CMS has released a final rule that completes what the agency has described as an “overhaul” of the Medicare Shared Savings program for Accountable Care Organizations (ACOs.). Called “Pathways to Success,” these finalized policies bring significant change to the ACO program, particularly with the transition to a two-track system. The agency is estimating that this rule will result in about $2.9 billion less in federal spending over the next ten years and that the overall number of ACOs participating in the program will be reduced, particularly because of the elimination of Track 1. However, the rule states that CMS believes this may create opportunities for more effective ACOs to serve beneficiaries previously assigned to ACOs that leave the program.

The rule will be published in the Federal Register on December 31, 2018 and its provisions will go into effect on February 14, 2019.

CMS Will Consolidate the Existing 3 ½ ACO Tracks to 2

The 2011 Shared Savings Program final rule included two tracks: a 1-sided model (Track 1) and a 2-sided model (Track 2). The 2015 final rule added an alternative 2-sided model (Track 3) with a higher reward for shared savings (as well as greater risk for shared losses). An additional Track 1.5 was also added. These tracks required a 3-year agreement period. CMS is largely finalizing its proposal to do away with Tracks 1 and 2 and replace them with a two-track system:

• BASIC track, in which ACOs would begin under a one-sided model and gradually transition to two-sided risk
  • Transition in year 4 of 5 for the first set of ACOs
  • Transition in year 3 of 5 for subsequent enrollees
• ENHANCED track (a renamed Track 3), which would continue to carry the greatest two-sided risk, albeit for a 5-year period.

Existing ACOs will have until July 1, 2019 to decide which track to transition into, and the final rule establishes financial reconciliation procedures for those ACOs who elect to terminate their current agreement to enter a new track on July 1, 2019. All ACOs may annually choose a beneficiary assignment methodology (preliminary prospective assignment with retrospective reconciliation, or prospective assignment) as well as whether to opt into two-sided risk under the BASIC track. CMS expects that the BASIC track will increase ACO participation by ACOs that might not otherwise be ready to take on higher risk exposure, including low-revenue and physician-led ACOs.

	BASIC Track Year				ENHANCED Track
	1&2 (Levels A&B)	3 (Level C)	4 (Level D)	5 (Level E)
Shared Savings	Up to 40%, not to exceed 10% of benchmark	Up to 50%, not to exceed 10% of benchmark	Up to 50%, not to exceed 10% of benchmark	Up to 50%, not to exceed 10% of benchmark	Up to 75%, not to exceed 20% of benchmark
Shared Losses	None	Up to 30%, not to exceed 2% of revenue or 1% of benchmark	Up to 30%, not to exceed 4% of revenue or 2% of benchmark	Up to 30%, not to exceed revenue-based nominal amount stated in QPP or 1% more than expenditure-based nominal amount	1 minus final sharing rate (between 40 and 75 percent) not to exceed 15% of benchmark
Annual election to take on higher risk?	Yes	Yes	No, automatic transition	No, maxed out in BASIC track	No
Advanced APM status under QPP?	No	No	No	Yes	Yes

 

The maximum shared savings rates in Levels A-D of the BASIC track have been significantly raised in the final rule. The loss-sharing amounts are finalized as proposed. In response to comments lamenting the loss of Track 1, CMS is modifying the BASIC track to allow new low-revenue and other inexperienced ACOs to participate in 1-sided risk sharing for up to three years (four if they enter on July 1, 2019). High revenue ACOs will be limited to a single agreement period in the BASIC track before transitioning to the ENHANCED track. Low revenue ACOs will be limited to two, for a total of ten years in the BASIC track. CMS is finalizing efforts to prevent “gaming” this system by creating new ACO legal entities to subvert the intent of the limitations. CMS will also monitor financial performance of ACOs and may terminate those ACOs who are significantly underperforming.

