On December 1, 2014, CMS issued a proposed rule for Accountable Care Organizations (ACOs) operating under the Medicare Shared Savings Program (MSSP). The proposed rule updates the MSSP final rule released in November 2011, and makes several recommendations to improve flexibility for ACOs participating in the MSSP. The proposed changes include (1) additional options for ACOs renewing their participation in the MSSP, (2) the introduction of an additional risk sharing model, and (3) a greater emphasis on primary care. Comments to the proposed rule should be submitted by February 6, 2015.

The MSSP currently offers ACOs the option of participating in two tracks of risk-sharing, a one-sided risk model that does not include performance-based risk (Track 1), and a two-sided risk model that includes performance-based risk in exchange for a higher share of savings (Track 2). For ACOs that are already participating in the MSSP under Track 1, the proposed rule would allow those ACOs to renew their agreement under Track 1 with a reduced share of savings for the second term, rather than transitioning to Track 2 at the end of their three year agreement. For ACOs participating under Track 2, the proposed rule would change the Minimum Savings and Loss Rates from fixed to variable rates based on the size of the ACO’s population. This would protect ACOs with small populations and offer greater shared savings payments.

The proposed rule also considers the addition of a Track 3, which would encourage greater ACO responsibility in exchange for greater rewards. Track 3 ACOs would receive a fixed list of prospectively assigned beneficiaries at the start of the performance year. The beneficiary list for Track 3 ACOs would be adjusted at the end of the performance year to exclude only beneficiaries that no longer meet eligibility criteria. Unlike Track 1 and Track 2 beneficiary lists, the retrospective reconciliation for Track 3 beneficiary lists would not exclude beneficiaries based on actual utilization of primary care services. CMS believes this will provide an incentive for Track 3 ACOs to provide high-quality, low-cost care to discourage beneficiaries from seeking care outside the ACO. Additional Track 3 features include a higher shared savings rates and a fixed, rather than variable, Minimum Loss Rate. CMS is also considering the expanded use of telehealth, beneficiary attestation, and more flexible post-acute care referrals to improve quality and care coordination while making Track 2 and 3 models more attractive to ACOs.

In addition, CMS seeks to refine the beneficiary assignment model. Medicare beneficiaries are currently assigned to ACOs based on primary care service utilization. The proposed rule would expand this methodology to include primary care services provided by nurse practitioners and physician assistants, while excluding the services provided by certain physicians such as dermatologists, surgeons, and radiologists. Beneficiary assignment would also include transitional care management services following discharge from an inpatient hospital or skilled nursing facility, as well as chronic care management services.

Currently, 330 ACOs are participating in the MSSP in 47 states, treating more than 4.9 million Medicare fee-for-service beneficiaries. In the first year of the MSSP, 58 ACOs kept spending below their benchmarks by a total of $705 million and earned $315 million in shared savings payments. An additional 60 ACOs kept expenditures below their benchmarks, though not at an amount to earn shared savings.