This is the sixth post in Health Care Law Today’s series on the proposed rule modifying the Medicare Shared Savings Program (“MSSP”). The proposed rule was published in the Federal Register on December 8, 2014 and parties have 60 days to offer comments. Click here to read earlier posts about the rule. This post addresses proposed changes to the MSSP Tracks and the financial model of the MSSP.
Many critics have suggested that the November 11, 2011 final rule establishing the MSSP created a financial model that over time would not be sustainable. ACOs viewed the requirement to take risk after the initial three years as undesirable and a requirement for which many ACOs were not ready. While over 330 ACOs are participating in the MSSP under the existing rule, only five have elected to participate in Track 2, where ACOs must take downside risk, and less than one-quarter of the ACOs participating have earned shared savings.
CMS in the proposed rule recognizes that “many of the organizations currently participating in the program are risk adverse and lack the infrastructure and readiness to manage increased performance-based risk.” While CMS is of the view that it is when ACOs are at risk that more meaningful systematic change will occur, it also acknowledges that the current financial models do not offer a sufficient pathway for many ACOs to transition from Track 1, in which there is only an upside, to Track 2, in which ACOs must take downside risk.
To address these concerns, in the proposed rule CMS offers several revisions to the MSSP and its financial models.
There are numerous proposed changes to the Track 1 model, the Track in which 98% of the ACOs currently participate.
To reduce the financial risk under Track 2, which CMS believes is important to make participation in Track 2 more desirable, the new rule proposes to have the Minimum Savings Rate (MSR) and the Minimum Loss Rate (MLR) be based on the number of assigned beneficiaries to an ACO, as has been the case in Track 1 for the MSR. The impact of this change is to raise the amount of losses that must be incurred for ACOs who have a smaller number of assigned beneficiaries, before there is any responsibility for loss-sharing. Currently under Track 2, all ACOs, irrespective of whether an ACO has 5,000 or 75,000 assigned beneficiaries, shares in losses once the total losses exceed 2% of the benchmark. As proposed, ACOs with smaller assigned beneficiaries, and thus a greater likelihood of variability in medical costs for the ACO assigned population, will only share in losses if a higher threshold (3.9% if there are 5,000 to 5,999 assigned beneficiaries) is met. As such, there will be less risk that variability in medical costs in a smaller assigned population will lead to loss sharing. To keep it balanced, CMS also proposes that there be more initial savings realized for ACOs with fewer assigned beneficiaries against the benchmark before there will be any shared savings paid.
CMS proposes to develop a new risk-based Track 3, in order to offer a more attractive option for ACOs who are ready to accept increased performance-based risk. Track 3, as proposed, is modeled in part off the current provisions governing Track 2, including for eligibility requirements, quality performance standards, data sharing requirements, monitoring rules and transparency requirements. But, there are new features, unique to Track 3, including beneficiary assignment, sharing rate, MSR and MLR, and performance payment and loss sharing limits.
Among the more significant proposed aspects of the model for Track 3 are:
To further encourage ACOs to take downside risk and move to Track 2 or 3, CMS proposes several changes with respect to the mechanisms that ACOs must have in place to ensure that they can repay CMS for losses. Some of the more significant proposed aspects are to:
CMS also is concerned about ACOs continued participation in the MSSP. To encourage continued participation in the MSSP program, CMS seeks comments on stakeholders continued concerns that resetting benchmarks at the start of each agreement period disadvantages ACOs, particularly those that have generated savings. CMS does not propose any changes to the benchmarking methodology at this time, however. It merely seeks comment on various alternatives it describes in the proposed rule as well as alternative approaches.