Editor’s note: June 4, 2015, the Centers for Medicare and Medicaid Services (CMS) published a final rule addressing changes to the Medicare Shared Savings Program (MSSP or Program) established under Section 1899 of the Social Security Act. The final rule codifies much of the proposed rule CMS released in December 2014, as well as operational guidance released following the original Program final rule in 2011.

Manatt has prepared a comprehensive memo providing an in-depth overview and analysis of the final rule. Key highlights are summarized below. If you would like a copy of the full memo, please contact Jonah Frohlich at jfrohlich@manatt.com or Kier Wallis at kwallis@manatt.com. Please refer to Manatt’s summaries of the proposed rule and 2011 final rule for background on the current Program.

ACO Eligibility Requirements

ACO Participant Agreements and Lists. CMS codified guidance regarding participant agreements and responsibilities to update enrollment information in the Web-based Provider Enrollment, Chain and Ownership System (PECOS). CMS also finalized rules regarding submission of executed agreements.

Legal Entity and Governing Body. CMS clarified rules regarding ACO formation by multiple participants with unique Tax Identification Numbers (TINs) and defined a list of criteria that an ACO’s governing body must satisfy. With these changes, CMS is signaling its intent to ensure ACO decision-making authority resides with the ACO governing body and not an existing governing body or committee of an ACO’s parent organization.

Care Coordination and Enabling Technologies. CMS finalized its proposal to require prospective ACOs to describe how they will “encourage and promote the use of enabling technologies for improving care coordination for beneficiaries” in their applications to join the Program. Going forward, applicants will also need to describe how they will partner with long-term and post-acute care providers to improve care coordination.

Transition of Pioneer ACOs into the Medicare Shared Savings Program. CMS finalized its proposal to create a streamlined transition process for Pioneers to join the MSSP. Pioneer ACOs also may consider transitioning to the Center for Medicare & Medicaid Innovation’s (CMMI’s) new Next Generation ACO Model under which ACOs would assume higher levels of financial risk and reward than under the Pioneer Model and MSSP.

Provision of Beneficiary Data

Streamlined Data-Sharing Policies. CMS finalized its proposal to streamline data-sharing policies and processes to better support ACOs in Tracks 1 and 2. CMS specified four categories of data and will finalize the specific data elements in forthcoming operational guidance. It also specified rules regarding data sharing on assigned beneficiaries at the beginning of the agreement period and each performance year, on a quarterly basis and in conjunction with annual reconciliation.

Beneficiary Notification and Claims Sharing. CMS finalized its proposal to assume responsibility for notifying beneficiaries about the opportunity to decline claims data sharing with an ACO through CMS materials and processing beneficiary opt-out requests via 1-800-Medicare. Beneficiary Assignment

Definition of Primary Care Services and Incorporation of Physician Specialties and Non-Physician Practitioners. CMS finalized its proposal to expand the definition of primary care services upon which beneficiary assignment is based to include transitional care management (TCM) and chronic care management (CCM) Current Procedural Terminology (CPT) codes. It also finalized proposals to include primary care services furnished by non-physician practitioners in the first step of the beneficiary assignment methodology. CMS modified its proposal to exclude services provided by certain CMS physician specialties from the second step of the assignment process. These changes and corresponding adjustments to ACOs’ benchmarks will take effect at the beginning of the January 2016 performance year.

Payment Track Changes

Modifications to Existing Payment Tracks. CMS finalized changes to the existing payment tracks and established a new payment track—Track 3—to “smooth the on ramp” for organizations participating in the MSSP. CMS also will allow Track 1 participants to remain in Track 1 for an additional three years. CMS will allow Track 2 ACOs to select their minimum savings rate (MSR) and minimum loss rate (MLR) from a menu of three options prior to the start of their agreement period.

CMS finalized its proposal to create a third payment track under which ACOs will assume increased levels of risk. Prospective beneficiary assignments in Track 3 will utilize a 12-month assignment window prior to the start of the performance year.

Encouraging ACO Participation in Performance-Based Risk Arrangements

CMS will waive the skilled nursing facility (SNF) three-day rule that requires beneficiaries to have a prior inpatient hospital stay of no fewer than three consecutive days to be eligible for Medicare coverage of inpatient SNF care for ACOs that participate in Track 3. CMS declined to implement other waivers at this time, but it plans to test and introduce additional waivers in a phased approach.

Changes to Establishing, Updating and Resetting Benchmarks

CMS will change how it resets ACO benchmarks and signaled its intent to propose changes that will factor in regional fee-for-service (FFS) costs in resetting benchmarks during a proposed rulemaking process this summer. In resetting the historical benchmark for ACOs in their second or subsequent agreement periods, CMS will weight each benchmark year equally and make adjustments to reflect the average per capita amount of savings earned by the ACO in its first agreement period. CMS will continue to maintain the current weighting approach when establishing the historical benchmark for an ACO’s initial agreement period.