MSSP Final Rule Seeks to Accelerate Move to Performance-Based Risk in Traditional Medicare

The Centers for Medicare & Medicaid Services (CMS) published a final rule on December 31, 2018, that overhauls the Medicare Shared Savings Program (MSSP) and takes a new approach to transitioning providers to performance-based risk arrangements in traditional Medicare. In exchange for this shift in financial accountability, Accountable Care Organizations (ACOs) participating in two-sided risk contracts will receive waivers from certain burdensome regulatory requirements and additional flexibility.

Concurrent with announcing the final rule, CMS touted the success of the Innovation Center’s Next Generation (Next Gen) ACO program.  CMS stated that the 44 Next Gen ACOs saved more than $164 million and demonstrated strong quality performance for the 2017 performance year. Participants in the Next Gen ACO program bear the highest level of downside risk within the Medicare ACO portfolio.

Taken together, the announcements underscore the administration’s commitment to advancing performance-based risk for providers as an integral part of its value-based care strategy. An expansion of the performance based risk portfolio is expected in early 2019. Read on for highlights from the MSSP final rule.

The MSSP ACO Program: Background

The Affordable Care Act created the original MSSP ACOs.  Under this traditional Medicare program, groups of providers are held accountable for the cost and quality of care to a defined patient population. The MSSP has consisted of numbered tracks with different levels of financial risk:

  • Track 1, which has been the most popular, is an upside-only participation option. In this track, ACOs are eligible to share in amounts that they save as compared to a predetermined spending benchmark, but are not at risk for financial losses for overspending against their benchmark.
  • In Tracks 2 and 3, ACOs may share in savings but are also accountable for repaying losses. The two tracks differ in their specific design elements.

For the 2018 performance year, CMS added a new Track 1+, intended to facilitate the move to performance-based risk. This track is two sided, but has lower levels of risk and reward than Tracks 2 and 3. Of the 561 participating ACOs, 460 participated in Track 1, 55 in Track 1+, eight in Track 2 and 38 in Track 3. In 2018, 51 organizations participated in the Next Gen ACO program.

More than 10.4 million beneficiaries (out of 38 million in traditional Medicare) participated in a shared savings ACO in 2018, compared to about 20 million Medicare Advantage enrollees in 2018.[1] While the program has seen steady growth since its inception, most participants have elected upside-only models. The final rule is intended to encourage organizations to voluntarily move to two-sided models.

CMS Finalizes the Creation of New Payment Tracks and Longer Contract Periods

The final rule transitions the four existing MSSP tracks into two new options: BASIC and ENHANCED. The BASIC option will incorporate Tracks 1 and 1+. Track 3 will be renamed ENHANCED, and Track 2 will be retired.

The BASIC option includes five levels labeled A through E. Each level represents a progression along the glide path to higher levels of performance-based risk. Levels A and B remain upside-only arrangements, while Levels C, D and E feature increasing amounts of downside financial risk. In general, organizations will be automatically advanced from level to level at the start of each new performance year, although organizations could choose to start at higher levels or skip levels, as long as they are moving toward Level E. Level E represents roughly the same amount of risk as the existing Track 1+.

CMS also extended the agreement period from three years to five years. Because of the timing of the proposed and final rules, there was no application period for a January 1, 2019 start date. Instead, CMS offered a one-time application period for a July 1, 2019 start date. For organizations that begin their contract period on July 1, 2019, agreements will be five years and six months in duration. Organizations applying for a July 1, 2019 start date must complete the notice of intent to apply by January 18, 2019.

CMS Shortens the Amount of Time an ACO Can Remain in an Upside-Only Arrangement

Since the Medicare ACO program’s inception, its intent has been to transition provider organizations into two-sided arrangements. In the 2011 proposed rule implementing the MSSP, CMS proposed to transition ACOs entering Track 1 into a two-sided model in the final year of the three-year agreement.[2] Ultimately, however, the agency finalized a full three-year agreement in upside only. The agency subsequently extended the amount of time in upside only to a total of six years by allowing ACOs a second full contract period in upside only.

In the new Pathways to Success final rule, CMS expressed frustration with MSSP ACOs—especially ACOs including hospitals—that have remained in Track 1 upside-only arrangements for six years. The agency indicates particular concern that MSSP ACOs have taken advantage of waivers, (including waivers of the Stark Law, anti-kickback statute and beneficiary inducements requirements) that may be valuable in certain markets and may contribute to consolidation, without taking serious steps to significantly reduce costs.

To address these concerns, in the final rule CMS generally requires that new MSSP ACOs move to downside risk after two years of participation. CMS includes an exception for low-revenue ACOs without prior MSSP experience, permitting these organizations to participate in a one-sided model for a maximum of three performance years. In exchange for this flexibility, these ACOs would automatically advance to Level E for the remaining performance years of their agreements (thereby forfeiting participation in Levels C and D).

ACOs with previous MSSP experience have different participation options depending on their track, whether they are high or low revenue, and whether it is their first agreement.[3] In general, existing MSSPs without experience in two-sided risk arrangements have an additional year (or one year and six months for July 1, 2019 starters) in upside-only arrangements under the new participation options.