Jan. 7-11: Providers Mull ACO Regulatory Changes Ahead of Deadlines

Some provider advocates have warned the new rules could decrease ACO participation.

Jan. 3—An overhaul of Medicare’s main accountable care organization (ACO) program was finalized in mid-December, and many providers looking to join or continue participating will be required to begin the process this month.

The Centers for Medicare & Medicaid Services (CMS) issued a final rule revising the Medicare Shared Savings Program (MSSP) Dec. 21, eliciting a mixed reaction from provider advocates. But those looking to launch ACOs have little time to digest the new rules since CMS required providers to file a “notice of intent to apply” by Jan. 18 for the July 1 start. The application submission deadline is Feb. 22.

Chad Mulvany, director of healthcare finance policy, perspectives and analysis, for HFMA, urged providers that are considering starting an ACO under the new rules to carefully monitor the CMS webpage for information on the application, which will be processed in a “compressed” schedule.

“While I would anticipate CMS might simplify the application compared to prior years, it will still require a fair amount of time and effort to complete,” Mulvany said.

Those looking to participate this summer may want to review previous ACO applications to get a sense of the CMS requirements.

The July 1, 2019 start date—a departure from the usual Jan. 1 start date for new ACOs–could affect a significant number of ACOs, since 90 percent of eligible ACOs with participation agreements that would have ended Dec. 31, 2018, elected to extend their agreement period to June 30, 2019, in anticipation of the new rules, according to CMS. Additionally, ACOs in an existing three-year contract have the option to replace that with a new agreement period that would start on July 1 and incorporate the new rules.

Rule Provisions

Provider organizations weighing participation in the redesigned ACO program will have numerous changes to consider.

Key provisions of the final rule, according to a CMS fact sheet, include:

• Replacing existing MSSP tracks with just two tracks—Basic and Enhanced 
• Requiring two-sided risk within two to three years of joining an upside-only track
• Reducing shared savings rates for upside-only models from 50 percent to 40 percent
• Creating a differentiation between “low-revenue” and “high-revenue” ACOs and requiring high-revenue ACOs to take on more risk more quickly
• Increasing agreement periods from three years to at least five years
• Allowing all ACOs to elect prospective beneficiary assignment or preliminary prospective assignment with retrospective reconciliation
• Expanding the use of regional factors in the benchmarking methodology
• Allowing ACOs’ risk scores to decrease by an unlimited amount, without the proposed 3 percent cap
• Increasing the availability of waivers of Medicare payment requirements

Mixed Reaction

Katherine Schneider, MD, president and CEO of the Delaware Valley ACO, said it remains “highly likely” her ACO will renew when its latest three-year contract expires at the end of 2019 but there also is “a lot more to know” about the new rules. Her organization—one of the largest Medicare ACOs with 90,000 enrollees—is modeling the financial impacts of changes to the benchmarks, which previously have produced unexpected results. A particularly large challenge will come from the need to set aside “tens of millions of dollars” in reserves that the ACO may need to pay back to CMS for subpar results—once it begins accepting risk.  

The National Association of Accountable Care Organizations (NAACOS) praised the move to five-year agreement periods and the increased flexibility in the form of waivers for telehealth and skilled nursing facility stays. And changes from the proposed rule that increased shared savings from 25 percent to at least 40 percent and that increased the one-sided risk term for certain low-revenue ACOs to three years were described as “steps forward.”

However, the two-year limit on the no-risk window for many ACOs and the distinction between high- and low-revenue ACOs drew concerns.

“These polices may present challenges to providers who want to participate in this important, yet voluntary, Medicare program,” Clif Gaus, chief executive of NAACOS, said in a written statement. “NAACOS believes there needs to be movement toward greater risk, and that movement requires an appropriate and reasonable glide path to encourage participation and success.”

A survey of NAACOS members after the proposed rule was released found that the reduction in shared-savings rates for no- and low-risk ACOs was the most troubling provision for existing ACOs.

NAACOS also warned that its analysis of how ACOs would be classified under CMS’s proposed high-revenueand low-revenue definitions found almost 20 percent of physician-led ACOs would be considered high-revenue. Some federally qualified health centers and rural health clinics also would be categorized as high-revenue ACOs.

Schneider, who also is chair of the NAACOS board of directors, said in an interview that other ACO leaders have told her they were particularly concerned with the lack of time to assess early results before the new rules require them to move to risk.

“Overall, this will shrink the program,” Schneider said about the new rules. “It’s pretty clear CMS is not trying to grow the program.”

Tom Nickels, executive vice president of the American Hospital Association, said the final rule made some improvements to shared savings rate policies and expanded participants’ ability to provide care to beneficiaries, such as through telehealth. He also commended the longer agreement periods.

However, “drastically shortening” ACOs’ upside-only periods ran contrary to requests of hospitals and health systems for a more gradual “pathway” to financial risk.

“As a whole, the policies in the rule will likely result in a significant decrease in program participation,” Nickels said in a statement. “That would be unfortunate, as we seek to transform care to better serve our patients and communities.”

Similarly, the American Medical Group Association (AMGA) warned the final rule may not provide sufficient incentives to maintain current participation levels and attract new participants.

 “CMS is asking ACOs to very quickly move into a risk-based model, which is a policy that AMGA supports,” Jerry Penso, MD, president and CEO of AMGA, said in a written statement. “But once an ACO is two-sided and more of its revenue is put at risk each year, its possible upside is locked into place at the rate that previously was for upside-only models. We believe this is a missed opportunity to drive providers to the Medicare Shared Savings Program.” 

Monday, Jan. 7

37th Annual J.P. Morgan Healthcare Conference, San Francisco (through Jan. 10). Learn more.

Digital Medtech Medicine Showcase, San Francisco (through Jan. 9). Learn more.

Extended deadline for the CMS Physician Compare preview period. Learn more.

Tuesday, Jan. 8

The Future of Medicaid Innovation Forum, San Francisco. Learn more.

Webcast by the Agency for Healthcare Research and Quality titled “Understanding CAHPS® Surveys: A Primer for New Users.” Learn more.

Wednesday, Jan. 9

Conference calls (morning and afternoon options) by CMS titled “CY 2019 OPPS/ASC Final Rule: Hospital Outpatient Quality Reporting Program.” Learn more.

Thursday, Jan. 10

Webinar by CMS titled “CY 2019 OPPS/ASC Final Rule: Ambulatory Surgical Center Quality Reporting Program.” Learn more.

Webinar by America’s Health Insurance Plans titled “From Herding Cats to Best Practices: Managing Health Data.” Learn more.

Webinar by Avalere titled “Healthcare Industry Outlook 2019.” Learn more.

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Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare