42 CFR 425.304 -- User Incentives. (2023)

(a) In general.

(1)Except as provided in this section or as permitted by law, ACOs, ACO participants, ACO providers/suppliers, and other individuals or entities that perform functions or services related to ACO activities are prohibited from giving gifts or other consideration to recipients as an inducement to receive items or services from or remain on an ACO or with ACO providers/providers in a particular ACO or to receive items or services from ACO participants or ACO providers/providers.

(2)Nothing in this section shall be construed to prohibit an ACO from using shared savings received under this part to cover the cost of an in-kind item or service or incentive payment made to a beneficiary underparagraph (b)or(c)of this section.

(b) Non-monetary incentives.ACOs, ACO participants, ACO providers/providers, and other individuals or entities that perform functions or services related to ACO activities may provide in-kind items or services to Medicare fee-for-service beneficiaries if all of the following conditions are met:

(1)There is a reasonable connection between the products and services and the user's medical care.

(2)The items or services are preventive care items or services, or further a clinical goal for the user, including adherence to a medication regimen, adherence to a medication regimen, adherence to a follow-up care plan, or management of an illness or chronic condition.

(3)The in-kind item or service is not a Medicare-covered item or service for the beneficiary on the date the in-kind item or service is provided to the beneficiary.

(c) monetary incentives

(1) In general.For performance years beginning July 1, 2019 and for subsequent performance years, an ACO who participates in a Track 2, Level C, D or E BASIC or ENHANCED may, in accordance with this section, establish a program of beneficiary incentive for providing cash incentives to Medicare fee-for-service beneficiaries who receive a qualifying service.

(2) Application procedures.

(e)To establish or reinstate a Beneficiary Incentive Program, an ACO must submit a completed application in the form and by the time specified by CMS.

(ii)CMS evaluates the ACO's application to determine whether the ACO meets the requirements of this section and approves or denies the application.

(iii)If an ACO wishes to make a material change to its CMS-approved beneficiary incentive program, the ACO must submit to CMS a description of the relevant change in the form and within the time frame specified by CMS. CMS will promptly evaluate the proposed material change and approve or deny it.

(3) Customer Incentive Program Requirements.An ACO must begin implementing its approved beneficiary incentive program on or after July 1, 2019 or January 1 of the relevant performance year.

(e) Duration.

(A)Subject to termination provision inparagraph (c)(7)of this section, an ACO must implement its approved beneficiary incentive program for an initial period of 18 months in the case of an ACO approved to administer a beneficiary incentive program effective July 1, 2019, or 12 months in the case of an approved ACO implements a user incentive program beginning January 1 of the year of achievement.

(B)For each consecutive year that the ACO intends to implement its beneficiary incentive program after the initial period approved by CMS, it must certify all of the following, within the timeframe specified by CMS:

(1)Its intention is to continue implementing the customer incentive program throughout the relevant performance year.

(2)That the customer incentive program meets all applicable requirements.

(ii) User eligibility.A fee-for-service payee is eligible to receive incentive payments under the payee incentive program if the payee is assigned to an ACO through any of the following:

(A)Preliminary potential assignment, as described in§ 425.400(a)(2).

(B)A potential task, as described in§ 425.400(a)(3).

(iii) Qualified service.For purposes of this section, a qualifying service is a primary health care service (as defined in§ 425.20) to which Part B coinsurance applies, if the service is provided by an ACO through one of the following:

(A)An ACO specialist who has a primary care specialty included in the definition of a primary care physician under§ 425.20.

(B)An ACO professional who is an attending physician, registered nurse, or certified nursing specialist.


(4) Incentive payments.

(A)An ACO establishing a beneficiary incentive program must provide an incentive payment for each qualifying service provided to a beneficiary described inparagraph (c)(3)(ii)of this section in accordance with this section.

