Medicare ACO and Shared Savings Program: A Practice Guide

A Medicare ACO (accountable care organization) is, under 42 CFR 425.20, a legal entity identified by a Taxpayer Identification Number (TIN) and formed by one or more ACO participants, each identified by a Medicare-enrolled billing TIN.

The ACO program set up by law is the Medicare Shared Savings Program (section 1899 of the Social Security Act, 42 CFR part 425), which this guide covers as of October 2026. CMS Innovation Center ACO models, such as ACO REACH, run under their own agreements and payment rules.

What is a Medicare ACO?

An ACO is not a health plan. Patients stay in Original Medicare, can receive care outside the ACO and may decline claims data sharing.

Its physicians, physician assistants, nurse practitioners and clinical nurse specialists bill Medicare through participant TINs.

Under 42 CFR 425.102, an ACO can be formed by:

• Group practices or networks of individual practices
• Hospital and professional joint ventures, or hospitals employing ACO professionals
• Rural health clinics or federally qualified health centers
• Certain critical access hospitals and teaching hospitals

Other participants join through an ACO formed by one of these groups.

The ACO needs at least 5,000 assigned beneficiaries and enough primary care ACO professionals to serve them (42 CFR 425.110), so a practice too small to reach that count alone takes part with other participants, in an ACO it joins or one they form together.

How the Medicare Shared Savings Program works through a performance year

The Shared Savings Program is voluntary; performance years start January 1.

Track	Risk structure
BASIC	Phases from sharing savings only toward sharing both savings and losses
ENHANCED	Shares both savings and losses throughout the agreement period

Before the year: two agreements

• Practice agreement: sign the ACO’s participant agreement for at least one performance year. It covers program rules, quality reporting, patient notices and remedial action, including termination (42 CFR 425.116).
• CMS approval: the ACO requests addition of the practice’s TIN; approval takes effect the next January 1 (42 CFR 425.118).
• ACO agreement: the ACO separately signs its agreement with CMS (42 CFR 425.200).

During the year: patients are assigned and told

CMS assigns Original Medicare patients from the primary care they receive from the ACO’s professionals, or from the clinician they name as responsible for their overall care (42 CFR 425.20, 425.400, 425.402(e)). Assignment does not restrict where a patient gets care.

• Public notice: post participation signs and provide written notices on request, including how to decline claims data sharing or name a clinician.
• Individual notice: once per agreement period, give the standardized notice at or before the first primary care visit; under prospective assignment, notify each assigned patient during that year.
• Follow-up: send a follow-up communication within 180 days of the notice (42 CFR 425.312).

After the year: CMS settles with the ACO

CMS compares the Parts A and B spending of the ACO’s assigned patients with its benchmark. Below it, the ACO can be eligible for shared savings if it meets its minimum savings rate and the quality performance standard; above it, an ACO in a two-sided model can owe shared losses (42 CFR 425.20, 425.100). The money moves between CMS and the ACO, not through the practice’s claims.

As of 2026, the CY2027 Physician Fee Schedule proposed rule (July 2026) proposes Shared Savings Program changes; none applies unless CMS finalizes it.

What changes for a practice inside a Medicare ACO

Joining a Shared Savings Program ACO leaves fee-for-service Medicare’s payment, coverage and program integrity rules in place, except under a section 1899(f) waiver (42 CFR 425.10). The billing practitioner reports chronic care management (99490, 99439) and principal care management (99426, 99427) per calendar month, the same way inside an ACO as outside one.

Three part 425 rules apply to the practice:

• Exclusivity. A participant whose claims are used for assignment belongs to one Shared Savings Program ACO. Billing those services while in two drops its services from assignment that year and exposes the ACO to corrective action or termination (42 CFR 425.306).
• Assignment codes. The chronic care management, principal care management, principal illness navigation and community health integration codes are on CMS’s list of primary care services used for assignment (42 CFR 425.400(c), list from performance year 2026). Billed by the ACO’s primary care clinicians, they count toward assignment and bring the TIN under the exclusivity rule.
• Clinician changes. The participant tells the ACO within 30 days when clinicians join or leave its TIN (42 CFR 425.116).

The guide to what care management is covers those four CMS services; gaps in care shows the between-visit work inside the CCM scope.

