Medicare Payment and Reimbursement

HFMA Comments on the Proposed Rule on the Medicare Shared Savings Program

February 11, 2015 4:40 pm

February 6, 2015

Marilyn Tavenner
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Hubert H. Humphrey Building
200 Independence Avenue, SW, Room 310G
Washington, DC 20201

Re: CMS–1461–P: Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations ; proposed rule (Vol. 79, No. 235), December 8, 2014

Dear Ms. Tavenner:

The Healthcare Financial Management Association (HFMA) would like to thank the Centers for Medicare & Medicaid Services (CMS) for the opportunity to comment on issues related to the proposed rule: Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, published on December 8, 2014. 

HFMA is a professional organization of more than 40,000 individuals involved in various aspects of healthcare financial management. HFMA is committed to helping its members improve the management of healthcare delivery systems, comply with the numerous rules and regulations that govern the industry, and further the principles of administrative simplification. 

The Medicare Shared Savings Program (MSSP) is a new and complex payment system. By aligning financial incentives across the care continuum, it has the potential to improve both beneficiary outcomes and the overall cost efficiency of care delivery. However, like many early-stage models, it has significant design issues that challenge the long-term viability of the MSSP. HFMA commends CMS for its efforts to modify the program, based on feedback from participants, to ensure the sustainability of the MSSP. HFMA appreciates the thoughtful approach that CMS demonstrated in the proposed rule as it balances the needs of beneficiaries, providers, and the Medicare program. Below please find comments related both to specific provisions in the proposed rule and other MSSP issues HFMA’s members believe need to be addressed.

Proposed Changes to Specific Tracks

HFMA appreciates CMS’s modifications to Track 1 and the newly proposed Track 3. While specific comments related to common features across tracks are discussed in the following sections, HFMA would like to make the following track-specific comments. 

Track 1: HFMA agrees with CMS’s assessment that the “slope of the on ramp” for risk-bearing tracks may currently be too steep for many ACOs. We generally support allowing Track 1 ACOs additional time to gain experience managing populations before subjecting them to downside risk. However, HFMA strongly believes CMS’s proposal needs to be modified in the following ways:

  1. CMS’s current proposal reduces the shared savings rate for the additional contracting period to 40 percent for the ACO/60 percent for the program (40/60). Given the significant upfront investments required to manage populations and the difficulty that even organizations with considerable population health management experience have encountered, HFMA believes the shared savings rate for the additional contracting period should remain at 50/50.
  2. Additionally, Track 1 ACOs are limited to one additional contracting period under a shared- savings-only model in the proposed rule. HFMA believes that non-rural Track 1 ACOs should be afforded up to two additional contracting periods without exposure to downside risk. The second contracting period continue with 50/50 shared savings. If a Track 1 ACO avails itself of the third additional contracting period as shared savings only, HFMA believes it would then be appropriate to reduce the shared savings rate to 45/55. 
  3. Through HFMA’s Value Project , we believe that rural providers face unique circumstances related to bearing risk. Therefore, we believe that rural ACOs should be allowed the option of remaining in Track 1 in perpetuity as long as a rural ACO meets minimum performance standards. 

Track 3: HFMA is generally supportive of the proposed Track 3. We appreciate CMS’s efforts to develop a risk-bearing track for more sophisticated organizations seeking to bear risk in exchange for a higher shared savings rate. HFMA’s comments related to the specific design features of Track 3 are discussed in the relevant sections below.

Shared Savings Rates Increased for High Performing ACOs

HFMA believes ACOs that exhibit high performance across quality measures relative to their peers and generate shared savings should be allowed to “share” a larger portion of those savings. High performance should be based on either an ACO’s absolute score or its improvement over the prior year. In either case, “high quality” should be defined as top quartile relative to peers. 

