On June 4, 2015, CMS issued a final rule updating the Medicare Shared Savings Program (MSSP). Under the MSSP, Accountable Care Organizations (ACOs) that achieve certain levels of quality and savings share a percentage of the savings with Medicare, and some ACOs also take on financial risk if they fail to meet certain targets. Over 400 organizations are currently participating in the MSSP, serving over 7 million Medicare beneficiaries. CMS estimates that, with the changes and options provided under the final rule, at least 90 percent of ACOs currently participating in the MSSP will opt to renew their participation.

Section 3022 of the Affordable Care Act added section 1899 to the Social Security Act, which established the MSSP. The goal of the MSSP is to change the way that health care is delivered by promoting coordination of items and services provided to beneficiaries, encouraging provider accountability for a population of Medicare beneficiaries, and fostering investment in infrastructure and improved care processes. 

Initially, CMS provided two options, or tracks, for ACO participation under the MSSP: Track 1 (“one sided model”) which allowed ACOs to share in certain savings without taking on financial risk for losses, and Track 2 (“two sided model”) in which the ACO could share in a higher percentage of savings but also agreed to be liable for sharing any losses. The final rule makes some changes applicable to Track 1 and Track 2, and also creates a new Track 3, which is another two sided model with additional features. 

In the final rule, CMS makes clear that it is committed to the ACO concept, and is willing to give providers time and financial incentives to develop ACO networks and learn how to better manage populations of Medicare beneficiaries in order to achieve savings and promote higher quality care, but that the ultimate goal is to move all ACOs into two sided models in which they share in both savings and risk, while improving quality of care. 

Key provisions of the final rule include:

  • Allowing ACOs in the one sided model, Track 1, to remain in that model for a second 3 year agreement under this model, with the continued opportunity to achieve a shared savings payment of up to 50 percent, provided they meet certain quality standards and are otherwise in good standing. CMS initially allowed ACOs to participate in Track 1 for only 3 years, and had proposed to cut the shared savings rate for ACOs remaining in the one sided model, a proposal that it declined to finalize.
  • Establishment of a new two sided model, Track 3, in which ACOs can both share a higher level of savings and take on a higher level of risk (up to 75%). Beneficiaries would be prospectively assigned to ACOs in Track 3, giving the ACO a more targeted set of beneficiaries on whom it can focus its efforts.  ACOs in Track 3 may also apply to CMS for a waiver of the current requirement that beneficiaries have a prior 3 day inpatient hospital stay in order to qualify for the Skilled Nursing Facility benefit.  Several of the Track 3 features are based on elements of the Pioneer ACO Model currently being tested by the Center for Medicare & Medicaid Innovation.
  • Changes and refinements to the methodology by which beneficiaries are “assigned” or attributed to a particular ACO, including changes to better identify primary care services and the primary care providers serving beneficiaries. Claims for primary care services provided by nurse practitioners, physician assistants, and clinical nurse specialists will now be included in the ACO assignment process, and services provided by certain physician specialists will be excluded.
  • Expansion of the data set that CMS will share with ACOs through aggregate reports and beneficiary-identifiable claims data, and streamlining that process. Previously, ACOs had to request the data from CMS, as well as notify beneficiaries of the request and provide them with the opportunity to decline to allow their data to be shared.  Under the final rule, ACOs will no longer have to send out requests to beneficiaries, but beneficiaries will be able to call 1-800-Medicare and decline to allow their data shared with the ACO.  
  • For an ACO under one of the two sided models, CMS will allow the ACO to choose from several options for establishing their Minimum Savings Rate and Minimum Loss Rate, which determine eligibility to share in savings or be responsible for losses.
  • Refines the policies for resetting ACO benchmarks for subsequent agreement periods in a way that makes it easier for ACOs to share in savings. Under the final rule, when resetting an ACO’s benchmark at the start of a second or later agreement period, CMS will equally weight the historical benchmark years, and will account for savings generated by the ACO during its prior agreement period.

CMS also announced that it would address other modifications to the ACO program in further rulemaking later this year. This will include modifying the methodology for assigning beneficiaries to an ACO in order to hold ACOs more accountable for beneficiaries who have indicated that ACO practitioners are responsible for their care; waiving certain requirements for the use of telehealth services by ACO practitioners; and modifying the methodology for resetting ACO benchmarks, to include regional, rather than just national, costs and trends.