As part of the CY 2023 Physician Fee Schedule proposed rule (the Proposed Rule) released on July 7, 2022, CMS has proposed significant changes to the Medicare Shared Savings Program (MSSP). The agency’s press release characterizes these proposed program changes as representing some of the most significant reforms since the inception of the MSSP in 2012. CMS has announced a goal of having all traditional Medicare beneficiaries in an accountable care relationship with a healthcare provider by 2030. The proposed rules are targeted to achieve that goal by encouraging providers in rural and underserved areas to participate in the MSSP, promoting health equity for underserved populations, and encouraging more accountable care organizations (ACOs) to participate and succeed in the program.

The most significant reforms in the Proposed Rule include providing advance shared savings payments to certain ACO that could be used to address the social needs of beneficiaries; implementing a health equity adjustment to ACO quality performance category scores; allowing certain ACOs additional time to transition to downside risk; and providing for various modifications in the calculation of ACO benchmarks, including removal of certain disincentives for successful ACOs. The rule also includes several proposals to streamline administrative burdens on ACOs.

Advance Investment Payments. In this rule, CMS builds on a prior Innovation Center program that tested advance shared savings payments to support the formation of ACOs. The current proposal marks the first time that traditional Medicare payments would be made available for this purpose. The Proposed Rule states that the purpose of advance investment payments is to encourage low-revenue ACOs that are inexperienced with risk to participate in the MSSP, and to provide additional resources to those ACOs to support care improvements for underserved beneficiaries. In order to receive these advance payments, an ACO applying to participate in the MSSP would complete a supplemental application for advance funds. To be eligible to receive advance investment payments, the ACO must meet all of the following standards:

• The ACO is not a renewing or re-entering ACO;
• The ACO has applied to participate in the MSSP under any level of the BASIC track’s glide path;
• The ACO is inexperienced with performance-based Medicare ACO initiatives; and
• The ACO is a low-revenue ACO.

Advance investment payments may only be used to improve the quality and efficiency of items and services furnished to beneficiaries by investing in increased staffing, health care infrastructure, and the provision of accountable care for underserved beneficiaries, which may include addressing social determinants of health. The ACO must establish and maintain a separate account to segregate advance investment payments from all other revenues, and disbursements from this account could be made only for allowable uses as set in the rule. As part of its supplemental application for advance investment payments, the ACO must submit a spend plan describing how it will spend its advance investment funds during the period of the agreement to build care coordination capabilities, address specific health disparities and meet other criteria under the rule. The spend plan must identify the categories of goods and services that will be purchased with these advance investment payments and the dollar amounts to be spent on the various categories. CMS may review the ACO’s spend plan at any time and require modifications in the plan to comply with requirements of the rule.

A qualifying ACO would receive two types of advance investment payments:

• A one-time payment of $250,000, received at the beginning of performance year 1; and
• Quarterly payments made during the first two performance years of the ACO’s agreement period. These quarterly payments will vary based on the risk factors attributed to the ACO’s assigned beneficiaries. For each of the ACO’s assigned beneficiaries, CMS will set a risk factors-based score. This score is highest (100) for dual eligible beneficiaries. If the beneficiary is not dual eligible, the risk factors-based score will be set to the Area Deprivation Index national percentile rank matched to the beneficiary’s mailing address. If insufficient data is available to match the beneficiary to the Area Deprivation Index, the risk factors-based score will be set to 50. The rule sets the payment amount per beneficiary based on the risk factors-based score, with the highest payment set at $45 for each beneficiary in the highest level of the risk factors-based score. The ACO’s quarterly payment will be the sum of its beneficiary payment amounts, capped at 10,000 beneficiaries. For ACOs having more than 10,000 beneficiaries, the highest risk factors-based scores would be used in the calculation.

ACOs will be monitored for continuing eligibility to receive advance investment payments. If changes in the ACO participants cause the ACO to no longer meet the eligibility standards for these payments (e.g., the ACO is experienced with performance-based risk Medicare ACO initiatives or is a high revenue ACO), CMS would cease the quarterly advance payments and may recover advance investment payments already made.

Advance investment payments will be recouped by CMS from shared savings earned by the ACO. The agency will carry any balance forward to subsequent performance years in which the ACO earns shared savings, including subsequent agreement periods. The ACO must repay all advance investment payments if it terminates participation in the MSSP during the agreement period in which advance payments were received.

