated PDE records, CMS would filter for records with beneficiary ID, service provider ID, and claim date combinations that align with one of the beneficiary-pharmacy-month combinations. For any PDE record that matches these pairings, the units associated with the record would be considered 340B units. While CMS anticipates the degree of overlap between the two methodologies to be high, CMS may consider revisions to the Prescriber-Pharmacy Methodology based on further analyses of the Beneficiary-Pharmacy Methodology—such as defining 340B units using the union of units identified by both methodologies or refining the Prescriber-Pharmacy Methodology. CMS is soliciting comments on the potential benefits and drawbacks of using a Beneficiary-Pharmacy Methodology and on whether a Beneficiary-Pharmacy Methodology could be combined with the Prescriber-Pharmacy Methodology to validate 340B units identified, such as via a union of the two methodologies. iii. Alternative Policy Considered: Estimat macy Methodology could be combined with the Prescriber-Pharmacy Methodology to validate 340B units identified, such as via a union of the two methodologies. iii. Alternative Policy Considered: Estimation Percentage Using PVP and AMP Data As described in section III.E.3.c.i of this proposed rule, CMS considered an alternative estimation methodology to remove units from the total number of units dispensed of a Part D rebatable drug for each applicable period that would be based on a calculated percentage that reflects the portion of 340B purchasing relative to total sales. This alternative estimation methodology was proposed in the CY 2025 PFS rule (89 FR 61969), in which we proposed to use an estimation percentage that would equal the total number of units purchased by covered entities under the 340B Program for an NDC–9, divided by the total units sold of that NDC–9. CMS included more detail in section III.E.3.c.i of this proposed rule regarding the estimation percentage methodology originally discussed in the CY 2025 PFS proposed rule. We acknowledged some limitations of this methodology in the CY 2025 PFS proposed and final rules, as noted above in section III.E.3.c.i of this pro iginally discussed in the CY 2025 PFS proposed rule. We acknowledged some limitations of this methodology in the CY 2025 PFS proposed and final rules, as noted above in section III.E.3.c.i of this proposed rule. After further consideration of comments received in response to the CY 2025 PFS proposed rule, CMS is no longer pursuing this policy at this time but may consider it in future rulemaking. iv. Proposal To Establish a Medicare Part D Claims Data 340B Repository In the initial Medicare Part D Drug Inflation Rebate Guidance, CMS solicited comments on the best mechanism to identify 340B units dispensed under Part D.285 CMS discussed requiring the dispensing entity to include a 340B claims indicator on the Part D drug claim to be included in PDE records.286 Many commenters disagreed that requiring the dispensing entity to include a 340B claims indicator on the Part D drug claim to be included on the PDE record was the most accurate way to identify 340B discounts for Part D drugs. A few commenters highlighted the operational challenges, administrative burden, and potential for increased dispensing fees and reimbursement issues with both point-of-sale modifiers and retrospective 28 ew commenters highlighted the operational challenges, administrative burden, and potential for increased dispensing fees and reimbursement issues with both point-of-sale modifiers and retrospective 285 See: https://www.cms.gov/files/document/ medicare-part-d-inflation-rebate-program-initial- guidance.pdf. 286 Currently, a pharmacy may voluntarily use the value of ‘‘AA’’ in the Submission Type Code (D17– K8) field to indicate use of a 340B drug at the time of the adjudication or dispensing of the claim. See: National Council on Prescription Drug Program (NCPDP) 340B Information Exchange Reference Guide Version 2.0, June 2019, https:// www.ncpdp.org/NCPDP/media/pdf/340B_ Information_Exchange_Reference_Guide.pdf. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00291 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32642 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 340B identifiers. In addition, a wide array of interested parties recommended that CMS create a mechanism through which covered entities would retrospectively submit data to CMS identifying 340B claims disp dentifiers. In addition, a wide array of interested parties recommended that CMS create a mechanism through which covered entities would retrospectively submit data to CMS identifying 340B claims dispensed under Part D. Interested parties urged that this mechanism allow covered entities to submit these data directly to CMS, rather than through claims that dispensers submit via Part D plan sponsors. In response to this feedback from interested parties, in the CY 2025 PFS proposed rule (89 FR 61971 through 61972) we solicited comments on establishing a repository in a future year of the Medicare Part D Drug Inflation Rebate Program to comply with the requirement under section 1860D– 14B(b)(1)(B) of the Act that CMS shall exclude from the total number of units for a Part D rebatable drug those units for which a manufacturer provides a discount under the 340B Program. In the CY 2025 PFS proposed rule (89 FR 61971), we stated that this approach would require that covered entities submit certain data elements from Part D 340B claims to the repository, and we solicited comments on such a requirement. In the CY 2025 PFS final rule (89 FR 98293), we stated that we would explore avenues to i tain data elements from Part D 340B claims to the repository, and we solicited comments on such a requirement. In the CY 2025 PFS final rule (89 FR 98293), we stated that we would explore avenues to implement section 1860D–14B(b)(1)(B) of the Act, which requires the exclusion from the total number of units for a Part D rebatable drug those units for which a manufacturer provides a discount under the 340B Program starting January 1, 2026, through the establishment of a repository. To inform policy development for this rulemaking, we reviewed and considered the comments received on the CY 2025 PFS proposed rule. We are proposing to establish a repository to receive voluntary submissions from covered entities of certain data elements from Part D 340B claims to allow CMS to assess such data for use in identifying units of Part D rebatable drugs for which a manufacturer provides a discount under the 340B Program in a future applicable period. We intend to allow covered entities to submit data on units of Part D rebatable drugs for which a manufacturer provides a discount under the 340B Program beginning in 2026 to begin testing the usability of the 340B repository. We propose that the 3 ta on units of Part D rebatable drugs for which a manufacturer provides a discount under the 340B Program beginning in 2026 to begin testing the usability of the 340B repository. We propose that the 340B repository would receive, via submission by covered entities that choose to submit data to the repository, data elements (as described in the next section) from all claims with dates of service during the relevant period which the covered entity determined utilized a drug for which the manufacturer provides a discount under the 340B program (‘‘Part D 340B claims’’) for all covered Part D drugs billed to Medicare Part D. As requested by interested parties in comments on the initial Medicare Part D Drug Inflation Rebate Guidance and the CY 2025 PFS proposed rule, the 340B repository would allow covered entities to submit these data directly to CMS (or a contractor), rather than through claims that dispensers submit to Part D plan sponsors. CMS would consider all data elements received by the 340B repository to be associated with Part D 340B claims; that is, the 340B repository would not further verify the 340B status of a claim but rather would serve solely to store these data. Under the 340B repository to be associated with Part D 340B claims; that is, the 340B repository would not further verify the 340B status of a claim but rather would serve solely to store these data. Under this process, CMS intends to require a certification from covered entities that the covered entity has submitted all Part D 340B claims with dates of service during the relevant time period and that the data elements from all claims submitted to the 340B repository are from verified 340B claims and, to the best of the covered entity’s knowledge, their submission includes all Part D 340B claims for the covered entity at the time of submission for the applicable period. We would require covered entities to certify the completeness and accuracy of the data submitted, and attest that the submitter is authorized to submit on behalf of the entity. We are exploring approaches to confirming completeness and accuracy of data submissions to the 340B repository and are soliciting comments on methods to review and ensure the accuracy of reported data. CMS would match the stored data elements in the 340B repository to PDE transactions for each Part D rebatable drug dispensed during the applicable to review and ensure the accuracy of reported data. CMS would match the stored data elements in the 340B repository to PDE transactions for each Part D rebatable drug dispensed during the applicable period. If we determine that the data reported to the repository is usable and reliable and, in the future, propose and finalize a policy to use such data to exclude 340B units from rebate calculations, then units associated with PDE transactions that match to data elements stored in the 340B repository would be considered those for which the manufacturer provides a discount under the 340B Program and therefore would be removed from the total number of units used to calculate the total rebate amount. We understand the importance of maintaining the confidentiality of data submitted to the 340B repository. We do not expect concerns about the privacy of data submitted to the 340B repository, as this data would not be made available to external parties, including manufacturers and Part D plan sponsors. v. Proposal for Covered Entities To Submit 340B Claims Data to the 340B Repository We are proposing that covered entities would optionally begin submitting the fields specified by CMS below sponsors. v. Proposal for Covered Entities To Submit 340B Claims Data to the 340B Repository We are proposing that covered entities would optionally begin submitting the fields specified by CMS below to the 340B repository beginning in 2026 for Part D 340B claims with dates of service on or after January 1, 2026 to allow for CMS to begin usability testing for the 340B repository. CMS would not use the data submitted during the testing period to remove units from Part D inflation rebates unless and until a policy to do so is proposed and finalized. CMS expects that hospitals receiving Medicare Disproportionate Share Hospital (DSH) payments, Federally Qualified Health Centers (FQHCs), and Critical Access Hospitals (CAHs) would begin to submit data elements to the 340B repository during the testing period. CMS strongly encourages all covered entities to submit data elements to the 340B repository during the testing period beginning in 2026, as this participation would allow for robust testing of data quality and completeness. It would also provide an opportunity for covered entities to develop and test their data submission processes. CMS will address the possibility of mandatory repo ting of data quality and completeness. It would also provide an opportunity for covered entities to develop and test their data submission processes. CMS will address the possibility of mandatory reporting of data elements to the 340B repository by covered entities in future years in future rulemaking. Many covered entities are providers and suppliers regulated by CMS under Title XVIII of the Social Security Act, including hospitals receiving DSH payments, CAHs and FQHCs. CMS is actively considering options for mandatory reporting to the 340B repository in the near future and recommends that covered entities take advantage of the testing period to prepare for future policy development related to 340B repository reporting. We understand covered entities typically contract with vendors, such as 340B third-party administrators (TPAs), to determine 340B-eligibility of claims using data submitted by covered entities and their contractors. We would allow covered entities that choose to submit data to arrange for their TPAs or other vendors to submit certain data elements to the 340B repository on their behalf. Covered entities would certify and would ultimately be responsible for the acc t data to arrange for their TPAs or other vendors to submit certain data elements to the 340B repository on their behalf. Covered entities would certify and would ultimately be responsible for the accuracy of the data submitted to the 340B repository, even if a covered entity has an arrangement with a vendor to submit on its behalf. We propose to require entities (whether a 340B covered entity, or a vendor on their behalf) that choose to submit data to the 340B repository during the testing period beginning in VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00292 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32643 2026 to provide information identifying the 340B covered entity, which could include information such as the covered entity’s 340B ID and name as designated in the 340B OPAIS database, when submitting claim information to the 340B repository. We propose to use the collected identifying information to: (1) perform analyses to assess suitability of the data for future use in removing 340B units; and (2) provi ormation to the 340B repository. We propose to use the collected identifying information to: (1) perform analyses to assess suitability of the data for future use in removing 340B units; and (2) provide a means to follow up with the covered entity on questions related to claims data submission. In addition to this identifying information, we propose to require covered entities that choose to submit data to the 340B repository during the testing period beginning in 2026 to submit the following data elements from Part D claims for covered Part D drugs that are purchased under the 340B Program and dispensed to Medicare Part D beneficiaries: (1) Date of Service (that is, the date the prescription was filled by the pharmacy); (2) Prescription or Service Reference Number; (3) Fill Number (that is, the code indicating whether the prescription is an original or a refill; if a refill, the code indicates the refill number); (4) Dispensing Pharmacy NPI; and (5) NDC–11. We propose to use these data elements to match claims to PDE transactions and perform further analyses to assess suitability of the data for future use in removing 340B units from Part D drug inflation rebate calculations. In t a elements to match claims to PDE transactions and perform further analyses to assess suitability of the data for future use in removing 340B units from Part D drug inflation rebate calculations. In the CY 2025 PFS proposed rule (89 FR 61971), we solicited comments from interested parties on the first four data elements in the list referenced in the previous paragraph ((1) Date of Service; (2) Prescription or Service Reference Number; (3) Fill Number; and (4) Dispensing Pharmacy NPI) and whether these data elements would be accessible to covered entities to submit to CMS. In comments on the CY 2025 PFS proposed rule and summarized in the CY 2025 PFS final rule (89 FR 98293), many interested parties recommended that CMS collect additional data elements, such as the NDC, stating that the NDC would help CMS better match the data submitted by the covered entity to the PDE data for Part D rebatable drugs dispensed during an applicable period. We believe that collecting the NDC would provide useful information for analysis of the data submitted, in addition to the four data elements on which we solicited comment in the CY 2025 PFS proposed rule, and which are the minimum elements that wo useful information for analysis of the data submitted, in addition to the four data elements on which we solicited comment in the CY 2025 PFS proposed rule, and which are the minimum elements that would be necessary to match a submission to a PDE transaction to exclude units from inflation rebate calculations, were the repository to be used for such purpose in the future. The NDC is also a required data element collected under an existing state-based program that operates to match and identify 340B units, similar to the 340B repository that we are proposing to establish.287 Therefore, we believe that requiring covered entities participating in the 340B repository during the testing period beginning in 2026 to submit the NDC in addition to the four data elements listed previously ((1) Date of Service, (2) Prescription or Service Reference Number; (3) Fill Number; and (4) Dispensing Pharmacy NPI) is reasonable and would not create substantial additional burden. We are issuing an Information Collection Request alongside this proposed rule entitled ‘‘Information Collection Request (ICR) for the Medicare Prescription Drug Inflation Rebate Program under Section 11101 and 11102 of the In tion Collection Request alongside this proposed rule entitled ‘‘Information Collection Request (ICR) for the Medicare Prescription Drug Inflation Rebate Program under Section 11101 and 11102 of the Inflation Reduction Act (IRA)’’ (CMS–10930, OMB 0938– TBD) for submission to the 340B repository (by covered entities that choose to submit) of certain data elements from all 340B identified claims for all covered Part D drugs billed to Medicare Part D with dates of service during the relevant period. Section VI: The Collection of Information Requirements section of this proposed rule addresses the burden associated with the collection of data for the 340B repository. The Information Collection Request includes more details regarding how covered entities can submit data to the 340B repository, including the format for data submission. vi. Timing Requirements for Covered Entity Submissions to a Medicare Part D Claims Data 340B Repository CMS expects the Medicare Part D claims data 340B repository to launch in Fall 2026, meaning it would be available to collect 340B data from covered entities for claims with dates of service on or after January 1, 2026. To foster robust data reporting by c tory to launch in Fall 2026, meaning it would be available to collect 340B data from covered entities for claims with dates of service on or after January 1, 2026. To foster robust data reporting by covered entities, CMS understands that covered entities will need time to develop a process for collecting the 340B data elements described above and preparing the data in the form and manner prescribed by CMS. Additionally, given the variety in the scope of provider types and organizations that participate in the 340B Program, CMS recognizes 287 The state of Oregon allows 340B covered entities to avoid duplicate 340B discounts and Medicaid rebates when contracting with one or more retail pharmacies to dispense drugs purchased at the 340B price by using a retroactive 340B claims submission process. The NDC–11 is one required data element in Oregon’s retroactive 340B claims submission process. See: https://www.oregon.gov/ oha/HSD/OHP/Tools/340B%20Claims%20 File%20Instructions%20and%20Design.docx. the amount of preparation time varies. In consideration of these factors and the anticipated launch date for the 340B repository in Fall 2026, we are proposing to require covered entities that c docx. the amount of preparation