Accountable Care: Final Shared Savings Rule and Updates to ACO Model

The centers for Medicare and Medicaid continue to emphasize coordination of care through accountable care organizations (ACOs), finalizing a rule on shared savings and expanding eligibility for the Investment model for ACOs.

A proposed rule updating the Shared Savings Program was issued last December, received 270 public comments and was finalized earlier this month. Last December, NIR detailed the proposed Track 3 performance-based risk option for shared savings and prospectively assigning beneficiaries to ACOs "rather than preliminarily assign[ing] to ACOs with a retrospective reconciliation." (See the Dec. 11, 2014 issue of NIR). That Track 3 was solidified in the final rule issued June 4, 2015, offering a higher level of sharing than the first two Tracks. Other changes in the rule address:

• Increased "emphasis on primary care services in the beneficiary assignment."
• Facilitating better data access to improve quality of care by doing away with confusing ACO letters to patients about data sharing and relying on point of care signage and notices and having patients stipulate their data sharing preference directly to CMS.
• Giving ACOs in performance-based risk tracks symmetrical thresholds for savings and losses.
• Permitting renewal of one-sided ACO model agreements (Track 1) for a second term after the first three-year agreement. Track 1 includes shared savings but not losses. Previously, participants would have to renew for a two-sided risk track after that initial Track 1 period. To be eligible for this renewal, the ACO must have met "the quality performance standard in at least one of the first two years" of the initial three-year agreement.
• Waiving the three-day skilled nursing facility stay rule "for beneficiaries that are prospectively assigned to ACOs under Track 3."
• Refining the way benchmarks are reset at the start of subsequent agreement periods.

CMS issued a Fact Sheet summarizing the major changes the Final Rule makes to the program. "Accountable Care Organizations have shown early but exciting progress in improving quality of care, while providing more patient-centered care at a lower cost," said CMS Acting Administrator Andy Slavitt, in a press release announcing the Final Rule. "The ACO rules today strengthen our ability to reward better care and lay the groundwork for more providers to become successful ACOs."

ACO Investment Model Update
Shortly after the release of the Final Rule, CMS also updated eligibility criteria for its ACO Investment Model for participants in the Medicare Shared Savings Program. This model involves "pre-paid shared savings that builds on experience with the Advanced Payment Model to encourage new ACOs to form in rural and underserved areas and current Medicare Shared Savings Program ACOs to transition to arrangements with greater financial risk," according to a CMS Fact Sheet regarding the Investment Model.

New ACOs joining in 2015 or 2016 can take advantage of the model that provides "pre-payment of shared savings in both upfront and ongoing per beneficiary per month payments." "CMS believes that encouraging participation in areas of low ACO penetration may spur new markets to focus on improving care outcomes for Medicare beneficiaries," the agency said in June 25, 2015 fact sheet. The model is also open to ACOs joining the Shared Savings Program in the years 2012, 2013 or 2014, to encourage a shift to higher risk sharing.

The model involves three types of payments for new ACO participants (joining January 1 of 2015 or 2016):

• Upfront, fixed payment;
• Upfront variable payment (variation is based on "the number of its preliminarily prospectively-assigned beneficiaries"); and
• ffMonthly payment (which varies based on ACO's number of "preliminarily prospectively-assigned beneficiaries").

Pre-existing ACO participants that joined the Shared Savings Program on dates in 2012, 2013 and 2014, receive either an upfront variable payment or a monthly payment. Both payments vary based on "the number of its preliminarily prospectively-assigned beneficiaries."

The Investment model is only open to ACOs already participating in the Shared Savings Program and which also:

• Had its first performance year in any year from 2012 to 2016;
• Reported quality measures in the most recent performance year, if it joined the program in 2012, 2013 or 2014;
• Has 10,000 or fewer beneficiaries for the most recent quarter, unless the ACO joined the program in 2015 (or joins in 2016) and is from a rural area using the application selection criteria (in which case it can have more than 10,000 beneficiaries);
• Don't include a hospital participant or provider/supplier (except critical access hospitals or inpatient prospective payment system hospitals having 100 or fewer beds);
• Isn't operated by a health plan; and
• Doesn't participate in the Advance Payment Model.

The Fact Sheet indicates CMS will prefer ACOs serving rural areas and those with low ACO penetration and ACOs moving to higher risk levels. "CMS will also give preference to ACOs that provide high quality of care, achieved their financial benchmark, and demonstrate exceptional financial need." The application period is July 1-31, 2015 for ACOs that start in 2014, 2015 or 2016.

Takeaway: The focus on ACOs as the engine for reforming health care delivery continues.