Concerns about the changes include possible adverse impacts on early ACOs and the lack of provisions accounting for MACRA requirements.


June 8—A final rule issued this week will allow accountable care organizations (ACOs) to benchmark their results to regional Medicare spending, rather than nationally, but only after their first three-year contract.

The final rule created a phased approach to incorporating regional fee-for-service (FFS) spending into calculations for resetting, adjusting, and updating a Medicare Shared Savings Program (MSSP) ACO’s rebased historical benchmark in its second or subsequent agreement period, beginning in 2017.

Changes from the proposed rule included revising the benchmarking methodology for national FFS calculations to use “assignable” Medicare FFS beneficiaries instead of all FFS beneficiaries. The Centers for Medicare & Medicaid Services (CMS) planned to also apply the use of assignable beneficiaries to ACOs that started as early as 2014.

National benchmarks will continue to be used in an ACO’s first three-year term. Benchmark changes to the second or subsequent agreement period will include phasing in the transition to a higher weight in calculating the regional adjustment.

Premier commended CMS for finalizing policies to regionally adjust and trend ACO benchmarks following a transition that will minimize disruption, and hailed removal of a proposal to subtract shared savings payments from ACO spending in calculating the rebased benchmarks. That change would have unfairly penalized ACOs for performing well in the past, according to Premier.

“We believe these changes represent steps in the right direction, helping improve the overall fairness of the benchmarks, and improving the long-term viability of the program by attracting new providers,” Blair Childs, a senior vice president for Premier, said in a written statement.

Chad Mulvany, director of healthcare finance policy, strategy and development, for HFMA, also praised CMS’s effort to replace the “flawed” original benchmarking and trending methodologies.

HFMA was still analyzing the final rule at press time to identify whether it included suggested changes from the Association (login required).

At the urging of providers, CMS made further changes for ACOs with high expenditures compared with their region, including a revised, phased-in rebasing methodology. The phased approach aims to give high-spending providers time to alter their practices, according to CMS.

CMS plans to annually update the rebased benchmark to account for changes in regional FFS spending.

The final rule adjusts an ACO’s rebased historical benchmark prior to the start of a performance year to account for changes in the ACO’s certified ACO Participant List during the agreement period.

The final rule also eliminates a proposal to replace the method for calculating adjusted historical benchmarks for ACOs that make ACO Participant List changes. CMS had proposed use of an expenditure ratio based on a single reference year but dropped the idea due to concerns raised by commenters.

Areas Impacted

The final rule defines an ACO’s regional service area as any county where one or more assigned beneficiaries reside. CMS will use county-level data to determine regional FFS expenditures for the assignable beneficiary population in the ACO’s regional service area. The final rule dropped a plan to calculate expenditures for the end-stage renal disease (ESRD) population at the state level and apply this value to each county within the state.

“This modification responds to concerns raised by some commenters about the proposed approach and support for calculating ESRD expenditures at the county level,” CMS stated in a fact sheet.

The changes mean an ACO’s rebased historical benchmark will be determined by comparing the ACO’s performance with that of other providers in the same regional market instead of simply evaluating the ACO against its own past performance.

The rebased historical benchmark will not apply until the third agreement period—beginning in 2019—for ACOs that started in 2012 and 2013.

That provision drew criticism from Premier.

“This decision puts the inaugural class of ACOs at a distinct disadvantage to those that applied later,” Childs said.

The provision delaying the benchmarking changes for early ACOs could endanger the continued participation of as many as half of the 22 ACOs operated by Collaborative Health Systems (CHS), the largest operator of MSSP ACOs, Jeffrey Spight, president of CHS, said in a previous interview.

CMS plans to publicly release annual data files containing county-level expenditure and risk score data to allow ACOs and other stakeholders to model impacts. Additionally, CMS plans to publicly release ACO-specific aggregated data on counties of residence of an ACO’s assigned population for each performance year.

MSSP Track Changes

CMS plans to allow upside-only Track 1 ACOs—which comprise 95 percent of MSSP ACOs—to add an additional year of upside-only risk if they commit to subsequently move into Track 2. The rebased benchmark would not apply to the possible fourth year of an ACO’s Track 1 participation agreement.

“We are committed to facilitating entry and continued participation in the Shared Savings Program by ACOs with varying levels of experience with accountable care models and differing degrees of readiness to take on performance-based risk, and to encourage transition of ACOs to performance-based risk tracks,” the CMS fact sheet stated.

Premier also expressed concern about the lack of provisions to address the ability of an ACO to move into tracks that will qualify as alternative payment models under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) once those rules are finalized but before the ACO’s three-year contract is up. Under proposed rules implementing MACRA, Track 1 ACOs will not quality as APMs, meaning their participating physicians would not qualify for related bonus payments.

“This will lock out many early adopter ACOs from the bonus on eligible clinician payments,” Childs said.

The final rule added first-time criteria for reopening a determination of the amount of shared savings or losses for an ACO if an inspection, evaluation, or audit found an error in the calculation. The rule allowed limiting re-openings of such determinations within four years of the notification to the ACO of the initial determination while reserving the right to reopen a payment determination at any time in the case of fraud or similar fault.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C. office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, June 08, 2016