CMS Proposes Redesign of Medicare Shared Savings Program

Healthcare Alert

Client Alert

Author(s) ,

On August 9, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would redesign the Medicare Shared Savings Program (MSSP). The proposed changes would accelerate the risks associated with participation, as well as tighten participation requirements. The redesigned program, dubbed “Pathways to Success,” is intended to transition Accountable Care Organizations (ACOs) to two-sided models, whereby the ACO is eligible to share in savings but is also responsible for repaying shared losses. The proposed rule reflects a determination by CMS that ACOs participating in upside only arrangements (i.e., without downside financial risk) are generally less effective at reducing costs.

If finalized, the impact of the proposed rule on the future of the MSSP could be significant. Over 80 percent of the ACOs currently participating in the MSSP are in upside only tracks. Forcing these ACOs to move more quickly toward two-sided models may result in many of them dropping out of the program. Likewise, potential new ACOs may elect not to participate in the MSSP at all because of the limited time period in which they would be allowed to remain in upside only tracks. CMS itself notes in the proposed rule that it expects an overall drop in participation due to the program being less likely to attract new ACOs, but also expects that the program will retain existing ACOs already in, or about to enter, two-sided tracks. It remains to be seen how many ACOs will stick with the program when they are required to take downside risk. A recent survey from the National Association of ACOs shows that over 70 percent of ACOs that responded would likely drop out of the MSSP if forced to assume downside risk.

The major proposed changes are summarized below. 

New Participation Tracks

CMS proposes to replace MSSP’s existing Tracks 1, 2, and 3 with two new tracks, “BASIC” and “ENHANCED”:

  • BASIC features a gradual shift to downside risk over the course of the five-year term, known as a “glide path.” The glide path has five levels. A one-sided model is available for Levels A-B, though ACOs that previously participated in the program under Track 1 would be restricted to a single year under a one-sided model. Levels C-E are two-sided models that involve progressively higher risk and potential reward. An ACO automatically moves to the next level each year, but can elect to move more quickly by skipping a level.
  • ENHANCED has a five-year term but is otherwise a renamed Track 3 (two-sided model). This track has the highest level of risk and reward, even as compared to Level E of the BASIC track.

Participation Options Going Forward

CMS has proposed a July 1, 2019 start date for the first Pathways to Success agreement period. Thereafter, the start date for new agreement periods will revert back to January 1. All new participation agreements will be for initial five-year terms, except that ACOs beginning a new agreement on July 1, 2019 would have an initial term of five years and six months. ACOs currently participating in MSSP with agreements that end December 31, 2018 may extend their existing MSSP participation agreements for an additional six months and then renew for the July 1, 2019 start date. ACOs currently participating in MSSP that have participation agreements that expire in 2019 or later have the option of finishing their current MSSP agreement period or terminating early and entering into an early renewal under the BASIC or ENHANCED track starting July 1, 2019.  New ACOs wishing to join the program would not be able to start until July 1, 2019.

The proposed eligibility criteria for the BASIC and ENHANCED tracks takes into consideration the ACO’s prior experience with the MSSP as well as its revenue. ACOs that are inexperienced with performance-based Medicare ACO initiatives may participate in the BASIC track’s glide path, while ACOs that have previously participated under Track 2, Track 3 or the Track 1+ model are limited to either the BASIC track’s highest level of risk and reward (if the ACO is identified as a low revenue ACO) or the ENHANCED track. Likewise, low revenue ACOs would be allowed to participate in the BASIC track for up to two agreement periods, whereas high revenue ACOs must transition to the ENHANCED track after a single agreement period under the BASIC track.