CMS should increase the “shared savings” rate by 10 percentage points for ACOs that are in the top quartile (based on either absolute performance or improvement over prior year) and generate shareable savings. Please see below for a breakdown of shared savings rates by track:

Shared Savings Rate for High- Performing ACOs All Other ACOs Generating Shareable Savings

  Shared Savings Rate for 
High-Performing ACOs
All Other ACOs Generating 
Shareable Savings
Track 1 60/40 50/50
Track 2 70/30 60/40
Track 3 85/15 75/25


ACO Benchmarks and Trending Factors

In the proposed rule, CMS stated it continues to receive feedback that the manner in which it sets benchmarks poses a challenge to an ACOs’ ability to generate shared savings. First, given the heavy weighting of the most recent benchmark year (BY3 – 60 percent) it puts downward pressure on the benchmark in subsequent years, which makes generating additional cost efficiencies even harder for ACOs. Second, given the significant regional variation, ACOs in historically low-cost markets have, in theory, fewer opportunities to generate shared savings. CMS requested feedback on a number of concepts to address both of these issues.

Equally Weighting the Benchmark Across All Three Performance Years: Currently, benchmarks for MSSP participants are set by weighting BY3 (most recent year prior to the performance period) at 60 percent, BY2 at 30 percent, and BY1 at 10 percent. In the proposed rule, CMS suggested equal weighting would gradually lower ACO benchmarks, making it more likely that ACOs achieve shared savings. 

HFMA strongly supports this suggestion as it will allow ACOs a greater opportunity to generate shareable savings as a result of their investments in care coordination and quality improvement. Under the current model, interventions put in place in the first and second performance year will have the most impact in performance year three (PY3) of a contracting period. Therefore, not only do ACOs have only one year in which to generate shareable savings off of their investments in care coordination and quality improvement, but PY3 of the prior contracting period becomes BY3 in the next contracting period. Skewing the benchmark toward the year in which prior interventions had the most impact makes achieving savings relative to historic spend and thereby recouping some portion of their investment even more difficult for ACOs. CMS’s proposal would rectify this problem, creating a more equitable environment for shared savings. 

Increasing the Contracting Period: While it was not discussed in the proposed rule, HFMA suggests that CMS lengthen the contracting period for ACOs. If CMS were to reset the benchmark every five years, this (combined with equally weighting the benchmark years) would allow ACOs a longer period to generate a return on their investments in care coordination and quality improvement efforts implemented during the early years of the program. Not only would this be a more equitable sharing of the savings between CMS and MSSP participants, but it would increase the likelihood that ACOs would participate (or continue to participate) in the program. If CMS chooses to increase the contracting period, the issues discussed below related to risk adjustment for continuously attributed beneficiaries must be addressed as well. 

Incorporating Shared Savings into Benchmarks: Currently, any shared savings generated are not incorporated into future benchmarks. In the proposed rule, CMS suggested that it might include an upward adjustment to benchmarks based on the final savings rate for any organization that generated shareable savings. HFMA strongly supports this suggestion, as it would make the historical benchmark more reflective of CMS’s total cost of care for the beneficiaries during the prior agreement period. We believe this would encourage continued participation in subsequent agreement periods by not penalizing those ACOs that were able to make cost improvements. 

The proposed rule states that savings generated below the MSR (and therefore not shared under current rules) would not be included in the adjusted benchmark. HFMA strongly disagrees and believes that any savings, even if it is below the MSR (and not shared) should be incorporated as it serves to reduce actual spending and thus would lower future benchmarks. 

The proposed rule suggested the historical benchmark would be delayed if regulations were changed to include shared savings payments. HFMA believes this delay is acceptable for the final historical benchmark determination. However, a preliminary benchmark excluding the shared savings payments should be provided in a timely manner. 

Finally, HFMA strongly discourages CMS from including shared loss payments paid for the prior agreement period in the historical benchmark. This would decrease the historical benchmark, making it even harder for a struggling ACO to generate savings under a new agreement period, and thus, discourage continued participation in the MSSP. 