(B)Any incentive payment made by an ACO under a beneficiary incentive program must satisfy all of the following conditions:

(1)Incentive payment is in the form of check, debit card or traceable cash equivalent.

(2)The amount of the incentive payment does not exceed $20, adjusted annually for the percentage increase in the Consumer Price Index for all urban consumers (US city average) for the 12-month period ended June of the previous year, rounded to the closest total value in dollars.

(3)The ACO pays the incentive payment to the beneficiary no later than 30 days after the qualifying service is provided.

(C)An ACO must provide incentive payments in the same amount to each eligible Medicare fee-for-service beneficiary, regardless of whether that beneficiary is enrolled in a Supplemental Medicare Plan (described in section 1882(g)(1) of the Act), on a Medicaid State plan under Title XIX, or a waiver of such plan, or under any other health insurance policy or health benefit plan.

(4) Program integrity requirements

(e) Record keeping.An ACO that establishes a beneficiary incentive program must maintain records related to the beneficiary incentive program that include the following:

(A)Identification of each beneficiary who received an incentive payment, including beneficiary name and HICN or Medicare beneficiary identifier.

(B)The type and amount of each incentive payment to each beneficiary.

(C)The date on which each beneficiary received the qualifying service, the HCPCS code corresponding to the qualifying service, and the identification of the ACO provider/supplier that provided the qualifying service.

(D)The date the ACO awarded each incentive payment to each beneficiary.

(ii) Funding source.

(A)An ACO may not use the funds of any entity or organization outside the ACO to establish or operate a grantee incentive program.

(B)An ACO may not directly, through insurance or otherwise, charge or otherwise transfer the costs of establishing or operating a beneficiary incentive program to a federal health care program.

(iii) Notify the user.The ACO or its ACO participants must notify designated grantees of the availability of grantee incentive programs in accordance with their§ 425.312(b).

(4) Marketing ban.Except for user notices required by this section, the User Incentive Program is not subject to marketing materials and activities, including, but not limited to, advertising or solicitation of the user or any potential patient whose care is paid for in full or partly by a federal health program (as defined in42 U.S.C. 1320a-7b(f)).

(5) Impact on program calculations.CMS disregards incentive payments made by ACOs underparagraph (c)this section in calculating ACO benchmarks, estimated average Medicare costs per capita, and shared savings and losses.

(6) Income exemption.Incentive payments made under a beneficiary's incentive program are not considered income or resources or otherwise counted for purposes of any of the following:

(e)Determine eligibility for benefits or assistance (or the amount or extent of benefits or assistance) under any federal program or under any state or local program funded in whole or in part by federal funds.

(ii)Any federal or state laws relating to taxation.

(7) Termination.CMS may require an ACO to terminate its Beneficiary Incentive Program at any time due to any of the following:

(e)Failure to comply with the requirements of this section.

(ii)Any of the grounds for termination of the ACO set out in the§ 425.218(b).


What are the incentives for Medicare ACO? ›

An ACO may provide the beneficiary with an incentive payment in an amount up to $20 per qualifying service.

What is the beneficiary incentive program? ›

Beneficiary Incentive Program Guidance

Participating ACOs approved to establish and operate a Beneficiary Incentive Program (BIP) may provide an incentive payment with a value of up to $20 to each assigned beneficiary for each qualifying primary care service received.

What are Medicare incentive payments for? ›

The Merit-Based Incentive Payment System (MIPS) is the program that will determine Medicare payment adjustments. Using a composite performance score, eligible clinicians (ECs) may receive a payment bonus, a payment penalty or no payment adjustment.

What are the incentives to Medicare participating providers? ›

Medicare provides a number of incentives for physicians to participate:
  • The Medicare payment amount for PAR physicians is 5% higher than the rate for non-PAR physicians.
  • Directories of PAR physicians are provided to senior citizen groups and individuals who request them.

How do incentive programs work? ›

An incentive program signals to employees they recognize and value the work they are doing while also encouraging employees to continue driving the results that the company is looking for. For example, an advertising agency might reward their sales department for meeting a certain quota at the end of a quarter.

