Proposed Pathways to Success for the Medicare Shared Savings Program

On August 9, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would set a new direction for the Medicare Shared Savings Program (Shared Savings Program).  Referred to as “Pathways to Success,” this proposed new direction for the Shared Savings Program would redesign the participation options available under the program to encourage Accountable Care Organizations (ACOs) to transition to two-sided models (in which they may share in savings and are accountable for repaying shared losses), increase savings for the Trust Funds and mitigate losses, reduce gaming opportunity and increase program integrity, and promote regulatory flexibility and free-market principles. This proposed rule would also strengthen beneficiary engagement, ensure rigorous benchmarking, and help improve care for Medicare beneficiaries, with an emphasis on combatting opioid addiction and expanding the use of interoperable electronic health record technology among ACO providers/suppliers.  The proposed policies also include changes to address the additional tools and flexibilities for ACOs established by the Bipartisan Budget Act of 2018 (BBA of 2018), specifically in the areas of new beneficiary incentives, telehealth services, choice of beneficiary assignment methodology, and voluntary alignment refinements.

In connection with the proposed program redesign, CMS does not intend to offer an application cycle during 2018 for new agreement periods that would start on January 1, 2019, and instead proposes to offer an application cycle for a one-time new agreement period start date of July 1, 2019.  To avoid an interruption in their participation, if the proposed policies are finalized, ACOs with a participation agreement ending on December 31, 2018, would have an opportunity to extend their current agreement period for an additional 6-month performance year and may apply for a new agreement beginning on July 1, 2019. This would provide ACOs time to review new policies, make business and investment decisions, obtain buy-in from their governing bodies and executives, and complete and submit a Shared Savings Program application for a performance year beginning July 1, 2019.  CMS would resume the usual annual application cycle for the performance year starting on January 1, 2020 and subsequent years.

This fact sheet summarizes the major proposed changes that are included in this proposed rule, and select issues on which we seek comment. There will be a 60-day public comment period on this proposed rule. CMS encourages all interested members of the public, including ACOs, providers, suppliers, and Medicare beneficiaries to submit comments so that CMS can consider them as we develop the final rule. The 60-day comment period closes on October 16, 2018. Comments can be submitted at: https://www.regulations.gov/ (in commenting please refer to file code CMS-1701-P).

Background

Currently, 561 Shared Savings Program ACOs serve over 10.5 million Medicare fee-for-service (FFS) beneficiaries. ACOs are an important tool for moving CMS’s payment systems away from paying for volume and towards paying for value and outcomes, as ACOs are held accountable for the total cost of care (spending in relation to a historical benchmark) and quality outcomes for the assigned beneficiary patient population they serve. ACOs receive a share of any savings under the benchmark if they meet quality performance and program participation requirements, and ACOs participating in a two-sided model must also pay CMS back if spending exceeds the benchmark. ACOs facilitate coordination and cooperation among health care providers to improve the quality of care for Medicare FFS beneficiaries and reduce the rate of growth in expenditures under Medicare Parts A and B.

The Shared Savings Program currently includes three Tracks and is structured to allow ACOs to gain experience with the program before transitioning to performance-based risk.  The vast majority of Shared Savings Program ACOs have chosen to enter and maximize the allowed time under Track 1, the one-sided shared savings-only model, under which eligible ACOs receive a share of any savings under their benchmark but are not required to pay back a share of spending over the benchmark. Some Track 1 ACOs are generating losses (and therefore increasing Medicare spending) while having access to waivers of certain federal requirements in connection with their participation in the program. These ACOs may be encouraging consolidation in the market place, reducing competition and choice for Medicare FFS beneficiaries.