time varies. In consideration of these factors and the anticipated launch date for the 340B repository in Fall 2026, we are proposing to require covered entities that choose to submit data to the 340B repository during the testing period beginning in 2026 to submit the fields specified by CMS to the 340B repository by a date announced in the future, which would be no sooner than 3 months after the date on which the 340B repository is available to receive submissions from covered entities. Covered entities that choose to submit data would submit data elements related to Part D 340B claims with dates of service on or after January 1, 2026. At a point in the future, if this proposal is finalized, CMS would provide a deadline that CMS believes will allow sufficient time for covered entities to gather, validate, and submit the specified data to the 340B repository. CMS would provide the submission deadline(s) once the Medicare Prescription Drug Inflation Rebate ICR is finalized. During the rest of the testing period, CMS anticipates that covered entities will be expected to report data on a quarterly basis within 3 months of the end of a given calendar qu te ICR is finalized. During the rest of the testing period, CMS anticipates that covered entities will be expected to report data on a quarterly basis within 3 months of the end of a given calendar quarter. For example, for claims with dates of service between October 1, 2026, through December 31, 2026, covered entities that choose to submit data elements from Part D 340B claims would submit the data to the 340B repository no later than March 31, 2027. The data from these submissions would be used to assess the usability of such data to remove 340B units from the total number of units and total rebate amount specified in the Preliminary Rebate Report and Rebate Report detailed at §§ 428.401(b) and (c), respectively. We are proposing to provide covered entities that choose to submit data to the 340B repository with additional time to submit data to reflect a revision to the 340B determination of claims with dates of service throughout an applicable period. A revision could come in one of two forms: (1) resubmission of data for a claim that the covered entity previously submitted to the 340B repository in error or with errors in the requested data fields, or (2) new submission of dat f two forms: (1) resubmission of data for a claim that the covered entity previously submitted to the 340B repository in error or with errors in the requested data fields, or (2) new submission of data for a claim for a drug that the covered entity had previously determined was not purchased under the 340B Program, but later identified was purchased under such program. In instances where the covered entity submits 340B Part D claims data to the repository that is either (1) incomplete, or (2) contains invalid data, we may inform the covered entity of such error VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00293 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32644 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules and request that the covered entity resolve and resubmit the 340B Part D claims data in order to process the submission successfully. We will provide details on the process and timing for covered entities to submit revised data to the 340B repository after the end of the reporting period in the future. d. Reports of Rebate Amounts, Reconciliation, Suggesti on the process and timing for covered entities to submit revised data to the 340B repository after the end of the reporting period in the future. d. Reports of Rebate Amounts, Reconciliation, Suggestion of Error, and Payments (§§ 428.400 through 428.405) Section 1860D–14B(a)(1) of the Act requires the Secretary to report to each manufacturer of a Part D rebatable drug the following information not later than 9 months after the end of the applicable period: (1) the amount, if any, of the excess AnMP increase described in section 1860D–14B(b)(1)(A)(ii) of the Act for each Part D rebatable drug, and (2) the rebate amount for each Part D rebatable drug. In compliance with section 1860D–14B(a)(2) of the Act, the manufacturer of a Part D rebatable drug must provide a rebate for each Part D rebatable drug no later than 30 calendar days after the receipt of the information provided by the Secretary in section 1860D–14B(a)(1) of the Act. In accordance with §§ 428.404 and 428.405, CMS has established a standard method and process to issue Rebate Reports to manufacturers of Part D rebatable drugs and to accept manufacturer rebate payments. CMS has established an online portal, the ‘‘Manufactu ished a standard method and process to issue Rebate Reports to manufacturers of Part D rebatable drugs and to accept manufacturer rebate payments. CMS has established an online portal, the ‘‘Manufacturer Payment Portal’’ (MPP), administered by a CMS contractor, through which manufacturers will access their Rebate Reports, submit Suggestions of Error, as applicable, and pay rebate amounts due, as described in §§ 428.404 and 428.405. Manufacturers of Part D rebatable drugs should provide points of contact to view Preliminary Rebate Reports and Rebate Reports, enter and modify banking information, and initiate payments of rebate amounts through the MPP. i. Rebate Reports and Reconciliation (§ 428.401); Deadline and Process for Payment of Rebate Amount (§ 428.405) As stated in the CY 2025 PFS final rule (89 FR 98264), we codified a multi– step process to provide a manufacturer as set forth in § 428.20 with the rebate information specified in section 1860D– 14B(a) of the Act. Specifically, as stated in the CY 2025 PFS final rule (89 FR 98264), we established the information that will be included in a Rebate Report at § 428.401, which includes the NDC(s) identified for the Part D rebatab as stated in the CY 2025 PFS final rule (89 FR 98264), we established the information that will be included in a Rebate Report at § 428.401, which includes the NDC(s) identified for the Part D rebatable drug, the total number of units dispensed under Part D for the Part D rebatable drug for the applicable period, and the rebate amount due, among other items specified in § 428.401. Additionally, we established that payment for a rebate amount due must be paid by the 30th day after the date of the receipt of the information containing the rebate amount. Consistent with the approach specified in section 40 of the revised Medicare Part D Drug Inflation Rebate Guidance, we propose to add paragraph (c)(3) in § 428.401 to clarify that CMS will report the manufacturer’s rebate amount due as a dollar amount that is rounded to the nearest cent. CMS did not specify an approach to reporting of the rebate amount in the CY 2025 PFS final rule, and we believe it is necessary to provide this information to manufacturers to provide notice of CMS’ approach to rounding of the rebate amount. The calculation steps specified in subpart C of part 428 will not include rounded values. Additionally, we prop on to manufacturers to provide notice of CMS’ approach to rounding of the rebate amount. The calculation steps specified in subpart C of part 428 will not include rounded values. Additionally, we propose a clarifying edit at § 428.405(a)(1) to specify that the manufacturer must pay the rebate amount due no later than on the 30th calendar day after the date of receipt of the information regarding the rebate amount. The current language specifies that the payment is due ‘‘30 calendar days’’ after the date of receipt of information regarding the rebate amount. CMS does not believe this edit substantively revises the due date. In the CY 2025 PFS final rule (89 FR 98588), to determine which data elements would be included when CMS reports the rebate amount to the manufacturer, we stated that we considered the statutory requirements outlined in section 1860D–14B(a)(1)(A) through (B) of the Act to determine what information is necessary for manufacturers to review the accuracy of the rebate amount while also protecting proprietary information. As stated on page 98588 of the CY 2025 PFS final rule, CMS structured a two-step reporting process to first include a Preliminary Rebate Report to mount while also protecting proprietary information. As stated on page 98588 of the CY 2025 PFS final rule, CMS structured a two-step reporting process to first include a Preliminary Rebate Report to provide an initial notice to manufacturers regarding whether they may owe a rebate amount, followed by the Rebate Report. Further, we proposed and finalized additional data elements within the Preliminary Rebate Reports and the Rebate Reports not listed in statute based on input from public comments (for example, the payment amount benchmark period, the applicable period CPI–U). CMS did not finalize additional elements suggested, such as data at the prescription drug event (PDE) record level, after weighing whether any such additional information fulfilled CMS’ statutory obligation and the potential benefits to manufacturers against the administrative burdens additional reporting would impose on the agency and operational feasibility. The elements that are set forth in §§ 428.401(b)(1) and (c)(1) satisfy these considerations. In this proposed rule, CMS clarifies that certain data elements provided to manufacturers in Preliminary Rebate Reports, Rebate Reports, and reconciled reports of (c)(1) satisfy these considerations. In this proposed rule, CMS clarifies that certain data elements provided to manufacturers in Preliminary Rebate Reports, Rebate Reports, and reconciled reports of a rebate amount (which may each include the same elements, revised as applicable due to updates in the data), are provided to manufacturers of a Part D rebatable drug in alignment with § 1927(b)(3)(D) of the Act. This section of the Act provides an exception to the confidentiality of information disclosed by manufacturers or wholesalers under section 1927(b)(3) of the Act as the Secretary determines to be necessary to carry out certain sections of the Act, including section 1860D–14B of the Act (that is, the Part D Drug Inflation Rebate Program). Specifically, CMS anticipates that most data included in Preliminary Rebate Reports, Rebate Reports, reconciled Preliminary Rebate Reports, and reconciled Rebate Reports will not implicate § 1927(b)(3)(D) of the Act, as CMS anticipates that in most cases the party that will receive these reports will be the same party that reported the relevant information. However, CMS acknowledges that some situations may raise a possibility of disclosure b st cases the party that will receive these reports will be the same party that reported the relevant information. However, CMS acknowledges that some situations may raise a possibility of disclosure by the Secretary of AMP information, or information derived therefrom, to a party besides the party that reported the information originally; such situations could implicate confidentiality under section 1927(b)(3)(D) of the Act. Such situations may include, but are not necessarily limited to, (1) transfer of a rebatable drug from one manufacturer to another manufacturer, such that the manufacturer identified in the Rebate Report differs from the manufacturer that originally reported certain benchmark pricing information, and (2) information about initial drugs associated with line extensions. In instances where the parties may be different, CMS emphasizes that the data included in a report of the rebate amount is based on CMS’s independently performed calculations. Though these calculations rely on information disclosed by manufacturers as inputs, the data reported in a Preliminary Rebate Report and a Rebate Report (or a reconciled version of these reports) will not be identical to the s rely on information disclosed by manufacturers as inputs, the data reported in a Preliminary Rebate Report and a Rebate Report (or a reconciled version of these reports) will not be identical to the information reported by manufacturers (for example, manufacturers report quarterly AMP values, whereas the benchmark period manufacturer price is an aggregate amount using AMP values VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00294 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32645 across multiple quarters when available). Therefore, reporting such data elements to another manufacturer for purposes of the Rebate Program would not violate the confidentiality requirements in sections 1927 of the Act. Additionally, CMS notes that section 1927(b)(3)(D)(i) of the Act provides an exception from the confidentiality provision in 1927(b)(3)(D) of the Act based on what the ‘‘Secretary determines to be necessary to carry out’’ under 1860D– 14B of the Act (among other listed statutory provisions). CMS is applying this excepti in 1927(b)(3)(D) of the Act based on what the ‘‘Secretary determines to be necessary to carry out’’ under 1860D– 14B of the Act (among other listed statutory provisions). CMS is applying this exception to the data elements in the Preliminary Rebate Report for the purpose of carrying out the Rebate Program. Second, on page 98266 of the CY 2025 PFS final rule, CMS stated that the purpose of providing additional data elements not explicitly listed in sections 1860D–14B(a)(1)(A) through (B) of the Act (for example, benchmark period manufacturer price, the annual manufacturer price) is based on CMS’ assessment of what data elements are necessary to review the Preliminary Rebate Report for a Suggestion of Error. Providing these data in the Preliminary Rebate Report (and corresponding reports) ensures that (1) manufacturers will be able to submit a Suggestion of Error, thereby promoting accuracy in the implementation of the rebate program, and (2) manufacturers will have advanced notice of a potential rebate amount due. ii. Rebate Reports for the Applicable Periods Beginning October 1, 2022, and October 1, 2023 (§ 428.402) As stated in the CY 2025 PFS final rule (89 FR 97710), we codifie potential rebate amount due. ii. Rebate Reports for the Applicable Periods Beginning October 1, 2022, and October 1, 2023 (§ 428.402) As stated in the CY 2025 PFS final rule (89 FR 97710), we codified at § 428.402 the options afforded to CMS in section 1860D–14B(a)(3) of the Act to delay sending the information required by section 1860D–14B(a)(1) of the Act for the applicable periods beginning October 1, 2022, and October 1, 2023, until not later than December 31, 2025. Specifically, per § 428.402(c), CMS will issue a Preliminary Rebate Report for each applicable period followed by issuance of the Rebate Report for each applicable period no later than December 31, 2025. Additionally, for the applicable period beginning October 1, 2022, CMS will conduct a single reconciliation 21 months after issuance of the Rebate Report for this applicable period (see § 428.402(c)(1)(ii)). As set forth in § 428.402(c)(2)(ii), for the applicable period beginning October 1, 2023, the rebate amount will be reconciled twice at 9 and 33 months after the Rebate Report was issued for the applicable period. We stated in the CY 2025 PFS proposed rule (89 FR 61983) that this approach aligns claims and paym be reconciled twice at 9 and 33 months after the Rebate Report was issued for the applicable period. We stated in the CY 2025 PFS proposed rule (89 FR 61983) that this approach aligns claims and payment data run-out with the run-out used during a regular reconciliation cycle. However, CMS finalized the regulatory text specifying the time periods for regular reconciliation cycles at § 428.401(d) with text that provides CMS with operational flexibility as to the exact date the report with the reconciled rebate amount will be provided to each manufacturer of a Part D rebatable drug by including the word ‘‘within’’ prior to the specified date. We propose to amend §§ 428.402(c)(1)(ii) and (c)(2)(ii) to add the word ‘‘within’’ prior to the specified number of months (for example, 21 months for the applicable period beginning October 1, 2022, and 9 and 33 months for the applicable period beginning October 1, 2023) to be consistent with the regulatory text and cadence for regular reconciliation cycles, as well as to provide operational flexibility on the timing of the release of the report with the reconciled rebate amount. F. Medicare Shared Savings Program 1. Executive Summary and Backg on cycles, as well as to provide operational flexibility on the timing of the release of the report with the reconciled rebate amount. F. Medicare Shared Savings Program 1. Executive Summary and Background a. Purpose As of January 1, 2025, the Medicare Shared Savings Program (Shared Savings Program) has 477 accountable care organizations (ACOs) with over 650,000 healthcare providers and organizations providing care to over 11.2 million assigned beneficiaries.288 Eligible groups of providers and suppliers, such as physicians, hospitals, and other healthcare providers, may participate in the Shared Savings Program by forming or joining an ACO and in so doing agree to become accountable for the total cost and quality of care provided under Traditional Medicare to an assigned population of Medicare FFS beneficiaries. Under the Shared Savings Program, providers and suppliers that participate in an ACO continue to receive Traditional Medicare FFS payments under Parts A and B, and the ACO may be eligible to receive a shared savings payment if it meets specified quality and savings requirements, and in some instances may be required to share in losses if it increases healthcare spending. W be eligible to receive a shared savings payment if it meets specified quality and savings requirements, and in some instances may be required to share in losses if it increases healthcare spending. We continue to gain experience with and observe the impact of changes to the Shared Savings Program’s quality performance standard and other quality reporting requirements, financial methodology, beneficiary assignment methodology, participation options, and availability of new payment options, among other changes, finalized in recent years through the annual PFS rulemaking process.289 Section III.F. of this proposed rule addresses proposed changes to the Shared Savings Program regulations to allow for timely improvements to program policies and operations as summarized in section III.F.1.c of this proposed rule. b. Statutory and Regulatory Background on the Shared Savings Program On March 23, 2010, the Patient Protection and Affordable Care Act (Pub. L. 111–148) was enacted, followed by enactment of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111–152) on March 30, 2010, which amended certain provisions of the Patient Protection and Affordable Care Act (hereinafter actment of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111–152) on March 30, 2010, which amended certain provisions of the Patient Protection and Affordable Care Act (hereinafter collectively referred to as ‘‘the Affordable Care Act’’). Section 3022 of the Affordable Care Act amended Title XVIII of the Act (42 U.S.C. 1395 et seq.) by adding section 1899 of the Act to establish the Medicare Shared Savings Program to facilitate coordination and cooperation among healthcare providers to improve the quality of care for Medicare FFS beneficiaries and reduce the rate of growth in expenditures under Medicare Parts A and B. (See 42 U.S.C. 1395jjj.) Section 1899 of the Act has been amended through subsequent legislation. The requirements for assignment of Medicare FFS beneficiaries to ACOs participating under the program were amended by the 21st Century Cures Act (the Cures Act) (Pub. L. 114–255). The Bipartisan Budget Act of 2018 (Pub. L. 115–123), further amended section 1899 of the Act to provide for the following: expanded use of telehealth services