Accountable Care Organizations

ACO Overhaul Issued Amid Looming Regulations

December 20, 2018 3:47 pm

Hospitals also have been awaiting a rule that would address EHR information blocking.

Dec. 21—An overhaul of Medicare’s accountable care organization (ACO) program, issued today, is among several far-reaching federal regulations that hospital leaders and advocates have been anxiously awaiting, all of which could be released within the next week.

Among provisions in  the newly released Pathways to Success ACO rule that had raised concerns among ACO advocates was a proposal by the Centers for Medicare & Medicaid Services (CMS) to reduce the shared-savings rate from 50 to 25 percent for ACOs in shared-savings-only or low-risk models. In the final rule, CMS upped the rate for low-risk models to 40 percent.

The National Association of ACOs (NAACOS) had urged CMS to provide shared-savings rates ranging from 50 to 60 percent, depending on the type of ACO.

The proposed rule also drew fire for capping the upside-only risk period among new ACOs at two years. NAACOS urged CMS to allow new ACOs four years of bonus-only participation, with an additional fifth year available for those that demonstrate “superior performance.” The final rule kept the upside-only window at two years for most eligible ACOs.

NAACOS data found that 36 percent of the 142 ACOs earning shared-savings payments in 2017 had losses in one of their first two years. That finding illustrated the need to allow ACOs adequate time to prepare for risk, NAACOS said in a letter to CMS.

The American Hospital Association (AHA) also was concerned about provisions in the proposed rule that appeared to target hospital-led ACOs, such as by creating different participation options for high- and low-revenue ACOs.

“CMS bases its proposal to differentiate between high- and low-revenue ACOs on incomplete and misguided data that suggest ‘physician-led’ ACOs outperform ‘hospital-led’ ACOs, as well as its assumption that high-revenue ACOs are likely to include hospitals, health systems, and/or other institutional providers,” AHA wrote in a letter to CMS. “However, the results of the ACO program cannot be explained simply by dividing the world into high- and low-revenue or hospital- and physician-led.”

Almost half of MSSP ACOs had said in a survey they likely would continue to participate in the program if the proposed rule’s provisions were implemented. But more than one-third would be unlikely to continue.

Although Trump administration officials have said the loss of some ACOs would be acceptable due to the program’s low savings, ACO advocates aimed to change the narrative with the recent release of a NAACOS-commissioned analysis that found the MSSP saved $859 million in 2016.

Information Blocking

Also having made its way to the Office of Management and Budget (OMB)—the last stage of the federal rulemaking process—is a rule aimed at stemming information blocking. The proposed rule would define information blocking under the 21st Century Cures Act, which barred electronic health record (EHR) vendors, health systems, and other users of health data from interfering with the free exchange of patient information.

Before the U.S. Department of Health and Human Services and the Office of the Inspector General can enforce that provision of the law, the Office of the National Coordinator for Health Information technology needs to define what constitutes allowed and disallowed behavior.

Some hospital advocates have said the long-awaited information blocking rule is needed to address serious barriers to accessing EHR data that are undermining innovation and patient care and increasing healthcare costs.

Provider Enrollment

On Dec. 3, OMB began reviewing a final rule aimed at improving the Medicare provider enrollment process to bolster program integrity.

The proposed rule was released in early 2016 under the Obama administration and called for removing or preventing enrollment of providers that try to avoid Medicare requirements by changing their name and identity, and for increasing the maximum amount of time that a provider can be removed from Medicare.

The CMS regulatory agenda notes that final comments for the provider enrollment rule are due March 1, 2019.


CMS is collecting comments through Jan. 14 on long-anticipated proposed modifications to Medicaid managed care regulations that were issued by the Obama Administration in 2016.

The proposed rule included provider payment changes. For instance, the rule would authorize states to become far more engaged in directing managed care contractors to test certain value-based provider payment reforms that fit with the state’s quality improvement strategy.

However, any payment reform model cannot provide additional payment in exchange for higher local revenue. That provision was designed to reverse what CMS saw as an undue restriction in the 2016 rule on the ability of states to test value-based payment approaches.

Another provision would expand the authority of states to require contractors to make what are known as pass-through payments, which are state-directed supplemental payments, to certain hospitals, nursing homes, and physicians.

CMS proposed to expand pass-through authority to enable states to incentivize the transition to managed care of new populations and of services that are currently paid directly by the state on a fee-for-service basis. The new policy would apply to newly included services, the transition period would be capped at three years, and the rule would cap total pass-through payments at current aggregate levels under the state regulation.  

Tuesday, Dec. 25


Wednesday, Dec. 26

Comments due on the U.S. Preventive Services Task Force’s draft recommendations on HIV. Learn more.

Deadline for 17 Democratic attorneys general to respond to Republican plaintiffs’ filing in a motion in which the Democratic attorneys general are asking a federal judge to confirm that the Affordable Care Act remains in effect nationwide and to allow for a prompt appeal of his decision that the law is unconstitutional. Learn more.


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