The proposed rule, titled "Pathways for Success," marks the Trump Administration's first formal update to the Obama-era ACO models. And CMS has, in fact, proposed substantial changes to the program—collectively the most significant revamp of MSSP since the introduction of Track 3 in 2016—that, if finalized, would take effect in 2019. However, this rule does not immediately affect the Next Generation ACO Model, which is currently being tested by CMS' Center for Medicare and Medicaid Innovation (CMMI) and resides outside of MSSP's formal rules and regulations.
What you need to know: Our 4 early takeaways
Here are our early takeaways based on an initial scan of the proposed rule:
1. Tired of waiting for ACOs to voluntarily transition to downside risk, CMS looks to motivate and accelerate action
For several months, HHS Secretary Alex Azar and CMS Administrator Seema Verma have expressed concern that MSSP—and the upside-only Track 1 model in particular—may be driving up Medicare spending rather than bending the cost curve.
It's not surprising, then, that the proposed rule includes substantial changes intended to minimize the amount of time participants can remain in an upside-only model before transitioning to downside financial risk. To expedite this evolution, CMS proposes retiring the current Track 1 and Track 2 models and replacing them with a single track, called "BASIC." If the BASIC track is finalized as proposed, CMS would also discontinue future application cycles for the Track 1+ model. The new BASIC Track would span a five-year agreement period, with providers required to take on increasing levels of downside risk beginning in their third year of participation. Organizations that had previously participated in the Track 1 model would be required to transition even more quickly—the new model would only allow those ACOs one year of upside-only participation.
CMS in the proposed rule also would retain the Track 3 model, although it would be renamed as the '"ENHANCED" Track. However, beyond the new name, the overall structure of this higher-risk, higher-reward option would remain unchanged.
CMS estimates that these proposed changes would save Medicare $2.24 billion across the next 10 years, despite also projecting that, over the same timeframe, 109 ACOs would exit the program (for reference, there are currently 561 ACOs participating in MSSP).
2. Providers face fewer upfront choices—but they may face a complex experience in the BASIC Track
Under the current landscape, providers have to navigate a full menu of Medicare ACO options across the MSSP and Next-Generation ACO Model (we even developed an infographic to help leaders understand how the various options stack up). In comparison, however—with the Next-Gen ACO Model currently closed to new applicants and the proposed changes to MSSP—new providers forming ACOs would select between the BASIC and ENHANCED Tracks, streamlining upfront decisions dramatically.
That said, ACOs opting for the newly proposed BASIC Track would have to contend with steady increases in risk and reward once their performance periods commence, leaving little time for complacency over time. Once the transition to downside risk begins in Level C, the performance standards steadily increase. So new ACOs will need to be ready to adapt to heightened expectations, even if they're not graduating between tracks or agreement periods.
3. CMS wants hospital-led ACOs to bear more risk, more quickly than physician-led ACOs
CMS has not been shy about sharing results demonstrating that physician-led ACOs have generally produced superior financial results when compared with hospital-led ACOs.
The proposed rule clearly states that one of its primary ambitions is to "promote free-market principles by encouraging the development of physician-only and rural ACOs in order to provide a pathway for physicians to stay independent, thereby preserving beneficiary choice." It proposes to do this primarily by introducing a mechanism for categorizing model participants into "high revenue" and "low revenue" ACOs—with low revenue ACOs (largely physician-led ones) eligible for additional flexibilities.
For example, under the proposed rule, low revenue ACOs could apply for a second, five-year agreement period in the BASIC Track, while high revenue ACOs would be required to move to the ENHANCED Track in their second five-year agreement period.
As a result, to remain in MSSP, these newly classified high revenue ACOs would have a maximum of two years in upside-only risk (i.e., Levels A and B) and three years in modest downside risk (i.e., Levels C, D, and E) before needing to transition to more substantial downside risk in the ENHANCED Track. Conversely, the proposed rule would allow low revenue ACOs to spend up to 10 years in more modest downside risk before transitioning to the ENHANCED Track. For comparison, ACOs can currently spend up to six years in the upside-only Track 1, regardless of their size or revenue.
CMS in the proposed rule also solicits comment on ways to provide additional benefit for low revenue ACOs, such as making them eligible for higher shared savings payments or offering them transitional models between the BASIC and ENHANCED Tracks.
4. CMS is incorporating past lessons and provider feedback
As the proposed changes detailed above illustrate, CMS now has the benefit of several years' worth of participation and performance data to inform program updates. While some of these changes will impose more stringent requirements on participants—particularly hospital-based ACOs—CMS is also looking to incorporate additional flexibilities that have been requested by providers of all shapes and sizes. For example, the new rule proposes to:
- Allow ACOs to select and even change their desired beneficiary attribution methodology on an annual basis—and participants in upside-only models would have the option to select prospective attribution;
- Allow annual risk adjustment to ACO benchmarks (i.e., during an agreement period);
- Reimburse for telehealth services for prospectively assigned beneficiaries in non-rural areas;
- Allow broader access to the SNF 3-day waiver; and
- Accelerate the incorporation of regional adjustments into the program's benchmarking methodology.
Given the substantial changes included in the proposed rule, CMS is proposing to delay the start of the 2019 agreement period to July 1, 2019. ACOs with a participation agreement ending on December 31, 2018 can extend their current agreement period for an additional six-month performance year. CMS is accepting comments on the proposed rule through October 16, 2018.
Keep an eye out for more insights. Our team will continue to analyze the proposed rule—and pinpoint the strategic and operational takeaways for health care leaders.