by physicians or practitioners participating in an applicable ACO to furnish services to prospectively assigned benef 1899 of the Act to provide for the following: expanded use of telehealth services by physicians or practitioners participating in an applicable ACO to furnish services to prospectively assigned beneficiaries; greater flexibility in the assignment of Medicare FFS beneficiaries to ACOs by allowing ACOs in tracks under retrospective beneficiary assignment a choice of prospective assignment for the agreement period; permitting Medicare FFS beneficiaries to voluntarily identify an ACO professional as their primary care provider and requiring that such beneficiaries be notified of the ability to make and change such identification, and mandating that any such voluntary 288 See ‘‘Shared Savings Program Fast Facts—As of January 1, 2025’’, available at https:// www.cms.gov/files/document/2025-shared-savings- program-fast-facts.pdf. 289 Refer to the CY 2023 PFS final rule (87 FR 69777 through 69979), CY 2024 PFS final rule (88 FR 79093 through 79232), and CY 2025 PFS final rule (89 FR 98081 through 98213). VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00295 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k ough 98213). VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00295 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32646 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules identification will supersede claims- based assignment; and allowing ACOs under certain two-sided models to establish CMS-approved beneficiary incentive programs. The Shared Savings Program regulations are codified at 42 CFR part 425. The final rule establishing the Shared Savings Program appeared in the November 2, 2011, Federal Register (Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations; final rule (76 FR 67802) (hereinafter referred to as the ‘‘November 2011 final rule’’)). A subsequent update to the program rules appeared in the June 9, 2015, Federal Register (Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations; final rule (80 FR 32692) (hereinafter referred to as the ‘‘June 2015 final rule’’)). The final rule entitled ‘‘Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations—Revised Benchmark Rebasing Methodo ereinafter referred to as the ‘‘June 2015 final rule’’)). The final rule entitled ‘‘Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations—Revised Benchmark Rebasing Methodology, Facilitating Transition to Performance- Based Risk, and Administrative Finality of Financial Calculations,’’ which addressed changes related to the program’s financial benchmark methodology, appeared in the June 10, 2016, Federal Register (81 FR 37950) (hereinafter referred to as the ‘‘June 2016 final rule’’). A final rule, ‘‘Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2019; Medicare Shared Savings Program Requirements; Quality Payment Program; Medicaid Promoting Interoperability Program; Quality Payment Program—Extreme and Uncontrollable Circumstance Policy for the 2019 MIPS Payment Year; Provisions From the Medicare Shared Savings Program—Accountable Care Organizations—Pathways to Success; and Expanding the Use of Telehealth Services for the Treatment of Opioid Use Disorder Under the Substance Use- Disorder Prevention That Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act,’ se of Telehealth Services for the Treatment of Opioid Use Disorder Under the Substance Use- Disorder Prevention That Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act,’’ appeared in the November 23, 2018, Federal Register (83 FR 59452) (hereinafter referred to as the ‘‘November 2018 final rule’’ or the ‘‘CY 2019 PFS final rule’’). In the November 2018 final rule, we finalized a voluntary 6-month extension for existing ACOs whose participation agreements would otherwise expire on December 31, 2018; allowed beneficiaries greater flexibility in designating their primary care provider and in the use of that designation for purposes of assigning the beneficiary to an ACO if the clinician they align with is participating in an ACO; revised the definition of primary care services used in beneficiary assignment; provided relief for ACOs and their clinicians impacted by extreme and uncontrollable circumstances in performance year 2018 and subsequent years; established a new Certified Electronic Health Record Technology (CEHRT) use threshold requirement; and reduced the Shared Savings Program quality measure set from 31 to 23 measures (83 FR 59940 through 5999 ished a new Certified Electronic Health Record Technology (CEHRT) use threshold requirement; and reduced the Shared Savings Program quality measure set from 31 to 23 measures (83 FR 59940 through 59990 and 59707 through 59715). A final rule redesigning the Shared Savings Program appeared in the December 31, 2018, Federal Register (Medicare Program: Medicare Shared Savings Program; Accountable Care Organizations—Pathways to Success and Extreme and Uncontrollable Circumstances Policies for Performance Year 2017; final rule (83 FR 67816) (hereinafter referred to as the ‘‘December 2018 final rule’’)). In the December 2018 final rule, we finalized a number of policies for the Shared Savings Program, including a redesign of the participation options available under the program to encourage ACOs to transition to two-sided models; new tools to support coordination of care across settings and strengthen beneficiary engagement; and revisions to ensure rigorous benchmarking. In the interim final rule with comment period (IFC) entitled ‘‘Medicare and Medicaid Programs; Policy and Regulatory Revisions in Response to the COVID–19 Public Health Emergency,’’ which was effective on the March 31, 20 rule with comment period (IFC) entitled ‘‘Medicare and Medicaid Programs; Policy and Regulatory Revisions in Response to the COVID–19 Public Health Emergency,’’ which was effective on the March 31, 2020 date of display and appeared in the April 6, 2020, Federal Register (85 FR 19230) (hereinafter referred to as the ‘‘March 31, 2020 COVID–19 IFC’’), we removed the restriction that prevented the application of the Shared Savings Program extreme and uncontrollable circumstances policy for disasters that occur during the quality reporting period if the reporting period is extended to offer relief under the Shared Savings Program to all ACOs that may be unable to completely and accurately report quality data for 2019 due to the public health emergency (PHE) for coronavirus disease 2019 (COVID–19) (85 FR 19267 and 19268). In the IFC titled ‘‘Medicare and Medicaid Programs; Basic Health Program, and Exchanges; Additional Policy and Regulatory Revisions in Response to the COVID–19 Public Health Emergency and Delay of Certain Reporting Requirements for the Skilled Nursing Facility Quality Reporting Program,’’ which was effective on May 8, 2020, and appeared in the May 8, 2020, Federal Regis h Emergency and Delay of Certain Reporting Requirements for the Skilled Nursing Facility Quality Reporting Program,’’ which was effective on May 8, 2020, and appeared in the May 8, 2020, Federal Register (85 FR 27573 through 27587) (hereinafter referred to as the ‘‘May 8, 2020 COVID–19 IFC’’), we modified Shared Savings Program policies to: (1) allow ACOs whose agreement periods expired on December 31, 2020, the option to extend their existing agreement period by 1-year, and allow ACOs in the BASIC track’s glide path the option to elect to maintain their current level of participation for performance year 2021; (2) adjust program calculations to remove payment amounts for episodes of care for treatment of COVID–19; and (3) expand the definition of primary care services for purposes of determining beneficiary assignment to include telehealth codes for virtual check-ins, e- visits, and telephonic communication. We also clarified the applicability of the program’s extreme and uncontrollable circumstances policy to mitigate shared losses for the period of the PHE for COVID–19 starting in January 2020. We have also made use of the annual CY PFS rules to address quality reporting for the le circumstances policy to mitigate shared losses for the period of the PHE for COVID–19 starting in January 2020. We have also made use of the annual CY PFS rules to address quality reporting for the Shared Savings Program and certain other issues. For summaries of certain policies finalized in prior PFS rules, refer to the CY 2020 PFS proposed rule (84 FR 40705), the CY 2021 PFS final rule (85 FR 84717), the CY 2022 PFS final rule (86 FR 65253 and 65254), the CY 2023 PFS final rule (87 FR 69779 and 69780), the CY 2024 PFS final rule (88 FR 79094 and 79095) and the CY 2025 PFS final rule (89 FR 98082 and 98083). In the CY 2025 PFS final rule (89 FR 98081 through 98213), we finalized changes to Shared Savings Program policies, including to: sunset a requirement under which CMS would terminate an ACO’s participation agreement, under certain circumstances, if it failed to maintain at least 5,000 assigned beneficiaries during an agreement period; revise the requirement that newly formed ACOs must agree to allow CMS to share a copy of their application with the Antitrust Agencies; update the definition of primary care services used in beneficiary assignment; revise the Shared Savings P COs must agree to allow CMS to share a copy of their application with the Antitrust Agencies; update the definition of primary care services used in beneficiary assignment; revise the Shared Savings Program regulations to broaden a limited exception to the program’s voluntary alignment policy; make changes to the quality performance standard and other quality reporting requirements, including to: (1) require Shared Savings Program ACOs to report the Alternative Payment Model (APM) Performance Pathway (APP Plus) quality measure set beginning in performance year 2025 and for subsequent performance years; (2) focus the collection types available to Shared VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00296 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32647 Savings Program ACOs for reporting the APP Plus quality measure set to electronic clinical quality measures (eCQMs) and Medicare Clinical Quality Measures for Accountable Care Organizations Participating in the Medicare Shared Savings Program (Medicare CQMs) by per et to electronic clinical quality measures (eCQMs) and Medicare Clinical Quality Measures for Accountable Care Organizations Participating in the Medicare Shared Savings Program (Medicare CQMs) by performance year 2027 and make Merit-based Incentive Payment System clinical quality measures (MIPS CQMs) available in performance years 2025 and 2026; (3) establish a Complex Organization Adjustment for Virtual Groups and APM Entities, including Shared Savings Program ACOs, when reporting eCQMs; score measures of the Medicare CQM collection type using flat benchmarks for their first two performance periods in MIPS; and (4) extend the eCQM/MIPS CQM reporting incentive for meeting the Shared Savings Program quality performance standard to performance years 2025 and 2026 and extend the eCQM reporting incentive for performance year 2027 and subsequent performance years; allow ACOs receiving advance investment payments to voluntarily terminate from the payment option while remaining in the Shared Savings Program; codify a policy for recouping advance investment payments from ACOs whose participation agreements are terminated by CMS; make modifications to the Shared Savings Program’s financial Savings Program; codify a policy for recouping advance investment payments from ACOs whose participation agreements are terminated by CMS; make modifications to the Shared Savings Program’s financial methodology, including to (1) establish a third possible upward adjustment to an ACO’s historical benchmark—the health equity benchmark adjustment— based on the number of beneficiaries the ACO serves who are dually eligible or enrolled in the Medicare Part D low- income subsidy (LIS); (2) establish a calculation methodology to account for the impact of improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations upon reopening a payment determination; (3) establish a methodology for excluding payment amounts for Healthcare Common Procedure Coding System (HCPCS) and Current Procedural Terminology (CPT) codes exhibiting significant, anomalous, and highly suspect (SAHS) billing activity during CY 2024 or subsequent calendar years that warrant adjustment; and (4) make technical changes in provisions of the Shared Savings Program regulations on financial calculations, to align and clarify the language used to describe weights app hat warrant adjustment; and (4) make technical changes in provisions of the Shared Savings Program regulations on financial calculations, to align and clarify the language used to describe weights applied to the growth in ACO and regional risk scores for each Medicare enrollment type, as part of the calculation for capping ACO and regional risk score growth; and modify beneficiary notification requirements. In a final rule entitled ‘‘Medicare Program: Mitigating the Impact of Significant, Anomalous, and Highly Suspect Billing Activity on Medicare Shared Savings Program Financial Calculations in Calendar Year 2023,’’ which was effective on October 15, 2024, and appeared in the September 27, 2024, Federal Register (89 FR 79152) (hereinafter referred to as the ‘‘SAHS billing activity final rule’’), we finalized an approach to address the SAHS billing activity CMS identified for CY 2023 to protect the accuracy, fairness, and integrity of Shared Savings Program financial calculations. Policies applicable to Shared Savings Program ACOs for purposes of quality reporting for other programs have also continued to evolve based on changes in statute, such as the Medicare Access and CHIP Reaut ies applicable to Shared Savings Program ACOs for purposes of quality reporting for other programs have also continued to evolve based on changes in statute, such as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10), which established the Quality Payment Program. In the CY 2017 Quality Payment Program final rule with comment period (81 FR 77008), we established regulations for the MIPS and Advanced APMs and related policies applicable to eligible clinicians who participate in APMs, including the Shared Savings Program. We have also made updates to policies under the Quality Payment Program through the annual CY PFS rules. c. Summary of Shared Savings Program Proposals In sections III.F.2. through III.F.9. of this proposed rule, we propose modifications to the Shared Savings Program’s policies. As a general summary, we are proposing the following changes to Shared Savings Program policies to: • Modify requirements for determining an ACO’s eligibility for Shared Savings Program participation options, for agreement periods beginning on or after January 1, 2027, to limit participation in a one-sided model to an ACO’s first agreement period under the BASI Shared Savings Program participation options, for agreement periods beginning on or after January 1, 2027, to limit participation in a one-sided model to an ACO’s first agreement period under the BASIC track’s glide path (if eligible), and require ACOs inexperienced with performance-based risk Medicare ACO initiatives (defined at § 425.20) to progress more rapidly to higher levels of risk and potential reward under Level E of the BASIC track or the ENHANCED track (subject to the proposed exception prohibiting ACOs with fewer than 5,000 assigned beneficiaries in benchmark year (BY) 1, BY2, or both, from participating in the ENHANCED track under the proposals at section III.F.4.b.(2).(b). of this proposed rule), compared to existing policies (section III.F.2 of this proposed rule). • Modify Shared Savings Program eligibility requirements to require ACOs to make certain changes to their ACO participant list when an ACO participant experiences a change of ownership (CHOW) where the surviving Taxpayer Identification Number (TIN) is newly enrolled in the Provider Enrollment, Chain, and Ownership System (PECOS) with no prior Medicare billing claims history, during the performance year and ng Taxpayer Identification Number (TIN) is newly enrolled in the Provider Enrollment, Chain, and Ownership System (PECOS) with no prior Medicare billing claims history, during the performance year and outside of the annual change request cycle, and similarly allow for changes during the performance year to the ACO’s Skilled Nursing Facility (SNF) affiliate list if a SNF affiliate undergoes a CHOW resulting in change to the Medicare enrolled TIN (section III.F.3 of this proposed rule). • Modify Shared Savings Program eligibility requirements and financial reconciliation requirements in connection with the statutory requirement that ACOs have at least 5,000 assigned Medicare FFS beneficiaries to: ++ Require ACOs applying to enter a new agreement period to have at least 5,000 assigned beneficiaries in BY3, while allowing the ACO to have under 5,000 assigned beneficiaries in BY1, BY2, or both (section III.F.4.b.(2)(a) of this proposed rule). ++ Require ACOs that enter a new agreement period with less than 5,000 assigned beneficiaries in BY1, BY2, or both to enter the BASIC track (section III.F.4.b.(2).(b). of this proposed rule). ++ Cap shared savings and shared losses at a lesser amou d with less than 5,000 assigned beneficiaries in BY1, BY2, or both to enter the BASIC track (section III.F.4.b.(2).(b). of this proposed rule). ++ Cap shared savings and shared losses at a lesser amount for ACOs with fewer than 5,000 assigned beneficiaries in any of the three BYs, to help ensure the amounts reflect the ACO’s performance in the program rather than normal variation in expenditures (section III.F.4.c.(1). of this proposed rule). ++ Exclude ACOs that fall below 5,000 assigned beneficiaries in any benchmark year from being eligible to leverage existing policies that provide certain low revenue ACOs participating in the BASIC track with increased opportunities to share in savings (section III.F.4.c.