Calendar Year (CY) 2025 Medicare Physician Fee Schedule Final Rule (CMS-1807-F) - Medicare Shared Savings Program Provisions

On November 1, 2024, the Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2025 Medicare Physician Fee Schedule (PFS) final rule (CMS-1807-F) that includes changes to the Medicare Shared Savings Program (Shared Savings Program) to further advance Medicare’s value-based care strategy of growth, alignment, and equity.

As of January 1, 2024, the Shared Savings Program has 480 Accountable Care Organizations (ACOs) with over 634,000 health care providers and organizations providing care to more than 10.8 million assigned beneficiaries. ACOs are now delivering care to nearly 50% of people with Traditional Medicare. Nineteen newly formed ACOs in the Shared Savings Program are participating in a new payment option beginning in 2024 that is enabling these ACOs to receive more than $20 million in advance investment payments for caring for underserved communities. Building on the changes to the Shared Savings Program finalized in the CY 2023 PFS final rule (87 FR 69777 through 69979) and CY 2024 PFS final rule (88 FR 79093 through 79232), the policies in the CY 2025 PFS final rule are expected to further drive growth in participation, particularly in rural and underserved areas, promote equity, and advance alignment across accountable care initiatives, and are central to achieving CMS’ goal of having 100% of people with Traditional Medicare in a care relationship with accountability for quality and total cost of care by 2030. 

This Fact Sheet summarizes the major changes to the Shared Savings Program that are included in the CY 2025 PFS final rule. We are finalizing policies to establish a new “prepaid shared savings” option to encourage investments by eligible ACOs that have a history of earning shared savings that would aid beneficiaries, such as investments in direct beneficiary services and investments to improve care coordination through enhanced staffing or health care infrastructure. We are also finalizing changes to the Shared Savings Program’s financial methodology to encourage ACO participation in the Shared Savings Program, by removing barriers for ACOs serving underserved communities and increasing incentives to enter and remain in the program, through the application of a health equity benchmark adjustment. Additionally, we are finalizing several policies to align quality measure reporting with the Adult Universal Foundation Measures (Universal Foundation) and promote digital quality measure reporting.

To improve the accuracy, fairness, and integrity of Shared Savings Program financial calculations, we are finalizing a methodology to account for the impact of improper payments in recalculating performance year and benchmark expenditures used in financial reconciliation upon the reopening of a payment determination. We are also adopting a methodology for excluding payment amounts for Healthcare Common Procedure Coding System (HCPCS) and Current Procedural Terminology (CPT) codes exhibiting significant, anomalous, and highly suspect (SAHS) billing activity during CY 2024 or subsequent calendar years that warrant adjustment. These provisions complement the approach finalized in a separately issued final rule, “Medicare Program: Mitigating the Impact of Significant, Anomalous, and Highly Suspect Billing Activity on Medicare Shared Savings Program Financial Calculations in Calendar Year 2023” (herein referred to as the Shared Savings Program SAHS billing activity final rule; CMS-1799-F), that addressed SAHS billing activity associated with selected intermittent catheter supplies in CY 2023. For a Fact Sheet on the Shared Savings Program SAHS billing activity final rule, please visit https://www.cms.gov/newsroom/fact-sheets/final-rule-mitigating-impact-significant-anomalous-and-highly-suspect-billing-activity-medicare.

In addition, in this final rule, we summarize comments received in response to the comment solicitation that sought to gather information on financial arrangements that could allow for higher risk and potential reward than are available under the current ENHANCED track within the Shared Savings Program, including the design of and trade-offs between financial model features. 

Prepaid Shared Savings

CMS is finalizing a new “prepaid shared savings” option for eligible ACOs with a history of earning shared savings. ACOs that apply and are determined eligible to receive prepaid shared savings will receive advances of earned shared savings that they can use to make investments that will aid beneficiaries, including beneficiaries in underserved communities, such as investments in direct beneficiary services and investments to improve care coordination and quality through staffing or health care infrastructure. Eligible ACOs include those participating in Levels C-E of the BASIC track or the ENHANCED track with consistent prior success in earning shared savings in the Shared Savings Program. Eligible ACOs will be eligible for quarterly payments to invest in staffing, health care infrastructure, and additional services for beneficiaries. 

