The Centers for Medicare & Medicaid Services (“CMS”) recently published the proposed physician fee schedule for 2023 (“PSF”), which contains several important changes affecting accountable care organizations (“CO”) who participate in the Medicare Shared Savings Program (“MSSP”), including a new advanced incentive program. See PSF Proposal 2023, 82 Fed. Reg. 45,860 (July 29, 2022).
ACOs allow health care providers to provide coordinated patient care to Medicare beneficiaries and share in the savings resulting from improved care. According to CMS, as of January 1, 2022, more than 11 million Medicare beneficiaries receive care from 483 ACOs across the country. Identifier. at 46,093.
The proposed changes aim to advance “growth, alignment, and equity” and “increase the percentage of people receiving Medicare in accountable care arrangements.” Identifier. at 46,093-94. Of note, and as described in a publication preceding the PFS, CMS proposed the changes to increase (i) the number of beneficiaries assigned to MSSP ACOs; (ii) the number of high-spending populations in the program since moving to region-adjusted benchmarks; and (iii) the representation of Black (or African American), Hispanic, Asian/Pacific Islander, and Native American/Alaska Native beneficiaries assigned to MSSP ACOs, relative to non-Hispanic whites.
Below we summarize several of the key proposals. CMS invites public comment on proposed rules until September 6, 2022.
Proposed Changes to Advance Equity
- Advanced Incentive Payments Recognizing the start-up costs required for participation in the COA and this burden on small organizations, CMS offers to provide Shared Savings Advance Payments (“Advanced Incentive Paymentsor “AIP”) to low-income ACOs who: (i) are inexperienced with performance-based risk and (ii) serve underserved populations. In 2011, CMS estimated that ACOs participating in the MSSP spent an average of $580,000 in start-up costs and $1.27 million in ongoing annual operating costs.
According to CMS Innovation Center experiences, payments similar to advanced incentive payments “encouraged ACOs to form in areas where ACOs might not otherwise have formed and where other payment and delivery innovations Medicare were less likely to be present.” Identifier. at 46,098.
To reduce the financial burden faced by smaller suppliers, CMS envisions that advanced incentive payments be distributed to ACOs over two years of performance. Although payments may be deducted from the shared savings that the ACO ultimately achieves, if an ACO does not achieve any shared savings during its agreement period or a renewed agreement period, the ACO is not responsible for refunding AIPs and CMS is not in a position to recover any of the AIPs from ACO. ID. at 46, 109-10; see also 42 CFR 425.630(g) (as proposed).
AIPs must consist of two types of payments: (i) a one-time payment of $250,000 and (ii) eight quarterly payments based on the number of beneficiaries assigned in the COA, capped at 10,000 beneficiaries. See identifier. at 46,103. Quarterly payouts would be determined by: (i) a risk factor-based score set at 100 for dual-eligible beneficiaries (Medicare and Medicaid); or (ii) set to the national percentile rank of the Area Deprivation Index (a whole number between 1 and 100) of the census block group in which the beneficiary resides for Medicare beneficiaries only. Higher quarterly payment amounts would be granted to recipients with higher risk scores.
The proposed rules contain several eligibility criteria, which CMS intends to codify at 42 CFR 425.630(b). Specifically, to be eligible for AIPs, the ACO: (i) must not be a renewing or re-entering ACO as defined in 42 CFR 425.20; (ii) must request to participate in the MSSP below any level of the BASIC glidepath as specified in 42 CFR 425.600(a)(4)(i)(A); (iii) must be inexperienced with Medicare ACO performance-based risk initiatives as defined in 42 CFR 425.20; and (iv) must be a low-income ACO as defined in 42 CFR 425.20. Identifier. at 46,100.
Note that to allow for the recoupment of funds where permitted by the proposed regulations, CMS is proposing to change the definition of “inexperienced with performance-based Medicare ACO initiatives” and “experienced with at-risk performance-based Medicare ACO initiatives as defined in 42 CFR 425.20. Identifier. at 46.109-10. Under current regulations, an ACO is deemed inexperienced if, in part, less than 40% of the ACO’s participants have participated in a performance-based risk initiative in each of the five highest performance years. recent. before the start date of the agreement. See 42 CFR 425.20. The proposed new regulations, on the other hand, adopt a five-year look-back period that begins from the then-current performance year. 82 Fed. Reg. at 46,109-10, 46,439.