Beneficiary Assignment

ACOs in both the BASIC and ENHANCED tracks would be able to select beneficiary assignment under either a prospective assignment or preliminary prospective assignment with retrospective reconciliation, and the ACO can change this election each performance year. Currently the assignment methodology is dictated by the track selected, with some tracks having mandatory prospective and some mandatory retrospective. The right of beneficiaries to voluntarily align with a primary care provider would be modified to allow the beneficiary to select any physician (regardless of specialty) or a nurse practitioner, physician assistant, or clinical nurse specialist as their primary clinician. Additional codes are being added to the definition of primary care services used in beneficiary assignment.

Beneficiary Engagement

CMS proposes permitting ACOs in certain two-sided models to apply to establish beneficiary incentive programs that allow payments to beneficiaries of up to $20 for each qualifying primary care service received from certain ACO professionals or from a Federally Qualified Health Center or Rural Health Clinic. CMS also clarifies that existing MSSP rules allow ACOs to provide beneficiaries with vouchers for items and services reasonably related to their care. Additionally, to foster beneficiary choice, ACO participants must notify beneficiaries at the point of care of their right to select a clinician for voluntary alignment. ACO participants must also provide a standardized notice developed by CMS to each beneficiary at the first primary care visit of the year, rather than simply upon request, as is the current requirement. 

Change in Approach on Benchmarking

Shared savings and losses under the MSSP are determined by comparing actual Medicare expenditures for the ACO’s attributed beneficiaries during the performance year against a financial benchmark. In an effort to set more accurate benchmarks for each ACO, CMS has proposed changes to the MSSP’s benchmarking methodology. These changes include adjustments based on regional fee-for-service expenditures, accounting for changes in national and regional expenditure growth rates, and incorporating certain health status changes for beneficiaries.

Reducing Opportunities for “Gaming”

CMS proposes to hold ACOs in two-sided models that voluntarily terminate their CMS participation agreement after June 30 of a performance year responsible for pro-rated shared losses. Previously, ACOs could voluntarily terminate and avoid losses. Additionally, in evaluating an ACO’s application for the MSSP, CMS will now review the providers that comprise the ACO to determine if the applicant is effectively the same as a terminated ACO (i.e., greater than 50 percent of the ACO’s participants have recent prior participation in the other ACO). In the past, an ACO could terminate its CMS participation agreement and then its participants could re-apply as a new ACO with the same providers. 

Expansion of SNF Three-Day Rule Waiver

The proposed rule broadens access to the program’s existing skilled nursing facility (SNF) three-day rule waiver. The SNF three-day rule waiver would now be available to all ACOs in the ENHANCED track and ACOs in the BASIC track’s glide paths that include downside risk. Currently, the waiver is only available to ACOs participating in Track 1+ and Track 3. CMS also proposes to amend the existing SNF three-day rule waiver to allow critical access hospitals and other small, rural hospitals operating under a swing bed agreement to be eligible to partner with ACOs as SNF affiliates to provide services pursuant to the SNF three-day rule waiver. At present, the waiver is limited to SNFs.

Promoting Interoperability

CMS proposes to require ACOs to certify, as a condition for initial program participation and also as part of the annual compliance certification, that the percentage of eligible clinicians participating in the ACO who use Certified Electronic Health Record Technology (CEHRT) meets or exceeds certain levels.


CMS proposes expanding coverage of telehealth services for ACOs starting in 2020. The proposed policies would be effective for two-sided ACOs that participate under the prospective assignment method. Specifically, CMS proposes removing geographic limitations, which would increase coverage of telehealth services in non-rural areas, and allowing the beneficiary’s home to serve as the originating site for prospectively assigned beneficiaries.  

Impact on Merit-Based Incentive Payment System (MIPS) Participation

The ENHANCED track and Level E of the BASIC track have Advanced Alternative Payment Model status, and therefore eligible clinicians participating in ACOs in these tracks would receive the APM incentive bonus and are excluded from MIPS reporting and payment adjustments. Clinicians participating in ACOs in other tracks must participate in MIPS.

Comment Period

CMS is accepting comments on the proposed rule through October 16, 2018.

You might also be interested in...