CMS Finalizes 60% Savings Rate For Mid-Risk ACOs, Up From 50%, In Shared Savings Overhaul

The Centers for Medicare & Medicaid Services (CMS) finalized an overhaul of the Medicare Shared Savings Program on Wednesday, raising the sharing rate for Level E of the BASIC track from 50% to 60% and projecting $5.5 billion in added net federal savings over 10 years. The changes sit inside the final calendar year 2027 physician fee schedule rule and govern how accountable care organizations (ACOs), the provider groups that share in savings when they hold down Medicare spending, are paid.

The projected payoff

CMS projects the changes would add up to 1 million assigned beneficiaries in an average year of the 10-year projection period. The $5.5 billion savings estimate carries a range of uncertainty of plus or minus $3.3 billion.

Shared savings net of losses paid to ACOs would rise by $1.1 billion over 10 years, plus or minus $3.6 billion, the agency estimates.

CMS said the aim is to strengthen financial incentives to join the program while limiting selection problems and benchmark rebasing concerns.

Rebalancing BASIC and ENHANCED

CMS said evidence suggests ACOs in BASIC Level E generate higher savings for the Trust Funds than ENHANCED ACOs, yet fewer ACOs sit in Level E. The ENHANCED track carries a 75% sharing rate.

The rule also cuts the maximum weight for the positive regional adjustment, a benchmark boost for lower-spending ACOs in the ENHANCED track, from 50% to 35%. CMS said those ACOs get both a higher sharing rate and larger regional adjustments, which may push ACOs toward the track independent of their ability to save money.

Three more benchmark changes:

• The prior savings adjustment's scaling factor rises from 50% to 75%, easing the rebasing "ratchet effect."
• The 5% cap on upward benchmark adjustments will be risk adjusted for the severity and case mix of an ACO's population.
• A new growth adjustment rewards ACOs for recruiting professionals and beneficiaries new to value-based care.

For agreement periods starting Jan. 1, 2027, the Accountable Care Prospective Trend, a growth target in the benchmark update, can be no more than 1 percentage point below or 1.5 percentage points above national growth. The lower limit applies retroactively to ACOs with 2024, 2025 and 2026 start dates, and CMS delayed performance year 2025 reconciliation until November 2026.

Assignment and Part B cost sharing

Beginning with the performance year starting Jan. 1, 2028, assignment will exclude primary care billed through a non-ACO tax ID by ACO professionals. Enrollment eligibility criteria are also modified, and new primary care codes count toward assignment from Jan. 1, 2027.

Starting April 1, 2027, ACOs with an approved implementation plan could reduce or eliminate Part B cost sharing for all Original Medicare Part B items and services except durable medical equipment, prosthetics, orthotics and supplies, and prescription drugs. CMS plans to collect initial applications in early 2027.

CMS is also removing the prepaid shared savings payment option, citing low uptake. Participating ACOs will receive those payments through Dec. 31, 2027.

ACOs applying for a Jan. 1, 2027 start can change their track selection during the Phase 2 request for information window, Nov. 6-12, 2026, which closes at noon ET.

Sources

• Calendar Year (CY) 2027 Medicare Physician Fee Schedule Final Rule (CMS-1848-F) — Medicare Shared Savings Program — Centers for Medicare & Medicaid Services
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