On December 1, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would alter parts of the original Medicare Shared Savings Program (MSSP) regulations, specifically relating to Accountable Care Organizations (ACOs), promulgated in November 2011. See Press Release; Fact Sheet. In the rule, CMS states that this proposed rule and future rules make “refinements based on experience with the program and to respond to concerns raised by stakeholders.” CMS anticipates the new modifications will apply to the 2016 performance year for all participating organizations. Adoption of a final rule will likely have a significant impact on ACOs that are contemplating joining or continuing participation in the MSSP. CMS is seeking comments on the proposed rule until February 6, 2015.

CMS hopes to increase participation in the MSSP by easing the transition to risk, reducing risk under the current model and adopting an alternative risk-based model participation. As a result of these changes, CMS expects a significant increase in total shared savings while shared losses would decrease. Further, with expansion, CMS believes there will be a broader focus on care coordination and quality improvement among providers and suppliers leading to both increased efficiency in the provision of care and improved quality of the care provided to Medicare beneficiaries.

The proposed changes include:

  • Continued Participation in Track One

CMS proposes to grant ACOs an additional agreement period to participate in the one-sided risk model (share savings but no financial losses). However, the shared savings rate would be reduced to a lower sharing rate than the previous agreement period. Under the new rule, ACOs must transition to a two-sided risk model (sharing savings and losses) after the additional one-sided risk agreement period.

  • Encouraging ACOs to Take on Greater Performance Based Risk

CMS seeks to encourage ACOs to progress along the performance risk continuum by modifying certain aspects of the MSSP, which could improve and increase interest in performance risk-based options. For example, an additional performance risk-based model (Track Three) is proposed for ACOs to participate in MSSP. Track Three would offer a higher sharing rate than Tracks One and Two. Moreover, the proposed rule modifies Track Two to increase its attractiveness by making the minimum savings and loss rates variable rather than the current flat two percent.

  • Establishing, Updating and Resetting ACO Financial Benchmarks

CMS is focused on developing new methodologies of calculating loss that are more objective and less dependent on a specific ACO’s historical data. For example, it has been proposed to use regional FFS expenditures and cost data. This transition would be gradual, but the goal is to make cost benchmarks more dependent on the ACO’s success – being more cost efficient – relative to its local market.

  • Participation Agreement Renewals and Requirements

In order to facilitate the application process and reduce technical rejections, the proposed rule adds requirements and further standardizes ACO participation agreements. For example, CMS proposes to require that the participation agreement (1) is only between the ACO and the ACO participant; (2) is signed by authorized individuals; (3) mandates that an ACO provider/supplier bill through the ACO’s taxpayer identification number; (4) “describe[s] how the opportunity to receive shared savings or other financial arrangements will encourage the ACO participant to adhere to the quality assurance and improvement program and evidence-based medicine guidelines established by the ACO”; and (5) contains a minimum term of one year. Moreover, CMS proposes to lessen the burden on ACOs that desire to continue participation in the MSSP. Under the proposed rule, ACOs would only be required to submit “renewal requests” instead of an entire or condensed application for continued participation in the MSSP after expiration of the current agreement.

  • Beneficiary Assignment

Currently, in order to be assigned to the ACO at Step 1, a beneficiary must receive primary care from a physician in the ACO. See MSSP Assignment Methodology. The proposed rule allows primary care services provided by non-physician practitioners (NPs, PAs, etc.) to be used as a basis for assignment in Step 1 of the assignment process, as opposed to Step 2. However, specialty types that are not likely to perform primary care services (e.g., surgeons and radiologists) would be removed.

  • Data Sharing

CMS proposes to streamline the process and lessen the costs for ACOs to receive the directly identifiable beneficiary claims data that is vital for their health care operations, while retaining meaningful choice for beneficiaries. Notably, ACO participants would provide written notification of claims data sharing and their right to opt-out at the point of care through signs posted in their facilities (using template language), with copies available on request, rather than mailing notices. CMS would interact with beneficiaries regarding opt-out requests through 1-800-MEDICARE.

  • Eligibility Requirements

CMS proposes several modifications to the eligibility requirements for ACO participation in the MSSP including:

  • Requirements for addition/removal of entities or individuals from ACO participant and ACO provider/supplier lists; and
  • Increasing flexibility of governing body and leadership requirements.
  • Definitions

The rule proposes new defined terms, “ACO Participation Agreement” and “ACO Participant Agreement,” as well as clarifies existing defined terms including, “ACO Participant,” “ACO Professional,” “ACO Provider/Supplier,” “Assignment” and “Primary Care Services.” CMS has indicated that many of the definitional changes should not impact how the MSSP currently operates.

  • Reporting and Transparency

In addition to adding a few reporting requirements, CMS proposes to use a mandatory template for ACOs to report public information. CMS envisions that the template would that would be similar to current guidance. See Public Reporting Guidance, Appendices A & B.

  • Termination

CMS proposes to not only add new close-out procedures upon nonrenewal and termination, but also add new grounds for termination from the MSSP (e.g., to permit termination for failure to timely comply with requests for documents and other information and for submitting false or fraudulent data).