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ACO Repayment Mechanisms – Surety Bonds
Medicare Shared Savings Program (“MSSP”) Tracks 1+, 2, and 3; Pathways to Success Tracks C, D, E, and Enhanced; and NextGen ACOs, have two-sided risk. CMS requires these ACOs to provide a repayment mechanism to assure that shared losses can be repaid.
Depending on its track, a Pathways to Success ACO’s repayment mechanism equals the lesser of either: 2% of the total Medicare Parts A and B FFS revenue of its ACO participants or 1% of the total per capita Medicare Parts A and B FFS expenditures for its assigned beneficiaries.
CMS accepts letters of credit (LOC), cash held in escrow, and/or surety bonds for this purpose. While LOCs are an acceptable form of collateral, LOCs are costly and inflexible, and ACOs often struggle to find the capital to place into escrow funds. The better, more cost-effective option for ACOs is using a surety bond.
Reasons to consider a surety bond as an alternative to an LOC:
Why a Surety Bond? Surety Bonds:
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