Medicare Shared Savings Program “Pathways to Success” Proposed Rule

HFMA Executive Summary

On August 17, 2018, CMS published a proposal to redesign participation options under the Medicare Shared Savings Program (MSSP) to create a better pathway for Accountable Care Organizations (ACOs) to rapidly transition to two-sided risk models, in which they would share in savings, but also be accountable for repaying any shared losses. Comments on the proposed rule are due October 8, 2018. For more information on these highlights from the proposed rule, download a detailed summary of the rule.

Currently, under the MSSP, the vast majority of ACOs (82%) operate under a one-sided, shared savings-only model (Track 1), while there is limited participation in the traditional two-sided risk models (18%) (Track 2 and Track 3). CMS believes that the one-sided risk models are not producing desired results; increasing Medicare spending, encouraging marketplace consolidation, and reducing competition and choice for Medicare beneficiaries. CMS believes that ACO participation in its additional lower-risk, two-sided track option (Track 1+ Model) that allows for ACO participation in an Advanced Alternative Payment Model, while accepting more moderate levels of risk, shows more promise.

Key Proposed Provisions
CMS would redesign the program’s participation options by discontinuing Track 1, Track 2, and the deferred renewal option and create a new BASIC Track. Track 3 would be retained, and renamed the ENHANCED track.CMS proposes to offer ACOs entering agreement periods in the BASIC or ENHANCED track, beginning July 1, 2019, and in subsequent years, the annual option to choose either prospective assignment or preliminary prospective assignment with retrospective reconciliation, prior to the start of their agreement period.

These two tracks would allow ACOs to enter into an agreement period of at least 5 years.

1. BASIC track

• Includes option for ACOs to begin participation under a one-sided model.
• Potential reward phased in over the course of a single agreement period, referred to as a glide path, which includes 5 levels:
  • Levels A and B – one-sided risk model available only for the first 2 consecutive performance years of a 5-year agreement period
  • Levels C, D, and E – progressively higher risk and potential reward in performance years 3 through 5 of the agreement period
• ACOs that previously participated in Track 1 would be ineligible to enter the glide path at Level A (limiting their participation in one-sided risk).
• Six-month extension would be granted for current  ACOs whose agreements expire at the end of 2018.
• ACOs entering a new agreement period on July 1, 2019, would have the opportunity to participate in the program under agreement periods spanning 5 years and 6 months, with a 6-month first performance year.
  • This one-time July 1, 2019, start date would have a spring 2019 application period.
• ACO entering the glide path for an agreement period beginning July 1, 2019, could remain at the same level of BASIC track glide path at which it entered for the 6-month period, and automatically advance to the next level in subsequent years.
• ACOs could elect to move more quickly to a higher level of risk/reward during their agreement period, but could not go to a lower risk level.
• ACOs would automatically advance at the start of each participation year, along the progression of risk/reward levels, until they reach the track’s maximum level of risk/reward.
• Risk incrementally phased in (calculated based on ACO revenue, and capped at a percentage of ACO’s updated benchmark).
• Savings would be calculated based on same methodology used to determine shared savings under the program’s existing tracks.
• The maximum amount of potential reward under the BASIC track would be the same as the upside of Track 1 and the Track 1+ Model.

2. ENHANCED track

• Based on the program’s existing Track 3, for ACOs that take on the highest level of risk and potential reward.
• The track’s structure would remain the same as the current Track 3.
• Would apply to all performance years during an agreement period.
• Current 3-year agreement period structure would be replaced with an agreement period of at least 5 years.
• Track 2 ACOs prepared to take on higher risk could elect to enter the ENHANCED track by:
  • Completing their agreement period, and applying to renew for a subsequent agreement period, or
  • Voluntarily terminating their current 3-year agreement, and entering a new agreement period under the ENHANCED track, without waiting until the expiration of their current 3-year agreement period.
• Certain Track 2 ACOs not prepared for the higher level of risk under the ENHANCED track could elect to enter the proposed BASIC track at the highest level of risk and potential reward.

Beneficiary Assignment
CMS proposes to offer ACOs entering agreement periods in the BASIC or ENHANCED track, beginning July 1, 2019, the option to choose either prospective beneficiary assignment or preliminary prospective assignment with retrospective reconciliation, prior to the start of their agreement period. An ACO would remain under that beneficiary assignment methodology for the duration of its agreement period, unless it chooses to change the methodology through the annual election process.

Revenue-based loss sharing limits
Instead of using self-reported information for purposes of determining the loss sharing limit, CMS proposes to calculate a revenue-based loss sharing limit for all BASIC track ACOs, and cap this amount as a percentage of the ACO’s updated historical benchmark expenditures. CMS proposes to establish the revenue-based loss sharing limit as the default for ACOs in the BASIC track, and to phase-in the percentage of ACO participants’ total Medicare Parts A and B fee-for-service revenue.

Impact
The proposed changes would result in average estimated federal savings of $2.24 billion from 2019 through 2028, or about $200 million per year. A drop is expected in participation as the number of risk-free years available to new ACOs would reduce from six to two years in the BASIC track, but increased continued participation from existing ACOs is expected.