Alternative Methods for Setting and Trending Benchmarks: In the proposed rule, CMS discusses a number of alternative methodologies for setting and updating ACO benchmarks, which included using regional factors to set and update the benchmark and an approach that would “hold“ an ACO’s historical cost relative to the region. It is difficult to provide substantive comments on these alternatives as there is no quantitative analysis provided with the discussion. HFMA strongly encourages CMS to model these and other potential alternatives using data from currently participating ACOs. HFMA encourages CMS to give careful analysis and consideration to the impact of regional or comparative population based benchmarks on ACOs that include cost based entities like critical access hospitals (CAHs). HFMA believes there is potential for ACOs that include CAHs to be significantly disadvantaged, holding utilization constant, if they are compared to populations who predominately receive their acute services from hospitals paid under prospective payment systems. The results of all analysis should be made available for comment so the industry better understands the potential consequences of moving to one or more of these models.

HFMA continues to receive feedback from its members that the method for calculating and trending the benchmark has a significant impact on an ACO’s ability to generate shareable savings based on historic regional costs and current regional cost growth relative to national factors. If CMS is truly interested in attracting and retaining participants in the MSSP program, then it should allow ACOs to choose the benchmark and trending methodology from a menu of options based on the current methodology or regional data. While this may reduce overall savings to the Program in the short term, HFMA believes that long-term increases in the number of ACOs that participate (and continue to participate) in the MSSP will exert downward pressure on cost growth, helping CMS achieve long-term financial objectives. Additionally, given that increased care coordination will improve outcomes for beneficiaries, even if short-term savings targets aren’t met, value will still be created for beneficiaries. Also, retaining current MSSP participants and attracting new participants is key to achieving Secretary Burwell’s recently stated goal of making 30 percent of Medicare fee for service (FFS) payments under value based alternative payment models by the end of 2016 and 50 percent by the end of 2018.

Transition ACOs to Benchmarks Based Only on Regional Costs Over the Course of Multiple Agreement Periods: Should CMS opt to implement regional benchmarks/trend factors on a mandatory basis, as opposed to a voluntary basis, it must allow a sufficient transition period for ACOs that would potentially be disadvantaged to adjust.

HFMA believes the transition period should be dependent on the percentage by which an ACO’s historical benchmark is above or below the regional fee-for-service (FFS) benchmark. This approach acknowledges the differences it may take for different ACOs to reach the regional benchmark. For example, it will take more time for an ACO that is 20 percent above the regional FFS benchmark to reach the mark than for an ACO 10 percent above the regional FFS benchmark.

Technical Adjustments to Benchmark and Performance Year Expenditures: HFMA believes that two additional adjustments need to be made to the benchmark and performance year expenditures.

  1. Currently, the benchmark and performance year expenditures include adjustments for value- based programs such as the hospital value-based purchasing program (HVBP), hospital readmissions reduction program, and the physician value modifier. HFMA believes that both the benchmark and performance periods need to be normalized to remove these adjustments. If they are not, an ACO could actually be penalized for improving quality. For example, if an ACO participant hospital receives a positive payment adjustment under hospital value-based purchasing in the performance year that exceeds the payment adjustment received during the benchmark year, it will reduce the amount of savings the ACO generated even though the hospital improved quality as measured by the HVBP.

  2. Currently, the benchmark for a given performance year is not fully adjusted for changes in beneficiary health status. Newly assigned beneficiaries are adjusted using the CMS-HCC model, however continuously assigned beneficiaries are adjusted using demographic factors alone unless CMS-HCC risk scores result in a lower risk score and therefore a lower benchmark.

    HFMA strongly believes that the benchmark for a given performance year needs to be fully adjusted for changes in beneficiary health status. Failing to do so ignores the fact that even when care is optimally managed, individuals become sicker and therefore more expensive to care for as disease processes progress (or initially present). For example, when a beneficiary who has been continuously attributed to an ACO is diagnosed with cancer, it seems inappropriate for the ACO to carry that cost with no expectation from Medicare for higher spending related to that member.