Under the approach we are finalizing, at least 50% of prepaid shared savings will be required to be spent on direct beneficiary services, not otherwise payable in Traditional Medicare, that are evidence-based and medically appropriate for the beneficiary based on clinical and social risk factors. Additionally, up to 50% of the prepaid shared savings can be spent on staffing and health care infrastructure. This policy will improve beneficiary engagement while allowing ACOs the flexibility to better address beneficiary needs. The policy also builds on allowing ACOs to address health-related social needs in partnership with community-based providers. ACOs that receive prepaid shared savings will repay them through earned shared savings, similar to those ACOs receiving advance investment payments. However, if an ACO receiving prepaid shared savings in unable to repay through earned shared savings, the ACO will be required to directly repay any outstanding balance to CMS at the end of their agreement period. ACOs will be required to continue to maintain their existing repayment mechanisms that CMS can use to recoup any funding in the event that the ACO does not earn shared savings or cannot otherwise repay the amount owed to CMS. CMS will carefully monitor ACO performance to minimize overpayments to ACOs that do not earn sufficient shared savings. An ACO can work with a community-based organization to provide services to beneficiaries using prepaid shared savings, to satisfy its obligation to establish processes to address the needs of its population, by partnering with community stakeholders.

ACOs will be able to apply to participate in the prepaid shared savings payment option during the annual application cycle, and the initial application cycle to apply for prepaid shared savings will be for a January 1, 2026, start date. There will also be a one-time exception for ACOs renewing in 2025 to apply to participate in prepaid shared savings beginning on January 1, 2026.

Health Equity Benchmark Adjustment 

In order to provide a greater financial incentive for ACOs to serve more beneficiaries from underserved communities and encourage ACOs that serve higher proportions of beneficiaries from underserved communities to enter and remain in the Shared Savings Program, we are finalizing policies to establish a Health Equity Benchmark Adjustment (HEBA). Under the approach we are finalizing, for agreement periods beginning on January 1, 2025, and in subsequent years, we will adjust an ACO’s historical benchmark using a HEBA, if eligible, based on the proportion of the ACO’s assigned beneficiaries who are enrolled in the Medicare Part D low-income subsidy (LIS) or who are dually eligible for Medicare and Medicaid. The HEBA will offer a third method of upwardly adjusting an ACO’s historical benchmark. We will adjust an ACO’s historical benchmark using the highest of three values for which it is eligible, either a positive regional adjustment, a prior savings adjustment, or a HEBA. 

In response to commenters’ suggestions, we are finalizing our proposal with a modification to allow more ACOs with above average proportions of underserved beneficiaries to be eligible to receive a HEBA. Under the calculation methodology we are finalizing, an ACO must have at least 15% of their assigned beneficiaries enrolled in Medicare Part D LIS or be dually eligible for Medicare and Medicaid in order to be eligible for the HEBA, instead of applying a threshold of 20%, as proposed. 

The design of the HEBA is informed by CMS’ initial experience with the ACO REACH Model, which includes a HEBA that has been associated with increased participation in ACOs by safety net providers. However, unlike the ACO REACH Model HEBA, the Shared Savings Program HEBA cannot cause a downward adjustment to an ACO’s benchmark. Increasing beneficiary access to providers participating in ACOs in rural and other underserved areas remains a priority for CMS to help address inequities in participation and grow accountable care. The prepaid shared savings option that we are finalizing operates synergistically with the HEBA, in that ACOs that have been successful in earning shared savings while serving larger proportions of beneficiaries from underserved communities would, in subsequent agreement periods, have additional capabilities through prepaid shared savings to address the unmet health-related social needs of the beneficiaries they serve. 

Alternative Payment Model (APM) Performance Pathway (APP) Plus Quality Measure Set, Scoring Methodology, and Incentives to Report via Electronic Clinical Quality Measures (eCQMs) 

To promote alignment with CMS’ quality programs and adoption of the Universal Foundation measure set, we are finalizing with modification our proposal to adopt the APP Plus quality measure set, which aligns with the Universal Foundation quality measures. This will better align the quality measures reported by Shared Savings Program ACOs with the Medicaid Core Sets, the Marketplace Quality Rating System, and Medicare Advantage and Part D Star Ratings, which have previously adopted or are in the process of adopting the quality measures in the Universal Foundation. For performance year 2025 and subsequent performance years, we are finalizing our proposal to require Shared Savings Program ACOs to report the APP Plus quality measure set. The APP quality measure set will no longer be available for reporting by Shared Savings Program ACOs beginning in performance year 2025. 

