The Centers for Medicare and Medicaid Services (CMS) recently issued a proposed rule modifying the Medicare Shared Savings Program (MSSP) regulations (the “Rule”). Among other changes, the Rule proposes (a) to modify the method in which cost benchmarks for MSSP-participating Accountable Care Organizations (ACOs) are updated both during a three-year agreement period and upon renewal, and (b) to offer a fourth year to participating ACOs in their initial three-year agreement to facilitate transition to a performance risk-track in the renewal term.

One of the concerns with the sustainability of the MSSP has been that the success of well-performing ACOs is used against the ACO in setting the ACO’s cost benchmark after the initial agreement period. That is, a successful ACO in reducing its Medicare costs will result in a lowered cost benchmark for future years, which will be more difficult to beat through further reduced costs to generate a share of savings. In the proposed rule, CMS attempts to address that concern.

Under the Rule CMS proposes to modify the process for resetting the cost benchmark used for ACOs renewing their participation agreements for second and subsequent agreement periods. Instead of using the national Medicare cost trend factor, CMS proposes to use a regional cost trend. CMS also has removed any adjustment to account for prior savings generated during the prior agreement period. In addition, CMS proposes, when it establishes a new cost benchmark for second or subsequent terms to include a percentage between the required Medicare fee-for-service (FFS) expenditures in the ACO’s region and the ACO’s historical expenditures. This means an ACO’s historical performance will be less important to the new benchmark and instead the ACO’s benchmark will be set by a comparison to other providers in the same region.

In addition, the Rule proposes to annually update the rebased benchmark for changes in regional Medicare FFS spending. This replaces the current adjustment which is based in trends on national Medicare FFS spending.

The Rule also includes a couple of other proposed changes to the MSSP:

  • To facilitate the transition to performance-based risk in which an ACO takes downside risk, CMS proposes that an ACO which will renew its initial contract with CMS by moving to a downside risk track in the second agreement, shall have the option of adding a fourth year without downside risk to the initial contract. For such an electing ACO, CMS also will defer rebasing the ACO’s cost benchmark for a year. Such electing ACOs shall have four years of only shared savings before taking downside risk. The revisions to the MSSP made in June of 2015 also allow ACOs to renew for a second three-year without taking downside risk.
  • In response to requests, CMS also announced it is making data files available on the MSSP website to allow for modeling of proposed changes to the rebasing methodology. The data made available include: average per capita county-level FFS spending and risk scores for three historical years and ACO-specific data on the total number of assigned beneficiaries residing in each county where at least one parent of the ACO’s assigned beneficiaries resides for three historical years.

CMS continues to modify the MSSP regulations in an attempt to encourage further participation as they move along the road to providers being paid increasingly on a performance basis. Comments to the Rule must be submitted by March 28, 2016.