Accountable Care Organization Surety Bond

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The redesign of the Medicare Shared Savings Program (MSSP) in 2018—known as “Pathways to Success”—brought significant changes to Accountable Care Organizations (ACOs). Notably, it introduced the repayment mechanism requirement known as “assurance of ability to repay”:

“An ACO must have the ability to repay all shared losses for which it may be liable under a two-sided model” [42 CFR 425.204(f)]. 

Before this implementation, ACO participants were able to share in the savings it helped achieve for the Medicare Program. However, they didn’t take on any financial risk for shared losses.

What is an ACO Surety Bond?

An ACO Surety Bond is one of the easiest ways to fulfill the repayment mechanism requirement for the MSSP. This financial agreement involves three parties: 

  • Principal – The ACO that needs to get bonded.
  • Obligee – The one asking for the bond (Centers for Medicare and Medicaid Services)
  • Surety – The surety company issuing and financially backing the bond.

In this agreement, the Surety becomes contractually liable for the ACO’s shared losses. While the Surety will initially pay for these losses, the ACO is then responsible for repaying the company.

How Much Does an ACO Bond Cost?

An ACO Bond costs a small percentage (generally 1% - 10%) of the required bond amount (repayment mechanism amount). For example, if you need a $500,000 bond, you will pay a $5,000 - $50,000 premium.

What Is the Amount Needed for ACO’s Repayment Mechanism?

Centers for Medicare and Medicaid Services (CMS) calculates the amount of the required repayment mechanism as follows:

Track 2 ACO: Dollar amount must be equal to at least 1 percent of the total per capita Medicare Parts A and B fee-for-service expenditures for the ACO's assigned beneficiaries, based on expenditures used to calculate the benchmark for the applicable agreement period, as estimated by CMS at the time of application.

BASIC Track or ENHANCED Track ACO:  the repayment mechanism amount must be equal to the lesser of the following:

  1. One-half percent of the total per capita Medicare Parts A and B fee-for-service expenditures for the ACO's assigned beneficiaries, based on expenditures and the number of assigned beneficiaries for the most recent full calendar year,
  2. One percent of the total Medicare Parts A and B FFS revenue of its ACO participants, based on revenue for the most recent calendar year for which 12 months of data are available, and based on the ACO's number of assigned beneficiaries for the most recent full calendar year.

How Do I Get an ACO Bond?

You can get an ACO Bond in a few easy steps by applying online or over the phone.

Note that all ACO bonds must be issued by an insurance or surety company included on the U.S. Department of Treasury's List of Certified Companies.

1. Complete a Bond Application

Fill out an online bond application. You will need basic information such as:

  • Bond Name (Accountable Care Organization Bond)
  • Obligee Name (Centers for Medicare and Medicaid Services)
  • Bond Amount (Varies)
  • Contact Information

If you prefer to apply by phone (888-592-6631), you will still need the same information mentioned above.

2. Get a Free Quote

We will send you a free bond quote. To start the bonding process, you must fill out the paperwork emailed to you and pay the attached invoice.

3. Receive the Bond

A copy of the bond will be emailed to you. The original will be sent by mail and must then be forwarded to your obligee. 

Need another type of healthcare bond? JW Surety Bonds offers many different types of bonds, including the Health Care Clinic Surety Bond.

ACO Surety Bond Requirements

According to the MSSP Repayment Mechanism Arranged Guidance, ACO surety bonds must meet the following criteria:

  • Liable Party: The ACO must be the liable party for the repayment mechanism. Therefore, the ACO Legal Entity Name (LEN) detailed in the ACO Management System (ACO-MS) must be listed.
  • Obligee: Must be listed as follows

    The Centers for Medicare & Medicaid Services
    7500 Security Boulevard
    Mail Stop C5-15-12 
    Baltimore, MD 21244

  • Inception Date: The inception date, generally included within the escrow agreement and surety bond documentation, must reflect the date the ACO enters into a Participation Agreement with CMS.
    • The inception date (also known as the Participation Agreement start date) can be viewed by navigating to the ACO’s Performance Year tab in ACO-MS.
  • Demand Letter: Repayment mechanism documentation should allow for payment to CMS in response to a written notice from CMS, sometimes referred to as a demand letter.

See the latest guidelines and requirements at

What Are Repayment Mechanisms for ACOs?

ACO’s are required to have a repayment mechanism in place to prove that they have the ability to repay all shared losses. Acceptable repayment mechanisms are: 

  • Escrow Account with an insured institution.
  • Line of Credit at an insured institution. This must be evidenced by a letter of credit.  
  • Surety Bond from an insurance or surety company. The company must be included on the U.S. Department of Treasury's List of Certified Companies.

One or more of the options may be chosen to create an adequate repayment mechanism. 

Important Definitions

What is an Accountable Care Organization (ACO)?

An Accountable Care Organization is a group of health care providers (ex. doctors) and health care organizations (ex. hospitals) that collaborate to give care to Medicare patients. An ACO elects to be responsible for the cost of patient care and later gets reimbursed through the Medicare fee-for-service (FFS) model.

The ACO model makes tracking treatments and testing easier for primary care providers. This helps eliminate accidental duplication of health care services, prevent medical errors, and overall, prioritize health care quality over cost. 

What is the Medicare Shared Savings Program (MSSP)?

The Medicare Shared Savings Program is an incentive for ACOs to deliver high quality care and spend health care dollars more wisely. When they succeed in doing so, they may be eligible for a share in the savings it achieves for the Medicare program (known as performance payments). 

This Affordable Care Act program has proven to be highly effective—saving Medicare 1.8 billion in 2023 alone

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