Minimum Savings Rate (MSR)/Minimum Loss Rate (MLR)

Tracks 1, 2, and proposed Track 3 of the MSSP include an MSR to protect the Medicare program from inappropriately sharing savings that resulted from random fluctuations in patient expenditure patterns that are unrelated to provider efforts to deliver care more efficiently. A similar mechanism, the MLR, exists in downside-risk-bearing tracks (2 and proposed 3) to protect ACOs from losses incurred as a result of random, adverse fluctuations in patient expenditure patterns that are unrelated to an inability to deliver care more efficiently. For Track 1 ACOs, the MSR ranges based on attributed beneficiaries from a high of 3.9 percent (5,000 attributed beneficiaries) to a low of 2 percent (60,000+ attributed beneficiaries). For example, in order to receive shared savings, an ACO with 5,000 attributed beneficiaries must generate savings that exceed 3.9 percent of the benchmark. Track 2 ACOs face a flat 2 percent MSR and MLR.

HFMA believes CMS’s MSR policy is problematic. While the estimates vary, it is clear that ACOs face significant start-up and ongoing costs in terms of financial and human capital.1,2 The most recently available data indicate that 57 of the first 220 MSSP participants generated shared savings that did not exceed their MSR. Given the graduated nature of the policy with the MSR increasing as attributed patient populations decrease, this is especially problematic for smaller ACOs. HFMA understands the need to protect Medicare funds from unearned shared savings distributions but if organizations that are making great strides to improve outcomes and reduce the overall cost of care for Medicare beneficiaries are unable to recoup their upfront investments and cover their ongoing expenses related to the MSSP, they are unlikely to continue participating. To that end, HFMA recommends the following policies related to the MSR/MLR:

  1. ACOs that do not generate losses over the course of a contract period should be allowed to retroactively share savings for any year they generated savings but the savings did not exceed the MSR.

  2. ACOs that generate savings during a performance year but the savings do not exceed the MSR should be allowed to share savings if their composite quality score is in the top quartile relative to other ACOs.

  3. HFMA does not support eliminating the flat 2 percent MSR/MLR for Track 2 ACOs in favor of the sliding scale approach used in Track 1. Instead, HFMA recommends allowing Track 2 ACOs to choose their MSR/MLR for a contracting period. We believe it should range from 0 percent (fully exposed to positive and negative variation) to 3.9 percent. We recommend this approach be extended to Track 3 participants as well. This would allow risk-bearing ACOs to choose the level of risk they feel comfortable assuming, based on the capabilities they’ve developed.

Beneficiary Assignment

CMS proposed changes to the beneficiary assignment methodology, including eliminating certain physician specialties from the second step of the assignment process, incorporating non-physician practitioners in step one of the assignment process, and allowing beneficiaries to attest to their primary care physician for purposes of attribution. 

HFMA generally supports these changes, but offers the following suggestions for improvement:

  1. While HFMA’s members expressed general support for including non-physician practitioners into the first step of the attribution process, concern was voiced that many of these practitioners may not be providing primary care services. These sub-providers do not self-report specialty codes. To overcome this, we recommend categorizing these sub-providers as either primary care or specialty providers on the basis of their Provider Taxonomy Code.

    Sub-providers would be included in step 1 of the assignment methodology if their Provider Taxonomy Code indicated that they provided primary care. Otherwise, they would be included in step 2. Another option for ensuring accurate attribution would be to use only non-physician practitioner visits in step 1 of attribution if there is at least one primary care physician visit (as defined in Table 1) from the same Tax Identification Number (TIN).

  2. HFMA strongly supports allowing beneficiaries to attest to their primary care physician and letting that attestation serve as attribution to an ACO. However, HFMA believes CMS needs to identify to ACOs instances where a beneficiary is attributed via attestation to their ACO, but that attestation-based attribution is not supported by claims-based attribution. In these instances, ACOs should be allowed to proactively educate these patients on the benefits of staying within an ACO network for all of their care. This will not only help improve beneficiary outcomes and reduce the overall cost of care delivery to Medicare beneficiaries, but also protect MSSP participants from having attributed patients with whom the participants, in reality, have a limited relationship.

