CMS Outlines ACO Pathways to Success
Will the latest regulations governing accountable care organizations (ACO) deliver favorable results for all?
The Pathways to Success final rule, released by the Centers for Medicare & Medicaid Services (CMS) on Dec. 21, 2018, offers several new participation options and flexibility to healthcare organizations in the Medicare Shared Savings Program (MSSP). Participation options are meant to encourage ACOs to transition to performance-based risk more quickly and incrementally.
MSSP ACOs service more than 10.5 million Medicare fee-for-service patients, according to a CMS Fact Sheet. New and existing ACOs have until July 1, 2019, to review new policies, make business and investment decisions, and complete and submit an MSSP application.
The final rule restructures the participation options for ACOs in 2019:
- Discontinues Track 1 (one-sided shared savings-only model)
- Discontinues Track 2 (two-sided shared savings and shared losses model)
- Renames Track 3 to ENHANCED track; and
- Offers a new BASIC track.
Tracks 1 and 2, as well as the deferred renewal option, are no longer available for applicants with agreement periods starting in 2019. Note that CMS will identify new ACOs as re-entering ACOs if greater than 50 percent of their participants have recent prior participation in the same ACO.
The BASIC and ENHANCED tracks are applicable to agreement periods starting on or after July 1, 2019. ACOs will be able to choose either prospective assignment or preliminary prospective assignment with retrospective reconciliation prior to the start of their agreement period.
A key element of the final rule is a reduction in the amount of time an ACO can remain in the program without taking accountability for healthcare spending. The BASIC track includes a “glide path” option for eligible ACOs to begin participation under a one-sided model and incrementally phase in risk and potential reward over the course of a single agreement period. Under this track’s glide path, the levels of risk and potential rewards phase in as such:
Level A: The ACO operates under a one-sided model. Shared savings rate of 40 percent based on quality performance, not to exceed 10 percent of updated benchmark.
Level B: The ACO operates under a one-sided model. Shared savings rate of 40 percent based on quality performance, not to exceed 10 percent of updated benchmark.
Level C: The ACO operates under a two-sided model. Shared savings rate of 50 percent based on quality performance, not to exceed 10 percent of updated benchmark; and a loss sharing rate of 30 percent, not to exceed 2 percent of ACO revenue, capped at 1 percent of updated benchmark.
Level D. The ACO operates under a two-sided model. Shared savings rate of 50 percent based on quality performance, not to exceed 10 percent of updated benchmark; and a loss sharing rate of 30 percent, not to exceed 4 percent of ACO revenue, capped at 2 percent of updated benchmark.
Level E: The ACO operates under a two-sided model. Shared savings rate of 50 percent based on quality performance, not to exceed 10 percent of updated benchmark; and a loss sharing rate of 30 percent, not to exceed the percentage of revenue specified in the revenue-based nominal amount standard under the Quality Payment Program (QPP), capped at 1 percentage point higher than percentage of updated benchmark specified under the QPP.
For each performance year starting after Jan. 1, 2020, ACOs in the glide path will be automatically progressed to the next level. Low-revenue ACOs will have the option to participate under one-sided risk for three years and, in exchange, will be required to move to Level E of the BASIC track for the final two years of their five-year agreement period.
2016 results showed 56 percent of MSSP ACOs saved relative to their benchmark and 31 percent received the shared savings bonus. (Health Affairs, 2017) Data show that the likelihood of shared savings increases the longer an ACO has been in the program, “which reflects the time required to redesign care delivery and implement infrastructure,” state the authors.
This track is based on the program’s Track 3, but ACOs will agree to participate for a period of not less than 5 years for agreement periods beginning on July 1, 2019 (for a 5-year and 6-month agreement period), and in subsequent years. The risk and reward amounts are unchanged. However, both tracks include revised repayment mechanism arrangement requirements meant to “help ensure that an ACO can repay losses for which it may be liable,” CMS says in the final rule.
