On June 4, 2015, CMS released for public inspection a final rule that makes significant changes to the regulations governing Medicare Shared Savings Program (“MSSP”) ACOs.  The rule, scheduled to be officially published in the Federal Register on June 9, revises numerous functions related to MSSP ACOs and their operations and codifies previous CMS guidance.  Most of the rule becomes effective August 3, 2015 with some provisions becoming effective November 1, 2015 and January 1, 2016.  This article outlines some of the key issues addressed by the rule.

  1. An ACO formed by two or more ACO participants, each of which is identified by a unique TIN, must be a legal entity separate from any of its ACO participants.
    • An ACO formed by a single ACO participant may use its existing legal entity and governing body.
    • An ACO’s governing body must satisfy numerous criteria specified in the regulations, including:
      • The governing body must have ultimate authority to execute the functions of the ACO. (CMS’s intent is to preclude the retention of ACO decision-making authority by a parent company.)
      • In the case of an ACO that comprises multiple ACO participants, the governing body must be separate and unique to the ACO.
  2. Regulating ACO Participants:
    • CMS added a new regulation, applicable to performance years 2017 and beyond, that specifies requirements for agreements between an ACO and an ACO participant (among other things, the regulation requires that such agreements permit an ACO to take remedial action against an ACO participant, and must require the ACO participant to take remedial action against its ACO providers/suppliers, to address noncompliance with MSSP requirements and other issues).
    • An ACO participant must be an entity, not an individual.1
    • If, after the commencement of a performance year, an ACO submits to CMS a request to add an entity and its Medicare-enrolled TIN to its ACO participant list, and if CMS approves the request, the entity and its Medicare-enrolled TIN is added to the ACO participant list effective January 1 of the following performance year.
      • Note:  Until an entity is officially added to an ACO’s list of ACO participants (January 1 of the following performance year), eligible professionals who have assigned their billing rights to the TIN of the entity will not be eligible to satisfy, through the ACO, the requirements of the PQRS, the Value-Based Payment Modifier Program or the Medicare EHR Incentive Program.
    • The requirement that an ACO participant TIN be exclusive to a single MSSP ACO applies when the ACO participant TIN submits claims for primary care services that are considered in the assignment process.  An ACO participant TIN that does not submit claims for primary care services is not required to be exclusive to a single ACO.  Note: As discussed later in this article, CMS’s rule changed the definition of “primary care services.”
    • Effective November 1, 2015, ACO participants must notify beneficiaries at the point of care that their ACO providers/suppliers are participating in the Shared Savings Program and of the opportunity to decline claims data sharing.  This notification requirement is satisfied when the ACO participant posts signs in its facilities and, in settings in which beneficiaries receive primary care services, by making standardized written notices (using template language developed by CMS) available upon request.
  3. Regulating ACO Providers/Suppliers:
    • An ACO has the option of contracting directly with its ACO providers/suppliers regarding items and services furnished to beneficiaries assigned to the ACO.  For performance years 2017 and beyond, an ACO’s agreement with an ACO provider/supplier regarding such items and services must satisfy numerous criteria, including notification of the ACO provider’s/supplier’s rights and obligations regarding, and representation by the ACO with respect to, the PQRS reporting requirements and the Medicare EHR Incentive Program.
    • An ACO must notify CMS within 30 days after an individual or entity becomes a Medicare-enrolled provider or supplier that bills for items and services it furnishes to Medicare fee-for-service beneficiaries under a billing number assigned to the TIN of an ACO participant.  If the ACO timely submits notice to CMS, the addition of an individual or entity to the ACO provider/supplier list is effective on the date specified in the notice furnished to CMS but no earlier than 30 days before the date of the notice.  If the ACO fails to submit timely notice to CMS, the addition of an individual or entity to the ACO provider/supplier list is effective on the date of the notice.
      • Note:  Until an eligible professional who has assigned his/her billing rights to the TIN of an ACO participant is officially added to an ACO’s list of ACO providers/suppliers, the eligible professional will not be able to satisfy, through the ACO, the requirements of the PQRS, the Value-Based Payment Modifier Program or the Medicare EHR Incentive Program.
  4. Two-Step Beneficiary Assignment Methodology:
    • The rule establishes a new two-step beneficiary assignment process for performance years 2016 and beyond.
