August 13, 2018

CMS Proposes Major ACO Overhaul

Holland & Knight Healthcare Blog
Miranda A. Franco

On Aug. 9, 2018, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that would update the Medicare Shared Savings Program (MSSP). Called "Pathways to Success," the proposal significantly alters the Accountable Care Organization (ACO) program. CMS estimates that these changes will save the federal government $2.24 billion over the next ten years, primarily due to a $2.17 billion reduction in ACO net earnings.

Uncertainty for ACOs

There are currently 561 ACOs participating in the Shared Savings program that have approximately 10.5 million assigned beneficiaries—with the vast majority only participating in one-sided risk arrangements. CMS' proposed changes to the MSSP create uncertainty for future ACO participation. Given the limited years of one-sided risk available, a lower amount of potential shared savings, and long transition to Advanced Alternative Payment Model (APM) status, it is unclear how current ACOs and providers considering forming an ACO will participate in the program. CMS estimates that 20 ACOs will drop out of the program in 2019 and 109 ACOs will drop out of the program by 2028.

CMS Consolidates Tracks to Basic and Enhanced

Notably, CMS proposes to retire the current Track 1 and Track 2 options and replace them with a new model, the "BASIC" track. CMS also proposes to modify agreement periods from 3-years to 5-years. The BASIC track would feature a glide path for taking risk. Currently, ACOs have up to six years to shift to a model where they share in the financial risk. As proposed, BASIC ACOs will be forced to assume risk within two years while gradually transitioning to higher risk in years three, four, and five, concluding in year five at a level of risk that meets the standard to qualify as an Advanced APM under the Medicare Access and CHIP Reauthorization Act (MACRA). Current upside-only ACOs would be limited to one year without risk before being required to transition to the risk level in year three of the glide path. The percentage of maximum savings will be cut in half from current levels. CMS also proposes to retain Track 3 but rebrand it as the "ENHANCED" track.

Updated Timeline and Beneficiary Assignment Changes

To ease the transition, CMS says it will start new ACO agreements in July 2019 rather than January of next year. ACOs currently in the program would have an option to extend their participation agreement through the end of next June. The usual application cycle will pick up again in January 2020. All ACOs may annually choose a beneficiary assignment methodology (preliminary prospective assignment with retrospective reconciliation, or prospective assignment) as well as whether to opt into two-sided risk under the BASIC track.

ACOs that are low-revenue—which CMS says are mostly physician and rural ACOs—could participate in the basic track for two five-year periods, under the proposal. However, the high-revenue ACOs, which are mostly those that include hospitals, would be required under the proposed rule to move to the enhanced track after one five-year agreement period.

Changes to Benchmark Calculations

CMS is also proposing multiple updates to the calculation of the benchmark amounts. The following updates are included in the proposal:

  • Move benchmarks towards reflecting the costs of care delivered in the ACO's region, instead of the ACO's historical performance;
  • Mitigate the effects of excessive positive or negative regional adjustment used to establish and reset benchmarks;
  • Blend national and regional expenditure growth rates, with increasing weight placed on the national component of the blend as the ACO's penetration in its region increases; and
  • Use the full CMS-Hierarchical Condition Category (HCC) risk score to adjust benchmark performance to better account for certain health status changes.

CEHRT Requirements

The proposal also seeks to discontinue the ACO electronic health record (EHR) quality measure (ACO-11) and instead establish an interoperability criterion based solely on the level of use of certified electronic health record technology (CEHRT) to determine eligibility for program participation. Specifically, ACOs that would not be considered advanced APMs under the MACRA would need to attest that at least 50 percent of eligible clinicians use CEHRT, while ACOs that would be considered AAPMs would need to attest to the level of CEHRT requirements outlined in the Quality Payment Program (QPP).

Skilled Nursing Facility (SNF) Waiver

CMS is also proposing to expand waiver availability that allows beneficiaries to transfer to a skilled nursing facility (SNF) with an inpatient stay of fewer than three days. Currently, CMS allows only Track 3 and Track 1+ ACOs with prospective beneficiary assignment to use the SNF waiver. However, CMS is proposing to allow use of the SNF 3-day waiver by ACOs in two-sided risk contracts in the Basic and Enhanced Tracks, regardless of prospective beneficiary assignment (Track 3) or preliminary prospective assignment with retrospective reconciliation (Track 1 and Track 2). Also, CMS proposes to amend the existing waiver design to allow critical access hospitals and other small, rural hospitals operating under a swing bed agreement to be eligible to partner with eligible ACOs as SNF affiliates under the three-day waiver.

BBA Implementation

The rule also implements some provisions of the Bipartisan Budget Agreement (BBA) of 2018, including expanding the use of telehealth for two-sided ACOs, allowing for prospective beneficiary assignment to an ACO, allowing for beneficiary incentives, and letting beneficiaries designate their primary clinician.

Comment Period

CMS is looking to update the program's quality measure set as part of the agency's Meaningful Measures initiative for addressing opioid epidemic and addition by adding three new measures. The agency seeks comments on the addition of any other measures related to aspects of opioid use or opioid use disorder treatment and suggestions on any information and aggregate data that would be useful to ACOs to combat opioid misuse in their beneficiary population.

The proposed rule is expected to appear in the Federal Register on Aug. 17, 2018, and comments are due on Oct. 16, 2018.

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