The Centers for Medicare & Medicaid Services (CMS) is proposing a “new direction” for the Medicare Shared Savings Program, with changes to Medicare accountable care organization (ACO) requirements designed to increase Medicare savings and reduce “gaming opportunities.” In a press release announcing the “Pathways to Success” redesign, CMS Administrator Seema Verma asserts that “after six years of experience, the time has come to put real ‘accountability’ in Accountable Care Organizations.” According to Administrator Verma, “most Medicare ACOs do not currently face any financial consequences when costs go up, and this has to change.”

To that end, CMS is proposing to accelerate the schedule for ACOs to transition to two-sided models, under which the ACO is accountable for repaying shared losses in addition to qualifying for shared savings bonus payments. In short, under proposed restructured participation options, an ACO would select one of the two tracks:

  • The BASIC track, which would include an option for eligible ACOs to participate under a one-sided model for a maximum of two years, and incrementally phase-in risk (an approach referred to as a glide path). At the highest level of risk, this track would qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program.
  • The ENHANCED track for ACOs that immediately take on the highest level of risk and potential reward; this qualifies as an APM.

Under the proposed rule, the Shared Savings Program agreement period would be extended to five-years (up from three currently). To give ACOs more time to prepare for these changes, CMS proposes that the first participation period under the new requirements would begin July 1, 2019; that is, CMS would forgo a 2018 application cycle for a January 1, 2019 start date. CMS proposes allowing ACOs with a participation agreement ending on December 31, 2018 to extend their current agreements by six months (and new ACOs could extend their initial agreement period to 5 years and 6 months).

CMS proposes numerous other changes to ACO program policies, including implementation of Bipartisan Budget Act of 2018 provisions that promote telehealth services and allow certain ACOs to provide incentive payments of up to $20 to assigned beneficiaries who receive qualifying primary care services. Other provisions address: the methodology for establishing adjusting, updating, and resetting benchmarks; repayment mechanism arrangement requirements; expanded availability of the skilled nursing facility 3-day rule waiver; evaluation of the eligibility of ACOs seeking to renew program participation; termination of ACO participation; quality measures; and adoption of Certified Electronic Health Record Technology (CEHRT) by ACO clinicians. CMS also seeks comments on approaches to encourage Medicare ACOs to collaborate with the sponsors of stand-alone Part D prescription drug plans to improve the coordination of pharmacy care to reduce the risk of adverse events and improve medication adherence.

CMS estimates that the proposed rule would save $2.24 billion over 10 years and reduce the number of ACOs participating in the Shared Savings Program by approximately 109 by 2028.

CMS will accept comments on the proposed rule until October 16, 2018.