United States: CMS Releases New Proposal To Improve Accountable Care Organizations

Last Updated: December 23 2014
Article by Robert M. Wolin

The Centers for Medicare and Medicaid Services (CMS) recently released a proposed rule aimed at revitalizing accountable care organizations (ACOs) under the Medicare Shared Savings Program (MSSP). Given the low level of ACOs receiving shared savings payments in their first year, CMS is making several proposals to adjust participants' risk levels to encourage continued participation. As a result, the proposed rule will impact the 330 ACOs currently participating in the MSSP, as well as any new ACOs. Whether the impact will be sufficient to encourage more ACO participation remains to be seen.

Increased ACO Ramp-up Period

Current regulations require that ACOs participating in Track 1 (sharing savings, but not losses) may continue in the program after their initial three-year agreement period only if they enter a Track 2 performance risk-based agreement (sharing savings and losses). The proposed rule would permit some ACOs to continue in Track 1 for one additional three-year period but at a lower sharing rate than under the initial agreement period (a 40-60 sharing ratio instead of the current 50-50). The lower rate is intended to encourage ACOs to progress along the performance risk continuum. The additional one-sided risk period will be available to ACOs that have met CMS's quality performance standard in at least one of the first two years, and have not generated losses exceeding the negative minimum savings rate in both of their first two years under the initial Track 1 agreement period.

Establishment of a Third Track

A third track, offering a higher share of savings to ACOs (up to 75 percent as compared to Track 1 and 2 which allow savings to be shared up to 50 and 60 percent, respectively) is now being proposed. Minimum savings and loss hurdles would remain at 2 percent as under the current Track 2 model. The performance payment limit would be 20 percent. Under this model, beneficiaries would be prospectively assigned to the ACO. The shared loss rate will range from 40 to 75 percent, as compared to 60 percent or less under the current Track 2 model. The loss sharing limit would be set at 15 percent under Track 3, as compared to 5 percent in year one to 10 percent in year three under the Track 2 model.

Two-sided Risk Model – Enhanced Savings and Loss Rates

The minimum savings and loss hurdles under Track 2 would change from the current flat 2 percent hurdle (the amount by which the ACO's average per capita Medicare expenditures for the performance year must be above or below the applicable benchmark in order to share in savings or losses) to a variable amount from 2 percent to 3.9 percent, in an effort to make the risk assumption more attractive.

CMS is also seeking comments to help it understand what other incentives would be necessary to encourage ACOs to assume greater financial risk.

Savings Participation Financial Benchmarks

CMS is requesting input on a number of alternative methodologies for establishing, updating and resetting ACO financial benchmarks for determining shared savings, including: (1) using regional beneficiary fee-for-service (FFS) expenditures as a benchmark against which savings are determined in lieu of the current national FFS expenditures, and (2) "transitioning to using regional FFS cost data to make ACO benchmarks gradually more independent of the ACO's past performance and gradually more dependent on the ACO's success in being more cost efficient relative to its local market, resetting the ACO's benchmark in subsequent agreement periods such as equally weighting the three benchmark years and/or accounting for shared savings payments received by an ACO in its prior agreement period." The agency is also seeking comments on related changes to the benchmark calculations in support of the foregoing options, "including changes to risk adjustment normalization and coding intensity adjustments, comparison group definitions, adjustments for ACO composition changes, the timeline for transition to regional FFS costs, and other adjustments."

Beneficiary Assignment to an ACO

Beneficiaries are assigned to an ACO based upon where they receive the plurality of their primary care. CMS proposes to include recognition of primary care services provided by nurse practitioners, physician assistants and clinical nurse specialists under this rubric. Another proposal would remove certain physician specialties unlikely to be indicative of primary care from the assignment protocol. CMS is also deliberating assignment based on beneficiary attestation. Advocates believe giving beneficiaries the opportunity to voluntarily ''align'' with the ACO in which their primary healthcare provider participates will result in improved patient centeredness.

Program Requirement Waivers

CMS is considering whether to waive certain FFS requirements for ACO participants to encourage greater cost savings, including qualifying hospital stays for SNF admission, telehealth limitations, qualifications for home health services and qualifications for post-acute referrals.

ACO Requirement Amendments

  • The proposed rule also provides for the following amendments and requirements relating to ACOs participating in the MSSP:
  • Requires public reporting of additional data (sometimes using a specific format) and identification of key ACO clinical and administrative leaders.
  • Establishes a process for terminating ACO participation (whether voluntarily or by CMS) and allows shared savings in an ACO's termination year if the termination is effective as of December 31.
  • Amends the requirements for ACO participant agreements.
  • Requires that the ACO and the legal entity that is the ACO share the same governing body. In the case of an ACO that is comprised of multiple participants, requires that the governing body be separate and unique to the ACO and not the same governing body of any ACO participant. CMS also proposes to explicitly prohibit an ACO provider/supplier from being the beneficiary representative on the governing body.
  • Offers additional flexibility regarding the qualifications of an ACO's medical director. CMS also proposes to eliminate a provision that permits some ACOs to participate without satisfying certain requirements for operations and clinical management.
  • Requires that ACOs, in their application for participation, describe how they intend to encourage and promote the use of enabling technologies for improving beneficiary care coordination.

ACO Renewal Process

A process for renewing an ACO's existing participation agreement, rather than requiring the ACO to submit a new or condensed application for continued program participation, is being considered by CMS. Renewal determinations will be based on an evaluation of whether the ACO (1) satisfies the criteria for operating under the selected risk model; (2) has a history of compliance with eligibility and other requirements of the MSSP, including the ability to repay losses, if applicable; (3) met the quality performance standards during at least one of the first two years of the previous agreement period; and (4) if participating under a two-sided model, has repaid losses owed to the program. In addition, CMS will conduct a program integrity screening of the ACO, its participants and providers/suppliers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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