On Dec. 1, 2014, the Centers for Medicare and Medicaid Services (“CMS”) released a new proposed rule for Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP). This advisory focuses on CMS’s proposed revisions to the methodology used to assign Medicare beneficiaries to ACOs. This is the final installment of our four-part series (part one, part two, part three) on significant changes to the MSSP under the proposed rule.

Current Beneficiary Assignment Methodology

The term “assignment” refers to the process CMS uses to determine whether a beneficiary has chosen to receive a sufficient level of the primary care services from physicians associated with a specific ACO so that the ACO may be appropriately designated as exercising basic responsibility for that beneficiary’s care.

Under the current rule, CMS uses a stepwise process to assign beneficiaries to an ACO. As a preliminary matter, the agency identifies all beneficiaries who, within the year, received at least one primary care service from any physician, regardless of specialty, who participates in an ACO. After excluding beneficiaries who do not meet general eligibility requirements (e.g., at least one month of Part A and Part B enrollment), CMS applies the following two-step assignment methodology:

Step 1: The beneficiary is assigned to an ACO if the allowed charges for primary care services given to the beneficiary by primary care physicians (PCPs) who are in the ACO are greater than the allowed charges for primary care services furnished by PCPs who are: (i) in any other ACO; and (ii) not affiliated with any ACO and identified by a Medicare-enrolled TIN.

Step 2: This step applies only to beneficiaries who haven’t received any primary care services from a PCP, either inside or outside the ACO. The beneficiary will be assigned to an ACO if the allowed charges for primary care services furnished to the beneficiary by all ACO professionals in the ACO are greater than the allowed charges for primary care services furnished by: (i) all other ACO professionals in the ACO (including non-PCPs, NPs, CNSs and PAs); and (ii) other non-PCPs, NPs, CNSs, and PAs who are not affiliated with an ACO and are identified by a Medicare-enrolled TIN.

In CMS’s experience, approximately 92 percent of the beneficiaries assigned to ACOs are assigned in Step 1.

CMS currently defines “primary care service” as the set of services identified by the following CPT Codes:

Expansion of Step 1: Inclusion of Non-Physician Practitioners

The proposed rule would modify Step 1 by including the services of NPs, CNSs and PAs in measuring whether a beneficiary receives the plurality of his or her primary care services from an ACO. The agency believes that including the services furnished by these non-physician practitioners (NPPs) may help to ensure beneficiaries are assigned to the ACO that should be responsible for managing the beneficiary’s overall care. This proposed change responds to stakeholders who observed that NPPs often serve as a beneficiary’s sole primary care provider, based on beneficiary preferences or other factors.

The agency is concerned that the specialty codes self-reported on NPP claims are not further broken down by specific specialty areas and therefore do not allow practitioners to indicate whether they are typically functioning as primary care providers or as specialists. This lack of specificity could result in the assignment of some beneficiaries based on specialty care rather than true primary care. CMS seeks comment on (i) the extent to which NPPs provide non-primary care services, and (ii) whether there are ways to further identify the primary care services billed by NPPs.

Contraction of Step 2: Exclusion of Certain Physician Specialties

In reaction to stakeholder comments that certain physician specialties are inappropriately included in the assignment process, the proposed rule would exclude services provided by physicians with the specialties listed below from Step 2 of the assignment methodology. The agency believes that, in actual practice, these specialists would rarely provide primary care to beneficiaries, even though they often bill Medicare with the CPT codes that fall under the definition of an MSSP "primary care service."

Step 2 would continue to include services provided by physicians with the specialties listed below. The agency explained that especially for beneficiaries with certain chronic conditions but who are otherwise healthy, these specialists often assume a PCP-like role in the beneficiary’s overall treatment.

Playing the Field: How Do These Changes Affect Physician Exclusivity?

Under the current regulations, for purposes of beneficiary assignment, each ACO participant TIN upon which beneficiary assignment is dependent must be exclusive to a single ACO. In contrast, if beneficiary assignment does not depend on an ACO participant’s TIN, that participant may participate in multiple ACOs.

The proposed rule’s exclusion of certain physician specialties from Step 2 of the assignment methodology could increase opportunities for participants that wish to join multiple ACOs. Specifically, participants that submit claims solely for services performed by physicians with specialties that are excluded from Step 2 would have greater flexibility to participate in multiple ACOs if the participant does not submit claims for any primary care services performed by other physicians or NPPs that are considered in the assignment process. This change could create significant opportunities for ACO participants that are composed solely of excluded specialists.