Overall, the ACOs in two‑sided models (Track 2 and Track 3), under which eligible ACOs share in a larger portion of any savings under their benchmark but can be required to share losses if spending exceeds the benchmark, have shown significant savings to the Medicare program and are improving quality. Further, we have observed that low revenue ACOs (which are typically composed of physician practices and rural ACOs) outperform high revenue ACOs (typically ACOs that include hospitals). However, participation in current performance-based risk Tracks remains modest, and some low revenue ACOs lack a pathway to transition from a one-sided model to more modest levels of performance-based risk that recognize their having less control over the Medicare FFS expenditures for their assigned beneficiaries. Our early experience with the Medicare Track 1+ ACO Model, a time-limited Center for Medicare and Medicaid Innovation (Innovation Center) model which began January 1, 2018, demonstrates that the availability of a lower-risk, two-sided model is an effective way to rapidly progress to performance-based risk.

The proposed redesign of the Shared Savings Program would put the program on a path towards achieving a more measureable move to value, demonstrate savings to the Medicare program, and promote a competitive and accountable marketplace.

Promoting accountability by accelerating the move to two-sided risk while promoting competition by encouraging participation by low revenue ACOs

New BASIC and ENHANCED Tracks and 5 Year Agreement Periods

We propose to redesign the program’s participation options by offering, for agreement periods beginning on July 1, 2019 and in subsequent years, two tracks that eligible ACOs would enter into for an agreement period of not less than 5 years: (1) BASIC track, which would allow eligible ACOs to begin under a one-sided model and incrementally phase-in higher levels of risk that, at the highest level, would qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program, and (2) ENHANCED track, based on the program’s existing Track 3, providing additional tools and flexibility for ACOs that take on the highest level of risk and potential reward. Appendix A summarizes the characteristics of the proposed participation options.

We would streamline the program by discontinuing Track 1 and Track 2 and the deferred renewal option such that these participation options would no longer be available to ACOs applying to enter or renew their participation in the program. Further, the Innovation Center would discontinue future application cycles for the Track 1+ Model.

The BASIC track’s glide path would offer an incremental approach to transitioning eligible ACOs to higher levels of risk and potential reward. The glide path includes 5 levels:  a one-sided model available only for the first two years to eligible ACOs (ACOs identified as having previously participated in the program under Track 1 would be restricted to a single year under a one-sided model); and three levels of progressively higher risk and potential reward in years 3 through 5 of the agreement period. Under the one-sided model years of the glide path, an ACO’s maximum shared savings rate would be 25 percent based on quality performance, applicable to first dollar shared savings after the ACO meets the minimum savings rate. The glide path concludes with a maximum 50 percent sharing rate, based on quality performance, and a maximum level of risk which qualifies as an Advanced APM for purposes of the Quality Payment Program.

ACOs in the BASIC track glide path would be automatically advanced at the start of each performance year along the progression of risk/reward levels, or could elect to move more quickly to a higher level of risk/reward, over the course of their agreement period. While the typical agreement period under the proposed rule would be 5 years in duration, with 12-month performance years based on calendar years, ACOs entering an agreement period beginning on July 1, 2019, would participate in a first performance year of 6 months for the period from July 2019 – December 2019. ACOs entering the BASIC track’s glide path for an agreement period beginning on July 1, 2019, would have at most 2 ½ years under a one-sided model (with ACOs identified as having previously participated in the program under Track 1 restricted to 1 ½ years) and their first automatic advancement would occur at the start of performance year 2021.

The proposed eligibility criteria for the BASIC track and ENHANCED track recognize differences in ACO participants’ Medicare FFS revenue and the experience of the ACO and its ACO participants with performance-based risk Medicare ACO initiatives. Under the proposed approach, ACOs inexperienced with performance-based Medicare ACO initiatives may enter an agreement period under the BASIC track’s glide path. ACOs identified as experienced with performance-based risk Medicare ACO initiatives, such as ACOs identified as having previously participated in the program under Track 2, Track 3 or the Track 1+ Model, are restricted to participating in either the BASIC track’s highest level of risk and reward (if the ACO is identified as a low revenue ACO) or the ENHANCED track.