Health Equity Adjustment. Under the Proposed Rule, an ACO’s quality performance score will be adjusted for health equity bonus points based on the ACO’s high performance on quality measures and providing care for a higher proportion of underserved or dually eligible beneficiaries. Health equity adjustment bonus points will be calculated for the ACO based on the proportion of the ACO’s assigned beneficiaries that are underserved, as measured by the proportion of beneficiaries that reside in a census block group with an Area Deprivation Index national percentile rank of at least 85, or that are dually eligible for Medicare and Medicaid. The bonus points would be applied if the ACO scores in the top third or middle third of performance for each quality measure. This adjusted score will be used in determining (i) whether the ACO meets the quality performance standards across all MIPS quality performance category scores; (ii) the final sharing rate for calculating shared savings payments, (iii) the shared loss rate for calculating shared losses under the ENHANCED track, and (iv) the quality score for an ACO affected by extreme and uncontrollable circumstances. The health equity adjustment is intended to impact ACOs positively and would not be applied to penalize ACOs.

Sliding Scale to Determine Shared Savings. The Proposed Rule would reinstate a sliding scale approach to determining shared savings based on the ACO’s quality performance. Alternative quality performance standards would be set for ACOs that do not meet the quality performance standards to share in savings at the maximum rate. The purpose of this proposed change in the current all-or-nothing approach is to avoid situations in which ACOs lose the opportunity to earn shared savings based on small differences in quality scores.

Transition to Downside Risk. The Proposed Rule would ease the current schedule under which MSSP ACOs are required to transition from the shared savings only model to a two-sided risk model. For performance years beginning on January 1, 2023, ACOs currently participating in Level A or Level B of the BASIC track will have the option to continue in their current level of the glide path for the remainder of their agreement. For agreement periods beginning on January 1, 2024, ACOs inexperienced with performance-based risk may participate in one 5-year agreement under a one-sided shared savings by entering the BASIC track’s glide path and remaining in Level A for all 5 years. These ACOs may be eligible for a second agreement period within the BASIC track’s glide path (which would allow the ACO a total of 7 years before transitioning to two-sided risk). In addition, for agreement periods beginning January 1, 2024, the Proposed Rule would remove the limitation on the number of agreement periods an ACO could participate in Level E of the BASIC track, and participation in the ENHANCED track would be optional.

ACO Benchmarks. The Proposed Rule includes a number of adjustments to the ACO benchmarking methodology to address such matters as reducing the impact of ACO performance on ACO historical benchmarks and providing incentives for ACOs to care for medically complex, high-cost beneficiaries and to remain in the MSSP. Among several other revisions, the proposed rule includes –

• A proposal to use a three-way blend of national and regional growth rates with a new prospectively determined administrative growth factor when updating the ACO’s benchmark for each performance year. The effect of this blended growth rate would be to shield a portion of the annual update from savings resulting from MSSP ACO activity, thereby addressing increasing market penetration by ACOs in a regional service area.
• An adjustment to the benchmark to account for the ACO’s prior savings, thereby mitigating the extent to which the ACO’s benchmark is ratcheted down over time.
• A proposal to reduce the impact of negative regional adjustments on ACO benchmarks by reducing the cap on negative regional adjustments and by decreasing the negative regional adjustment amounts as the proportion of dually eligible beneficiaries increases or the ACO’s weighted-average prospective HCC risk score increases.
• Proposed revisions to the application of the 3 percent cap on positive prospective HCC risk score growth to better account for medically complex, high-cost populations.

Administrative Matters and Updates. The Proposed Rule also includes several provisions intended to reduce administrative burdens for ACOs and to update the beneficiary assignment methodology:

• Although an ACO’s marketing materials must still meet standards set in the MSSP rule, ACOs would no longer be required to submit marketing materials to CMS in advance.
• ACOs would be required to provide the required standardized written notice to beneficiaries at least once during an agreement period rather than annually. After the standardized written notice has been provided, the ACO must provide a verbal or written follow-up communication to the beneficiary, not later than the earlier of (i) the beneficiary’s next primary care service visit or (ii) 180 days from the date the standardized written notice was provided. The follow-up beneficiary communication is intended to promote beneficiary comprehension of the standardized written notice.
• ACOs applying for the SNF 3-Day Rule Waiver would no longer be required to submit narratives describing the ACO’s communication plan, care management plan, and beneficiary evaluation and admission plan. Instead, ACOs would submit attestations that these plans have been established.
• Data sharing rules would be updated to provide that ACOs acting as organized health care agreements (OHCAs) may request aggregate reports and beneficiary-identifiable claims data.
• To ensure that the MSSP beneficiary assignment methodology remains consistent with billing and coding rules, the definition of primary care services used for beneficiary assignment will be updated, including incorporating new prolonged services codes and chronic pain management codes.

The Proposed Rule can be found here.