N.Y. Comp. Codes R. & Regs. tit. 10, § 1003.5 – Medicare-only ACOs sharing losses.

(a) A Medicare-only ACO may not enter into a contract under which its shared losses may exceed 10 percent of the benchmark established under its contract with CMS unless:
1. (1) medical claims of the ACO participants are paid by CMS on a fee-for-service basis directly to the ACO participants and the ACO does not directly or indirectly receive, pay or transfer any claims payments;
2. (2) any shared savings or shared losses under the two-sided model will be tabulated and transferred in a lump sum between CMS and the ACO only at year end;
3. (3) in lieu of a lump sum payment from the ACO to CMS, the ACO has an option to instead reduce future fee for service CMS payments below the standard Medicare fee schedule until the balance due has been extinguished;
4. (4) the ACO has placed funds in an escrow account (under terms and computations specified in the contract with CMS) equal to at least 25 percent of the potential maximum deficit payment due from the ACO to CMS in a particular year.
(b) The application for a certificate of authority of a Medicare-only ACO, whose shared losses may exceed 10 percent of the benchmark established under the contract with CMS, must include the following information:
1. (i) A financial statement in a form prescribed by the commissioner in consultation with the superintendent, sworn to under penalty of perjury by the ACO’s chief financial officer, showing the ACO’s financial condition at the close of its fiscal year, together with an opinion of an independent certified public accountant (CPA) on the financial statement of such health care provider.
2. (ii) When reviewing the financial condition of the ACO, the CPA’s certification shall represent whether the liabilities of the ACO make adequate provision for any additional liability that may inure to the ACO by virtue of its assumption of risk under a financial risk transfer agreement or any similar transaction, including but not limited to information relating to section 1003.4(o) of this Part. The amount and adequacy of any such liability (and a description of the procedures used by the CPA to determine such liability) shall be disclosed and commented upon by the CPA in its certification.
3. (iii) In rendering the required opinion, the CPA may take into consideration the financial position of a guaranteeing parent corporation, provided that the terms and conditions of the guarantee have been reviewed by the CPA and the guaranteeing parent corporation includes the financial condition of the controlled health care provider in its consolidated financial statement as required by this Part. In such cases, the opinion of the CPA on the ACO’s financial statement shall state to what extent, if any, the CPA relied upon the guarantee when rendering its opinion and to what extent the CPA reviewed the financial position of the guaranteeing parent corporation. A copy of the consolidated financial statement of the guaranteeing parent corporation for the same fiscal year together with an opinion of an independent CPA on the financial statement shall be attached to the CPA’s opinion on the ACO’s financial statement. For purposes of this paragraph, a guaranteeing parent corporation means an entity that controls, within the meaning of paragraph (16) of subdivision (a) of section 107 of the Insurance Law, an ACO and guarantees the performance of the ACO’s obligations under the financial risk transfer agreement including the payment of any amounts owed by the ACO to participating providers for services rendered pursuant to a risk transfer agreement; provided that nothing in this paragraph shall be construed as permitting such entity to exercise control over the ACO’s governing board with respect to ACO operations.
4. (iv) Such financial statement and opinion shall be available for public inspection at the offices of the commissioner and the principal office of the ACO.
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5. (i) An actuarial certification that, after examining the ACO’s ability to meet its responsibilities with respect to its use of in-network capitation funds received (from an insurer, the CMS or other government agency in regard to Medicare or Medicaid) and the ACO’s compliance with the terms and conditions of any financial risk transfer agreement and the provisions of this Part that such contracts are not expected to threaten the financial solvency of the ACO.
6. (ii) In rendering the required certification, the actuary may take into consideration the financial position of a guaranteeing parent corporation, provided that the terms and conditions of the guarantee have been reviewed by the actuary and the guaranteeing parent corporation includes the financial condition of the controlled health care provider in its consolidated financial statement as required by this Part. In such cases, the actuary’s certification shall state to what extent, if any, the actuary relied upon the guarantee when rendering its certification and to what extent the actuary reviewed the financial position of the parent corporation.
7. (iii) The actuarial certification shall be available for public inspection at the offices of the commissioner and the principal office of the ACO.
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(c) A Medicare-only ACO whose shared losses may exceed 10 percent of the benchmark established under the contract with CMS, shall submit to the commissioner on an annual basis, within 120 days of the close of its fiscal year:
1. (1) a financial statement meeting the same requirements specified in paragraph (b)(1) of this section; and
2. (2) an actuarial certification meeting the same requirements specified in paragraph (b)(2) of this section.
(d) A Medicare-only ACO, whose shared losses may exceed 10 percent of the benchmark established under the contract with CMS, and its participating providers may not collect or attempt to collect from a patient any amounts owed to such participating provider for covered services, but excluding any amounts owed by the patient to the provider pursuant to the patient’s subscriber contract. Such a “hold harmless” requirement is in addition to the protections afforded to subscribers under any applicable State or Federal statute.
(e) The commissioner may make an examination of the affairs of the ACO as often as the commissioner deems prudent. The focus of the examination will be to ensure that the ACO is not subject to adverse conditions which in the commissioner’s determination have the potential to impact the ACO’s ability to meet its responsibilities with respect to its use of in-network capitation funds received from an insurer, CMS or other government agency in regard to Medicare or Medicaid and the ACO’s compliance with the terms and conditions of any financial risk transfer agreement and the provisions of this Part.