ACOs identified as low revenue could participate in the BASIC track for up to two agreement periods.  For instance, a low revenue ACO that participates in the BASIC track’s glide path could renew under the BASIC track, at the highest level of risk and reward, for a second agreement period. ACOs identified as high revenue would be required to transition to the ENHANCED track more quickly, after no more than a single agreement period under the BASIC track.

Six-Month Agreement Period Extension & Mid-year 2019 Start Date Allow ACOs to Prepare

In order to facilitate ACOs’ transition to the new BASIC track or ENHANCED track, a special one-time July 1, 2019 agreement period start date is proposed in lieu of a January 1, 2019 agreement period start date. We propose to allow ACOs with participation agreements ending December 31, 2018 the opportunity to elect to extend their agreement period by a 6-month performance year from January 1, 2019, to June 30, 2019. We propose an approach to reconcile ACOs’ performance for the first half of 2019, and second half of 2019 for ACOs entering agreements beginning on July 1, 2019, by considering financial and quality performance on a calendar year basis, and then pro-rating savings and losses for one-half of the year.

Updates to Repayment Mechanism Requirements for Two-sided Model ACOs

We are proposing modifications to the repayment mechanism arrangement requirements for ACOs in performance-based risk tracks to reduce burden.  Under our proposal, certain BASIC track ACOs may have a lower repayment mechanism amount to reflect the potentially lower levels of loss liability under the proposed BASIC track.  In addition, we propose to permit renewing ACOs to maintain a single, existing repayment mechanism arrangement to support its ability to repay shared losses in the new agreement period.  We also propose to establish new requirements regarding the issuing institutions for a repayment mechanism arrangement.

Ensuring rigorous benchmarking by using regional benchmarks for all agreement periods

For each performance year, the ACO’s spending is compared to its benchmark to determine if the ACO receives shared savings from CMS or owes shared losses to CMS. The current benchmarking methodology uses differing amounts of ACO historical experience and regional performance depending on the ACO’s agreement period.  Under the proposed redesign of the program, we would provide for more accurate benchmarks for ACOs.  These benchmarks would protect the Trust Funds by ensuring that ACOs do not unduly benefit from any one aspect of the benchmark calculations, while also helping to ensure the program continues to remain attractive to ACOs, especially those caring for the most complex and highest risk patients who could benefit from high-quality, coordinated care from an ACO.

The revised benchmarking methodology described in the proposed rule would incorporate factors based on regional FFS expenditures in establishing the ACO’s historical benchmark beginning with the ACO’s first agreement period, rather than applying this approach starting in the ACO’s second or subsequent agreement period. More generally, we propose to mitigate the effects of excessive positive or negative regional adjustments used to establish and reset the benchmark by: (1) reducing the maximum weight used in calculating the regional adjustment from 70 percent to 50 percent, and (2) capping the regional adjustment amount using a flat dollar amount equal to 5 percent of national Medicare FFS per capita expenditures. The proposed approach would also replace the current methodology for annually risk adjusting the benchmark for newly assigned and continuously assigned populations of beneficiaries with an approach that would allow for adjustments to reflect changes in health status of up to positive or negative 3 percent over the length of the agreement period.

In calculating the regional trend and update factors, we propose to use a blend of regional and national growth rates based on Medicare FFS expenditures with increasing weight placed on the national component of the blend as the ACO’s penetration in its regional service area increases. This proposed approach is anticipated to result in more favorable trend factors for ACOs with high penetration in their regional service area with lower spending growth compared to the nation and less favorable trend factors for ACOs with high penetration in their regional service area with higher spending growth compared to the nation. This approach would have little impact on ACOs with low to medium penetration in their regional service area.

Use of factors based on regional FFS expenditures in establishing the benchmark starting in an ACO’s first agreement period would allow the benchmark to be a more accurate representation of the ACO’s costs in relation to its localized market (or regional service area), and could strengthen the incentives of the program to drive meaningful change by ACOs.  Further, allowing agreement periods of at least 5 years, as opposed to the current 3-year agreement periods, would provide greater predictability for benchmarks by reducing the frequency of benchmark rebasing, and therefore provide greater opportunity for ACOs to achieve savings against these benchmarks.  In combination, these policies would be protective of the Trust Funds, provide more accurate and predictable benchmarks, while creating incentives for ACOs to transition to performance-based risk.

