Final Rule Seeks to Level Playing Field for ACO Incentives

June 09, 2016 04:01 pm News Staff

CMS has filed a final rule( on Medicare Shared Savings Program payments and performance measurements that is intended to create a more balanced way of determining when accountable care organizations (ACOs) earn incentives for strong performance.

[Doctor holding tablet and talking with a patient]

A major change in the rule, which was filed June 6 and is scheduled to be published June 10 in the Federal Register, is that ACOs will be measured against their peers on a regional basis instead of on a national scale. The AAFP supported this change in a March 23 letter(9 page PDF) to CMS Acting Administrator Andy Slavitt that outlined approval for some proposed changes and opposition to others.

Medical costs reported by an ACO will now be evaluated in comparison with what fee-for-service care would cost in its particular region. Using a national measuring stick instead, ACOs that operate in low-cost areas had a built-in advantage over peers in high-cost areas, so the change will create a more level playing field. CMS has yet to clearly define regional service areas, but they will be created by aggregating counties.

The new rule also addresses criticism that annual performance measurements forced ACOs to compete against themselves under the difficult standard of having to surpass their own savings each year. If a practice saved $5 million one year, for instance, it would have been required to exceed that amount the following year. Now there is no penalty if an ACO reports large savings that cannot be duplicated the following year. Historical data will still play a role in measuring performance, but benchmarks will combine historical and regional data.

Another revision that will benefit participating practices sets a four-year window for an ACO to appeal a calculation of shared savings or shared losses if it believes it is entitled to a greater incentive payment based on an audit of its records.

Many ACOs are participating in the shared savings program with no risk for losses under the expectation that they will later move into a shared risk model such as the Pioneer or Next Generation ACO program. The final rule permits ACOs to extend their participation in the no-risk track for an extra year before they take on financial risk under a different track.

The AAFP sought an appeals process that would permit a physician to decline patients based on utilization patterns and also implored CMS to shorten the current two-year lag between performance and incentive payment. CMS did not address either issue in the final rule, but they could arise during upcoming discussions about the final rule for incentive payment models outlined in the Medicare Access and CHIP Reauthorization Act.

Many ACOs in the shared savings program, though still in their infancy, are showing progress in reducing costs and improving care coordination even as the rules for incentive payments are being continually revised. The rule changes give ACOs more potential to receive incentives for this progress as CMS seeks to support growth of the organizations.

Results for 2015 ACO performance will be released later this summer. In 2014, ACOs generated a net savings of $411 million, according to CMS. Nationally, 430 ACOs care for an estimated 7.7 million patients.

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