Who are the beneficiaries of the program? ›

The project beneficiaries also called the target group or the target beneficiaries of your project, are those who will benefit from your project. They are the people whose circumstances you want to change by implementing your idea. They can be affected directly or indirectly by the project.

What is the difference between a benefits dependent and beneficiary? ›

A dependent is a person who is eligible to be covered by you under these plans. A beneficiary can be a person or a legal entity that is designated by you to receive a benefit, such as life insurance.

How much is the meaningful use incentive? ›

Eligible professionals can receive up to $63,750 during the 6 years that they choose to participate in the program if they adopt, implement, upgrade, or demonstrate Meaningful Use in their first year of participation.

What are the four parts of Medicare and what each helps pay for? ›

Part A provides inpatient/hospital coverage. Part B provides outpatient/medical coverage. Part C offers an alternate way to receive your Medicare benefits (see below for more information). Part D provides prescription drug coverage.

Who is eligible for Medicare premium reimbursement? ›

Only the retired member or Qualified Survivor enrolled in Parts A and B is eligible for Medicare Part B premium reimbursement.

What are the three types of incentives for providers? ›

Healthcare systems most often use three types of incentives: licensure requirements, social incentives, and financial incentives.

What are the three items that Medicare beneficiaries are responsible for paying? ›

What are the parts of Medicare?
  • Medicare Part A (Hospital Insurance) Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
  • Medicare Part B (Medical Insurance) ...
  • Medicare Part D (prescription drug coverage)

What are examples of financial incentives in healthcare? ›

Financial incentives such as payments and vouchers are often used to encourage patients to undergo preventive care such as screenings, vaccinations, and other brief interventions.

What are some examples of incentive programs? ›

16 Examples of effective employee incentive programs
  • Awards/rewards-based incentive programs. ...
  • Remote/hybrid workplace-friendly programs. ...
  • Referral bonuses. ...
  • Profit sharing. ...
  • Travel incentives. ...
  • Fringe benefits. ...
  • Suggestion incentive. ...
  • Tuition assistance.
Feb 23, 2023

Who is best to list as a beneficiary? ›

Anyone who will suffer financially by your loss is likely your first choice for a beneficiary. You can usually split the benefit among multiple beneficiaries as long as the total percentage of the proceeds equal 100 percent.

Who is the major beneficiary? ›

A primary beneficiary is an individual or organization who is first in line to receive benefits in a will, trust, retirement account, life insurance policy, or annuity upon the account or trust holder's death.

What are the four beneficiaries? ›

Generally, there are four classes of beneficiaries to consider: you and your spouse, friends and family, charity, and the government. Listing the beneficiaries of your wealth is the important first step in your estate plan.

Who are the beneficiaries to your benefits? ›

What is a Beneficiary? A beneficiary is the person or entity named in a life insurance policy, retirement plan or health savings account. This is the person that receives the benefit upon death. The beneficiary designation on file at the time of death is binding in the payment of your benefits.

Should spouse or child be beneficiary? ›

If you're married with kids, naming a spouse as a primary beneficiary is the go-to for most people. This way, your partner can use the proceeds of the policy to help provide for your kids, pay the mortgage, and ease the economic hardship that your death may bring.

Is a spouse or child a beneficiary on life insurance? ›

You can, but it's not recommended because a minor can't legally receive a life insurance payout. Should your beneficiary be your spouse or your child? You should designate a legal adult as your beneficiary. Most people name their spouse, partner, or a trust to ensure that the funds are used appropriately.

