CMS Announces Proposed Rule to Revise the Medicare Shared Savings Program

King & Spalding

On August 9, 2018, CMS issued a proposed rule for restructuring the Medicare Shared Savings Program (Shared Savings Program) which would, among other things, change the participation options available under the program for Accountable Care Organizations (ACOs). The Shared Savings Program is a voluntary program in which groups of doctors, hospitals, and other health care providers form an ACO for the purpose of working to lower growth in healthcare expenditures and improve quality of care. An ACO is held accountable for the quality, cost, and experience of care of an assigned Medicare Fee-For-Service (FFS) beneficiary population. ACOs that successfully meet quality and savings requirements share a percentage of the achieved savings with Medicare. Alternatively, under two of the three current ACO tracks, if the ACO does not achieve the cost savings requirement, the ACO is responsible for covering a portion of the losses. The restructuring of the Shared Savings Program, as outlined in the proposed rule, would move all ACOs from a one-sided model to a “two-sided shared savings and shared loss model” at an accelerated pace, meaning all participating ACOs under the new structure would have both upside and downside risk by the end of a five-year initial agreement. The proposed rule would also modify the benchmarking process. The proposed rule can be found here, and the fact sheet here.

The Shared Savings Program currently has three tracks for ACOs. Track 1 is a one-sided shared savings-only model under which eligible ACOs receive a share of achieved savings but are not required to pay back a share of any losses. Tracks 2 and 3 are two-sided models with increasing benefit and risk allocations. Currently, 561 ACOs participate in the Shared Savings Program, and 82% of those are in Track 1. The Shared Savings Program’s initial entrants are nearing the end of the six year period currently allowed under Track 1. In summarizing its proposed modifications to the program, CMS noted that transition to performance-based risk is a “pressing concern for ACOs,” many of which have expressed reluctance to move to two-sided risk under the current program. On the other hand, CMS stated that one-sided model ACOs “have actually increased Medicare spending relative to their benchmarks,” and “may be encouraging consolidation in the marketplace,” thus reducing competition.

The proposed rule would restructure the participation options for ACOs by discontinuing Tracks 1 and 2, offering a new BASIC track, and maintaining Track 3 (renamed the ENHANCED track). For eligible ACOs, the new BASIC track would offer a graduated path from a one-sided model to progressively higher increments of risk and potential reward over a single agreement period of 5 years. The maximum level of risk under the BASIC track would be the same as the current Track 1+ Model. The one-sided model under the BASIC track would apply for the first two years, with the risk level increasing over the last three years of the agreement. However, ACOs that previously participated in Track 1, as well as “re-entering ACOs” (which will include new ACOs having 50 percent or more of participants with recent prior experience in a Track 1 ACO), would be limited to one year of the one-sided model.

To allow ACOs whose participation expires at the end of the year additional time to analyze the financial impacts of the restructuring and whether to continue participating in the Shared Savings Program, CMS proposes a one-time move of the agreement start date from January 1, 2019, to July 1, 2019. The ACOs whose terms expire December 31, 2018, may extend their term for 6 months (through June 30, 2019), and apply for a new agreement under the BASIC track or ENHANCED track that would begin July 1, 2019.

Additional elements of the proposed rule include:

  • Use of regional benchmarks for all agreement periods:  The proposed rule would incorporate factors based on regional FFS expenditures in establishing the ACO’s historical benchmark beginning with the ACO’s first agreement period, rather than applying this approach starting in the ACO’s second or subsequent agreement period as is currently the case.  The frequency of benchmark rebasing would be reduced with the extension of the Shared Savings Program agreement from 3 years to 5 years.
  • Increases flexibility for review and termination of ACOs:  The proposed rule would permit the termination of ACOs with multiple years of poor financial performance; modify the application review criteria to permit CMS to consider the ACO’s per capita expenditures and failure to meet quality performance standards in multiple years of the previous agreement period; and hold terminated ACOs in two-sided models accountable for pro-rated shared losses.
  • Increased flexibility for ACO coordination of care:  The proposed rule would allow for annual assignment of beneficiaries by the ACO, expanded use of telehealth for practitioners, and expanded use of the existing Skilled Nursing Facility 3-day rule waiver.
  • Promotion of beneficiary engagement:  The proposed rule would permit more involvement by members through increased notifications and updates to members, voluntary alignment and opt-in programs, and by permitting eligible ACOs to apply for beneficiary incentive programs to promote primary care, such as providing incentive payments to qualifying beneficiaries of up to $20 for each qualifying primary care service or providing care vouchers for such services.
  • Improved services and efficiency:  The proposed rule seeks to improve interoperability of ACOs through the implementation of certified electronic health record technology (CEHRT), seeks comments on approaches to addressing opioid utilization, and also seeks comments on how ACOs and stand-alone Part D prescription drug plans might better collaborate to improve coordination of pharmacy care for Medicare FFS beneficiaries.

The CMS press release provides further information on the propose rule, which can be found here. The comment period for the proposed rule closes on October 16, 2018.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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