Will New CMS Rule Reduce ACO Participation in Shared Savings Program?

| Brittany McCullough
Dollars with stethoscope on them

Last month, CMS finalized rulemaking that overhauls the Medicare Shared Savings Program (Shared Savings Program) to encourage participating accountable care organizations (ACOs) to transition to risk-based models more quickly.

Since release of the final rule, stakeholders such as the National Association of ACOs (NAACOS) and American Hospital Association (AHA) have expressed concern that the new policy will discourage ACOs from future participation due to the reduced amount of time ACOs have to take on risk.

CMS refers to the new rule, which goes into effect February 14, 2019, as “Pathways to Success” because it will require more ACOs to take on risk in the continued move towards value-based care. In a press release, CMS Administrator Seema Verma stated “Pathways to Success is a bold step towards quality healthcare at a lower cost through competition and beneficiary engagement.”

Almost 30 percent of beneficiaries in traditional fee-for-service Medicare receive services from a provider participating in a Medicare ACO as of 2018. A Medicare ACO is a collection of providers like hospitals and physicians that voluntarily come together to improve care coordination for their Medicare patients. Ideally, ACOs should lead to better quality care, improved patient outcomes and reduced costs. However, as noted in CMS’s fact sheet, some ACOs in Track 1 are increasing expenditures.

So, what is Track 1?

The Shared Savings Program currently consists of three tracks: Track 1, Track 2 and Track 3.

Track 1 is an upside risk model. In upside or one-sided risk, ACOs share in savings if spending is below historical benchmarks but they are not responsible for any costs that exceed the benchmark.

Track 1+, which began on January 1, 2018, is a derivation of Track 1 but tests various payment models with a limited amount of down-side risk. Most ACOs have opted to stay in Track 1.

In a downside-risk or two-sided risk model, ACOs must reimburse CMS a portion of the difference when spending exceeds historical benchmarks. Due to concerns about the lack of ACOs moving to the two-sided risk models of Tracks 2 and 3, CMS has redesigned the Shared Savings Program.

Agreements under the new rules will start on July 1, 2019, and all new participants must apply under these rules. ACOs that are currently participating in the Shared Savings Program can continue participating until their current agreements lapse and thereafter re-apply to the program under the new rules. New and current participants had to notify CMS of their intent to apply under the new Shared Savings Program structure by January 18th. There will also be an annual call for participation on January 1st starting in 2020 and each following year.  

Here are some of the key changes to the Shared Savings Program structure:

  • Eliminates Tracks 1, 1+ and 2
  • Creates a Basic Track that has 5 risk levels, levels A-E
    • A variation of Tracks 1 and 1+
    • Functions as a “glide path” that will increase the amount of risk ACOs take on over time
    • Tracks A and B are one-sided risk, while tracks C, D, and E gradually increase the amount of risk the ACO takes on
    • Under the Basic Track, new, low-revenue ACOs (i.e. those without a hospital) have the option to participate in one-sided risk for period of 3 years in exchange for immediate transition to Level E, the highest risk level
  • Creates an Enhanced Track which is the new name for Track 3
    • Remains an immediate down-sided risk model
  • Expands three-year contracts for participating ACOs to a minimum of five years

In addition, CMS has finalized a few initiatives aimed at increasing flexibility to afford ACOs the ability to innovate, such as increasing choice in ACO assignment methodology, expanding use of telehealth for ACOs in down-sided risk, and expanding skilled nursing facility three-day rule wavier eligibility.

To give ACOs more choice over beneficiary assignment, all ACOs regardless of track will have the flexibility to use prospective or preliminary prospective assignment with retrospective reconciliation prior to start of each agreement period. Prospective assignment is favorable because it will allow ACOs to know their population in advance and develop a model of care that results in optimal value. ACOs can also change their selection in subsequent performance years during the agreement period.

Under preliminary prospective assignment, CMS compiles a list of beneficiaries likely to receive care from the ACO prior to the start of the performance year based on previous primary care utilization. CMS updates this list during the performance year to give the ACO the opportunity to make changes in their assigned population. At the end of the performance year, CMS goes back and updates the list one last time to only include Medicare beneficiaries that meet the criteria for assignment. This final list is used to determine the calculations for shared savings or losses.

Prospective assignment is similar in that the beneficiary list is determined prior to the start of the performance year, but, subsequent modifications based on actual utilization are not made. If you want to read more on how patients are attributed to an ACO, check out this Health Affairs article.

Brittany McCullough

Brittany McCullough, Health Policy Associate.

Brittany McCullough, URAC's health policy associate, focuses on tracking and analyzing legislation and regulations of importance to URAC stakeholders. Brittany considers herself an early careerist but most of her policy and research work has been centered on the ACA, Medicaid, CHIP, and mental health. She holds a B.S. in Neuroscience and a Master of Health Administration.

Views, thoughts and opinions expressed in my articles belong solely to me, and not necessarily to my employer.

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