What are the benefits of a healthcare organization becoming an ACO? ›

Joining an Accountable Care Organization (ACO) provides many benefits for patients and physicians, as a growing number of people have noticed.
  • The Advantages of Joining an ACO. ...
  • Better Care for Patients. ...
  • Movement towards Value-Based Care. ...
  • Increased Healthcare Accessibility. ...
  • Better Care Quality. ...
  • Improved Care Coordination.
Jun 8, 2022

What is the downside of ACO? ›

ACO costs can be prohibitive

You'll also need to have a health information exchange (HIE) system in place so that you can safely share patient information with other providers. Practices must also invest in care and disease management programs, which are particularly important for patients with chronic diseases.

Are Medicare ACOs a downside risk? ›

In 2020, 37 percent of MSSP ACOs are subject to downside risk and will face potential penalties if their spending exceeds their benchmark. Prior to the new IFC, the proportion of ACOs with downside risk would rise to 64 percent in 2021.

How does an ACO make money? ›

First, ACO providers are reimbursed through fee- for-service payments like most Medicare providers. ACOs are also compensated by sharing in the savings they create by improving care. If ACOs can lower spending while maintaining quality, the ACO is paid a portion of that savings.

What is the difference between ACO and Medicare Advantage? ›

An ACO isn't a Medicare Advantage Plan, a health maintenance organization (HMO) plan or an insurance plan of any kind. It is an agreement between Mayo Clinic Community ACO and Medicare to be financially accountable for the quality, cost and experience of care you receive.

Do patients know they are in an ACO? ›

Patient Experience with ACOs

Patients generally do not realize that their care is being managed by a Medicare ACO.

How do I make my ACO successful? ›

There are three keys to making an ACO successful:
  1. Prevention. With metrics based on quality and patient outcomes, working with patients to help them stay well is the crux of everything ACOs do. ...
  2. At-risk patient identification. High-risk patients are the most costly to treat. ...
  3. Care transitions.

What challenges can lead to an ACOs failure? ›

Robert Pearl, M.D., described the four major challenges facing ACOs: (1) Perverse Payment Model; (2) Wrong-Sized Medical Staff; (3) Technology Platform Incompatibility; and (4) Lack of Physician Leadership and Management Structure. Dr.

What is the biggest barrier for the ACO model? ›

Last year, the Premier, Inc. and eHealth Initiative survey found similar results; although most ACOs have the health IT in place to improve clinical quality, poor interoperability across systems and providers remains their biggest barrier, according to the 2014 ACO survey.

What is the primary goal of ACO? ›

Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care professionals that work together with the aim of giving you better care. They do this by coordinating their efforts and sharing information with one another, rather than working separately.

How serious is ACOs? ›

People with a diagnosis of ACOS tend to have more symptoms than people with either asthma or COPD alone and have more severe attacks, leading to more emergency room visits and hospitalizations. It is important to find out if you have ACOS because it can be more serious than having either asthma or COPD alone.

Are ACOs good for patients? ›

ACOs are designed to put patients at the center of their care and help them navigate a complex health system. Patients whose health care provider participates in an ACO may get: extra help managing chronic diseases. coordination between different doctors or members of their care team.

Do ACOs actually work? ›

ACOs Can Promote Equity

Setting payments for underserved groups above current FFS spending levels also strengthens incentives for providers to attract those groups with enhanced care or additional services. In fact, evidence from the commercial sector demonstrates that ACOs can reduce disparities.

Is ACO an effective method to save money for Medicare? ›

"To date, ACOs have generated modest savings, with most evaluations estimating 1 percent to 2 percent reductions in spending from existing ACO models," – Medicare Payment Advisory Commission, June 2020 Report.

What percentage of Medicare is ACO? ›

Today, ACOs care for nearly 20 percent of all Medicare patients and nearly a third of traditional Medicare patients.

What are the three types of Medicare accountable care organizations? ›

Medicare offers several ACO programs, including:
  • Medicare Shared Savings Program (cms.gov) - For fee-for-service beneficiaries.
  • ACO Investment Model - For Medicare Shared Savings Program ACOs to test pre-paid savings in rural and underserved areas.
Apr 13, 2023


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