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:
Get a print friendly version of this information by clicking here or by clicking the PDF button on this page.
The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.