The APP Plus quality measure set will incrementally grow to be comprised of 11 measures, consisting of the six measures in the existing APP quality measure set and five new measures from the Adult Universal Foundation measure set. These 11 measures will be incrementally incorporated into the APP Plus quality measure set over performance year 2025 through performance year 2028, or the performance year that is one year after eCQM specifications become available for Quality IDs: 487 (Screening for Social Drivers of Health) and 493 (Adult Immunization Status), whichever is later. 

We are finalizing, with modification, the phase-in of the quality measures that will be in the APP Plus quality measure set. Specifically, there will be: 

• Six measures (four eCQMs/MIPS CQMs/ Medicare Clinical Quality Measure for Accountable Care Organizations Participating in the Shared Savings Program (Medicare CQMs), one administrative claims measure, and the CAHPS for MIPS Survey measure) in the APP Plus quality measure set for Shared Savings Program ACOs in performance year 2025, 
• Eight measures (five eCQMs/MIPS CQMs/Medicare CQMs, two administrative claims measures, and the CAHPS for MIPS Survey measure) in performance year 2026,  
• Nine measures (six eCQMs/Medicare CQMs, two administrative claims measures, and the CAHPS for MIPS Survey measure) in performance year 2027, and 
• Eleven measures (eight eCQMs/Medicare CQMs, two administrative claims measures, and the CAHPS for MIPS Survey measure) in performance year 2028 or the performance year that is one year after eCQM specifications become available for Quality IDs: 487 (Screening for Social Drivers of Health) and 493 (Adult Immunization Status), whichever is later. 

ACOs will be required to report on all measures in the APP Plus quality measure set annually. 

We are finalizing, with modification, our proposal to streamline the collection types available for Shared Savings Program ACOs reporting the APP Plus quality measure set to focus on eCQM and Medicare CQM collection types. In order to allow ACOs to continue to gain experience with all payer measures and to allow more time before sunsetting MIPS CQMs as a collection type for ACOs, because some ACOs may have already contracted with vendors for the MIPS CQM collection type, we are finalizing that MIPS CQMs will be an available collection type for Shared Savings Program ACOs reporting the APP Plus quality measure set in performance years 2025 and 2026. When calculating MIPS Quality performance category scores, ACOs will be scored on all required measures in the APP Plus quality measure set using the APP scoring policies, and ACOs reporting Medicare CQMs will be scored using flat benchmarks for the measures’ first two performance periods in MIPS. 

Establishing the APP Plus quality measure set to align with the Adult Universal Foundation measure set also prioritizes the eCQM collection type that underlies the Digital Quality Measurement (dQM) Strategic Roadmap, and uses Medicare CQMs as a transition step on our building-block approach for ACOs’ progress to adopt digital quality measurement. We stated in the final rule that the sunsetting of Medicare CQMs would take place no sooner than five years from now, when we anticipate there is widespread uptake of Fast Healthcare Interoperability Resources (FHIR) Application Programming Interface (API) technology. While FHIR API technology is employed in other components of digital health information, we noted that we would assess the uptake of FHIR API technology for quality reporting in alignment with the CMS dQM Strategic Roadmap, specifically Domain 3: Optimize Data Aggregation. In particular, CMS would assess whether ACOs broadly have developed capabilities to efficiently leverage FHIR API technology to aggregate quality reporting data and patient-centered measurement and are reporting eCQMs. CMS is committed to working with ACOs in overcoming barriers to digital quality measure reporting. 

In order to encourage ACOs to more quickly transition to eCQMs to leverage interoperability and digital data, we are finalizing our proposal to extend the Shared Savings Program’s eCQM reporting incentive to performance year 2025, and subsequent performance years, to continue to support ACOs reporting eCQMs in meeting the Shared Savings Program quality performance standard for sharing in the savings at the maximum sharing rate. In order to align the reporting incentive with our policy to make MIPS CQMs available as a collection type, for Shared Savings Program ACOs reporting the APP Plus quality measure set for two additional performance years, we are also finalizing a policy to extend the reporting incentive to ACOs reporting MIPS CQMs in performance years 2025 and 2026. 