Finally, we also propose to extend the policies to address determination of shared losses owed by ACOs participating under performance-based risk in the event of extreme or uncontrollable circumstances and quality performance scoring that were adopted for performance year 2017 to apply for performance year 2018 and subsequent years.

Promote program integrity by reducing opportunities for gaming

We propose a combination of policies to strengthen the integrity of the program: using past participation in performance-based risk Medicare ACO initiatives by the ACO legal entity and by its ACO participants to determine available participation options; monitoring for financial performance and permitting termination of ACOs with multiple years of poor financial performance; modifying application review criteria to permit CMS to consider the ACO’s per capita expenditures and failure to meet quality performance standards in multiple years of the previous agreement period; and holding terminated ACOs in two-sided models accountable for pro-rated shared losses. ACOs that voluntarily terminate their participation would be accountable for pro-rated shared losses if they terminate after June 30 of a 12-month performance year. We would hold involuntarily terminated ACOs accountable for pro-rated shared losses incurred during the portion of the performance year prior to their termination.

Promote regulatory flexibility to allow ACOs to innovate and be successful in coordinating care

Annual Choice of Assignment:  To implement a provision of the BBA of 2018, to provide ACOs with greater choice of beneficiary assignment methodology, BASIC track and ENHANCED track ACOs would have the flexibility to elect prospective assignment or preliminary prospective assignment with retrospective reconciliation prior to the start of each agreement period, and to change that selection for each subsequent performance year.

Expand Use of Telehealth for Practitioners in ACOs in Performance-Based Risk Arrangements:  To support ACOs’ coordination of care across settings, we propose regulations to govern the use of telehealth services by certain ACOs under performance-based risk, consistent with the requirements of the BBA of 2018. Under this approach, beginning in January 1, 2020, eligible physicians and practitioners in applicable ACOs in performance-based risk tracks could receive payment for telehealth services furnished to prospectively assigned beneficiaries even if the otherwise applicable geographic limitations are not met, including when the beneficiary’s home is the originating site. This policy would apply to ACOs entering the BASIC track (under a two-sided model) and ENHANCED track, when the ACO elects prospective assignment, as well as Track 3 ACOs and Track 1+ Model ACOs. We also seek comment on an approach that could allow for expansion of this policy to ACOs under performance-based risk that have selected preliminary prospective assignment with retrospective reconciliation, instead of prospective assignment, as their assignment methodology.

Expand Skilled Nursing Facility (SNF) 3-day Rule Waiver Eligibility:  We propose to allow eligible ACOs in performance-based risk within the BASIC track’s glide path and the ENHANCED track use of the existing SNF 3-day rule waiver, regardless of their choice of prospective assignment or preliminary prospective assignment with retrospective reconciliation, to support ACO efforts to increase quality and decrease costs. We also propose amending the existing SNF 3-day rule waiver to allow critical access hospitals and other small, rural hospitals operating under a swing bed agreement to be eligible to partner with eligible ACOs as SNF affiliates for purposes of the SNF 3-day rule waiver.

Promoting beneficiary engagement by incentivizing beneficiaries to achieve and maintain good health

Beneficiary Incentive Programs:  To encourage patient engagement, we propose to allow eligible ACOs in certain two-sided models the opportunity to apply to establish a beneficiary incentive program.  Consistent with the BBA of 2018, the proposal would allow such ACOs to provide an incentive payment of up to $20 to an assigned beneficiary for each qualifying primary care service that the beneficiary receives from certain ACO professionals, or from a Federally Qualified Health Center or Rural Health Clinic.  Further, we clarify that under the program’s existing regulations, we consider vouchers, which can be used only for particular goods or services (including certain gift cards in the nature of a voucher), to be “in-kind items or services” that may be provided to beneficiaries so long as the vouchers meet all other program requirements.  This means that the items and services accessible through use of the voucher must have a reasonable connection to the beneficiary’s medical care and be preventive care items or services or advance a clinical goal for the beneficiary, including adherence to a treatment or drug regime, adherence to a follow-up care plan, or management of a chronic disease or condition.

