MLR

New Shared Savings Program rules offer flexibility

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Last June, the Centers for Medicare & Medicaid Services (CMS) modified the Medicare Shared Savings Program to increase participation in accountable care organizations.

risk and reward sign

The Medicare Shared Savings Program (MSSP) is designed with several tracks. Track 1 is risk free. Participants share in savings but not losses, while Track 2 participants share in both potential savings and losses.

In 2015, there were more than 400 accountable care organizations (ACOs). Only 1 percent chose to participate in Track 2. The new rule adds flexibility, updates benchmarks and adds a third track offering greater reward in relation to greater risk.

Track 1

Previously, ACOs could stay in the risk-free model only for an initial three-year period, after which they were required to transition to Track 2. CMS acknowledged that some smaller and less experienced ACOs would likely drop out of the program rather than enroll in the two-sided model because “the smaller an ACO’s assigned beneficiary population, the greater the chances that shared losses could result from normal variation.”

Participants in good standing can now remain in the one-sided track for another three years and maintain their maximum sharing rate of 50 percent. To be eligible, the ACOs must have met the quality performance standard in at least one of the first two years of their initial three-year agreement period.

Track 2

To encourage ACOs to accept increased performance-based risk, CMS modified the threshold that ACOs must meet in the two-sided risk model to share in savings or losses.

ACOs entering Track 2 for agreement periods beginning January 2016 or later have several options for setting their minimum savings rate/minimum loss rate (MSR/MLR) as opposed to the flat 2 percent rate currently in place. Specifically, (1) 0 percent MSR/MLR; (2) symmetrical MSR/MLR in a 0.5 percent increment between 0.5-2.0 percent; and (3) symmetrical MSR/MLR that varies based on the ACO’s number of assigned beneficiaries.

CMS noted that ACOs that are “more hesitant to enter a performance-based risk arrangement may choose a higher MSR/MLR to have the protection of a higher threshold on downside risk.”

Track 3

CMS is now offering a chance for greater reward (and greater risk) under the newly established Track 3. Track 3 offers the same flexibility with respect to MSR/MLR as Track 2.

It also includes a shared savings rate of up to 75 percent in conjunction with accepting risk for up to 75 percent of all losses, depending on quality performance. Shared losses of high-performing ACOs cannot be reduced below 40 percent.

Other elements have been added to Track 3 in an effort to make it more attractive for ACOs to accept increased performance-based risk. Beneficiaries are prospectively assigned, rather than preliminarily assigned, to ACOs with a retrospective reconciliation.

This enables an ACO to know the population for which it is accountable at the beginning of each performance year. CMS also has established a waiver of the three-day stay skilled nursing facility rule for beneficiaries who are prospectively assigned to ACOs.

The performance payment limit under Track 3 has been raised to 20 percent of the updated benchmark. Under Tracks 1 and 2 the performance payment is not to exceed 10 percent and 15 percent of an ACO’s updated benchmark, respectively. The loss recoupment limit is 15 percent of the Track 3 ACO’s updated benchmark.

ACO benchmarks

In the face of criticism that its benchmarking methodology unfairly penalizes high-performing ACOs, CMS has made some improvements, such as equal weighting each year versus progressive weighting when resetting the historical benchmark for second and subsequent agreements. CMS is also taking into account shared savings generated under the prior agreement period.

In October, CMS proposed a more comprehensive benchmarking methodology that incorporates both an ACO’s historical costs and regional fee-for-service costs and trends. The revised methodology is expected to apply to ACOs that are beginning new agreement periods in 2017.

Beneficiary notification

Since Medicare beneficiaries are free to see any physician or provider, ACOs do not always receive data about beneficiary claims from non-ACO participants. The process to get claims data from CMS was cumbersome and confusing to beneficiaries, who must have been notified and offered an opportunity to decline claims sharing before the ACO could request the data.

The new process effective Nov. 1, 2015, is greatly streamlined. ACO participants must post signs at the point of care, notifying Medicare beneficiaries of the ACO’s participation in the Medicare Shared Savings Program, advising the beneficiaries of their right to decline data sharing and providing them with instructions on how to decline. Standardized written notices also must be available upon request. – Irene E. Lombardo