Table 1 below displays a complete list of the final quality measures to be included in the APP Plus quality measure set for Shared Savings Program ACOs. These quality measures will be added to the APP Plus quality measure set incrementally over performance year 2025 through performance year 2028, or the performance year that is one year after eCQM specifications become available for Quality IDs: 487 and 493, whichever is later. 

Table 1: Quality Measures in the APP Plus Quality Measure Set for Shared Savings Program ACOs 

To account for the organizational complexities faced by virtual groups and APM Entities, including Shared Savings Program ACOs, when reporting eCQMs, we are finalizing our proposal to establish a Complex Organization Adjustment beginning in the CY 2025 performance period/2027 MIPS payment year. A Virtual Group and an APM Entity, including Shared Savings Program ACOs, would receive one measure achievement point for each submitted eCQM that meets the data completeness and case minimum requirements. Each reported eCQM may not score more than 10 measure achievement points and the total achievement points (numerator) may not exceed the total available measure achievement points (denominator) for the MIPS Quality performance category. The Complex Organization Adjustment for a Virtual Group or APM Entity may not exceed 10% of the total available measure achievement points in the MIPS Quality performance category. The adjustment will be added for each measure submitted at the individual measure level.

For a fact sheet on the CY 2025 Quality Payment Program final rule changes, please visit the QPP Resource Library (cms.gov).

Mitigating the Impact of Significant, Anomalous, and Highly Suspect (SAHS) Billing Activity on Shared Savings Program Financial Calculations in Calendar Year 2024 or Subsequent Calendar Years

We are finalizing our proposals to mitigate the impact of SAHS billing activity on Shared Savings Program financial calculations in CY 2024, or subsequent calendar years that complement our recently finalized policies in the Shared Savings Program SAHS billing activity final rule issued on September 24, 2024. The Shared Savings Program SAHS billing activity final rule addresses SAHS billing activity associated with two intermittent catheter codes in CY 2023. 

We are finalizing, in the CY 2025 PFS final rule, an approach to mitigating the impact of SAHS billing activity in CY 2024, or subsequent calendar years that excludes Medicare Parts A and B payment amounts from expenditure and revenue calculations for the relevant calendar year for which the SAHS billing activity is identified on one or more HCPCS or CPT codes, as well as from historical benchmarks used to reconcile the ACO for a performance year corresponding to the calendar year for which the SAHS billing activity was identified. We will routinely examine billing trends identified by CMS and other relevant information that is raised through complaints by ACOs or other interested parties to the Department of Health and Human Services Office of Inspector General or to CMS. We seek to identify and monitor any codes that would potentially trigger the adjustment policy and make a final determination as to which codes, if any, warrant adjustments for the previous calendar year shortly after the start of the following calendar year. In general, we anticipate that billing activity that meets the high bar to be considered SAHS billing activity will be a rare occurrence. We anticipate considering multiple criteria in determining whether SAHS billing activity warrants removal of the corresponding billing codes from Shared Savings Program financial calculations. These criteria are included when a given HCPCS or CPT code exhibits a level of billing that represents a significant claims increase, either in the volume or dollars (for example, dollar volume significantly above prior year, or claims volume beyond expectations), with national or regional impact (for example, not only impacting one or few ACOs) and represents a deviation from historical utilization trends that is unexpected and is not clearly attributable to reasonably explained changes in policy or the supply or demand for covered items or services. The billing level is significant and represents billing activity that would cause significantly inaccurate and inequitable payments and repayment obligations in the Shared Savings Program if not addressed.

While we anticipate future occurrences of SAHS billing activity of the scope and magnitude observed that meet these standards will be rare, having a permanent policy in place allows CMS to act quickly to adjust financial calculations affected by the activity. The permanent policy will also provide ACOs with greater certainty that they will not be held accountable for SAHS billing activity that is out of their control and strengthen the integrity of the Shared Savings Program through fairer and more accurate payment.