  3. HFMA supports the prospective assignment methodology outlined for the proposed Track 3. In addition to implementing it in Track 3, we strongly believe that CMS should use prospective assignment in both Tracks 1 and 2. Prospective attribution would benefit both MSSP participants and beneficiaries by:
       a. Making it easier to analyze data and evaluate trends on a stable population.
       b. Reducing churn, which is significant under the current model used and extremely difficult for ACOs to manage.
       c. Overcoming many of the barriers to expanding the waivers discussed in the proposed rule to all MSSP participants.

CMS has long resisted moving to a prospective methodology for beneficiary assignment based on the concern that ACOs would treat attributed beneficiaries under one set of protocols while treating non-attributed beneficiaries under another. While most (if not all) ACOs do track attributed beneficiaries, the clinical reality is that once care protocols are put in place, it is difficult, if not impossible for providers to change care pathways based on patient type. Further, it behooves ACOs to provide the same level/quality of care to non-attributed beneficiaries in hopes the beneficiary would migrate more of their care to the ACO. Given that CMS has yet to provide examples of MSSP participants bifurcating care delivery based on whether or not a beneficiary is attributed to an ACO, HFMA believes that the benefits of prospective attribution far out-weigh the hypothetical risks.

Data Sharing

The rule proposes several changes to requirements related to beneficiary data sharing. These include removing the requirement that ACOs mail beneficiary notification forms to beneficiaries and expanding the data provided to MSSP participants on both attributed beneficiaries and those who have received at least one primary care service from a MSSP participant.

Generally, HFMA is supportive of the proposed changes. However, we believe there is significant opportunity to improve them.

Beneficiary Notification/Opt-Out: HFMA appreciates CMS removing the option for MSSP participants to mail beneficiaries notification of data sharing. This will help alleviate the significant additional administrative burden faced by MSSP participants. This will reduce beneficiary confusion and expedite MSSP participants’ ability to receive claims data from CMS. The timeliness of claims data from CMS has been an ongoing concern of HFMA members. Additionally, HFMA believes that any beneficiary who opts out of claims data sharing should be removed from both the MSSP’s benchmark and results calculation. It is exceedingly difficult to manage and coordinate an individual’s health care without sufficient data to understand their needs and historic utilization patterns.

Shared Data Elements: HFMA strongly supports CMS providing the additional data elements proposed for both attributed beneficiaries and (in the instance of ACOs with preliminary prospective assignment with retrospective reconciliation – currently Tracks 1 and 2) providing the data for any beneficiary who has received one primary care service from an ACO participant. The additional beneficiary-level data described will assist in the identification of appropriate programs and services for particular beneficiaries.

However, HFMA strongly disagrees with the decision to limit the data provided to ACOs with prospective attribution (currently proposed Track 3) to only attributed beneficiaries. CMS argues that while ACOs with preliminary attribution with retrospective reconciliation (PARR) have an incentive to redesign care for their entire Medicare population, prospective attribution “incentivizes targeting of specific FFS beneficiaries.” Therefore sharing data with ACOs with prospective attribution beyond the list of attributed beneficiaries to include those who have had one or more primary care services is beyond the minimum data required to perform healthcare operations under HIPAA. 

HFMA finds this argument against sharing the additional patient-specific data elements for non-attributed beneficiaries with one or more primary care visits with prospective attribution ACOs both troubling and unconvincing.

It is troubling in the sense that it is a self-fulfilling prophecy. If ACOs don’t have data on beneficiaries who may potentially be attributed to them in a future year, it will be extremely difficult to develop specific interventions to improve outcomes for the beneficiary and reduce overall expenditures.

