On October 15, 2014, the Centers for Medicare & Medicaid Services (“CMS”) launched a new accountable care organization (“ACO”) program that aims to encourage new Medicare Shared Savings Program (“MSSP”) ACOs in rural and underserved areas. The program, known as the ACO Investment Model, provides up to $114 million to as many as 75 ACOs in the U.S. CMS created the program in response to concerns that the current ACO initiatives do not provide sufficient funding to certain classes of providers. The agency will recover its investments through an offset of the ACOs’ earned shared savings.

The ACO Investment Model will contain two types of ACOs, based on when the ACOs began:

1) New MSSP ACOs joining in 2016, with a focus on those in rural geographic areas and areas of minimal ACO activity; and

2) ACOs that joined the MSSP in 2012, 2013, or 2014, where the focus will be on encouraging success in the program and progression to higher levels of financial risk.

In the selection process, CMS will prioritize new ACOs in rural and low-penetration areas, and existing ACOs that provide high quality care, achieve financial benchmarks, demonstrate exceptional financial need, or provide compelling proposals for use of the funds. The deadline for 2012 and 2013 ACO MSSP participants is December 1, 2014. Applications for the 2014 or 2016 MSSP ACOs will be available in the summer of 2015. ACOs that began MSSP participation in 2015 are ineligible for the current ACO Investment Model because they will not have of reconciled financial and quality performance data until after the second application period.