Reopening ACO Payment Determinations

We are finalizing modifications to certain existing policies under the Shared Savings Program to address the impact of improper payments on program calculations. We are finalizing our proposal to establish a calculation methodology, to account for the impact of improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations, upon the reopening of a payment determination. Under the approach we are finalizing, we can account for demanded overpayment determinations that would adjust payment amounts after the three-month claims’ run-out period that applies in calculating performance year or benchmark year expenditures, or aggregate overpayment amounts that do not result in claim or line-item adjustments. We will also be able to account for an improper amount identified in a settlement agreement between a provider or supplier and the government or a court’s judgment, including pursuant to conduct by individuals or entities performing functions or services related to an ACO’s activities.

With this final rule we are also establishing an adjustment to the historical benchmark to account for the impact of improper payments, in the event CMS recalculates a payment determination and issues a revised initial determination for a performance year in a prior agreement period that corresponds to a benchmark year of the ACO’s agreement period.

Further, we are finalizing our proposal to establish a process by which an ACO can request a reopening of an initial determination of shared savings or shared losses. We anticipate providing additional information on the reopening request process for ACOs through guidance, including the form and manner in which CMS must receive a reopening request. ACOs seeking to submit a reopening request prior to the issuance of the guidance material on the reopening request process are encouraged to submit detailed information in writing to CMS by email to SharedSavingsProgram@cms.hhs.gov (as discussed in detail in the final rule). We are also finalizing our proposed revisions to the Shared Savings Program regulations to make clear CMS’ discretion to determine whether to reopen a payment determination.

Other Modifications to Medicare Shared Savings Program Policies

Eligibility Requirements

We are finalizing our proposal to sunset a requirement under which CMS would terminate an ACO’s participation agreement, under certain circumstances, if it failed to maintain at least 5,000 assigned beneficiaries during an agreement period. Under the changes being finalized in this final rule, ACOs must still meet the requirement of 5,000 assigned beneficiaries to begin a new agreement period in the Shared Savings Program, but we will allow ACOs that fall below 5,000 assigned beneficiaries during the agreement period until time of renewal to return to the 5,000-beneficiary threshold. This change will be effective beginning on January 1, 2025.

Beneficiary Assignment Methodology 

CMS assigns Medicare FFS beneficiaries to Shared Savings Program ACOs using claims-based assignment, based on their utilization of “primary care services” as defined in the program’s regulations. We are finalizing revisions to the definition of primary care services used for purposes of beneficiary assignment under the Shared Savings Program to align with payment policy changes under the Medicare PFS. With the exception of the modifications (as noted), we are finalizing our proposed additions to the Shared Savings Program definition of primary care services to include: Safety Planning Interventions; Post-Discharge Telephonic Follow-up Contacts Intervention; Virtual Check-in Service; Advanced Primary Care Management Services; Cardiovascular Risk Assessment and Risk Management Services; Interprofessional Consultation Service (with modification to finalize only one of the six proposed codes, CPT code 99452); Direct Care Caregiver Training Services; and Individual Behavior Management/Modification Caregiver Training Services. We note that the Advanced Primary Care Management services specifically incorporate reduced administrative requirements for billing these services in an ACO context, which we expect to help grow participation in the Shared Savings Program.

Additionally, we are finalizing revisions to the Shared Savings Program regulations to broaden the existing exception to the voluntary alignment policy to apply to beneficiaries who are claims-based, assigned to entities participating in certain disease- or condition-specific CMS Innovation Center ACO models. These changes to the Shared Savings Program’s assignment methodology will be applicable for the performance year starting on January 1, 2025, and in subsequent performance years.

Beneficiary Notification Requirements

We are finalizing our proposed changes to the follow-up requirements for the Beneficiary Notification. Under this final rule, we are removing the requirement that the ACO provide the follow-up communication at the next primary care service and will instead only require ACOs to provide the follow-up communication within 180 days of the original beneficiary notification. Additionally, for ACOs under preliminary prospective assignment with retrospective reconciliation, we are finalizing our proposal to limit the population of beneficiaries who must receive the beneficiary notice to those who are more likely to be assigned to the ACO, when compared to the population of beneficiaries who must receive the written notification under current regulations. These changes will be effective beginning on January 1, 2025.