Officials at the Centers for Medicare & Medicaid Services (CMS) took a significant step in changing some of the requirements for accountable care organizations (ACOs) under the Medicare Shared Savings Program (MSSP) for ACOs, on Thursday, Jan. 28.
In an announcement on its website, the agency said that it had “released a proposed rule to update the methodology used to measure the performance of Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program (Shared Savings Program). Today’s proposal builds on the momentum of growth in the Shared Savings Program and charts a path for long-term sustainability by improving the long-term incentives for ACOs as they continue to provide efficient, high quality health care to Medicare beneficiaries.”
The agency quoted its Acting Administrator, Andy Slavitt, as saying, “Medicare payments are an important catalyst to improving care delivery, spending our resources smarter and keeping people healthy. This proposal allows ACOs in all parts of the country to be successful by recognizing both their achievements and improvements in how they provide care. This should have the effect of growing the number of ACOs, and making ACOs and the coordinated care they provide to patients, more of a standard in all parts of the country."
CMS officials are looking to leverage the new proposed rule in order to modify the process for resetting the MSSP program’s benchmarks, which are used to measure ACO performance. Among the key elements in the changes that the agency is proposing:
- Recognizing that health cost trends vary in communities across the country by using regional, rather than national, spending growth trends when establishing and updating an ACO’s rebased benchmark.
- Adjusting an ACO’s rebased benchmark when it enters a second or subsequent agreement period by a percentage (increased over time) of the difference between fee-for-service
- spending in the ACO’s regional service area and the ACO’s historical spending, which will provide a greater incentive for continued ACO participation and improvement.
- Giving ACOs time to prepare for benchmarks that incorporate regional expenditures by using a phased-in approach to implementation.
- Adding a participation option to facilitate an ACO’s transition to performance-based risk arrangements by allowing eligible ACOs to elect a fourth year under their existing first agreement and defer by one year entering a second agreement period under a performance-based risk track.
- Streamlining the methodology for adjusting an ACO’s benchmark when its composition changes.
- Clarifying the timeline and other criteria for reopening determinations of ACO shared savings and shared losses for good cause or fraud or similar fault.
How it sets benchmarks and what benchmarks it sets are major issues for CMS and for the ACOs participating in all of the agency’s ACO programs. Industry observers have been noting for some time how challenging an issue this is for ACO leaders. For example, in a July 2015 analysis, April Wortham Collins, manager, customer sentiment analysis at the Burlington, Mass.-based Decision Resources Group, wrote that, “ When setting an ACO's benchmark, CMS looks at the most recent available three years of beneficiary expenditures for parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO. If an ACO's beneficiary expenditures come in at a certain level below the benchmark, it gets a check from CMS for a portion of the difference. If the ACO is in Track 2 or Track 3 and its beneficiary expenditures come in at a certain level above the benchmark, it writes a check to CMS.” Importantly, Wortham Collins notes, “Benchmarks are different for every ACO and can be adjusted based on a myriad of factors, including unique characteristics of the ACO's assigned patient population. They’re set at the beginning of each three-year agreement period and then updated each year of the agreement based, again, on a number of factors. One of these is the projected amount of growth in the national per-capita expenditures for parts A and B under traditional Medicare fee-for-service.”
Thus, Wortham Collins states, “Benchmarking is a sore spot for MSSP ACOs, which argue the current methodology is unfair and effectively punishes high-performing ACOs, forcing them to chase after diminishing returns in subsequent agreement periods when the benchmark is reset. In comments to the proposed rule released in December 2014, some ACO leaders argued they have to continually beat their own best performance in order to achieve share in savings, while higher-cost ACOs are rewarded for their historical inefficiency with higher benchmarks.”
What’s more, provider leaders have repeatedly expressed criticism of data measures within the various ACO programs sponsored by Medicare. For example, the ACO sponsored by San Diego’s Sharp HealthCare, exited the Pioneer ACO Program in 2014 partly over such issues.
For example, in August 2014, Alison Fleury, CEO of Sharp’s ACO, told California Healthline that CMS’s rigidity in applying national cost metrics to diverse regional situations was a major factor in leaving the Pioneer ACO Program. She attributed Sharp’s decision to drop out mostly to the financial model of Pioneer ACOs, saying that, “Because the Pioneer financial model is based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO despite favorable underlying utilization and quality performance.’” The article went on to note that San Diego’s area wage index had increased by 8.2 percent between 2012 and 2014, but because the Pioneer model did not take that into account, health systems have not received amplified regional payments.
With regard to CMS’s proposed rule for the MSSP program, among the first industry responses was a positive one from the Charlotte-based Premier, Inc. That health alliance released a statement that it attributed to Blair Childs, senior vice president of public affairs. In the statement, Childs said, “Members of the Premier alliance believe the Centers for Medicare & Medicaid Services (CMS) is taking a step in the right direction by proposing important changes to the Medicare Shared Savings Program's benchmarking process. Although the details will be important, the rule appears to make some encouraging recommendations, including a move away from accountable care organization (ACO) benchmarks based on historical spending in favor of a methodology that sets targets based on regional spending and trends,” Childs said.
“As we know from members of our population health collaborative, the current methodology can limit or eliminate shared savings payments for high-performing ACOs for no other reason than they happen to reside in an area with lower than average spending,” Childs said, adding that “We will continue to analyze the proposal and accompanying data and look forward to providing detailed comments to CMS on these efforts.”
Healthcare Informatics will update readers on this story as new developments occur.