(2). of this proposed rule). • Update the definition of primary care services used in beneficiary assignment at § 425.400(c) (section III.F.5. of this proposed rule). VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00297 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32648 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules • Revise the quality performance standar S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32648 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules • Revise the quality performance standard and other quality reporting requirements, including the following (section III.F.6. of this proposed rule): ++ Revise the definition of a beneficiary eligible for Medicare CQMs at § 425.20 for performance year 2025 and subsequent performance years so that the population identified for reporting within the Medicare CQM collection type would have greater overlap with the beneficiaries that are assignable to an ACO (section III.F.6.b. of this proposed rule). ++ Remove the health equity adjustment applied to an ACO’s quality score beginning in performance year 2025 and revise the terminology used to describe the health equity adjustment and other related terms for performance years 2023 and 2024 (section III.F.6.c. of this proposed rule). ++ Update the APP Plus quality measure set for Shared Savings Program ACOs including the removal of Quality ID: 487 Screening for Social Drivers of Health (section III.F.6.d of this proposed rule). ++ Require CMS-approved survey vendors to administer th Savings Program ACOs including the removal of Quality ID: 487 Screening for Social Drivers of Health (section III.F.6.d of this proposed rule). ++ Require CMS-approved survey vendors to administer the CAHPS for MIPS Survey via a web-mail-phone protocol beginning with 2027 (section III.F.6.e. of this proposed rule). • Expand the application of the Shared Savings Program quality and finance extreme and uncontrollable circumstances (EUC) policies to an ACO that is affected by an EUC due to a cyberattack, including ransomware/ malware, as determined by the Quality Payment Program, for performance year 2025 and subsequent performance years (section III.F.7 of this proposed rule). • Revise the Shared Savings Program regulations for performance year 2025 and subsequent performance years to rename the ‘‘health equity benchmark adjustment’’ to the ‘‘population adjustment’’ (section III.F.8. of this proposed rule). • Modify the Shared Savings Program quality reporting monitoring requirements at § 425.316 to specify for performance years beginning on or after January 1, 2026, requirements to monitor ACOs for failure to meet both the quality performance standard and the alternative quality pe § 425.316 to specify for performance years beginning on or after January 1, 2026, requirements to monitor ACOs for failure to meet both the quality performance standard and the alternative quality performance standard, the latter of which (established in the CY 2023 PFS final rule) was inadvertently omitted from the existing framework. Similarly, modify § 425.224(b)(1)(ii)(A) related to reviewing applications for renewing and re-entering ACOs with a demonstrated pattern of failure to meet both the quality performance standard and the alternative quality performance standard (section III.F.9 of this proposed rule). Taken together, the Shared Savings Program proposals in this proposed rule are anticipated to reduce program spending by $20 million in total through the end of the 10-year period 2026 through 2035, ranging from approximately $590 million lower spending at the 10th percentile to $670 million higher spending at the 90th percentile (as described in section VII of this proposed rule). Certain policies, including both existing policies and the proposed new policies described in this proposed rule, rely upon the authority granted in section 1899(i)(3) of the Act to use other rule). Certain policies, including both existing policies and the proposed new policies described in this proposed rule, rely upon the authority granted in section 1899(i)(3) of the Act to use other payment models that the Secretary determines will improve the quality and efficiency of items and services furnished under the Medicare program, and that do not result in program expenditures greater than those that would result under the statutory payment model. The following proposals require the use of our authority under section 1899(i) of the Act: the proposal to change the requirements for ACOs’ progression to performance-based risk under the program’s participation options (described in section III.F.2 of this proposed rule); the proposal to potentially apply an alternative loss recoupment limit, in conducting financial reconciliation for each performance year, for an ACO with fewer than 5,000 assigned beneficiaries in any BY, for agreement periods beginning on or after January 1, 2027 (described in section III.F.4.c of this proposed rule); the proposal to exclude ACOs that fall below 5,000 assigned beneficiaries in any BY from being eligible to benefit from the policies providi 027 (described in section III.F.4.c of this proposed rule); the proposal to exclude ACOs that fall below 5,000 assigned beneficiaries in any BY from being eligible to benefit from the policies providing certain low revenue ACOs participating in the BASIC track with additional opportunities to share in savings, for agreement periods beginning on or after January 1, 2027 (described in section III.F.4.c of this proposed rule); and the proposal to mitigate shared losses for an ACO determined to be affected by an EUC due to a cyberattack, including ransomware/malware, as determined by the Quality Payment Program, for performance year 2025 and subsequent performance years (described in section III.F.7.c of this proposed rule). As described in the Regulatory Impact Analysis in section VII. and elsewhere in this proposed rule, these proposed changes to our payment methodology are expected to improve the quality and efficiency of care and are not expected to result in a situation in which the payment methodology under the Shared Savings Program, including all policies we have adopted under the authority of section 1899(i) of the Act, results in more spending under the program than would hav ayment methodology under the Shared Savings Program, including all policies we have adopted under the authority of section 1899(i) of the Act, results in more spending under the program than would have resulted under the statutory payment methodology in section 1899(d) of the Act. We will continue to reexamine this projection in the future to ensure that an alternative payment model does not result in additional program expenditures and so continues to satisfy the requirement under section 1899(i)(3)(B) of the Act. If we later determine that the payment model that includes policies established under section 1899(i)(3) of the Act no longer meets this requirement, we would undertake notice and comment rulemaking to adjust the payment model to ensure continued compliance with the statutory requirements. 2. Shared Savings Program Participation Options Under the BASIC Track a. Background on Shared Savings Program Participation Options Section 1899(d) of the Act establishes the general requirements for shared savings payments to participating ACOs. Specifically, section 1899(d)(1)(A) of the Act specifies that providers of services and suppliers participating in an ACO will continue to re rements for shared savings payments to participating ACOs. Specifically, section 1899(d)(1)(A) of the Act specifies that providers of services and suppliers participating in an ACO will continue to receive payments under the original Medicare FFS program under Parts A and B in the same manner as would otherwise be made, and that an ACO is eligible to receive payment for a portion of savings generated for Medicare provided that the ACO meets both the quality performance standards established by the Secretary and achieves savings against its benchmark. Additionally, section 1899(i)(3) of the Act authorizes the Secretary to use other payment models rather than the one- sided model described in section 1899(d) of the Act, as long as the Secretary determines that the other payment model will improve the quality and efficiency of items and services furnished to Medicare beneficiaries without additional program expenditures. Since its inception in 2012, the Shared Savings Program has included both one-sided shared savings only models incorporating the statutory payment methodology under section 1899(d) of the Act, and two-sided shared savings and losses models that were also based on the both one-sided shared savings only models incorporating the statutory payment methodology under section 1899(d) of the Act, and two-sided shared savings and losses models that were also based on the payment methodology under section 1899(d) of the Act but incorporated performance- based risk using the authority under section 1899(i)(3) of the Act to use other VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00298 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32649 payment models.290 Under the Shared Savings Program regulations at § 425.20, we defined a one-sided model to mean a model under which the ACO may share savings with the Medicare program, if it meets the requirements for doing so, but is not liable for sharing any losses incurred under 42 CFR part 425 subpart G. At § 425.20, we defined a two-sided model to mean a model under which an ACO may share savings with the Medicare program, if it meets the requirements for doing so, and is also liable for sharing any losses incurred under subpart G. Subpart G of the a model under which an ACO may share savings with the Medicare program, if it meets the requirements for doing so, and is also liable for sharing any losses incurred under subpart G. Subpart G of the program’s regulations includes provisions on the calculation of shared savings and losses (as applicable) under the program’s tracks, among other policies. At § 425.600, we describe the options for an ACO’s selection of risk model. This section includes the criteria used by CMS to determine an ACO’s eligibility to participate under the program’s tracks or levels of participation, as well as limitations on the amount of time an ACO may participate under a one-sided model, options and requirements for an ACO to participate under a two-sided model, and provisions governing the progression from a one-sided model to higher levels of risk and potential reward under a two-sided model (as applicable). Over time, we have modified the available financial models under the Shared Savings Program, and approaches to determining an ACO’s eligibility to participate under these financial models, which we refer to as the ACO’s participation options. For additional information on the changes to the Share approaches to determining an ACO’s eligibility to participate under these financial models, which we refer to as the ACO’s participation options. For additional information on the changes to the Shared Savings Program’s available financial models, including finalization of the existing policies and background on earlier requirements, we refer readers to the discussion in the CY 2023 PFS final rule, at 87 FR 69805 through 69821. As finalized with the December 2018 final rule (see 83 FR 67831 through 67841), for agreement periods beginning on July 1, 2019, and in subsequent years, eligible ACOs enter into an agreement period of not less than 5 years under one of two tracks of the Shared Savings Program, either the BASIC track (see §§ 425.600(a)(4) and 425.605) or the ENHANCED track (see §§ 425.600(a)(3) and 425.610). The BASIC track includes a glide path from 290 For additional background, we refer readers to the CY 2023 PFS final rule (87 FR 69805 and 69806) for a summary of changes to the program’s financial models, or ‘‘tracks,’’ over time. one-sided model Levels A and B 291 to incrementally higher levels of performance-based risk under Levels C, D, and E. 292 The ENHANCED track o the program’s financial models, or ‘‘tracks,’’ over time. one-sided model Levels A and B 291 to incrementally higher levels of performance-based risk under Levels C, D, and E. 292 The ENHANCED track offers the highest level of risk and potential reward under the Shared Savings Program. Level E of the BASIC track and the ENHANCED track each qualify as an Advanced APM under the Quality Payment Program.293 enter either the BASIC track’s glide path at any of the levels of risk and potential reward (Levels A through E), or the ENHANCED track. In accordance with § 425.600(g)(1)(i)–(iii), an ACO that is inexperienced with performance-based risk Medicare ACO initiatives may participate under the BASIC track’s glide path for a maximum of two agreement periods: In rulemaking following the December ++ An ACO that enters an agreement 2018 final rule, we modified the approach for determining an ACO’s eligibility for participation options in the BASIC track and ENHANCED track, along with the number of performance years an ACO may remain under a one- sided model of the BASIC track’s glide path.294 As finalized with the CY 2023 PFS final rule (87 FR 69805 through 69821), for agreement periods begi of performance years an ACO may remain under a one- sided model of the BASIC track’s glide path.294 As finalized with the CY 2023 PFS final rule (87 FR 69805 through 69821), for agreement periods beginning on or after January 1, 2024, § 425.600(g) specifies the criteria CMS uses to determine an ACO’s eligibility to enter an agreement period under the BASIC track’s glide path, Level E of the BASIC track, or the ENHANCED track. Under these policies, CMS determines an ACO’s eligibility for participation options in the BASIC track and ENHANCED track based on the ACO’s experience and its ACO participants’ experience with the Shared Savings Program and other performance-based risk Medicare ACO initiatives.295 In accordance with § 425.600(g), we use the following approach: • If an ACO is determined to be inexperienced with performance-based risk Medicare ACO initiatives (as defined at § 425.20),296 the ACO may 291 For details on the Level A financial model, see §§ 425.600(a)(4)(i)(A)(1) and 425.605(d)(1)(i). For details on the Level B financial model see §§ 425.600(a)(4)(i)(A)(2) and 425.605(d)(1)(ii). 292 For details on the Level C financial model, see §§ 425.600(a)(4)(i)(A)(3) and 425.6 25.605(d)(1)(i). For details on the Level B financial model see §§ 425.600(a)(4)(i)(A)(2) and 425.605(d)(1)(ii). 292 For details on the Level C financial model, see §§ 425.600(a)(4)(i)(A)(3) and 425.605(d)(1)(iii). For details on the Level D financial model, see §§ 425.600(a)(4)(i)(A)(4) and 425.605(d)(1)(iv). For details on the Level E financial model, see §§ 425.600(a)(4)(i)(A)(5) and 425.605(d)(1)(v). 293 For related information, on Advanced APM status under the Quality Payment Program for each track/level, see the December 2018 final rule, Table 3 ‘‘Comparison of Risk and Reward Under BASIC Track and ENHANCED Track’’, and table notes at 83 FR 67852 and 67853. 294 We refer readers to discussions in earlier rulemaking, including: December 2018 final rule (83 FR 67863 through 67922); May 8, 2020 COVID– 19 IFC (85 FR 27575 and 27576) and CY 2021 PFS final rule (85 FR 84767 through 84769); Fiscal Year (FY) 2022 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) final rule (86 FR 45502 through 45506); and CY 2023 PFS final rule (87 FR 69805 through 69821). 295 See the definitions of ‘‘experienced with perf Care Hospital (LTCH) Prospective Payment System (PPS) final rule (86 FR 45502 through 45506); and CY 2023 PFS final rule (87 FR 69805 through 69821). 295 See the definitions of ‘‘experienced with performance-based risk Medicare ACO initiatives,’’ ‘‘inexperienced with performance-based risk Medicare ACO initiatives,’’ and ‘‘performance- based risk Medicare ACO initiative’’ under § 425.20. 296 In accordance with § 425.20 ‘‘inexperienced with performance-based risk Medicare ACO under the BASIC track’s glide path at either Level A or Level B is deemed to have completed one agreement under the BASIC track’s glide path and is only eligible to enter a second agreement under the BASIC track’s glide path if the ACO continues to meet the definition of inexperienced with performance-based risk Medicare ACO initiatives and satisfies either of the following: (A) the ACO is the same legal entity as a current or previous ACO that previously entered into a participation agreement for participation in the BASIC track’s glide path only one time; or (B) for a new ACO identified as a re-entering ACO, the ACO in which the majority of the new ACO’s participants were participating previously entered into the BASIC track’s glide path only one time; or (B) for a new ACO identified as a re-entering ACO, the ACO in which the majority of the new ACO’s participants were participating previously entered into a participation agreement for participation in the BASIC track’s glide path only one time. ++ An ACO that is determined to be inexperienced with performance-based risk Medicare ACO initiatives but is not eligible to enter the BASIC track’s glide path may enter either the BASIC track Level E for all performance years of the agreement period, or the ENHANCED track. • If an ACO is determined to be experienced with performance-based risk Medicare ACO initiatives (as defined at § 425.20), the ACO may enter either the BASIC track Level E for all performance years of the agreement period, or the ENHANCED track. Section 425.600(a)(4)(i)(C) specifies glide path progression for agreement initiatives’’ means an ACO that CMS determines meets all of the following: (1) the ACO is a legal entity that has not participated in any performance- based risk Medicare ACO initiative as defined at § 425.20, and has not deferred its entry into a second Shared Savings Program agreement period under a two-sided s not participated in any performance- based risk Medicare ACO initiative as defined at § 425.20, and has not deferred its entry into a second Shared Savings Program agreement period under a two-sided model at § 425.200(e); and (2) less than 40 percent of the ACO’s ACO participants participated in a performance-based risk Medicare ACO initiative, or in an ACO that deferred its entry into a second Shared Savings Program agreement period under a two-sided model at § 425.200(e), in each of the 5 most recent performance years. An ACO participant is considered to have participated in a performance-based risk Medicare ACO initiative if the ACO participant TIN was or will be included in financial reconciliation for one or more performance years under such initiative during any of the 5 most recent performance years. For brevity, we sometimes refer to such ACOs as ‘‘inexperienced with performance-based risk’’ or ‘‘inexperienced with risk.’’ VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00299 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32650 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2 00 Frm 00299 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32650 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules periods beginning on or after January 1, 2024. Under these requirements, an ACO eligible to enter the BASIC track’s glide path may elect to enter its agreement period at any of the levels of risk and potential reward available under Levels A through E. An ACO is automatically advanced to the next level of the BASIC track’s glide path at the start of each subsequent performance year of the agreement period, if a higher level of risk and potential reward is available under the BASIC track, except in the following circumstances: (1) the ACO elects to transition to a higher level of risk and potential reward within the BASIC track’s glide path as provided at § 425.226(a)(2)(i); (2) the ACO elects to maintain its level of participation as provided at § 425.600(a)(4)(i)(C)(3); 297 or (3) the ACO elected to participate under a one-sided model, but is determined to be experienced with performance-based risk Medicare ACO initiatives and will be automatically advanced to Lev ); 297 or (3) the ACO elected to participate under a one-sided model, but is determined to be experienced with performance-based risk Medicare ACO initiatives and will be automatically advanced to Level E within the BASIC track at the start of the next performance year and will remain in Level E for all subsequent performance years of the agreement period, in accordance with § 425.600(h)(2)(i).298 Under our existing policies, new ACOs inexperienced with performance- based risk Medicare ACO initiatives may participate in a BASIC track one- sided model for up to 7 performance years before being required to transition to performance-based risk. For example, an eligible ACO may enter a first BASIC track agreement period in the glide path and elect to remain under Level A for all 5 performance years of this agreement period. If the ACO is eligible to enter a second BASIC track agreement period in the glide path and enters at Level A for its first performance year, the ACO would be automatically advanced to Level B in its second performance year, respectively its sixth and seventh cumulative performance years under a one-sided model. The ACO would participate under performance-based risk ally advanced to Level B in its second performance year, respectively its sixth and seventh cumulative performance years under a one-sided model. The ACO would participate under performance-based risk for the third and 297 In accordance with § 425.600(a)(4)(i)(C)(3), a new ACO (not a renewing ACO or re-entering ACO as defined at § 425.20) participating in its first agreement period under the BASIC track that enters the glide path at Level A may elect to remain under Level A for all subsequent performance years of the agreement period. As described in the CY 2023 PFS final rule, an ACO must make this election prior to its automatic advancement to Level B for performance year 2 of its agreement period under the BASIC track’s glide path. See 87 FR 69810. 