The argument is unconvincing for the following reasons:

  1. As discussed above, it’s highly unlikely that ACOs will bifurcate their patient populations based on whether or not someone is attributed to an ACO in any given year. In all likelihood, ACOs would have multiple interests in beginning to coordinate care for these individuals. First, an individual who received one or more primary care services in a prior year is more likely to be attributed to the ACO in the future. Therefore, the ACO would want to include this individual in patient-specific interventions.
    Second, understanding who uses the ACO for some—but not most—primary care services will help ACOs identify individuals who could be brought into the ACO’s network, thereby increasing the attributed patient population. This will not only benefit the ACO (larger, more statistically stable beneficiary population) and the patient (moves away from fragmented FFS care to an integrated/ coordinated network), but also Medicare (better outcomes for beneficiaries, reduced costs to the program).

  2. CMS argues that sharing data related to individuals who are not attributed to an ACO but have received one or more primary care services with ACOs using a prospective attribution model is a violation of HIPAA. In the proposed rule, CMS interprets the HIPAA regulations such that sharing data on non-attributed beneficiaries who have received one or more primary care services is beyond the scope necessary for healthcare operations. However, according to the proposed rule, CMS is permitted to share the same data on the same beneficiaries if the attribution model used is PARR. The proposed rule states (emphasis added):

“With respect to the relationship requirements in 45 CFR 164.506(c)(4), we have a relationship with the individuals who are the subjects of the requested PHI because they are Medicare beneficiaries. The ACO has a relationship with such individuals, either as a covered entity itself or on behalf of its covered entity ACO participants and ACO providers/suppliers as a business associate, because the individuals are either preliminarily prospectively assigned to the ACO or have received a primary care service during the past 12 month period from an ACO participant upon whom assignment is based. In addition, the requested PHI pertains to the individuals’ relationship with both CMS and the ACO, in that we provide health care coverage for Medicare FFS beneficiaries and have an interest in ensuring that they receive high quality and efficient care, and the ACO is responsible for managing and coordinating the care of these individuals, who are part of the ACO’s assigned beneficiary population.”

HFMA believes that, in this instance, CMS is interpreting the regulations at 45 CFR 164.506(c)(4) too narrowly related to data sharing with prospective attribution ACOs. As emphasized above, prospective ACOs also meet two of the key criteria CMS uses to justify sharing additional patient level data with PARR ACOs:

   a. CMS has a relationship with the individuals subject to the PHI request as they are Medicare beneficiaries.

   b. Even though they are not attributed to the ACO, the ACO’s “ACO provider” who furnished at least one primary care service does have a relationship with the beneficiary.

The difference implied in CMS’s interpretation allowing it to provide additional beneficiary-level data to PARR ACOs, but not prospective ACOs, is the possible assumption of risk for cost and quality outcomes at some point in the future.

For example, based on CMS’s framework under a PARR model, it is allowable to share specific patient-level data with an ACO on a beneficiary who has received a primary care service from the ACO and ultimately is not attributed to an ACO. However, sharing that same data with a prospective ACO on an individual who is not attributed for a performance year but receives additional primary care services during the course of the performance year that results in attribution in a following year would be a HIPAA violation.

As illustrated by the example above, this appears to be a difference without distinction, as in both cases, CMS has a relationship with the patient/beneficiary and the ACO provider has a relationship with the patient/beneficiary. Both of these factors, using CMS’s argument, satisfy the requirements for healthcare operations under HIPAA. HFMA believes that the timing of risk assumption is largely irrelevant. Under both PARR and prospective attribution models, there is a risk that CMS will provide an ACO with beneficiary-specific data for a patient who has received one or more primary care services from an ACO but is ultimately not attributed to the ACO. CMS’s reliance on the timing of risk assumption to deny prospective attribution ACOs additional patient-level data for non-assigned beneficiaries necessary to improve outcomes for these individuals ignores the fact that:

  1. It is not uncommon for Medicare beneficiaries to change primary care providers based on either patient satisfaction or the onset of an episode of illness.

  2. Episodes of illness or the decline in health of a Medicare beneficiary does not neatly follow the same 12-month period that CMS uses for patient attribution.

  3. As CMS discussed in the proposed rule, Medicare beneficiaries already assume that this level of data sharing is occurring among providers.

