ACO Shared Savings Summary

September 10, 2018

Centers for Medicare & Medicaid Services (CMS)
42 CFR Parts 414 and 425
Proposed Rule: Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations—Pathways to Success
Released August 9, 2018; Published in the Federal Register August 17, 2018

 Comments Due: October 16, 2018

On Thursday, August 9, 2018 the Centers for Medicare & Medicaid Services (“CMS”) released a proposed rule focused on revamping the Medicare Shared Savings Program (“MSSP”) Accountable Care Organization (“ACO”) Program, which CMS is renaming “Pathways to Success.” CMS Administrator Seema Verma also published an article on the Health Affairs Blog announcing details of the proposal.

Background

 As a result of the Affordable Care Act there have been several ACO initiatives since 2012:

  • Pioneer ACO Model;
  • MSSP Track 1, 2, and 3;
  • Track 1+ Model;
  • Next Generation ACO Model; and
  • Comprehensive End-Stage Renal Disease Care Model.

CMS has found that two-sided model ACOs have performed better over time than one-sided model ACOs. CMS stated that ACOs in Track 1 that have been generating losses while having access to certain fraud and abuse waivers as a result of their participation “may be encouraging consolidation in the market place, reducing competition and choice for Medicare FFS beneficiaries”. In January, CMS announced that 561 ACOs were participating in MSSP, covering 10.5 million Medicare fee-for-service beneficiaries. 58 percent of ACOs were physicians, hospitals and other facilities, 30 percent were physician only, and 12 percent were federally qualified health centers or rural health clinics.  Presently, 82 percent (460 of 561) of MSSP ACOs participate as upside-only Track 1 ACOs.

Proposed Rule

Tracks: BASIC vs. ENHANCED

Under the proposed rule, the four tracks would be replaced with two “glide paths” – BASIC and ENHANCED (see Appendix A). The BASIC glide path would replace Tracks 1, 1+ and 2, and would limit the amount of time ACOs could participate in a one-sided risk model. Those ACOs already participating in Track 1 could only avoid downside risk through 2020. ACOs not already participating in the MSSP would not have downside risk through 2021. ACOs participating in the one-sided risk model would have their savings share capped at 25%, down from 50% under the current structure.

As ACOs on the BASIC glide path assume downside risk, their savings sharing would increase, peaking at 50% in the fifth and final year of the term (down from 60% under the current Track 2). At Level E, the highest of the five levels of risk on the BASIC glide path, ACOs would qualify as an Advanced Alternative Payment Model under the Quality Payment Program.

The ENHANCED glide path mirrors the current Track 3 where ACOs are able to share in up to 75% of any savings from cost efficiencies, but share between 40% and 75% of any downside risk.

Agreement Period and Accountability

The proposed rule would change all agreement terms following the renewal periods to five years. Under the current MSSP, agreements are for three years.

CMS proposes to avoid interruption in participation for ACOs currently under agreements ending December 31, 2018 by offering those ACOs an opportunity to extend their current agreement periods for an additional six months (to June 30, 2019) and allow those ACOs to apply for a new agreement under the new tracks beginning July 1, 2019.

ACOs currently participating in Tracks 1, 1+, or 2 may choose to either finish their current agreements or to terminate and apply for immediate participation in either of the new tracks;

Agreements entered into by July 1, 2019 would be agreements for five years and six months. Agreements entered into after July 1, 2019 would be for five years. CMS believes that these changes would provide ACOs with time to evaluate the impact of the proposed rule if finalized and determine the nature of their future participation in the MSSP, if any.

Under the proposed rule, CMS would implement partial year downside only reconciliation, which would hold ACOs participating in a two-sided risk arrangement accountable for partial year losses if the ACO terminates its agreement more than mid-way through a performance year;

CMS would also gain authority to terminate ACOs with a record of poor financial performance. 

“Low Revenue” vs. “High Revenue” ACOs

The proposed rule distinguishes between “low revenue” ACOs, which could participate on the BASIC glide path for two five-year terms, and “high revenue” ACOs, which would be limited to one five-year BASIC term.

The proposed rule defines a low revenue ACO as “an ACO whose total Medicare Parts A and B fee-for-service revenue of its ACO participants based on revenue for the most recent calendar year for which 12 months of data are available, is less than 25 percent of the total Medicare Parts A and B fee-for-service expenditures for the ACO’s assigned beneficiaries based on expenditures for the most recent calendar year for which 12 months of data are available,” and they are often small physician practices, rural providers, and providers serving underserved populations.

High revenue ACOs are those entities whose participants’ total Medicare Parts A and B FFS revenue for assigned beneficiaries is greater than 25 percent, often hospitals.