298 We refer readers to the CY 2023 PFS final rule (87 FR 69811 and 69812), in which we finalized the approach to monitoring of risk experience for agreement periods under Level A of the BASIC track, for performance years beginning on or after January 1, 2024, for a detailed explanation and examples of the approach. subsequent performance years of its second agreement period under the BASIC track, either by being automatically advance after January 1, 2024, for a detailed explanation and examples of the approach. subsequent performance years of its second agreement period under the BASIC track, either by being automatically advanced to Level C, D and E for each of the 3 remaining performance years of its second agreement period under the glide path, or electing to advance more rapidly to higher levels of risk and reward along the glide path. ACOs that initially elect to remain in Level A of the BASIC track for all 5 performance years for their first agreement period under the BASIC track have the option to subsequently elect to transition to performance-based risk during this agreement period in accordance with § 425.226(a)(2)(i) and § 425.600(a)(4)(i)(C)(3)(iii), and (a)(4)(i)(C)(4) to (6). For example, an ACO inexperienced with performance- based risk Medicare ACO initiatives that enters an agreement period under the BASIC track at Level A and elects to maintain participation at Level A for the second and subsequent performance years of this agreement period may subsequently elect to advance to a two- sided model along the BASIC track’s glide path (Level C, D or E) for performance year 3, 4 or 5 of this agreem nt performance years of this agreement period may subsequently elect to advance to a two- sided model along the BASIC track’s glide path (Level C, D or E) for performance year 3, 4 or 5 of this agreement period. In such a case, in accordance with § 425.600(a)(4)(i)(C)(6), when an ACO elects to transition to a higher level of risk and reward available under the BASIC track’s glide path, the ACO would be automatically advanced to the next level of the BASIC track’s glide path at the start of each subsequent performance year of the agreement period, if a higher level of risk and potential reward is available. Further, in progressing to performance- based risk in the BASIC track’s glide path, the ACO would be considered experienced with performance-based risk Medicare ACO initiatives for purposes of determining the ACO’s participation options for a future agreement period, and therefore eligible to enter either the BASIC track Level E for all performance years or the ENHANCED track in accordance with § 425.600(g)(2). CMS accepts applications for ACOs to participate in the Shared Savings Program annually. Applicant ACOs are required to make a track selection when submitting their applic rdance with § 425.600(g)(2). CMS accepts applications for ACOs to participate in the Shared Savings Program annually. Applicant ACOs are required to make a track selection when submitting their application, which is reviewed by CMS to determine the ACO’s eligibility for the selected option.299 During the annual change request cycle, for ACOs currently 299 See Medicare Shared Savings Program, Application Reference Manual (April 2025, version 7), available at https://www.cms.gov/medicare/ medicare-fee-for-service-payment/ sharedsavingsprogram/downloads/ssp-application- reference-manual.pdf. participating in the program, ACOs participating in the BASIC track’s glide path have the opportunity to submit participation options change requests, in connection with their level of participation, among other change requests, prior to the start of the next performance year in the program. For instance, ACOs participating in the BASIC track’s glide path may elect to remain in Level A (if participation in Level A was previously elected), or to advance to higher levels of risk and reward along the glide path.300 The timing of the annual application cycle and change request cycle typically coincide on in Level A was previously elected), or to advance to higher levels of risk and reward along the glide path.300 The timing of the annual application cycle and change request cycle typically coincide, and span a period from Spring through Fall in advance of the start of the upcoming performance year beginning on January 1st.301 During the application and change request cycles, CMS communicates information about an ACO’s experience with performance- based risk Medicare ACO initiatives, and track/level eligibility, among other information, at standardized intervals, to applicant ACOs and currently participating ACOs. b. Considerations for Timing of ACOs’ Progression to Performance-Based Risk in the Shared Savings Program As we have explained in earlier rulemaking, and as we continue to believe, financial models under which ACOs bear a degree of financial risk have potential to induce more meaningful systematic change in providers’ and suppliers’ behavior towards meeting the Shared Savings Program’s goals, compared to one-sided models (see for example, 76 FR 67904 through 67909, 80 FR 32758 through 32760, and 83 FR 67967 through 67968). As described in section III.F.2.a. of this prop gs Program’s goals, compared to one-sided models (see for example, 76 FR 67904 through 67909, 80 FR 32758 through 32760, and 83 FR 67967 through 67968). As described in section III.F.2.a. of this proposed rule, our policies on the amount of time an ACO can participate under a one-sided model of the Shared Savings Program, and progression to two-sided risk, have varied over time, including as a result of changes finalized with the CY 2023 PFS final rule. In the CY 2023 PFS final rule (87 FR 69808), we explained our ongoing consideration for how long ACOs should be allowed to participate under a one-sided model (including through prior rulemaking). In explaining what 300 See Medicare Shared Savings Program, Managing Program Participation Guidance (April 2025, version 2), available at https://www.cms.gov/ files/document/managing-program-participation- guidance.pdf. 301 For resources and information on the Shared Savings Program application and change request cycles, refer to the Shared Savings Program website at https://www.cms.gov/medicare/payment/fee-for- service-providers/shared-savings-program-ssp-acos (including the Application Types & Timelines webpage, and Application Toolkit w vings Program website at https://www.cms.gov/medicare/payment/fee-for- service-providers/shared-savings-program-ssp-acos (including the Application Types & Timelines webpage, and Application Toolkit webpage). VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00300 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32651 has contributed to this consideration, we identified the importance of balancing our goal of driving the greatest possible shift to high-value care delivery, which we believe may be incentivized most effectively under a two-sided model, with a concern that requiring ACOs to take on too much downside risk too quickly may disincentivize program participation and reduce the program’s potential to positively affect the quality and cost of care furnished to beneficiaries. As described in the CY 2023 PFS final rule, a number of factors informed our proposal and decision to finalize the current approach that allows eligible ACOs to participate for a 5-year agreement period under Level A of the BASIC track with the number of factors informed our proposal and decision to finalize the current approach that allows eligible ACOs to participate for a 5-year agreement period under Level A of the BASIC track with the opportunity to enter a second agreement period under the BASIC track’s glide path beginning under a one-sided model. In the following discussion, we summarize these considerations. In the CY 2023 PFS final rule (see 87 FR 69806 through 69807), we provided background on comments summarized in the December 2018 final rule, which finalized our proposal to limit ACOs to two performance years under a one- sided model (or three performance years for eligible low revenue ACOs).302 We explained that most commenters on that proposal recommended that CMS extend the time any ACO can participate in a one-sided model to 3 performance years, as opposed to the 2 performance years proposed for ACOs eligible to participate under the BASIC track with participation agreements beginning on or after January 1, 2020 that do not qualify for a third year under the one-sided model under the exception at § 425.600(a)(4)(i)(B)(2)(ii), stating that it takes longer than 2 performance years to implement meaningful 2020 that do not qualify for a third year under the one-sided model under the exception at § 425.600(a)(4)(i)(B)(2)(ii), stating that it takes longer than 2 performance years to implement meaningful changes in a healthcare delivery model and among healthcare provider and patient populations. Other commenters believed that the progression to two-sided risk that we proposed and ultimately finalized was far too aggressive and would deter participation. These commenters generally suggested allowing for 4 or 5 performance years (or a full agreement period) under a one-sided model. Some commenters suggested that rural ACOs 302 See § 425.600(a)(4)(i)(B)(2)(i)–(ii) for provisions on automatic advancement along the BASIC track’s glide path. Note, ACOs with an agreement period beginning on July 1, 2019 could participate under a one-sided model for up to 3 performance years under the exception to automatic advancement along the BASIC track’s glide path in accordance with § 425.600(a)(4)(i)(B)(2)(i), or for four performance years under the exception for eligible low revenue ACOs in accordance with § 425.600(a)(4)(i)(B)(2)(ii). should be allowed at least two, 5-year agreement periods under a o (i), or for four performance years under the exception for eligible low revenue ACOs in accordance with § 425.600(a)(4)(i)(B)(2)(ii). should be allowed at least two, 5-year agreement periods under a one-sided model (83 FR 67847). In the CY 2023 PFS final rule (see 87 FR 69807 through 69808), we described participation trends for PY 2022 and explained that while many ACOs had agreed to participate under a two-sided model, not all ACOs appeared to be ready to take on performance-based risk. In particular, we described our experience with policies finalized in connection with the PHE for COVID–19, in which ACOs participating in the BASIC track’s glide path could forgo automatic advancement and ‘‘freeze’’ their participation for PY 2021 and PY 2022 at their PY 2020 and PY 2021 levels, respectively.303 We observed that when given the opportunity to freeze at the ACO’s current BASIC track level of the glide path, most eligible ACOs under a one-sided model (Level A or Level B) chose to remain in a one-sided model. More generally, we explained that although we continued to believe there are stronger incentives for increased efficiency when ACOs are in a two-sided risk track, ACOs had conti in a one-sided model. More generally, we explained that although we continued to believe there are stronger incentives for increased efficiency when ACOs are in a two-sided risk track, ACOs had continued to report that they were constrained by the participation options finalized with the December 2018 final rule, and needed more time to invest in infrastructure and redesigned care processes for high quality and efficient healthcare service delivery before transitioning to performance-based risk. See 87 FR 69808. We noted our determination that allowing a maximum of 7 years under the one-sided model, as finalized in the CY 2023 PFS final rule, would strike a more appropriate balance within the structure of 5 performance year agreement periods, than only allowing for 2 years under a one-sided model. See 87 FR 46114; see also 87 FR 69809. We also noted that giving ACOs longer than 7 years or potentially unlimited time under a one-sided model would dilute the program’s ability to meaningfully influence expenditures and quality through the incentives provided by ACO risk assumption. Moreover, we explained that the approach that would extend the time an eligible ACO could participate un ully influence expenditures and quality through the incentives provided by ACO risk assumption. Moreover, we explained that the approach that would extend the time an eligible ACO could participate under a one-sided model to 7 years would allow ACOs more time to make investments in care improvement and to capitalize on these investments, while still working to lower costs and 303 The PHE for COVID–19 was in effect starting in January 2020, and ongoing at the time of the CY 2023 PFS rulemaking during 2022, and expired on May 11, 2023. See for example, U.S. Department of Health and Human Services website, COVID–19 Public Health Emergency webpage, available at https://www.hhs.gov/coronavirus/covid-19-public- health-emergency/index.html. improve the quality of care for their assigned beneficiaries. 87 FR 69809. We also recognized that ACOs are best able to select their participation options to meet the needs of their organizations, including when to time their transition to performance-based risk, including within an agreement period. Id. We also explained our intention with these changes was to provide ACOs with a more gradual ‘‘on-ramp’’ to taking on two-sided risk and to allow them ed risk, including within an agreement period. Id. We also explained our intention with these changes was to provide ACOs with a more gradual ‘‘on-ramp’’ to taking on two-sided risk and to allow them the flexibility to best ensure their readiness to take on two-sided risk, and our belief that the approach would encourage more ACOs to form and join the program, as well as encourage currently participating ACOs to remain in the program. See 87 FR 69812; see also 87 FR 69816. In the CY 2023 PFS final rule, we also recognized differing potential barriers to program participation by low revenue ACOs, and high spending ACOs, among other ACOs with particular characteristics or compositions. For instance, we recognized the importance of finalizing the participation option under which an eligible ACO may stay in a one-sided model of the BASIC track for the full 5-year agreement period for growing participation in the Shared Savings Program by eligible ACOs serving higher spending populations, particularly low revenue, physician-led ACOs. See 87 FR 70195. In combination with the expanded time under a one- sided model, policies finalized with the CY 2023 PFS final rule to allow the option for articularly low revenue, physician-led ACOs. See 87 FR 70195. In combination with the expanded time under a one- sided model, policies finalized with the CY 2023 PFS final rule to allow the option for eligible new, low revenue ACOs inexperienced with risk to receive advance investment payments (see § 425.630), and expanded opportunities for certain low revenue ACOs participating in the BASIC track to share in savings even if they do not meet the MSR (see § 425.605(h)), were designed to support program participation by low revenue ACOs. See 87 FR 70195. Additionally, in the CY 2023 PFS final rule (87 FR 70192), we explained that in combination with modifications to the benchmarking methodology to reduce the impact of the negative regional adjustment also being finalized in that rule, offering eligible ACOs a shared savings-only BASIC track participation option for a full 5-year agreement period, was expected to significantly re- engage participation for ACOs serving higher cost beneficiaries. We also explained our belief that flexibility with respect to the timeline for progression to two-sided risk would be important in the Shared Savings Program to encourage small, rural, safety-n aries. We also explained our belief that flexibility with respect to the timeline for progression to two-sided risk would be important in the Shared Savings Program to encourage small, rural, safety-net providers to form ACOs or to join larger, more urban practices to share resources, VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00301 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32652 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules which among other factors could help provide high need beneficiaries served by small, rural, safety-net providers with the resources to better coordinate their care and improve outcomes. See 87 FR 69809; see also 87 FR 69813. Recently, CMS has announced a vision to Make America Healthy Again.304 Relatedly, the Innovation Center announced a strategy to focus on testing models that transform the U.S. health system into one that builds healthier lives through prevention, individual empowerment, and choice and competition, under which people achieve their health goals and the providers caring for them are directly accountable for their lthier lives through prevention, individual empowerment, and choice and competition, under which people achieve their health goals and the providers caring for them are directly accountable for their health outcomes and the costs of their care.305 This strategy includes, among other objectives for protecting Federal taxpayers, to require all models to have downside financial risk and require providers to assume some of the financial risk. Similarly, with the Shared Savings Program, we are examining approaches to encourage ACO participation under two-sided models. In light of CMS’ current vision and strategic direction, we are revisiting Shared Savings Program policies on the amount of time an ACO can remain under a one-sided model, and the progression to performance-based risk, and in particular the current policy that allows ACOs to participate for up to 7 performance years under a one-sided model. Specifically, we are considering the effectiveness of the current requirements for determining an ACO’s participation options, finalized with the 304 See CMS Press Release, ‘‘Dr. Mehmet Oz Shares Vision for CMS’’, April 10, 2025, available at https://www.cms.gov/newsroom/press-releases/ rmining an ACO’s participation options, finalized with the 304 See CMS Press Release, ‘‘Dr. Mehmet Oz Shares Vision for CMS’’, April 10, 2025, available at https://www.cms.gov/newsroom/press-releases/ dr-mehmet-oz-shares-vision-cms (explaining CMS will work to modernize Medicare, the Marketplaces and Medicaid, so Americans get the care that they want, need, and deserve, including by holding healthcare providers accountable for health outcomes). 