  4. Medicare beneficiaries have the opportunity to opt out through numerous channels.

Therefore, HFMA believes the risk to patient privacy is outweighed by the need to improve healthcare operations. By understanding the health needs of the non-attributed population, prospective attribution ACOs, like PARR ACOs, will better understand the healthcare needs of their Medicare patient populations. This knowledge will allow for identification of opportunities to improve quality and care coordination, increasing the likelihood that the non-attributed beneficiaries are attributed in the subsequent year.

Waivers from Various Program Requirements

In the proposed rule, CMS discusses providing risk-bearing ACOs waivers related to the skilled nursing facility (SNF) three-day rule, tele-health originating site requirement, home health (HHA) homebound requirement, and the concern that recommending a specific post-acute care provider violates the conditions of participation.3 Additionally, the proposed rule requested feedback on additional waivers that may be necessary to facilitate the shift to a two-sided payment model.

HFMA is strongly supportive of all of the proposed waivers. However, we are concerned that CMS’s proposals were offered through the perspective of encouraging more ACOs to migrate from Track 1 to a risk-bearing model. HFMA believes a more productive framework for thinking about the waivers is making sure the patient receives the right care, in the right setting, at the right time. Therefore, we believe these waivers should be expanded to ACOs in all tracks. Additionally, if CMS elects to continue using PARR for ACOs in Tracks 1 and 2, we believe that these waivers should be available not only to attributed patients but to all patients who have had at least one primary care service from an ACO provider.

For the waivers related to the SNF three-day rule, home health homebound requirement, and recommendations of specific post-acute providers HFMA recommends that the waivers be available for care settings that:

  1. Have demonstrated high quality (e.g., SNFs with three or more stars on SNF Compare, HHAs that have demonstrated composite quality above the national average on HHA Compare) and

  2. Are aligned with the ACO afforded the waiver. While we believe that the SNFs, HHAs, and other post-acute providers subject to the various waivers do not need be an ACO supplier, there should be evidence of collaboration between the ACO and SNF, HHA, or post-acute provider related to implementing care transition protocols or other quality improvement efforts.

Additionally, HFMA strongly recommends CMS provide ACOs in all tracks with the following additional waivers.

Provide Incentives for Beneficiary Participation: Despite the important role beneficiaries play in their own care, the MSSP doesn’t offer incentives to encourage beneficiaries to utilize the ACO to which they’re attributed.

In the final rule, CMS and the Office of the Inspector General (OIG) should allow ACOs to waive beneficiary deductibles and copayments for the population to which they have been assigned. This should occur automatically in the subsequent performance year after the final rule. The waiver’s continuation in future performance years should be predicated on ACOs achieving the minimum quality standards for continued participation in the shared savings program. This waiver should be coupled with significant education efforts targeted to beneficiaries (discussed in the section below) to help them understand how ACOs differ from unmanaged FFS Medicare. To help beneficiaries find providers who are participating in the ACO to which they have been assigned, CMS should annually give beneficiaries a “provider directory” that lists all of the participating providers for the ACO to which they are assigned.

As HFMA has previously commented, allowing ACO providers to waive deductibles and copayments will help CMS achieve a number of its stated goals and avoid potential complications with the program.

  1. It encourages patients to seek out care from providers provide high quality coordinated care, as determined by CMS. As patients develop deeper relationships with the providers in their ACO, it’s likely that this will foster greater adherence with evidence-based care plans that will improve quality and reduce cost. It’s only right that patients share in the savings that were generated by active participation in their own care. This will also alleviate potential concerns that the Medicare program and ACO participants stand to benefit from stinting on care provided to beneficiaries.

  2. As beneficiaries align themselves with an ACO to receive the financial benefit, it will increase the volume of patients in the program. This will directly benefit CMS as it will accelerate the “bending of the cost curve” as patients’ conditions are better managed in the appropriate care setting. Additionally, it will reward providers who participate in the program, thereby encouraging more ACOs to form. While the per-beneficiary revenue an ACO receives will decrease, increases in patient volume will offset this loss and help ensure the organization’s financial stability.

