Medicare Compliance & Reimbursement

But don’t expect your benchmarking methodology to change until the second year.

Under the new Medicare Shared Savings Program (MSSP) final rule, the Centers for Medicare & Medicaid Services (CMS) will rebase, or reset, your Accountable Care Organization’s (ACO’s) benchmark under a newly revised methodology.

In the first agreement period’s benchmarking methodology, CMS will continue to establish an ACO’s historical benchmark based on the Parts A and B fee-for-service (FFS) expenditures for beneficiaries who would’ve been assigned to the ACO in each of the three years prior to the start of the agreement period, according to a June 6 CMS fact sheet. CMS will apply factors calculated based on national FFS expenditures, including:

• Truncate an assigned beneficiary’s total annual Parts A and B FFS per capita expenditures at the 99th percentile for national Medicare FFS expenditures;
• Use national trend factors to restate benchmark-year expenditures for the first and second benchmark years in terms of third-year expenditures; and
• Annually update the benchmark based on the projected absolute amount of growth in national per capita expenditures for Parts A and B services under the original FFS program.

What’s new: In the second or subsequent agreement period, however, the final rule revises the approach for resetting, or “rebasing,” an ACO’s benchmark for such a period that begins on or after Jan. 1, 2017. In the final rule, CMS set forth the following changes:

• Replace the national trend factor with regional trend factors for establishing an ACO’s rebased historical benchmark, and removed the adjustment to account for savings generated under the ACO’s prior agreement period;
• Make an adjustment when establishing an ACO’s rebased historical benchmark to reflect a percentage of the difference between the regional FFS expenditures in the ACO’s regional service area and its historical expenditures;
• Establish a phased-in approach to transition to a higher weight in calculating the regional adjustment;
• Work toward finalizing an approach that will apply a lower weight in calculating the regional adjustment the first and second time that an ACO’s benchmark is rebased under the revised methodology:
• For higher-spending ACOs, Medicare will reduce the weight placed on the regional adjustment to 25 percent (compared to 35 percent for other ACOs) in the first agreement period in which the regional adjustment is applied, and 50 percent (compared to 70 percent for other ACOs) in the second agreement period.
• Ultimately, Medicare will apply a weight of 70 percent in calculating the regional adjustment for all ACOs beginning no later than the third agreement period in which the ACO’s benchmark is rebased using the revised methodology.
• Annually update the rebased benchmark to account for changes in regional FFS spending, replacing the current update, which is based solely on the absolute amount of projected growth in national FFS spending;
• Adjust an ACO’s rebased historical benchmark prior to the start of the performance year, including re-determining the regional adjustment, to account for changes in the ACO’s certified ACO Participant List during the agreement period; and
• Re-determine, under the first and second agreement periods using the revised rebasing methodology, whether an ACO has higher spending compared to its region, and therefore whether Medicare should use the applicable lower weight in calculating the regional adjustment.