305 See Sutton, Abe, White Paper ‘‘CMS Innovation Center Strategy to Make America Healthy Again’’, May 13, 2025, available at https:// www.cms.gov/priorities/innovation/about/cms- innovation-center-strategy-make-america-healthy- again. December 2018 final rule, and modified through subsequent rulemaking, including the CY 2023 PFS final rule, as summarized elsewhere in this section of this proposed rule, in achieving a balance between encouraging transition to two-sided risk and a concern that requiring ACOs to take on too much downside risk too quickly may disincentivize program participation. In the following discussion, we describe more recent trends in ACO participation in the Shared Savings Program (including as a result of changes to pr quickly may disincentivize program participation. In the following discussion, we describe more recent trends in ACO participation in the Shared Savings Program (including as a result of changes to program requirements through rulemaking) and ACO financial performance, which inform our consideration of our current policies on ACOs’ progression to performance- based risk under the Shared Savings Program. This discussion focuses on Shared Savings Program participation trends in general between PY 2018 and PY 2025; participation trends among new, low revenue ACOs inexperienced with performance-based risk Medicare ACO initiatives, and ACOs serving medically complex, high-cost populations, for which we have finalized policies to facilitate program participation through CY 2023, 2024, and 2025 PFS rulemaking; our experience with the timing of ACO progression to performance-based risk under participation options that allow an eligible ACO to participate for up to 7 performance years under a one-sided model; and financial performance trends for recent performance years, among ACOs transitioning from one- sided to two-sided levels of the BASIC track, or remaining under the BASIC track’s two ne-sided model; and financial performance trends for recent performance years, among ACOs transitioning from one- sided to two-sided levels of the BASIC track, or remaining under the BASIC track’s two-sided model levels. The redesign of participation options with the December 2018 final rule greatly increased ACO participation in two-sided models.306 For PY 2018, 82 306 For data on ACO participation in the Shared Savings Program by track/level and performance year, see Shared Savings Program ‘‘Fast Facts’’ available through the Medicare Shared Savings Program website, Program Data webpage at https:// www.cms.gov/medicare/payment/fee-for-service- providers/shared-savings-program-ssp-acos/data (including the ‘‘Fast Facts Archives’’ (zip file), available at https://www.cms.gov/media/638196). See also, Data.CMS.gov, Medicare Shared Savings percent of ACOs were participating under a one-sided model, and 18 percent of ACOs were participating under a two-sided model.307 For PY 2025, 29 percent of ACOs are participating under a one-sided model, and 71 percent of ACOs are participating under a two-sided model.308 With respect to recent trends, Table 47 shows the number of ACOs participating t of ACOs are participating under a one-sided model, and 71 percent of ACOs are participating under a two-sided model.308 With respect to recent trends, Table 47 shows the number of ACOs participating in the BASIC track (by Level) and ENHANCED track for PYs 2022 through 2025.309 As shown in Table 47, participation in one-sided models is lower in PY 2025 (29 percent of ACOs) compared to PY 2022 (41 percent of ACOs), and PY 2023 and PY 2024 (33 percent of ACOs for each PY). Further, from program participation for PYs 2022 through 2025, we have observed that when ACOs participate under two-sided risk they opt for higher levels of risk and reward. Very few ACOs are participating under Levels C or D of the BASIC track’s glide path, compared to participation in Level E of the BASIC track or the ENHANCED track. Among ACOs participating under two-sided risk, more ACOs are participating under the highest level of risk and potential reward offered by the ENHANCED track than in Levels C, D and E of the BASIC track combined. Program, Accountable Care Organizations, Public Use File (by performance year), available at https:// data.cms.gov/medicare-shared-savings-program/ accountable-care-organi of the BASIC track combined. Program, Accountable Care Organizations, Public Use File (by performance year), available at https:// data.cms.gov/medicare-shared-savings-program/ accountable-care-organizations. We note that some observations described in this section of this proposed rule, particularly for PY 2025 data, are based on internal analysis. 307 See ‘‘Medicare Shared Savings Program Fast Facts (January 2018)’’, within ‘‘Fast Facts Archives’’, available at https://www.cms.gov/media/ 638196. 308 See ‘‘Shared Savings Program Fast Facts—As of January 1, 2025’’, available at https:// www.cms.gov/files/document/2025-shared-savings- program-fast-facts.pdf. 309 See ‘‘Shared Savings Program Fast Facts—As of January 1, 2025’’, available at https:// www.cms.gov/files/document/2025-shared-savings- program-fast-facts.pdf. See also, ‘‘Shared Savings Program Fast Facts—As of January 1, 2022,’’ ‘‘Shared Savings Program Fast Facts—As of January 1, 2023,’’ and ‘‘Shared Savings Program Fast Facts— As of January 1, 2024’’, within ‘‘Fast Facts Archives’’, available at https://www.cms.gov/media/ 638196. 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 — As of January 1, 2024’’, within ‘‘Fast Facts Archives’’, available at https://www.cms.gov/media/ 638196. 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 01:10 Jul 16, 2025 Jkt 265001 PO 00000 Frm 00302 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32653 Shared Savings Program participation with the two most recent start dates shows that nearly one-half of new ACOs are entering a one-sided model of the BASIC track, while the vast majority of ACOs continuing their participation in the program are participating under a two-sided model. Among the 140 ACOs entering a new agreement period for the January 1, 2024 start date, 51.6 percent (or 31 of 60) of ACOs participating in their first agreement period entered the BASIC track at Level A, while 2.5 percent (or 2 of 80) of ACOs participating in their second or subsequent agreement period entered the BASIC track at Level A. Among the 229 ACOs entering a new agreement period for the January 1, 2025 start date, 45.9 percent (or 17 of 37) of ACOs participating in their first agreement period entered the BASIC track at el A. Among the 229 ACOs entering a new agreement period for the January 1, 2025 start date, 45.9 percent (or 17 of 37) of ACOs participating in their first agreement period entered the BASIC track at Level A or B, while 17.7 percent (or 34 of 192) of ACOs participating in their second or subsequent agreement period entered the BASIC track at Level A. We have gained experience with ACOs’ participation under changes to the Shared Savings Program policies more recently finalized with CY 2023, 2024 and 2025 PFS rulemakings, which include policies to encourage participation by new, low revenue ACOs, such as through the availability of a payment option for eligible ACOs to receive advance investment payments, and ACOs serving medically complex, high-cost patient populations, such as through changes to the program’s benchmarking methodology. Our initial experience with ACOs entering agreement periods beginning on January 1, 2024 and January 1, 2025, offers insight into participation among such ACOs. For agreement periods beginning on January 1, 2024, and subsequent years, eligible new, low revenue ACOs inexperienced with performance-based risk Medicare ACO initiatives may receive advance ch ACOs. For agreement periods beginning on January 1, 2024, and subsequent years, eligible new, low revenue ACOs inexperienced with performance-based risk Medicare ACO initiatives may receive advance shared savings payments in the form of advance investment payments designed to assist ACOs that face difficulty funding the start-up costs for forming ACOs, caring for beneficiaries in underserved communities, and achieving long term success in the Shared Savings Program (see 87 FR 69782 through 69806). To be eligible to receive advance investment payments for the first two performance years of the ACO’s agreement period, the ACO must enter the program under BASIC track Level A and remain under a one-sided model level of the BASIC track’s glide path (Level A or B) for its second performance year, among other requirements specified at § 425.630(b). Among the new, low revenue ACOs inexperienced with performance-based risk Medicare ACO initiatives recently entering a first agreement period in the Shared Savings Program under a one- sided model, 19 of 21 of these new, low revenue ACOs inexperienced with performance-based risk entering an agreement period beginning on January 1, 2024 opted n the Shared Savings Program under a one- sided model, 19 of 21 of these new, low revenue ACOs inexperienced with performance-based risk entering an agreement period beginning on January 1, 2024 opted to receive advance investment payments for at least one performance year, while 10 of 12 of these new, low revenue ACOs inexperienced with performance-based risk entering an agreement period beginning on January 1, 2025 are receiving advance investment payments for PY 2025.310 Further, through recent rulemaking, we have refined the Shared Savings Program’s financial benchmarking methodology to support participation by ACOs serving medically complex, high- cost populations. For instance, with the CY 2025 PFS final rule (89 FR 98155 through 98166), we established an approach applicable for agreement periods beginning on January 1, 2025, and in subsequent years, under which we adjust an ACO’s historical benchmark based on the highest of three positive adjustments for which it is eligible, either the regional adjustment, prior savings adjustment, or health equity benchmark adjustment, in 310 See Medicare Shared Savings Program, Accountable Care Organizations, Public Use Files, for PY 2024 ther the regional adjustment, prior savings adjustment, or health equity benchmark adjustment, in 310 See Medicare Shared Savings Program, Accountable Care Organizations, Public Use Files, for PY 2024 and PY 2025, available at https:// data.cms.gov/medicare-shared-savings-program/ accountable-care-organizations. We note that one ACO that began receiving advance investment payments in PY 2024 is no longer receiving these payments in PY 2025. accordance with § 425.652(a)(8)(ii). As we explained in the CY 2025 PFS final rule (see 89 FR 98157), the health equity benchmark adjustment (HEBA), was designed to encourage new participation from ACOs serving medically complex, high-cost populations that are receiving lower regional adjustments or lower prior savings adjustments, or receiving neither adjustment. As described in the CY 2025 PFS final rule (89 FR 98523 through 98524), increased program participation by these ACOs as a result of these benchmark changes are expected to generate $260 million greater net savings for Medicare over 10 years. Based on early experience with program participation for the January 1, 2025 agreement period start date, the HEBA (as proposed to be renamed the illion greater net savings for Medicare over 10 years. Based on early experience with program participation for the January 1, 2025 agreement period start date, the HEBA (as proposed to be renamed the ‘‘population adjustment’’ as described in section III. F.8 of this proposed rule) is anticipated to provide an upward adjustment to ACO historical benchmarks for 33 of 229 ACOs that began a new agreement period for the 2025 start date (which includes new, renewing and re-entering ACOs and is approximately 14 percent of ACOs beginning a new agreement period with a January 1, 2025 start date). From an internal analysis of PY 2025 preliminary benchmarks for ACOs entering an agreement period beginning on January 1, 2025, we estimate that among the 33 ACOs that are anticipated to receive a HEBA to their historical benchmark, 13 are new ACOs participating in their first agreement period and would otherwise not have received a positive adjustment to the benchmark, 7 are in a one-sided model, and 6 are in a two-sided model. While we are still gaining experience with the impact of the HEBA on ACO benchmarks and ACO participation, these early findings suggest that the HEBA may incentivize parti 6 are in a two-sided model. While we are still gaining experience with the impact of the HEBA on ACO benchmarks and ACO participation, these early findings suggest that the HEBA may incentivize participation in the Shared Savings Program from ACOs serving high spending and high risk populations, including encouraging participation in two-sided models. More generally, we considered participation trends among ACOs that are higher spending compared to their VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00303 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00304 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00305 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32656 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules We believe this proposed approach strikes a balance between (1) policies that support growth o n o d n o m m a h k 32656 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules We believe this proposed approach strikes a balance between (1) policies that support growth of the Shared Savings Program by allowing for participation under a one-sided model for up to the entirety of an eligible ACO’s first agreement period, and (2) policies encouraging participation in performance-based risk which we believe have the potential for increased effectiveness towards meeting the program’s goals. This proposed approach retains an option for ACOs inexperienced with performance-based risk Medicare ACO initiatives, and that have no prior participation in the Shared Savings Program, to participate for their first agreement period under the BASIC track’s glide path, with the option for ACOs to elect to remain under a one-sided model for this 5-year agreement period, or to advance along the glide path to higher levels of risk and potential reward. We recognize that commenters in earlier rulemaking have made various suggestions for the amount of time an ACO should be allowed to remain under a one-sided model, including 4 or 5 performance years or a full agreement period ers in earlier rulemaking have made various suggestions for the amount of time an ACO should be allowed to remain under a one-sided model, including 4 or 5 performance years or a full agreement period (as described in section III.F.2.b of this proposed rule). See 87 FR 69806 through 69807; see also 83 FR 67847. We prefer an approach that continues to allow eligible ACOs to participate for up to 5 performance years (the duration of such ACOs’ first 5-year agreement period) under a one-sided model, which we believe is effective in attracting new ACOs to enter the Shared Savings Program, based on our analysis of participation trends, as we describe in section III.F.2.b of this proposed rule. Additionally, using an approach that leverages the existing structure of the regulations for how we identify participation options for an ACO inexperienced with performance-based risk Medicare ACO initiatives entering a first agreement period reduces complexity in the program’s policies, thereby facilitating ACOs’ ability to ascertain the available participation options and allowing CMS to more readily implement the proposed approach to determining ACO eligibility for participation options. This p itating ACOs’ ability to ascertain the available participation options and allowing CMS to more readily implement the proposed approach to determining ACO eligibility for participation options. This proposed approach would also encourage ACOs inexperienced with performance-based risk Medicare ACO initiatives participating in the BASIC track’s glide path for a first agreement period to prepare to take on two-sided risk no later than the start of their next 5-year agreement period in the Shared Savings Program, and thereby more quickly make meaningful changes to healthcare delivery, than the current approach. To create the most meaningful incentive to change healthcare delivery and based on our experience with ACOs’ selection of participation options, we believe it is appropriate to require ACOs to transition to participation in Level E of the BASIC track or the ENHANCED track after no more than 1 agreement period under the BASIC track’s glide path, which could include up to 5 performance years of participation under a one-sided model (for eligible ACOs). A number of factors informed our consideration of this approach. For one, under the benchmarking methodology applicable to agreeme e years of participation under a one-sided model (for eligible ACOs). A number of factors informed our consideration of this approach. For one, under the benchmarking methodology applicable to agreement periods beginning on January 1, 2025, and in subsequent years, in accordance with § 425.652(a)(8)(ii), we adjust an ACO’s historical benchmark based on the highest of three positive adjustments for which it is eligible, either the regional adjustment, prior savings adjustment, or HEBA. This approach to upwardly adjusting the benchmark could bolster the value of the rebased benchmark, calculated at § 425.652(c), for the ACO’s second and subsequent agreement period. The potential upward adjustment to an ACO’s benchmark through a regional adjustment, prior savings adjustment or HEBA, in combination with other policies under the existing financial methodology specified in subpart G, could help ensure there is sufficient incentive for ACOs to continue to participate in the program under higher levels of risk and potential reward. Additionally, although we recognize participation in Level C and Level D may serve as a means for some ACOs to gain experience with performance-based risk, we b er levels of risk and potential reward. Additionally, although we recognize participation in Level C and Level D may serve as a means for some ACOs to gain experience with performance-based risk, we believe the relatively low interest in participation in these financial models suggests it would be sufficient to only allow for participation in these lower levels of risk within the ACO’s first agreement period under the BASIC track’s glide path. As discussed in section III.F.2.b of this proposed rule, in recent performance years (PY 2023 through 2025) there has been limited and declining participation in Level C and Level D of the BASIC track’s glide path. Further, as we have observed based on more recent participation trends, once ACOs progress to performance-based risk, most ACOs do so by participating under Level E of the BASIC track, or the ENHANCED track. We believe that limiting additional participation in Levels C and D of the BASIC track to an ACO’s first and only agreement period in the glide path (if eligible) will support our programmatic goals by facilitating ACOs’ transition to two-sided models under which they have greater potential for risk and reward, and make more me d in the glide path (if eligible) will support our programmatic goals by facilitating ACOs’ transition to two-sided models under which they have greater potential for risk and reward, and make more meaningful changes to healthcare delivery, and in turn cost and quality improvements, for their assigned Medicare FFS beneficiary population. We propose to specify related requirements in amendments to the Shared Savings Program regulations at § 425.600 and propose technical and conforming changes elsewhere within § 425.600 and at § 425.605. We propose to amend § 425.600(g) introductory text, to limit the applicability of the requirements in this paragraph for determining an ACO’s eligibility for the Shared Savings Program participation options to agreement periods beginning on or after January 1, 2024, and before January 1, 2027. At § 425.600, we propose to redesignate paragraph (h) as paragraph (i), and propose to add a new paragraph (h) that specifies the requirements CMS would use to determine an ACO’s eligibility for Shared Savings Program participation options for agreement periods beginning on or after January 1, 2027, as described in further detail in the discussion that follows. ermine an ACO’s eligibility for Shared Savings Program participation options for agreement periods beginning on or after January 1, 2027, as described in further detail in the discussion that follows. Additionally, as we describe in section III.F.4.b.