Other Significant Changes

  • Payment Rule Waivers: The proposed rule would expand payment rule waivers to allow ACO physicians and practitioners more options for coordinating the care of attributed beneficiaries. It would permit eligible physicians and practitioners in ACOs in a performance-based risk track to receive payments for telehealth beneficiaries, even where geographic limitations have not been met. It would also allow ACOs with performance-based risk under either type of beneficiary assignment (prospective or preliminary prospective with retrospective reconciliation) to use existing skilled nursing facility (SNF) 3-day rule waiver.
  • Beneficiary Notice: The proposed rule also proposes to implement a new requirement that ACOs provide a written notice to beneficiaries at their first primary care visit in a performance year that she/he is in an ACO and what that means for her/his care.
  • Incentive Programs: The rule would also permit ACOs in certain two-sided risk arrangements to create benefit incentive programs for beneficiaries attributed to the ACO. The incentive payment could be up to $20 for each qualifying primary care service received by the beneficiary.
  • Certified Electronic Health Record Technology (CEHRT): The proposed rule also removes the ACO-11 quality measure for Certified Electronic Health Record Technology (CEHRT), and instead, require ACOs to attest that a certain threshold of an ACO’s eligible clinicians use CEHRT.

Impact on ACOs

CMS estimates the proposed rule will result in $2.24 billion in federal savings over the next ten years. CMS acknowledged that the proposed increased risk requirements would impact MSSP participation, estimating a decrease of 109 participating ACOs in ten years.

CMS noted that a survey conducted by the National Association of ACOs (“NAACOS”) suggests that the impact could be more severe. The NAACOS survey found 70% of ACOs were likely to leave the MSSP due to requirements to assume downside risk. CMS dismissed concerns about ACOs in one-sided risk models exiting the program because those ACOs have led to program losses overall.

The proposed rule’s changes could have a significant impact on both MSSP-participating ACOs and the businesses that rely on these entities. Under the proposed rule, ACOs could face smaller rewards while being exposed to downside risk sooner than they originally planned. Commercial and Medicaid ACO arrangements could implement similar changes that could cause decreased participation in those arrangements as well.

 

APPENDIX A: COMPARISON OF BASIC TRACK AND ENHANCED TRACK CHARACTERISTICS

BASIC Track’s Glide Path:

 Level A & Level B (one-sided model)Level C (risk/reward)Level D (risk/reward)Level E
(risk/reward)
ENHANCED Track (Current Track 3)
Shared Savings (once MSR met or exceeded)1st dollar savings at a rate up to 25% based on quality performance; not to exceed 10% of updated benchmark1st dollar savings at a rate of up to 30% based on quality performance, not to exceed 10% of updated benchmark1st dollar savings at a rate of up to 40% based on quality performance, not to exceed 10% of updated benchmark1st dollar savings at a rate of up to 50% based on quality performance, not to exceed 10% of updated benchmarkNo change. 1st dollar savings at a rate of up to 75% based on quality performance, not to exceed 20% of updated benchmark
Shared Losses (once MLR met or exceeded) N/A1st dollar losses at a rate of 30%, not to exceed 2% of ACO participant revenue capped at 1% of updated benchmark1st dollar losses at a rate of 30%, not to exceed 4% of ACO participant revenue capped at 2% of updated benchmark1st dollar losses at a rate of 30%, not to exceed the percentage of revenue specified in the revenue-based nominal amount standard under the Quality Payment Program (for example, 8% of ACO participant revenue in 2019 – 2020), capped at a percentage of updated benchmark that is 1 percentage point higher than the expenditure-based nominal amount standard (for example, 4% of updated benchmarkNo change. 1st dollar losses at a rate of 1 minus final sharing rate, with minimum shared loss rate of 40% and maximum of 75%, not to exceed 15% of updated benchmark
Annual choice of beneficiary assignment methodology? YesYesYesYesYes
Annual election to enter higher risk?YesYesNo; ACO will automatically transition to Level E at the start of the next performance year, except for July 1, 2019 starters that elect to enter at Level DNo; maximum level of risk / reward under the BASIC trackNo; highest level of risk under Shared Savings Program
Advanced APM status under the Quality Payment Program? NoNoNoYesYes
Beneficiary Incentive ProgramN/AYes, ACOs may  establish an approved program starting July 1, 2019, or in subsequent yearsYes, ACOs may establish an approved program starting July 1, 2019, or in subsequent yearsYes, ACOs may establish an approved program starting July 1, 2019, or in subsequent yearsYes, ACOs may establish an approved program starting July 1, 2019, or in subsequent years
Expanded Telehealth Services NoYes, available to ACOs electing prospective assignment methodology for performance year 2020, and subsequent yearsYes, available to ACOs electing prospective assignment methodology for performance year 2020, and subsequent yearsYes, available to ACOs electing prospective assignment methodology for performance year 2020, and subsequent yearsYes, available to ACOs electing prospective assignment methodology for performance year 2020, and subsequent years
3-Day SNF Rule WaiverN/AYes, ACOs may apply to start on July 1, 2019, and in subsequent yearsYes, ACOs may apply to start on July 1, 2019, and in subsequent yearsYes, ACOs may apply to start on July 1, 2019, and in subsequent yearsYes, ACOs may apply to start on July 1, 2019, and in subsequent years

 

Contributed by Greenberg Traurig, LLP

 

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