§ 425.316 Monitoring of ACOs. ( a ) *General rule.* ( 1 ) In order to ensure that the ACO continues to satisfy the eligibility and program requirements under this part, CMS monitors and assesses the performance of ACOs, their ACO participants, and ACO providers/suppliers.
( 2 ) CMS employs a range of methods to monitor and assess the performance of ACOs, ACO participants, and ACO providers/suppliers, including but not limited to any of the following, as appropriate: ( i ) Analysis of specific financial and quality measurement data reported by the ACO as well as aggregate annual and quarterly reports.
( ii ) Analysis of beneficiary and provider complaints.
( iii ) Audits (including, for example, analysis of claims, chart review (medical record), beneficiary survey reviews, coding audits, on-site compliance reviews).
( b ) *Monitoring ACO avoidance of at-risk beneficiaries.* ( 1 ) CMS may use one or more of the methods described in paragraph (a)(2) of this section (as appropriate) to identify trends and patterns suggesting that an ACO has avoided at-risk beneficiaries. The results of these analyses may subsequently require further investigation and follow-up with beneficiaries or the ACO and its ACO participants, ACO providers/suppliers, or other individuals or entities performing functions or services related to the ACO's activities, in order to substantiate cases of beneficiary avoidance.
( 2 ) ( i ) CMS, at its sole discretion, may take any of the pre-termination actions set forth in § 425.216(a)(1) or immediately terminate, if it determines that an ACO, its ACO participants, any ACO providers/suppliers, or other individuals or entities performing functions or services related to the ACO's activities avoids at-risk beneficiaries.
( ii ) If CMS requires the ACO to submit a CAP, the ACO will— ( A ) Submit a CAP that addresses actions the ACO will take to ensure that the ACO, ACO participants, ACO providers/suppliers, or other individuals or entities performing functions or services related to the ACO's activities cease avoidance of at-risk beneficiaries.
( B ) Not receive any shared savings payments during the time it is under the CAP.
( C ) Not be eligible to receive shared savings for the performance year attributable to the time that necessitated the CAP (the time period during which the ACO avoided at risk beneficiaries).
( iii ) CMS will re-evaluate the ACO during and after the CAP implementation period to determine if the ACO has continued to avoid at-risk beneficiaries. The ACO will be terminated if CMS determines that the ACO has continued to avoid at-risk beneficiaries during or after the CAP implementation period.
( c ) *Monitoring ACO compliance with quality performance standards.* To identify ACOs that are not meeting the quality performance standards, CMS will review an ACO's submission of quality measurement data under § 425.500 or § 425.512. CMS may request additional documentation from an ACO, ACO participants, or ACO providers/suppliers, as appropriate. If an ACO does not meet quality performance standards or fails to report on one or more quality measures, CMS will take the following actions: ( 1 ) *For performance years (or a performance period) beginning on or before January 1, 2020.* ( i ) The ACO may be given a warning for the first time it fails to meet the minimum attainment level on at least 70 percent of the measures, as determined under § 425.502, in one or more domains and may be subject to a CAP. CMS may forgo the issuance of the warning letter depending on the nature and severity of the noncompliance and instead subject the ACO to actions set forth at § 425.216 or immediately terminate the ACO's participation agreement under § 425.218.
( ii ) The ACO's compliance with the quality performance standards will be re-evaluated the following year. If the ACO continues to fail to meet the quality performance standard in the following year, the agreement will be terminated.
( iii ) An ACO will not qualify to share in savings in any year it fails to report accurately, completely, and timely on the quality performance measures.
( 2 ) *For performance years beginning on or after January 1, 2021.* ( i ) If the ACO fails to meet the quality performance standard, CMS may take one or more of the actions prior to termination specified in § 425.216. Depending on the nature and severity of the noncompliance, CMS may forgo pre-termination actions and may immediately terminate the ACO's participation agreement under § 425.218.
( ii ) CMS will terminate an ACO's participation agreement under any of the following circumstances: ( A ) The ACO fails to meet the quality performance standard for 2 consecutive performance years within an agreement period.
( B ) The ACO fails to meet the quality performance standard for any 3 performance years within an agreement period, regardless of whether the years are in consecutive order.
( C ) A renewing ACO or re-entering ACO fails to meet the quality performance standard for the last performance year of the ACO's previous agreement period and this occurrence was either the second consecutive performance year of failed quality performance or the third nonconsecutive performance year of failed quality performance during the previous agreement period.
( D ) A renewing ACO or re-entering ACO fails to meet the quality performance standard for 2 consecutive performance years across 2 agreement periods, specifically the last performance year of the ACO's previous agreement period and the first performance year of the ACO's new agreement period.
( d ) *Monitoring ACO financial performance.* ( 1 ) For performance years beginning on July 1, 2019 and subsequent performance years, CMS determines whether the Medicare Parts A and B fee-for-service expenditures for the ACO's assigned beneficiaries for the performance year exceed the ACO's updated benchmark by an amount equal to or exceeding either the ACO's negative MSR under a one-sided model, or the ACO's MLR under a two-sided model.
( 2 ) If the Medicare Parts A and B fee-for-service expenditures for the ACO's assigned beneficiaries for the performance year exceed the ACO's updated benchmark as specified in paragraph (d)(1) of this section, CMS may take any of the pre-termination actions set forth in § 425.216.
( 3 ) If the Medicare Parts A and B fee-for-service expenditures for the ACO's assigned beneficiaries for the performance year exceed the ACO's updated benchmark as specified in paragraph (d)(1) of this section for another performance year of the agreement period, CMS may immediately or with advance notice terminate the ACO's participation agreement under § 425.218.
( e ) *Monitoring ACO eligibility for advance investment payments.* ( 1 ) CMS monitors an ACO that receives advance investment payments pursuant to § 425.630 for changes in its ACO participants that may cause the ACO to no longer meet the standards specified in § 425.630(b)(3) and (4).
( 2 ) If CMS determines that an ACO participating in advance investment payments became experienced with performance-based risk Medicare ACO initiatives during its first or second performance year of its agreement period or that the ACO became a high revenue ACO during any performance year of its agreement period, CMS— ( i ) Will cease payment of advance investment payments no later than the quarter after the ACO became experienced with performance-based risk Medicare ACO initiatives or became a high revenue ACO.
( ii ) May take compliance action as specified in §§ 425.216 and 425.218.
( 3 ) If an ACO remains an ACO experienced with performance-based risk Medicare ACO initiatives or a high revenue ACO after a deadline specified by CMS pursuant to compliance action under this section, the ACO must repay all advance investment payments it received. CMS will provide written notification to the ACO of the amount due and the ACO must pay such amount no later than 90 days after the receipt of such notification.
[76 FR 67973, Nov. 2, 2011, as amended at 80 FR 32840, June 9, 2015; 81 FR 80559, Nov. 15, 2016; 83 FR 68069, Dec. 31, 2018; 85 FR 85039, Dec. 28, 2020; 87 FR 70233, Nov. 18, 2022; 88 FR 79544, Nov. 16, 2023]