BASIC Track Level E Added to Shared Savings Program

CMS is finalizing the inclusion of Level E in the BASIC track. This level has a comparable level of risk and reward to the Track 1+ Model, and therefore the agency will discontinue future application cycles for the Track 1+ Model beginning in 2019. The existing Track 1+ Model ACOs will be able to complete their current agreement in the model or terminate the current agreement and apply to enter a new SSP agreement under the BASIC track (Level E) or the ENHANCED track.

Any Track 1+ Model ACO that seeks to renew its SSP participation agreement will be permitted to use its existing repayment mechanism under a two-sided model in its next agreement period, but CMS will specify the update on the amount and duration of the repayment mechanism arrangement.

The following policies will also apply to the Track 1+ Model ACOs:

• Monitoring for and consequences of poor financial performance
• Payment consequences of early terminations for ACOs under performance-based risk
• Revising the MSR/MLR to address small population sizes
• Requirements related to providing telehealth services beginning January 1, 2020

ACOs Can Elect Beneficiary Assignment Methodology Annually

The Bipartisan Budget Act states that ACOs in a track that provides retrospective beneficiary assignment will have the opportunity to choose a prospective assignment methodology. This would apply to agreement periods entered into or renewed starting January 1, 2020. CMS is finalizing its proposal implementing this provision of the act.

Under CMS’ the new rules, beginning July 1, 2019, ACOs in the BASIC or EHANCED tracks can choose one of the following at the time of application:

• Prospective Assignment
• Preliminary prospective assignment with retrospective reconciliation

Additionally, ACOs will be allowed to either retain or switch their beneficiary assignment methodology selection annually. ACOs would have to indicate they want to change methodology before the start of the performance year it wants to change for. The new selection would be effective for that year as well as the remainder of the agreement period, unless the ACO again chooses to change methodology. The rule clarifies that this proposal has no effect on the voluntary alignment process.

Repayment Mechanism Thresholds Increased

ACOs entering a two-sided model are required to demonstrate that they have a repayment mechanism in place by which they can repay any losses for which they are responsible. CMS is finalizing its proposal to apply this requirement to both the BASIC and ENHANCED tracks; the minimum repayment mechanism amount will be the lesser of 1 percent of Medicare Part A and B fee-for-service expenditures in the most recent calendar year or two percent of the total Medicare Parts A and B fee-for-service revenue of its ACO participants in the most recent calendar year. This repayment amount will be recalculated annually while the ACO is in a two-sided model, but the ACO need only revise its repayment plan if the amount has increased by more than 50 percent or $1,000,000 (the proposed amounts were 10 percent or $100,000).

New Rules for Renewing and Reentering ACOs

CMS is finalizing its proposed definitions for renewing and reentering ACOs, as no such definitions previously existed. The new definitions are as follows:

• Renewing ACO: “an ACO that continues its participation in the program for a consecutive agreement period, without a break in participation, because it is either:
  • an ACO whose participation agreement expired and that immediately enters a new agreement period to continue its participation in the program; or
  • an ACO that terminated its current participation agreement and immediately enters a new agreement period to continue its participation in the program.”
• Reentering ACO: “an ACO that does not meet the definition of a “renewing ACO” and meets either of the following conditions:
  • Is the same legal entity as an ACO that previously participated in the program and is applying to participate in the program after a break in participation, because it is either:
    • (a) an ACO whose participation agreement expired without having been renewed; or
    • (b) an ACO whose participation agreement was terminated;
  • Is a new legal entity that has never participated in the Shared Savings Program and is applying to participate in the program and more than 50 percent of its ACO participants were included on the ACO participant list, of the same ACO in any of the 5 most recent performance years prior to the agreement start date.

Secondly, CMS has revised the eligibility requirements for both types of ACOs. CMS will remove the required “sit-out” period to allow ACOs to transition to new agreement options. It encourages ACOs to minimize the gap in time between its existing and new agreements to maintain the program policies.