Beneficiary Notification:  To further empower beneficiary choice, we are proposing to strengthen requirements regarding beneficiary notifications.  We propose that ACO participants must notify beneficiaries at the point of care of a beneficiary’s ability to, and the process by which, a beneficiary may identify or change identification of a primary care provider for purposes of voluntary alignment.  We also propose to require that each ACO participant provide a standardized notice developed by CMS to each of its Medicare FFS beneficiaries at each beneficiary’s first primary care visit of the performance year, in addition to having the same information also available upon request (as currently required).  To mitigate the burden of this additional notification, we propose to develop a template notice.

Updates to Beneficiary Assignment: We propose to expand the definition of primary care services used in beneficiary assignment to add new codes, and revise how we determine whether evaluation and management services were furnished in a SNF.

Voluntary Alignment:  We also propose modifications to the program’s existing policies on voluntary alignment in order to comply with the BBA of 2018, by allowing beneficiaries to designate a physician regardless of specialty or a nurse practitioner, physician assistant or clinical nurse specialist as their “primary clinician” responsible for coordinating their overall care.  We propose to continue to use a beneficiary’s designation to align the beneficiary to the ACO in which their primary clinician participates even if the beneficiary does not continue to receive primary care services from an ACO professional in that ACO.

Supplementing Claims-based Assignment with Beneficiary Opt-in:  We also seek comment on an alternative beneficiary assignment methodology to make the assignment methodology more patient-centered, and strengthen the engagement of beneficiaries in their health care, under which we would allow ACOs to elect an “opt-in” methodology. Under this approach, a beneficiary would be assigned to an ACO if the beneficiary “opted-in” to the ACO.  A hybrid approach is discussed that would supplement an “opt in” approach with  a modified claims-based assignment approach that focuses on the most complex patients, such as high risk patients or those receiving care for chronic conditions.

Promoting interoperability, combatting opioid addiction, and improving quality of care and coordination of pharmacy care for ACO beneficiaries

We propose to establish new program requirements related to the adoption of certified electronic health record technology (CEHRT) by eligible clinicians participating in ACOs.  Specifically, we propose to use an interoperability criterion regarding the use of CEHRT to determine eligibility for initial program participation and as part of an ACO’s annual certification of compliance with program requirements.  We also propose to discontinue the use of the meaningful use electronic health record quality measure and to require instead that ACOs attest that a specified percentage of their eligible clinicians use CEHRT in order to be eligible for the program and certify annually thereafter.  ACOs that are participating in a track or a payment model within a track that is not an Advanced APM would be required to attest that at least 50 percent of their eligible clinicians use CEHRT.  ACOs that are participating in a Track or payment model within a Track that is an Advanced APM would be required to attest to the higher of 50 percent or the CEHRT threshold required for Advanced APMs.

We seek comment on approaches to developing the program’s quality measure set in response to the agency’s Meaningful Measures initiative as well as to support ACOs and their ACO providers/suppliers in addressing opioid utilization within the FFS population.  We describe existing sources of program data that may be useful for ACOs to monitor trends in opioid utilization, and solicit comment on suggestions for providing additional Parts A, B and D data and aggregate statistics to ACOs.  We also seek comment on quality measures that could be used to assess factors related to opioid utilization.

Lastly, we seek comment on how Medicare ACOs and the sponsors of stand-alone Part D prescription drug plans (Part D sponsors) could be encouraged to collaborate so as to improve the coordination of pharmacy care for Medicare FFS beneficiaries.

APPENDIX A: COMPARISON OF BASIC TRACK AND ENHANCED TRACK CHARACTERISTICS

BASIC Track’s Glide Path :