December has been a busy month for CMS with respect to the Medicare Shared Savings Program (“MSSP”). Last week CMS announced that eighty-nine (89) more ACOs would begin participating in the MSSP starting in 2015, bringing the total number of ACOs in the program to four-hundred and five (405).

As far back as April 2011, when CMS first proposed MSSP regulations, the agency made clear its desire for ACOs to share in both the savings and losses generated. 76 Fed. Reg. 19528 (April 7, 2011). Under the 2011 proposed regulations, ACOs could initially elect to enter a one-sided upside-only risk model for two years, before automatically transitioning to a two-sided upside and downside-risk model during the final year of their initial agreement. However, after an outcry from the industry, CMS relented and published a final rule under which ACOs could participate in a Track 1 MSSP model for a single three-year term with only upside risk before graduating to a two-sided risk model in future years. 76 Fed. Reg. 67802 (Nov. 2, 2011). The Track 1 model proved quite popular, with 99% of the ACOs in the program choosing to participate in Track 1 as of 2014.

On December 8, 2014, CMS again proposed new MSSP regulations. 79 Fed. Reg. 72760 (Dec. 8, 2014). In arguably the most significant development contained in the 2014 MSSP proposed regulations, CMS has changed its tune regarding the transition to two-sided risk . . . sort of. In recognition of stakeholder comments and perhaps the relatively high drop-out rate in its “two-sided risk-only” Pioneer ACO program, CMS has proposed that Track 1 ACOs be allowed to linger in the Track 1 model for at least another three years if they so choose. However, that choice comes at a price. That price, according to CMS, would be specifically designed “to make staying in the one-sided model less attractive than moving forward along the risk continuum.” 79 Fed. Reg. 72805.

Under CMS’ proposed regulations, Track 1 ACOs that choose to stay in Track 1 for a second three-year term would see the maximum amount of savings they could potentially share with the government reduced from fifty percent (50%) to forty percent (40%). At the same time CMS has offered a carrot to encourage ACOs to move along the risk continuum, by proposing to create a new two-sided risk model, “Track 3,” that would increase the potential rewards (and risks) to those ACOs who select it.  The key changes from the current Track 2 two-sided risk model that CMS is proposing for Track 3 include:

  • Increasing the maximum percentage of savings and losses that can be shared with the government from sixty percent (60%) to seventy-five percent (75%).
  • Using a prospective assignment methodology that will allow ACOs to focus care coordination efforts more specifically on their assigned beneficiaries.
  • Increasing the maximum savings payment that an ACO can receive from fifteen percent (15%) to twenty percent (20%) of the ACO’s updated cost benchmark.

CMS has proposed numerous other changes to the MSSP and has stated it is considering the possibility of even more changes in the preamble to its comprehensive proposed rule, all of which are open for public comment until February 6, 2015 at 5 PM. If the significant changes between the original proposed MSSP regulations and the final regulations are any indication, significant parts of this regulatory saga have yet to be written.