      • The HCPCS codes included in the current definition of “primary care service” will continue to be used, plus codes 99495 and 99496 (transitional care management codes) and code 99490 (chronic care management code).  In addition, CMS reserves the right (including for performance year 2015) to designate additional codes as a primary care service.
      • The first step of the process involves the calculation of allowed charges for primary care services provided by primary care physicians and by physician assistants, nurse practitioners and clinical nurse specialists.
      • The second step of the process involves the calculation of allowed charges for primary care services provided by physicians having one of the following primary specialty designations:
        • Cardiology
        • Osteopathic manipulative medicine
        • Neurology
        • Obstetrics/gynecology
        • Sports medicine
        • Physical medicine and rehabilitation
        • Psychiatry
        • Geriatric psychiatry
        • Pulmonary disease
        • Nephrology
        • Endocrinology
        • Multispecialty clinic or group practice
        • Addiction medicine
        • Hematology
        • Hematology/oncology
        • Preventive medicine
        • Neuropsychiatry
        • Medical oncology
        • Gynecology/oncology
  5. Shared Savings and Losses:
    • Track 1.  An ACO may operate under Track 1 for a maximum of two agreement periods, provided the ACO has complied with MSSP requirements and has satisfied the quality performance standard during at least one of the first two years of the previous agreement period.  CMS made no other changes to the Track 1 model.
    • Track 2.  For agreement periods beginning in 2016 and subsequent years, as part of the ACO’s application for, or renewal of, program participation, the ACO must choose from the following options for establishing the minimum savings rate/minimum loss rate (“MSR/MLR”) for the duration of the agreement period:
      • Zero percent MSR/MLR.
      • Symmetrical MSR/MLR in a 0.5 percent increment between 0.5-2.0 percent.
      • Symmetrical MSR/MLR that varies, based on the ACO’s number of assigned beneficiaries according to the methodology established for the Track 1 model.
      • No changes were made to Track 2’s final sharing rate, performance payment rate or shared loss rate.
    • Track 3.
      • An ACO operating under Track 3:
        • Is eligible for a final sharing rate up to 75 percent of savings (not to exceed its 20 percent of its updated benchmark amount) and a shared loss rate between 40  and 75 percent, with a loss sharing limit of 15 percent of the updated benchmark amount; and
        • May choose from the same options for establishing its MSR/MLR that are available under Track 2.
    • CMS prospectively assigns beneficiaries to ACOs participating in Track 3 at the beginning of each performance year.
    • For performance years 2017 and beyond, CMS waives the three-day SNF rule for beneficiaries assigned to ACOs participating in Track 3.
  6. Sharing Aggregate Data with ACOs:
    • For performance years 2016 and beyond, at the beginning of the agreement period, during each quarter (and in conjunction with the annual reconciliation), and at the beginning of each performance year, CMS, upon the ACO’s request for the data for purposes of population-based activities relating to improving health or reducing growth in health care costs, process development, case management and care coordination, will provide the ACO with the following information:
      • Beneficiary name
      • Date of birth
      • Health Insurance Claim Number
      • Sex
      • Demographic data, such as enrollment status
      • Health status information, such as risk profile and chronic condition subgroup   Utilization rates of Medicare services, including the dates and place of service
      • Expenditure information related to utilization of services
    • For ACOs participating in Track 1 or Track 2, this information will be provided for the ACO’s preliminarily prospectively assigned beneficiaries and for beneficiaries that received a primary care service during the previous 12 months from one of the ACO’s ACO participants.  The information listed above will also be made available to ACOs participating in Track 3 but will be limited to the ACO’s prospectively assigned beneficiaries.
  7. Sharing Beneficiary-Identifiable Data with ACOs:
    • The rule leaves intact much of the current regulations regarding an ACO’s request for beneficiary-identifiable information, but, effective January 1, 2016, the rule deletes the requirement that, before asking CMS for beneficiary-identifiable information, the ACO must notify the beneficiary in writing of the ACO’s intent to use the information.
    • Effective November 1, 2015, the requirement that beneficiaries be given an opportunity to decline the sharing of their information with ACOs is satisfied when an ACO participant posts a sign in its facility, and in settings in which beneficiaries receive primary care services, indicating (using template language developed by CMS) that their information may be shared with the ACO and that they have an opportunity to decline such use of their information.