Redesigned MSSP Imposes Risk on ACOs More Quickly

Ken Terry

December 24, 2018

The Centers for Medicare and Medicaid Services (CMS) on December 21 issued its final rule covering new conditions of participation for accountable care organizations (ACOs) in the Medicare Shared Savings Program (MSSP), which serves over 10.5 million fee-for-service Medicare beneficiaries.

CMS redesigned the MSSP with the aim of moving ACOs more quickly into two-sided financial risk arrangements in which the organizations share both savings and losses with Medicare. Currently, 82% of ACOs in the MSSP are in track 1, which allows them to receive 50% of savings above a minimum level but doesn't require them to take downside risk. The rest are in tracks 1+, 2, or 3, which have progressively greater percentages of two-sided risk.

Under the new regulation, CMS will offer a basic track and an enhanced track to MSSP participants, starting July 1, 2019. ACOs that agree to participate under the new rules will sign up for 5 years, in place of the 3-year pacts they have had up to now. And instead of being limited to 6 years of upside-only risk, the ACOs will have to start taking two-sided risk within 2 years. An exception is made for "low-revenue," physician-led ACOs, which have an extra year to graduate to two-sided risk contracts.

The basic track is divided into five levels. The first two levels offer upside-only risk. ACOs in this category can receive up to 40% of Medicare savings above the minimum based on their quality performance. CMS's proposed rule, released in August, offered only 25%, so this is an improvement.

The other three basic levels offer shared savings of up to 50%, contingent on quality performance, and losses of up to 30% if an ACO exceeds its benchmark. The losses are not to exceed 2%, 4%, and 8% of ACO participant revenue as the ACO passes through these levels.

The enhanced track is the same as track 3 of the current program: ACOs in this category receive 75% of shared savings and are subject to a minimum shared loss of 40%. Eventually, CMS says, all ACOs in the MSSP are expected to advance to the enhanced track.

In order to give current MSSP participants enough time to prepare for the new system, CMS is allowing all ACOs in the program — whether or not they plan to renew — to extend their current agreements by 6 months, from January 1 to June 30. According to CMS, 90% of MSSP participants have indicated they want to do so.

ACOs that wish to enter the new agreements are being asked to submit a notice of intent to CMS between January 2 and January 18 of next year.

Differing Views

In a news release on the MSSP final regulation, CMS Administrator Seema Verma said, "The rule strikes a balance between encouraging participation in the ACO program and advancing the transition to value, ultimately protecting taxpayers and patients. Medicare can no longer afford to support programs with weak incentives that do not deliver value."

Verma's remark about the MSSP not delivering value refers to the losses that the program incurred in 2015 and 2016. In 2017, however, Medicare garnered net savings of $314 million after paying off the ACOs.

The National Association of ACOs (NAACOS) has argued that the MSSP's success last year shows there is no need to accelerate the transition of ACOs to two-sided risk. In a survey the association conducted earlier this year, more than 70% of responding ACOs said they'd leave the program if required to take two-sided risk. However, CMS has estimated that only 117 of the 472 ACOs participating in the MSSP will drop out under the new rules.

In the CMS news release, Verma predicted that, with a greater incentive to be efficient, the MSSP ACOs would save $2.9 billion over the next 10 years. 

Other New Policies

The final MSSP regulation also includes a number of provisions not directly related to financial risk. First, ACOs will be allowed to choose prospective assignment of Medicare beneficiaries to their primary care providers. This will allow the ACOs to know in advance who their assigned patients are. They will have to inform those beneficiaries that their providers are participating in the MSSP, and the patients must be given an opportunity to choose a different MSSP provider.

Under some of the two-sided risk models, ACOs are allowed to operate beneficiary incentive programs. For example, they can give beneficiaries an incentive payment of up to $20 for qualifying primary care services. These ACOs can also provide vouchers for activities that promote health.

CMS has also revised its benchmarking methodology to include both an ACO's historical performance and the regional performance of these organizations. This will help ensure that the MSSP remains attractive to ACOs as the benchmarks based on an ACO's own performance get harder to beat, according to CMS. In addition, the agency notes, the longer agreement period means that the benchmarks that determine an ACO's profit or loss will be revised less frequently.

Physicians in some ACOs that have elected prospective assignment of patients will also get paid for telehealth services on a broader basis than other physicians who take Medicare. The ACO physicians can receive telehealth payments from CMS even if a patient is not in a rural area and the originating site is the patient's home. This provision applies to ACOs that take two-sided risk, whether they're in the basic or enhanced track.

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