Providers Would Get a Boost Under Proposed Rule Changes to MSSP ACOs

Medicare Shared Savings Program Accountable Care Organizations (ACOs) would have three extra years before they could be punished for poor performance, according to a new proposal from CMS.


The proposal is one of dozens of changes to rules governing ACOs that CMS wants to implement. ACOs are affiliations of doctors, hospitals and other providers that jointly care for Medicare patients with the goal of receiving a portion of what they save the government. Those that spend above Medicare estimates stand to lose money. The objective is to reduce U.S. health spending with new incentives to improve the quality and efficiency of healthcare.


The incentives have been a source of controversy. “Policymakers have sought more substantial incentives—penalties as well as rewards—as a means to hasten changes to the way healthcare is delivered. Hospital officials and physicians have called for less financial risk so they can build the infrastructure and expertise they need to succeed.” (“Draft Medicare ACO rules would allow more time with less risk,” Modern Healthcare A.M., December 1, 2014)


More than 330 Medicare Shared Savings ACOs care for about 5 million people. (There are substantially fewer ACOs outside the Medicare Shared Savings Program, and these are not addressed in the new proposal from CMS.) The revisions to the program are intended to entice providers to form new ACOs and to keep existing ones in the program, which is voluntary.


The new rule would give both new and existing ACOs an extra three years before they faced penalties, for a total of six years.


Some of the details include the following:


  • ACOs that after their first three years decide to avoid penalties for the next three could keep no more than 40 percent of the money they save Medicare, rather than the 50 percent maximum they can keep during their first three years.
  • Providers that want a chance to earn the biggest savings while also being a higher risk for repayment if they fall short would transfer to a new model called “Track Three.” Many ACOs in the Pioneer ACO Model would transfer to this new model. These ACOs would keep up to 75 percent of the money they save Medicare. If they cost Medicare extra, they would be responsible for up to 15 percent of the excess spending. Currently ACOs cannot be held responsible for more than 10 percent.
  • The Third Track model would use new methods to identify which patients are included in the ACO. These ACOs would have a list of patients at the start of the year whose care and costs they must manage. Under the current rules, Medicare identifies beneficiaries as included in the ACO at the end of the year based on how much care they received from the providers in the network. ACOs have asked CMS to identify the patients at the beginning of the year to allow more focused improvement efforts.
  • Because some ACOs have complained that providers that are already practicing efficiently are having a harder time producing savings than less efficient ones, CMS would offer an option that compares ACO spending to the average spent by other doctors and hospitals in the region that are not part of an ACO.
  • The government is also soliciting views on alternative ways of deciding whether an ACO has saved Medicare money. Currently, Medicare estimates what the participants of the ACO spent in the past and uses that as a benchmark.


The public has until Feb. 6 to comment on the proposed rule.


(The major source for the information above is from Kaiser Health News; “New ACO Rules Would Delay Penalties An Extra Three Years,” Jordon Rau, Kaiser Health News, December 1, 2014. Kaiser Health News (KHN) is a nonprofit national health policy news service. KHN content is produced as part of a reporting partnership with NPR and public radio member stations.) 


To read the CMS proposal, click here.



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