CMS Proposes Changes to Payment Methods for Providers Who Participate in ACOs

New rules would take affect on January 1, 2017

The Centers for Medicare and Medicaid Services (CMS) has issued proposed rules that would update the methods used to calculate the benchmarks of accountable care organizations (ACOs) that continue their participation in the Medicare Shared Savings Program (MSSP) after an initial three-year agreement period.

The proposed changes are focused on incorporating regional fee-for-service (FFS) expenditures into the methods used to establish, adjust, and update an ACO’s historical benchmark for its second or subsequent agreement period. The CMS has also proposed further modifications to streamline the methods used for adjusting the ACO’s benchmark for composition changes to encourage ACOs to transition to performance-based risk arrangements.

The MSSP now includes 434 ACOs serving more than 7.7 million Medicare beneficiaries nationally.

The CMS proposes the following changes, to be applied in resetting an ACO’s benchmark for a second or subsequent agreement period beginning on or after January 1, 2017:

  • Replace the national trend factor with regional trend factors for establishing the ACO’s rebased historical benchmark, and remove the adjustment to explicitly account for savings generated under the ACO’s prior agreement period.
  • Make an adjustment when establishing the ACO’s rebased historical benchmark to reflect a percentage of the difference between the regional FFS expenditures in the ACO’s regional service area and the ACO’s historical expenditures. A higher percentage will be used in calculating this adjustment to the ACO’s rebased historical benchmark for the ACO’s third agreement period and all subsequent agreement periods.
  • Annually update the rebased benchmark to account for changes in regional FFS spending, replacing the current update, which are based solely on the absolute amount of projected growth in national FFS spending.

The CMS also proposes to define an ACO’s regional service area to include any county where one or more assigned beneficiaries reside and to weight county-level FFS costs by the proportion of the ACO’s assigned beneficiaries in the county. Moreover, the CMS is proposing to use all beneficiaries eligible for an ACO assignment instead of all FFS beneficiaries as the basis for program calculations using regional and national FFS expenditures.

In response to requests from ACOs and other stakeholders for data to allow modeling of proposed changes to the rebasing methods, the CMS has made new data files available through the MSSP’s website: average per capita county-level FFS spending and risk scores for three historical years; and ACO-specific data on the total number of assigned beneficiaries residing in each county, where at least 1% of the ACO’s assigned beneficiaries reside, for three historical years. These data can be used in combination with publicly available ACO financial performance data for Performance Year One and for Performance Year 2014 of the MSSP.

Source: CMS; January 28, 2016.