  3. A beneficiary pool that consistently stays within the ACO for all of its services helps the organization understand utilization patterns in real-time. Reports run from the ACO’s clinical and financial decision support systems will provide an immediately available, more accurate snapshot of beneficiary needs, allowing the organization to more effectively reengineer care processes.

Exclude MSSP Participants from Recovery Audit Contractors (RAC) and other Retrospective Audits: The MSSP shifts the economic incentives for providers from rewarding individual incidents of care to managing population health. ACOs are rewarded if they can reduce Medicare spending per beneficiary below a target benchmark while improving quality on a range of measures. Therefore inappropriate admissions would actually cause organizations participating in these programs financial harm, giving participants absolutely no incentive to admit a Medicare beneficiary to the hospital when the condition could be appropriately managed in a lower-cost setting. 

The administrative and clinical resources spent managing RAC audits do nothing to improve quality for patients, regardless of whether or not patients are Medicare beneficiaries. This is especially true at organizations pursuing population health models. As an example, Billings Clinic (an MSSP participant based in Billings, Mont.), estimates it spends 8,600 staff hours (over four full-time-equivalent employees) and $740,0004 annually ($2,731 per staffed bed) managing RAC reviews.5 Their experience is not uncommon. These resources could be better spent by Billings Clinic and other ACOs on improving care coordination and the quality of patient care, leading to better outcome at a lower cost to the Medicare program. Therefore, HFMA strongly recommends that CMS exclude ACO participants from RAC and other retrospective audits.

Beneficiary Education

Currently, the education CMS provides to beneficiaries regarding ACOs is extremely limited. For example, the “Medicare and You” handbook contains a single paragraph on ACOs. Given the dearth of information provided to beneficiaries, the burden falls to ACOs to explain the concept and benefits of staying within an ACO network to receive care. This lack of education and readily available information about ACOs makes beneficiaries reticent to engage in the model and become active participants in their own care. HFMA believes that CMS has an affirmative duty to provide comprehensive education to beneficiaries about ACOs and other models of coordinated care relative to unmanaged FFS. We particularly encourage CMS to dispel the myth (discussed in the proposed rule) that currently within FFS Medicare the myriad of providers a beneficiary uses are sharing data and coordinating care behind the scenes. To achieve this goal, we would strongly encourage CMS to engage with groups that represent the interests of Medicare beneficiaries to help disseminate this message.

We are at your service to help CMS gain a balanced perspective on this complex issue. If you have additional questions, you may reach me or Richard Gundling, Vice President of HFMA’s Washington, DC, office, at (202) 296-2920. The Association and I look forward to working with you.


Joseph J. Fifer, FHFMA, CPA
President and Chief Executive Officer
Healthcare Financial Management Association


About HFMA

With more than 40,000 members, the Healthcare Financial Management Association (HFMA) is the nation’s premier membership organization for healthcare finance leaders. HFMA builds and supports coalitions with other healthcare associations and industry groups to achieve consensus on solutions for the challenges the U.S. healthcare system faces today. Working with a broad cross-section of stakeholders, HFMA identifies gaps throughout the healthcare delivery system and bridges them through the establishment and sharing of knowledge and best practices. We help healthcare stakeholders achieve optimal results by creating and providing education, analysis, and practical tools and solutions. Our mission is to lead the financial management of health care.


1 The Value Journey: Organizational Road Maps for Value-Driven Health Care, HFMA
2 National ACO Survey, National Association of ACOs
3 The Work Ahead: Activities and Costs to Develop an Accountable Care Organization, American Hospital Association
4 “Requirement under section 1861(ee)(2)(H) of the Act that a hospital ‘not specify or otherwise limit the qualified provider which may provide post-hospital home services’ and the portions of the hospital discharge planning conditions of participation.”
5 HFMA notes that this amount is more than a third of CMS’s estimate of an ACO’s initial start-up cost.
6 Statement of Jennifer J. Carmody, CPA, Billings Clinic, Senate Finance Committee Hearing, June 25, 2013.



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googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text7' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-leaderboard' ); } );