Benchmarking Methodology Refinements
CMS is also changing the methodology for establishing, adjusting, updating, and resetting benchmarks, including:
- Application of factors based on regional FFS expenditures to establish, adjust, and update the ACO’s benchmark beginning in its first agreement period.
- Reducing the maximum weight used in calculating the regional adjustment from 70 percent to 50 percent.
- Modifying the phase-in schedule for applying increased weights in calculating the regional adjustment for ACOs with spending above their region.
- Capping the amount of the adjustment based on a percentage of national FFS expenditures.
- Calculating growth rates using a blend of regional and national expenditures, with increasing weight placed on the national component.
- Better accounting for certain health status changes by using full hierarchical condition category (HCC) risk scores to adjust the benchmark each performance year (capped at 3 percent).
Tim Gronniger, senior vice president of development and strategy for Caravan Health, says poor and inconsistent HCC coding is one reason ACOs fail. “Most fee-for-service providers either do not pay attention to HCC coding or do not understand it. Every year a group of ACOs lose their shared savings because average HCC codes for their population decreased solely due to neglect. Simple, robust processes are required to support clinicians and inform them at the point of care of what chronic conditions are present in patients so they can address them during the visit and accurately record the diagnoses,” Gronniger writes in The 10 Reasons Accountable Care Organizations Fail. (Becker’s Hospital Review, 2018)
Skilled Nursing Facility (SNF) 3-day Rule Waiver
CMS also finalized policy to allow eligible ACOs under performance-based risk under either prospective assignment or preliminary prospective assignment with retrospective reconciliation to use the program’s existing SNF 3-day rule waiver. The waiver allows 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 the purposes of the SNF 3-day rule waiver.
Similarly, the final rule establishes regulations for telehealth services furnished on or after Jan. 1, 2020, by physicians and other practitioners participating in ACO under performance-based risk that have selected prospective assignment. Limited waivers may be granted for the originating site and geographic requirements to allow for payment for otherwise covered telehealth services provided to patients who are no longer prospectively assigned to an applicable ACO during a 90-day grace period.
Beneficiary Incentive Programs
To benefit participants, ACOs may operate CMS-approved beneficiary incentive programs under certain two-sided models. ACOs will be required to notify patients of this assignment in writing prior to or at the patient’s first primary care visit of each performance year. This information must also be posted in facility and available upon request (as currently required). ACOs that operate a beneficiary incentive program must also notify its patients of the programs they offer.
Don’t Expect Something for Nothing
Although CMS is incorporating several provisions into the MSSP to encourage ACO growth, it has no intentions of letting its guard down. ACOs will be held to a higher standard when it comes to performance. Poor performers will be ousted more quickly, with less notice. And to prevent ACOs from gaming the system, CMS is putting policy in place, such as early termination penalties, to prevent ACOs from repeatedly participating in the BASIC tracks’ glide path for a short time, terminating, and then re-entering a one-side model.
Despite being published on the winter solstice, stakeholders seem to be warming up to the new direction CMS is taking the program. Clif Gaus, CEO of the National Association of Accountable Care Organizations (NAACOS) indicated his approval of the five-year agreement periods and other added flexibility in a statement, published after the release of the final rule. Gaus also said, “We will continue to advocate on certain provisions that CMS opted not to change in the final rule, such as the retention of a two-year period in the no-risk model for many ACOs and the distinction between high and low revenue ACOs.”
Saunders, Robert, Muhlestein, David, McClellan, Mark; “Medicare Accountable Care Organization Results for 2016: Seeing Improvement, Transformation Takes Time; Health Affairs, Nov. 21, 2017; https://www.healthaffairs.org/do/10.1377/hblog20171120.211043/full/
Gronniger, Tim; “The 10 Reasons Accountable Care Organizations Fail;” Becker’s Hospital Review; May 8, 2018; https://www.beckershospitalreview.com/accountable-care-organizations/the-10-reasons-accountable-care-organizations-fail.html
Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations – Pathways to Success final rule; Dec. 21, 2018; https://www.federalregister.gov/public-inspection/