(2).(b) and in greater detail in the discussion that follows, § 425.600(h)(3) would include a limited proposed exception for participation in the ENHANCED track by ACOs with less than 5,000 assigned beneficiaries in certain benchmark years. This limited proposed exception reflects our proposal that for agreement periods beginning on or after January 1, 2027, an ACO with fewer than 5,000 assigned beneficiaries in benchmark year (BY) 1, BY2, or both may only enter the BASIC track. We propose to specify in new § 425.600(h)(1) how CMS determines an ACO’s eligibility for participation options, for agreement periods beginning on or after January 1, 2027, if an ACO is determined to be inexperienced with performance-based risk Medicare ACO initiatives (as defined at § 425.20). We propose to specify at § 425.600(h)(1) introductory text that if an ACO is determined to be inexperienced with performance-based risk Medicare ACO initiatives, the ACO ives (as defined at § 425.20). We propose to specify at § 425.600(h)(1) introductory text that if an ACO is determined to be inexperienced with performance-based risk Medicare ACO initiatives, the ACO may enter either the BASIC track’s glide path at any of the levels of risk and potential reward, Levels A through E, or the ENHANCED track, subject to the proposed exception prohibiting ACOs with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, from participating in the ENHANCED track specified in new § 425.600(h)(3) VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00306 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32657 (described in section III.F.4.b.(2).(b) of this proposed rule). We propose to specify under new § 425.600(h)(1)(i) that, for agreement periods beginning on or after January 1, 2027, an ACO that is inexperienced with performance-based risk Medicare ACO initiatives may participate under the BASIC track’s glide path for a maximum of one agreement period, and for which the progression along the is inexperienced with performance-based risk Medicare ACO initiatives may participate under the BASIC track’s glide path for a maximum of one agreement period, and for which the progression along the glide path is specified at § 425.600(a)(4)(i)(C). We propose to specify under new § 425.600(h)(1)(ii) that an ACO that enters an agreement period under the BASIC track’s glide path at any of the levels of risk and potential reward, Levels A through E, would be deemed to have completed one agreement period under the BASIC track’s glide path. For the purpose of determining the ACO’s prior participation in the BASIC track’s glide path, we would consider whether the ACO satisfies either of the following: (A) the ACO is the same legal entity as a current or previous ACO that previously entered into a participation agreement for participation in the BASIC track’s glide path; or (B) for a new ACO identified as a re-entering ACO (as defined at § 425.20), the ACO in which the majority of the new ACO’s participants were participating previously entered into a participation agreement for participation in the BASIC track’s glide path. We propose to specify under new § 425.600(h)(1)(iii) that an A CO’s participants were participating previously entered into a participation agreement for participation in the BASIC track’s glide path. We propose to specify under new § 425.600(h)(1)(iii) that an ACO determined to be inexperienced with performance-based risk Medicare ACO initiatives but which is not eligible to enter the BASIC track’s glide path, in accordance with the provisions of § 425.600(h)(1), may enter BASIC track Level E for all performance years of the agreement period, or the ENHANCED track, subject to the proposed exception prohibiting ACOs with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, from participating in the ENHANCED track specified in new § 425.600(h)(3) (described in section III.F.4.b.(2).(b) of this proposed rule). We would adopt an approach similar to our existing requirements for determining the participation options of an ACO that is experienced with performance-based risk Medicare ACO initiatives (as defined at § 425.20). We propose to specify in new § 425.600(h)(2), for agreement periods beginning on or after January 1, 2027, if an ACO is determined to be experienced with performance-based risk Medicare ACO initiatives, the ACO may ente fy in new § 425.600(h)(2), for agreement periods beginning on or after January 1, 2027, if an ACO is determined to be experienced with performance-based risk Medicare ACO initiatives, the ACO may enter either the BASIC track Level E for all performance years of the agreement period, or the ENHANCED track, subject to the proposed exception prohibiting ACOs with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, from participating in the ENHANCED track specified in new § 425.600(h)(3) (described in section III.F.4.b.(2).(b) of this proposed rule). Additionally, as discussed in section III.F.4 of this proposed rule, we propose at § 425.600(h)(3) to require, for agreement periods beginning on or after January 1, 2027, that if an ACO is determined to have fewer than 5,000 assigned beneficiaries in either the first benchmark year, second benchmark year, or both, in accordance with § 425.110(a)(3), the ACO may only enter the BASIC track. Under this approach, an ACO prohibited from participating in the ENHANCED track because it has fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, may enter an agreement period beginning on or after January 1, 2027, in the BASIC track participating in the ENHANCED track because it has fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, may enter an agreement period beginning on or after January 1, 2027, in the BASIC track, at a level of risk and potential reward otherwise determined in accordance with the proposed requirements of new § 425.600(h), as follows: • An ACO determined to be inexperienced with performance-based risk Medicare ACO initiatives may enter the BASIC track’s glide path at any of the levels of risk and potential reward, Levels A through E (if eligible in accordance with the proposed requirements at new § 425.600(h)(1)), or BASIC track Level E for all performance years of the agreement period. • An ACO determined to be experienced with performance-based risk Medicare ACO initiatives may enter BASIC track Level E for all performance years of the agreement period. We are proposing to apply this modified approach in determining ACOs’ participation options for agreement periods beginning on or after January 1, 2027, since the application cycle for the January 1, 2027 start date (anticipated to occur in CY 2026) would be the next cycle following the anticipated effective date for the CY 20 r after January 1, 2027, since the application cycle for the January 1, 2027 start date (anticipated to occur in CY 2026) would be the next cycle following the anticipated effective date for the CY 2026 PFS final rule of January 1, 2026. The majority of the application cycle for the January 1, 2026 start date, spanning Spring—Fall 2025, will occur before this rule is finalized. The criteria CMS used to determine an ACO’s eligibility to enter an agreement period, at § 425.600(g), that were applied in determining participation options for ACOs entering an agreement period beginning on January 1, 2024 or January 1, 2025, would also be applied in determining participation options for ACOs entering an agreement period beginning on January 1, 2026. If finalized, the proposed criteria to determine an ACO’s eligibility to enter an agreement period, specified under new § 425.600(h), would be applied in determining participation options for ACOs entering an agreement period beginning on or after January 1, 2027. That is, we would apply the modified approach (if finalized) consistently across new ACO applicants, renewing ACOs (as defined at § 425.20) and re-entering ACOs (as defined at § 425. January 1, 2027. That is, we would apply the modified approach (if finalized) consistently across new ACO applicants, renewing ACOs (as defined at § 425.20) and re-entering ACOs (as defined at § 425.20) in determining ACO participation options for agreement periods beginning on or after January 1, 2027. We recognize that with the changes in the program’s policies over time, there are currently ACOs participating in agreement periods, to which different requirements apply for determining the ACO’s participation options, in accordance with § 425.600. This proposed approach would change how we determine an ACO’s eligibility for Shared Savings Program participation options, program-wide. If we finalize the proposed approach, ACOs currently participating in a first agreement period under the BASIC track’s glide path (with 2022, 2023, 2024, and 2025 start dates) and ACOs entering a first agreement period in the BASIC track’s glide path with the January 1, 2026 start date, would be ineligible to enter a subsequent agreement period under the BASIC track’s glide path, with a start date on or after January 1, 2027. Instead, such ACOs, should they continue their participation in the Shared S e to enter a subsequent agreement period under the BASIC track’s glide path, with a start date on or after January 1, 2027. Instead, such ACOs, should they continue their participation in the Shared Savings Program for a second or subsequent agreement period, would be limited to participation in Level E of the BASIC track or the ENHANCED track (subject to the exception prohibiting ACOs with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, from participating in the ENHANCED track). Based on the number of ACOs currently participating in a first agreement period under a one- sided model of the BASIC track’s glide path, we anticipate the proposed approach could limit participation in a one-sided model to a maximum of 5 performance years (instead of 7 performance years) for 57 ACOs currently participating in Level A of the BASIC track (7 2022 starters, 7 2023 starters, 26 2024 starters, and 17 2025 starters).314 At the time of this proposed rule, the number of eligible 2026 starters 314 Total count of ACOs participating in Level A of the BASIC track, among ACOs entering a first agreement period in the Shared Savings Program by start date, as of performance year 2025. See Da rters 314 Total count of ACOs participating in Level A of the BASIC track, among ACOs entering a first agreement period in the Shared Savings Program by start date, as of performance year 2025. See Data.CMS.gov, Medicare Shared Savings Program, Accountable Care Organizations, Public Use File (by performance year, for PY 2025), available at https://data.cms.gov/medicare-shared-savings- program/accountable-care-organizations. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00307 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32658 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules that may enter the BASIC track’s glide path at Level A is yet to be determined. We acknowledge that ACOs currently participating in Level A of the BASIC track may have joined or remained in the Shared Savings Program relying on the availability of participation options established with the CY 2023 PFS final rule. We further acknowledge that the proposed modifications to limit participation in the BASIC track’s glide path and the amount of time an ACO may remain under a one-sided model, if fina PFS final rule. We further acknowledge that the proposed modifications to limit participation in the BASIC track’s glide path and the amount of time an ACO may remain under a one-sided model, if finalized, may alter the ACOs’ incentives to remain in the Shared Savings Program. As discussed in the Regulatory Impact Analysis, in section VII of this proposed rule, we project that discontinuing the option for ACOs to participate under a second agreement period in the BASIC track’s glide path may create potential uncertainty for some ACOs on continuing in the program. We further explain that, notwithstanding this uncertainty for some ACOs, the proposed changes have the potential to improve care management and increase savings from other ACOs that successfully manage the transition to performance-based risk earlier than they would have. At this juncture, we do not find the concern about the potential attrition by ACOs unwilling to transition to performance- based risk a compelling reason to forgo the proposed changes to the Shared Savings Program’s participation options. As we have explained elsewhere in this section of this proposed rule, we believe the program’s benchmarking methodolo forgo the proposed changes to the Shared Savings Program’s participation options. As we have explained elsewhere in this section of this proposed rule, we believe the program’s benchmarking methodology includes sufficient incentive for ACOs to continue to participate in the program. Additionally, based on trends in program participation, we anticipate that at least some of the ACOs currently participating under Level A of the BASIC track may elect to transition to a two-sided model level of the BASIC track during the remaining performance years of their current agreement period or would transition to a two-sided risk model at the beginning of their next agreement period notwithstanding the proposed change. More generally, we believe the concern about potential for loss of participation by ACOs unwilling to progress to two-sided risk with their second agreement period is balanced against, and outweighed by, the potential for increased effectiveness from other ACOs that continue to participate and successfully manage an earlier transition to performance-based risk, and establishing a policy that we believe will further advance the program’s goals. To follow are several examples, to icipate and successfully manage an earlier transition to performance-based risk, and establishing a policy that we believe will further advance the program’s goals. To follow are several examples, to illustrate how the proposed policies for determining ACO participation options would apply. Take for example a new ACO inexperienced with performance- based risk Medicare ACO initiatives that enters the BASIC track’s glide path at Level A for an agreement period beginning on January 1, 2027, and concluding December 31, 2031, based on the criteria used to determine ACO participation options specified under new § 425.600(h) (as proposed). Under this example, the ACO would be able to elect to remain under Level A for all subsequent performance years of its agreement period (performance years 2028 through 2031) in accordance with § 425.600(a)(4)(i)(C)(3). Assume for this example the ACO chooses to remain under Level A for the duration of its first agreement period, and applies to renew to continue its participation in the Shared Savings Program for a new agreement period beginning on January 1, 2032. Under the proposed approach, the ACO would be considered inexperienced with performance-ba inue its participation in the Shared Savings Program for a new agreement period beginning on January 1, 2032. Under the proposed approach, the ACO would be considered inexperienced with performance-based risk Medicare ACO initiatives, and would be identified by CMS as having previously entered an agreement period under the BASIC track’s glide path and deemed to have completed one agreement period under the BASIC track’s glide path. As a result, the ACO would be ineligible to enter the BASIC track’s glide path and would be limited to participating under Level E of the BASIC track, or the ENHANCED track (subject to the proposed exception prohibiting ACOs with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, from participating in the ENHANCED track) for its second agreement period beginning on January 1, 2032, or a subsequent agreement period. As another example, consider a new ACO inexperienced with performance- based risk Medicare ACO initiatives that enters the BASIC track’s glide path at Level A for an agreement period beginning on January 1, 2026, based on the criteria used to determine ACO participation options specified at § 425.600(g). Under this example, the ACO ’s glide path at Level A for an agreement period beginning on January 1, 2026, based on the criteria used to determine ACO participation options specified at § 425.600(g). Under this example, the ACO elects to remain under Level A for all subsequent performance years of its agreement period in accordance with § 425.600(a)(4)(i)(C)(3). If the ACO applies to renew to continue its participation in the Shared Savings Program for a new agreement period, beginning on January 1, 2031, under the proposed approach, the ACO would be considered inexperienced with performance-based risk Medicare ACO initiatives, and would be identified by CMS as having previously entered an agreement period under the BASIC track’s glide path and deemed to have completed one agreement period under the BASIC track’s glide path. As a result, the ACO would be ineligible to enter the BASIC track’s glide path and would be limited to participating under Level E of the BASIC track, or the ENHANCED track (subject to the proposed exception prohibiting ACOs with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, from participating in the ENHANCED track) for its second agreement period beginning on January 1, 2 oposed exception prohibiting ACOs with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, from participating in the ENHANCED track) for its second agreement period beginning on January 1, 2031, or a subsequent agreement period. Similarly situated ACOs that entered an agreement period beginning on January 1, 2022, January 1, 2023, January 1, 2024, or January 1, 2025 that elected to remain under a one-sided model of the BASIC track’s glide path for the duration of their 5-year agreement period, and are applying to renew to continue their participation in the program for a new agreement period, would have the same participation options as the ACO in this example. We are proposing to use our authority under section 1899(i)(3) of the Act to change the requirements for ACOs’ progression to performance-based risk under the program’s participation options. To adopt requirements in connection with participation under a two-sided model of the Shared Savings Program under section 1899(i)(3) of the Act, we must determine that doing so will improve the quality and efficiency of items and services furnished to Medicare beneficiaries, without resulting in additional program expenditure i)(3) of the Act, we must determine that doing so will improve the quality and efficiency of items and services furnished to Medicare beneficiaries, without resulting in additional program expenditures. As we have discussed in earlier rulemaking, in connection with the use of this authority for establishing the program’s participation options (see 76 FR 67904 through 67909, 80 FR 32771 and 32772, 83 FR 67834 through 67841), the program’s two-sided models provide an additional opportunity for ACOs to enter a risk-sharing arrangement and accept greater responsibility for beneficiary care. Under the proposed approach we would modify the Shared Savings Program participation options to reduce the maximum amount of time an ACO may participate under the BASIC track’s glide path from two agreement periods to one agreement period, thereby limiting the amount of time an ACO may remain under a one-sided model to at most 5 performance years. We would also require ACOs inexperienced with performance-based risk Medicare ACO initiatives to progress more rapidly to higher levels of risk and potential reward under Level E of the BASIC track or the ENHANCED track, compared to the current