Medicare Compliance & Reimbursement

Not yet ready to take a big financial risk? Now you can get an extra year of breathing room.

If you’ve been fretting over how you can surpass your performance scores from year to year, you don’t need to worry any longer. The Centers for Medicare & Medicaid Services (CMS) has revised its rules on how Medicare pays Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP).

On June 6, CMS released a final rule that changes the way it makes Medicare payments to ACOs under the MSSP, moving another step toward rewarding physicians for coordinating with each other and delivering high-quality care to patients.

Expect the Bar to Get Lower

Background: “Previously, annual performance measurements forced ACOs to compete against themselves and surpass their own savings each year,” says John Meigs, Jr., MD, President-Elect of the American Academy of Family Physicians (AAFP) and a practicing family physician in Centreville, AL.

With more than 430 ACOs in 49 states and the District of Columbia, CMS is keeping a close eye on ACOs’ performance in the MSSP. Early results of the MSSP and the Pioneer ACO Model showed that ACOs had a combined total net program savings of $411 million, while reaping both quality improvements as well as boosts in patient and caregiver satisfaction. CMS has not yet released the 2015 MSSP results, but expects to do so later this summer.

And along with the astronomical growth in ACOs came an increase in complaints and other input from MSSP participants. One major complaint was that the annual performance measurements forced ACOs to compete against themselves under the difficult standard of having to surpass their own savings each year, or otherwise face a penalty, according to the AAFP.

But the recent MSSP final rule has changed the game. The rule incorporates regional fee-for-service (FFS) expenditures into the methodology for establishing, adjusting, and updating the benchmarks of ACOs that continue to participate in the MSSP after the initial three-year agreement period.

“Today’s changes will encourage more physicians to improve patient care by joining [ACOs], while also refining how the program measures success, so that current participants are better rewarded for quality,” CMS Acting Administrator Andy Slavitt said in a June 6 statement. “These new flexibilities are based on significant input from participants and will help physicians prepare for the new Quality Payment Program, part of bipartisan legislation Congress passed last year repealing the failed Sustainable Growth Rate.”

Prepare to Compete on a County Level

Good news: “There is no longer a penalty if an ACO reports large savings that cannot be duplicated the following year,” Meigs says. “Under the final rule, historical data will still play a role in measuring performance, but benchmarks will combine historical and regional data.”

“Medical costs reported by an ACO will now be evaluated in comparison with what fee-for-service [FFS] care would cost in its particular region,” Meigs points out.

The final rule changes how Medicare pays ACOs by basing one of the payment factors on whether the ACO is able to deliver high-quality care at a lower cost compared to other providers in its region. By making this fundamental change, CMS is essentially recognizing that health cost trends vary in counties and regions across the United States.

“In the past, strong performers found it difficult to achieve savings, since ACOs that operate in low-cost areas had a built-in advantage over peers in high-cost areas,” Meigs explains. “This change creates a more level playing field, making it more feasible for physicians to join ACOs.”

What’s more: The MSSP final rule also allows ACOs an extra year under their first agreement before taking on financial risk, providing a smoother and quicker transition to the more advanced tracks. This means that ACOs in the first track can extend their participation for another year under the same terms before advancing to the riskier tracks.

Watch for More Specifics on Service Areas

More to come: “CMS has yet to clearly define regional service areas, but they will be created by aggregating county-level data on FFS expenditures,” Meigs states. “An ACO regional service area will include any county where one or more assigned Medicare beneficiaries reside.”

CMS has said that it plans to release annual data reports on county-level risk scores and expenditures, along with ACO-specific data for the same counties.

Resources: To access the final rule, go to www.federalregister.gov/public-inspection. A fact sheet on the final rule is also available at www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-06-06.html. For more information on the MSSP, visit www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/index.html.