Lastly, CMS is finalizing a number of technical changes applicable to both types of ACOs. It will refer to agreement changes as “applications” rather than “renewal requests” to include reentering ACOs. It will require ACOs in two-sided models to reapply to participate in two-sided models. It will change the code of federal regulations to align with requirement that ACOs demonstrate its ability to repay losses if necessary. Finally, it will update evaluation criteria to consider the ACO’s history of compliance, shared losses owed, and deficiencies corrected. CMS will use a 5-performance-year look back period.

Termination Notice Shortened, but Two-Sided Risk ACOs Could be Liable for Pro-Rated Shared Losses

Current rules require ACOs to provide at least 60-days’ notice before they terminate participation in the program. However, this timeframe means that ACOs wishing to terminate participation effective at the end of a calendar year will only have access to two quarters of performance data on which to decide. CMS is shortening the notice requirement to 30 days, which would provide ACOs additional time, as well as access to three quarters of performance data, before making a decision.

Additionally, two-sided risk ACOs that voluntarily terminate participation prior to the end of a performance year are not held liable for losses but are also not eligible for savings. In order to prevent ACOs projected to have shared losses from terminating participation early in order to avoid financial liability, CMS is finalizing its proposal that ACOs that terminate after June 30 of a performance year will be liable for a pro-rated portion of shared losses. Furthermore, the prorated amount will apply to any month in which the ACO was active for at least one day. For example, if an ACO terminates participation effective July 1, the ACO would be liable for 7/12 of the shared losses (if any). CMS hopes that this change will prevent gaming as well as encourage ACOs to continue to control spending and report quality even after they leave the program, in order to reduce the amount of shared losses owed. This change will only be applicable for performance years starting on or after July 1, 2019.

Eligibility for SNF 3-Day Rule Waiver Expanded to New ACO Tracks

CMS is finalizing provisions that expand eligibility of the SNF 3-day rule waiver to ACOs in two-sided models under preliminary prospective assignment with retrospective reconciliation. Additionally, ACOs with performance-based risk within the new BASIC track or ACOs in the ENHANCED track may request to use the SNF 3-day rule waiver. When using these waivers, CMs is finalizing that SNFs can include providers furnishing SNF services under swing bed arrangements when determining eligibility to partner with an ACO for the waiver.

Certain ACOs Can Establish Beneficiary Incentive Programs

ACOs participating under certain two-sided models may apply to establish a beneficiary incentive program, as required by the Bipartisan Budget Act. These ACOs include Track 2 and ENHANCED Track ACOs as well as ACOs in Levels C, D, or E of the BASIC Track. Approved beneficiary incentive programs must run for at least 1 year and must begin on July 1, 2019 or January 1 of the relevant performance year; programs that are established on July 1, 2019 must run for 18 months.

The rule finalizes that incentive payments have to be in the form of a check, debit card, or traceable cash equivalent and can be up to $20, updated annually based on the CPI-U. The payments must be the same amount for each FFS beneficiary and made no later than 30 days after the qualifying service. The agency is finalizing their proposal that ACOs fund these programs and cannot shift costs related to establishing or operating them to a federal health care program. CMS will publish guidance related to beneficiary notification for these programs and guidance on the annual certification process

CMS Lays Out Requirements for Beneficiary Notification

CMS is finalizing that ACOs must notify Medicare FFS beneficiaries of the following:

• That each provider and providers/suppliers in the ACO are participating in the Shared Savings Program
• The beneficiary’s opportunity to decline claims data sharing
• Beginning July 1, 2019, the option and process by which a beneficiary can identify or change identification of the individual designed for purposes of voluntary alignment

Changes to Telehealth Services Finalized as Proposed

CMS is finalizing, consistent with the Bipartisan Budget Act, that the home of a beneficiary will be treated as an originating site for telehealth services furnished by a provider in an applicable ACO. Additionally, providers in an ACO will not be allowed to submit claims for services specified as inpatient only when provided as a telehealth service at the beneficiary’s home.

Extreme and Uncontrollable Circumstances Policy is Extended

CMS is not making any further changes to the Shared Savings program policies for ACOs affected by “extreme and uncontrollable circumstances” than those amendments made in the November 2018 Physician Fee Schedule final rule.