requirement e-based risk Medicare ACO initiatives to progress more rapidly to higher levels of risk and potential reward under Level E of the BASIC track or the ENHANCED track, compared to the current requirements. Under the VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00308 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32659 proposed approach, ACOs entering and continuing their participation in the Shared Savings Program would continue working towards meeting the program’s goals of lowering growth in Medicare FFS expenditures and improving the quality of care furnished to Medicare beneficiaries. As we have described elsewhere in this section of this proposed rule, we believe that requiring ACOs to more quickly progress to performance-based risk would create incentives for ACOs to make more meaningful changes to healthcare delivery, and in turn cost and quality improvements, for their assigned Medicare FFS beneficiary population. As discussed in the Regulatory Impact Analysis, in section VII of this proposed rule, we project ry, and in turn cost and quality improvements, for their assigned Medicare FFS beneficiary population. As discussed in the Regulatory Impact Analysis, in section VII of this proposed rule, we project that the proposed changes in participation options, in combination with other proposed changes to the statutory payment model in this proposed rule, as well as current policies we have adopted under the authority of section 1899(i)(3) of the Act, are expected to improve the quality and efficiency of items and services furnished under the Medicare program, and would not be expected to increase program expenditures relative to those of the statutory payment model. We will continue to reexamine this projection to ensure that an alternative payment model does not result in additional program expenditures and so continues to satisfy the requirement under section 1899(i)(3)(B) of the Act. If we later determine that the payment model that includes policies established under section 1899(i)(3) of the Act no longer meets this requirement, we would undertake notice and comment rulemaking to adjust the payment model to ensure continued compliance with the statutory requirements. Additionally, we the Act no longer meets this requirement, we would undertake notice and comment rulemaking to adjust the payment model to ensure continued compliance with the statutory requirements. Additionally, we propose to make the following technical and conforming changes, for completeness and clarity, to reflect our proposals to redesignate existing § 425.600(h) as paragraph (i), and to specify in a newly added paragraph (h) of § 425.600 the requirements for determining an ACO’s eligibility for Shared Savings Program participation options for agreement periods beginning on or after January 1, 2027. • Amending a cross-reference within § 425.600(a)(4)(i)(C)(1) to include a reference to proposed new paragraph (h)(1) at § 425.600. • Amending cross-references within § 425.600(a)(4)(ii) and § 425.605(d)(1) introductory text to include a reference to proposed new paragraph (h) at § 425.600. • Amending cross-references within § 425.600(a)(4)(i)(C)(2)(iii) and § 425.605(b)(2)(ii)(E) to refer to provisions within proposed newly redesignated paragraph (i) at § 425.600 instead of existing paragraph (h). • Revising § 425.605(d)(2), describing the level of risk and reward specified for Level E of the BAS ns within proposed newly redesignated paragraph (i) at § 425.600 instead of existing paragraph (h). • Revising § 425.605(d)(2), describing the level of risk and reward specified for Level E of the BASIC track. Currently this paragraph specifies Level E risk and reward at § 425.605(d)(1)(v) applies to an ACO eligible to enter the BASIC track that is determined to be experienced with performance-based risk Medicare ACO initiatives as specified at § 425.600(d) or § 425.600(g). We propose to amend this provision for greater consistency with the proposed approach to determining participation options described in this section of this proposed rule and new § 425.600(h)(1)(iii) and (h)(2), under which for agreement periods beginning on or after January 1, 2027, an ACO determined to be inexperienced with performance-based risk Medicare ACO initiatives that is not eligible to enter the BASIC track’s glide path, or an ACO that is determined to be experienced with performance-based risk Medicare ACO initiatives may enter either the BASIC track Level E for all performance years of the agreement period (among other participation options). Therefore, we propose to revise § 425.605(d)(2) to state CO initiatives may enter either the BASIC track Level E for all performance years of the agreement period (among other participation options). Therefore, we propose to revise § 425.605(d)(2) to state more generally: if the ACO enters the BASIC track at Level E as specified at § 425.600(d), (g), or (h), the level of risk and reward specified at § 425.605(d)(1)(v) applies to all performance years of an ACO’s agreement period. We seek comment on the proposed changes to the requirements for determining an ACO’s eligibility for Shared Savings Program participation options, for agreement periods beginning on or after January 1, 2027. We seek comment on the proposal to limit the amount of time an ACO can participate under the BASIC track’s glide path to one agreement period, and thereby to limit the amount of time an ACO (if eligible) can participate under a one-sided model to, at most, 5 performance years instead of 7 performance years. We also welcome comments on requiring ACOs that are determined to be inexperienced with performance-based risk Medicare ACO initiatives, and identified by CMS as having previously entered an agreement period under the BASIC track’s glide path, to progress ermined to be inexperienced with performance-based risk Medicare ACO initiatives, and identified by CMS as having previously entered an agreement period under the BASIC track’s glide path, to progress more rapidly to higher levels of risk and potential reward under Level E of the BASIC track or the ENHANCED track (subject to the proposed exception prohibiting ACOs with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, from participating in the ENHANCED track), thereby limiting ACOs’ participation in lower levels of risk and potential reward to their first and only agreement period under the BASIC track’s glide path. 3. Eligibility Requirements a. ACO Participant Change of Ownership (CHOW) Scenarios (1) Background In the June 2015 final rule (80 FR 32707 through 32712), we added § 425.118(a) and (b) to establish requirements for maintaining, updating, and submitting to CMS an accurate and complete ACO participant list. Section 425.118(a) includes requirements for ACOs to submit and certify their ACO participant lists before the start of each agreement period and each performance year thereafter, as well as at other times. Section 425.118(b)(1) and (2) authorize ACOs to m mit and certify their ACO participant lists before the start of each agreement period and each performance year thereafter, as well as at other times. Section 425.118(b)(1) and (2) authorize ACOs to make additions or deletions to their ACO participant lists, and § 425.118(b)(3) authorizes CMS to make annual adjustments based upon ACO participant list additions or deletions for purposes of the ACO’s assignment, historical benchmark, financial calculations, and quality reporting. Additionally, CMS has the authority at § 425.305(a) to screen ACOs, ACO participants, and ACO providers/ suppliers for program integrity purposes, as well to impose safeguards where negative program integrity history is present. To be eligible to participate in the Shared Savings Program, as specified at § 425.118(a)(1), an ACO must maintain, update, and submit to CMS an accurate and complete ACO participant list. The ACO participant list identifies each ACO participant by its Medicare- enrolled TIN and legal business name (LBN). ACO participant agreements must require an ACO participant to report changes in enrollment information to the ACO within 30 days of the change (§ 425.116(a)(6)) and in accordance wi siness name (LBN). ACO participant agreements must require an ACO participant to report changes in enrollment information to the ACO within 30 days of the change (§ 425.116(a)(6)) and in accordance with Shared Savings Program requirements (§ 425.116(a)(3)). CMS uses the certified ACO participant list to conduct critical oversight functions of the Shared Savings Program for downstream operations, such as establishing historical benchmarks; data sharing; financial performance; quality reporting; public reporting; and program eligibility. Changes to the certified ACO participant list can impact an ACO’s overall eligibility to participate in the Shared Savings Program. For example, removing an ACO participant could drop the ACO’s overall number of assigned Medicare fee-for-service beneficiaries below the 5,000 minimum VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00309 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32660 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules required for participation in the Shared Savings Program (§ 425.110(a)(1)). Additionally, modificati n o m m a h k 32660 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules required for participation in the Shared Savings Program (§ 425.110(a)(1)). Additionally, modifications to the certified ACO participant list can affect whether an ACO is determined to be a ‘‘low revenue ACO’’ or ‘‘high revenue ACO,’’ as well as CMS’ determination regarding whether an ACO is ‘‘experienced with performance-based risk Medicare ACO initiatives’’ or ‘‘inexperienced with performance-based risk Medicare ACO initiatives,’’ as defined in § 425.20. Because of the ACO participant list’s downstream effects on an ACO’s participation in the Shared Savings Program, changes to the certified ACO participant list are only permitted during the annual Shared Savings Program change request cycle. Absent unusual circumstances, CMS does not make adjustments during the performance year to the ACO’s assignment, historical benchmark, performance year financial calculations, the quality reporting sample, or the obligation of the ACO to report on behalf of eligible professionals that bill under the TIN of an ACO participant for certain CMS quality initiatives to reflect the addition or deletio sample, or the obligation of the ACO to report on behalf of eligible professionals that bill under the TIN of an ACO participant for certain CMS quality initiatives to reflect the addition or deletion of entities from the ACO participant list that become effective during the performance year (§ 425.118(b)(3)(ii). This includes adjustments of the ACO’s obligation to report on behalf of eligible professionals that bill under the TIN of an ACO participant to reflect the addition or deletion of entities from the ACO participant list that occurred during the performance year (§ 425.118(b)(3)(i)). Limiting additions of new ACO participants or revisions to an existing ACO participant on an ACO’s participant list to one annual change request cycle ensures the integrity of program operations for both CMS and ACOs. CMS has sole discretion to determine whether unusual circumstances exist that would warrant such adjustments (§ 425.118(b)(3)(ii)). Before the start of an agreement period, before each performance year thereafter, and at such other times as specified by CMS, the ACO must submit to CMS an ACO participant list (§ 425.118(a)(2)). As operationalized, ACOs are able to add an entity to ch performance year thereafter, and at such other times as specified by CMS, the ACO must submit to CMS an ACO participant list (§ 425.118(a)(2)). As operationalized, ACOs are able to add an entity to their previously certified ACO participant list according to the form and manner specified by CMS (§ 425.118(b)(1)). To add a new ACO participant TIN, an ACO must submit a change request by the final deadline established by CMS (§ 425.118(b)(1)). Currently, change requests are only accepted by CMS during the change request cycle. All additions to the ACO participant list approved by CMS during the change request cycle are effective on January 1 of the next performance year (§ 425.118(b)(1)(ii)). A change of ownership (CHOW) can occur when an ACO participant is purchased (or leased) by another organization. In such a case, the CHOW often results in the transfer of the previous owner’s Medicare Identification Number and provider agreement (including the previous owner’s outstanding Medicare debts) to the new owner. (See generally, § 489.18(c).) If the purchaser or lessee elects not to accept a transfer of the provider agreement, then the old agreement should be terminated, and the purch debts) to the new owner. (See generally, § 489.18(c).) If the purchaser or lessee elects not to accept a transfer of the provider agreement, then the old agreement should be terminated, and the purchaser or lessee is considered a new applicant and must initially enroll in Medicare.315 To notify CMS of the CHOW, an ACO participant submits the appropriate Medicare Enrollment Application form to their Medicare Administrative Contractor (MAC) or in the Provider Enrollment, Chain, and Ownership System (PECOS).316 The MAC uses the forms and required supporting documentation to document and identify changes in ownership and/or subsequent changes in TINs and Medicare Identification Numbers. When an ACO participant undergoes a CHOW resulting in a change to the TIN used for the Shared Savings Program, the ACO must provide documentation of the CHOW in a new change request to add the surviving Medicare enrolled TIN with no prior Medicare billing claims history to its ACO participant list. This allows CMS to appropriately track eligibility and other program requirements as well as perform other program operations such as beneficiary assignment, benchmark and performance year expenditure calcul lows CMS to appropriately track eligibility and other program requirements as well as perform other program operations such as beneficiary assignment, benchmark and performance year expenditure calculations, and determinations of shared savings and losses for ACOs with ACO participants that have undergone a CHOW. In some circumstances, an ACO participant CHOW could result in one Medicare-enrolled TIN being absorbed into an existing Medicare-enrolled TIN. This would mean the surviving ACO 315 If the purchaser (or lessee) elects not to accept a transfer of the provider agreement, then the old agreement is terminated, and the purchaser or lessee is considered a new applicant. (See generally Enrollment Applications at https://www.cms.gov/ medicare/enrollment-renewal/providers-suppliers/ chain-ownership-system-pecos/enrollment- applications.) 316 Medicare provider and suppliers can enroll using the Provider Enrollment, Chain, and Ownership System (PECOS). PECOS is a web-based platform managed by CMS that facilitates the enrollment process for Medicare providers and suppliers. See https://www.cms.gov/medicare/ enrollment-renewal/providers-suppliers/chain- ownership-system-pecos. particip ed by CMS that facilitates the enrollment process for Medicare providers and suppliers. See https://www.cms.gov/medicare/ enrollment-renewal/providers-suppliers/chain- ownership-system-pecos. participant TIN would have Medicare billing claims history or other factors affecting an ACO’s overall performance or benchmarking. Under this scenario, the surviving TIN could have a patient population and providers and suppliers who were not accounted for when CMS established the ACO’s benchmarks. Such a scenario could lead to variation in the patient population seen during the performance year compared to the ACO’s historical benchmark. In a dynamic healthcare environment, ACO participants may experience CHOWs and/or subsequent TIN changes during the performance year that affect their ability to continue in the Shared Savings Program. ACOs and ACO participants have requested that we establish a process whereby an ACO participant 317 that experiences a CHOW resulting in a surviving Medicare enrolled TIN with no prior Medicare billing claims history can be submitted by the ACO for CMS to review during the performance year. Currently, there are 477 ACOs participating in the Shared Savings Prog lled TIN with no prior Medicare billing claims history can be submitted by the ACO for CMS to review during the performance year. Currently, there are 477 ACOs participating in the Shared Savings Program with more than 15,000 ACO participant TINs and 650,000 ACO providers and suppliers who have agreed to participate in ACOs. Due to the volume of data that we utilize to operationalize the Shared Savings Program, allowing for frequent or high volumes of changes to occur to an ACO’s certified participant list during a performance year can increase the risk of errors, as well as uncertainty surrounding what data is utilized to produce a report. Additionally, it is important to ensure a degree of finality to reports for CMS and for ACOs to use during their participation in the Shared Savings Program and not allow data to constantly change. Therefore, it is important to limit the circumstances in which we allow ACOs to modify their certified ACO participant lists during a performance year, as well as the operational processes we allow to account for changes to occur during the performance year. (2) Proposal To Allow Modifications to the Certified ACO Participant List for ACO Participant s well as the operational processes we allow to account for changes to occur during the performance year. (2) Proposal To Allow Modifications to the Certified ACO Participant List for ACO Participant CHOWs During a Performance Year We recognize that requiring ACOs to wait until the upcoming change request cycle each performance year to update their certified ACO participant list to reflect an ACO participant’s CHOW can, in some cases, present operational 317 A ‘‘certified ACO participant’’ means ‘‘an ACO participant that an ACO has listed on the ACO’s certified ACO participant list.’’ See 425.118(a)(3): ‘‘The ACO must certify the submitted lists in accordance with § 425.302(a)(2).’’ VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00310 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32661 difficulties for ACOs. This gap may interfere with an ACO’s ability to provide coordinated care to an ACO participant’s patient population and negatively impact the ACO’s participation in the Shared Savings Program. To account for suc y interfere with an ACO’s ability to provide coordinated care to an ACO participant’s patient population and negatively impact the ACO’s participation in the Shared Savings Program. To account for such scenarios and to support ACOs’ participation, effective January 1, 2026, we propose ACOs that experience certain ACO participant CHOWs outside of the change request cycle must update their certified ACO participant list to reflect such ACO participant’s CHOW. This applies to instances in which an ACO participant has undergone a CHOW resulting in a change to its Medicare enrolled TIN whereby the surviving Medicare enrolled TIN has no Medicare billing claims history. Without the ability to report an ACO participant’s CHOW and effectuate a change in the ACO’s participant list during the performance year, the ACO may be unable to provide coordinated care to an ACO participant’s patient population, which may cause the ACO’s beneficiary count to fall below 5,000. An ACO participant change in ownership that reduces the ACO’s number of assigned beneficiaries could constitute a significant change (as described at § 425.214) for the ACO, adversely affecting the ACO’s participant agreement and