CMS notes that it “is concerned about the possibility that an ACO may be eligible to receive AIPs and then quickly seek to add experienced ACO participants with performance-based risks, thus avoiding…the eligibility requirements for the ‘inexperience and low income’. Identifier. at 46,108. The rolling look-back period, for example, would allow CMS to recover AIPs granted to an entity that, during the five-year look-back period, becomes “experienced” and, therefore, ineligible, for the receipt of the AIPs, unless otherwise provided by the ACO. See identifier. at 46,109 (clarifying that under proposed 42 CFR 425.316(e)(3), an ACO would be obligated to refund spent and unspent AIPs if CMS takes pre-termination action under 42 CFR 425.216 and the ‘ACO continues to be experienced in income-based or high-income performance).
Finally, entities requesting AIPs will be required to submit a spending plan outlining how ACO will use the payments. Identifier.; see also 42 CFR 425.630(d)(1) (as proposed). In addition, CMS will limit the types of expenses for which AIPs can be used. See 82 Fed. Reg. 46,101 Specifically, CMS proposes to require that all AIP be used to “improve the quality and efficiency of items and services provided to beneficiaries by investing in increased staffing, health care infrastructure and providing responsible care to underserved beneficiaries, which may include addressing the social determinants of health”. Identifier.
- Health Equity Adjustment for COAs Addressing Underserved Populations CMS proposes a health equity adjustment that would adjust an ACO’s quality score upwards. The purpose of the adjustment is to reward top performing ACOs and support ACOs serving a high proportion of underserved beneficiaries while encouraging all ACOs to treat underserved populations. This proposed adjustment would add up to 10 bonus points to the ACO Quality Performance Category score. Identifier. at 46, 113-142.
- Benchmark Adjustment for Providers Dealing with High-Risk Eligible Dual Beneficiaries CMS is proposing certain changes to its benchmarking methodology that aims to encourage ACO participation by health care providers who treat a significant number of high-risk Medicare/Medicaid beneficiaries. Specifically, the proposed methodology aims to reduce the effect of ACO performance on historical ACO benchmarks, increase opportunities for ACOs caring for medically complex and high-cost beneficiaries, and to strengthen incentives for ACOs to enter and stay in the MSSP. See identifier. at 46.158-218.
Operational changes and reduction of administrative burdens
- Duration of participation CMS is proposing to allow ACOs applying to the program who do not have experience with performance-based risk to participate in a five-year agreement under a unilateral shared savings model. This proposal aims to give these ACOs more time to invest in infrastructure and redesigned care processes, before moving to performance-based risk. Identifier. at 46.114-18.
- Removing the requirement to review marketing materials CMS proposes to eliminate the requirement for ACOs to submit marketing materials to CMS for review and approval prior to disseminate materials to COA beneficiaries and participants.
Under the proposed rules, ACOs would be required to submit marketing materials when requested by CMS and to cease using any marketing materials or activities disapproved by CMS. Notwithstanding the foregoing, CMS does not waive its Marketing Rules and ACOs must still comply with all marketing-related requirements. Identifier. at 46 203-04; see also 42 CFR 425.312 (as proposed).
- Relaxation of beneficiary notification rules Generally, an ACO is required to notify Medicare FFS beneficiaries annually that: (i) the ACO participates in the MSSP, (ii) the beneficiary may opt out of claims data sharing, and (iii) the beneficiary can identify or change the identification of a primary care provider. supplier for voluntary alignment purposes.
CMS proposes to require the notice only once per agreement period. In addition, to promote recipients’ understanding of the standardized written notice, CMS proposes that ACO follow up with each recipient to whom it has provided the standardized written notice. While this follow-up communication may be verbal or written, it must be provided no later than the recipient’s next primary care service visit, or 180 days from the date the first standardized written notice was provided. to the beneficiary. 82 Fed. Reg. 46,204-205; see also 42 CFR § 425.312 (as proposed).
Feedback to CMS on the PFS and these proposals for expanding access to ACOs is expected by September 6, 2022.