Medicare ACO vs chronic care management: how they differ

A practice can take part in both at once. They work at different levels:

Question	Shared Savings Program ACO	Chronic care management (99490, 99439)
What it is	A payment model for an organization of participants	A Part B service billed for one patient
Which patients	Original Medicare patients assigned from primary care use	Two or more chronic conditions expected to last 12 months or until death, with significant risk
If the patient says no	Can name a clinician outside the ACO; can decline claims data sharing	Can stop at any time, effective at the end of the calendar month
One at a time	A participant TIN billing assignment services belongs to one Shared Savings Program ACO	Only one practitioner can bill CCM for the patient in a calendar month
What is measured	Spending against a benchmark, plus a quality standard	At least 20 minutes of clinical staff time

Medicare Shared Savings Program rules that are easy to misread

Where Companian fits for practices in a Medicare ACO

Your team refers; we handle enrollment, outreach and documentation. You bill monthly under your license.

See care management services for ACOs. ACO assignment, program participation and shared-savings settlement are separate from the practice’s monthly CCM claim.

Key takeaways

• A Medicare ACO is a legal entity with its own TIN, formed by Medicare-enrolled participants.
• CMS assigns Original Medicare patients from their primary care or the clinician they name; nobody enrolls.
• Shared Savings Program participants keep billing fee-for-service, CCM and PCM included.
• CMS settles shared savings or losses with the ACO after each performance year.
• A TIN whose claims count for assignment belongs to one Shared Savings Program ACO only.

Questions about the Shared Savings Program

What is an ACO in healthcare?

ACO stands for accountable care organization: providers organized as one legal entity accountable for the care of a defined patient population. In Medicare, the ACO program set up by law is the Shared Savings Program; CMS Innovation Center ACO models run separately.

Is the Medicare Shared Savings Program a health plan?

No. It is a CMS program for ACOs, not insurance, and patients stay in Original Medicare. CMS assigns them from the primary care they receive or the clinician they name.

Can a patient opt out of a Medicare ACO?

Not by disenrolling: assignment is a CMS calculation and never limits where the patient gets care. A patient who names a clinician outside the ACO as responsible for their overall care is not assigned to it from claims, and any patient can tell CMS to stop sharing their claims data with the ACO.

Do Medicare Advantage patients count toward an ACO?

Not in the Shared Savings Program. Its assigned beneficiaries are enrolled in Part A and Part B and not in a Medicare Advantage plan, a section 1876 plan or PACE.

Does joining a Shared Savings Program ACO change how chronic care management is billed?

No. The practice bills 99490 and 99439 each calendar month under the same time and consent rules. When the ACO’s primary care clinicians bill them, CMS also counts them toward assignment.

How many patients does a Medicare ACO need?

At least 5,000 assigned beneficiaries, with enough primary care ACO professionals for that population. CMS checks the count across the benchmark years when the ACO applies.

In the Medicare Shared Savings Program, the ACO is accountable for its assigned population; participating practices continue billing Medicare services. CCM and PCM remain monthly Physician Fee Schedule services, with their own eligibility, consent and time requirements. Companian works with physician practices on CCM and PCM: your team refers; Companian handles enrollment, outreach and documentation; your practice bills monthly under its own license.

Sources

1. eCFR: 42 CFR 425.20
2. eCFR: 42 CFR 425.10
3. eCFR: 42 CFR 425.100
4. eCFR: 42 CFR 425.102
5. eCFR: 42 CFR 425.110
6. eCFR: 42 CFR 425.116
7. eCFR: 42 CFR 425.118
8. eCFR: 42 CFR 425.200
9. eCFR: 42 CFR 425.306
10. eCFR: 42 CFR 425.312
11. eCFR: 42 CFR 425.400
12. eCFR: 42 CFR 425.402
13. eCFR: 42 CFR 425.708
14. eCFR: 42 CFR 425.600
15. CMS: Shared Savings Program
16. CMS Innovation Center: ACO REACH Model
17. Federal Register: CY 2027 PFS proposed rule
18. Federal Register: CY 2022 PFS final rule
19. CMS: Chronic Care Management Services (MLN909188)
20. CMS: Chronic Care Management FAQs

Read more: What is care management? · What is chronic care management? · CPT 99490 and 99439 explained