DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services
Federal Register Volume 80, Issue 110 (June 9, 2015)
Page Range
32691-32845
FR Document
2015-14005
This final rule addresses changes to the Medicare Shared Savings Program including provisions relating to the payment of Accountable Care Organizations participating in the Medicare Shared Savings Program. Under the Medicare Shared Savings Program, providers of services and suppliers that participate in an Accountable Care Organizations continue to receive traditional Medicare fee-for-service payments under Parts A and B, but the Accountable Care Organizations may be eligible to receive a shared savings payment if it meets specified quality and savings requirements.
Federal Register, Volume 80 Issue 110 (Tuesday, June 9, 2015)
[Federal Register Volume 80, Number 110 (Tuesday, June 9, 2015)]
[Rules and Regulations]
[Pages 32691-32845]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-14005]
[[Page 32691]]
Vol. 80
Tuesday,
No. 110
June 9, 2015
Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 425
Medicare Program; Medicare Shared Savings Program: Accountable Care
Organizations; Final Rule
Federal Register / Vol. 80 , No. 110 / Tuesday, June 9, 2015 / Rules
and Regulations
[[Page 32692]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 425
[CMS-1461-F]
RIN 0938-AS06
Medicare Program; Medicare Shared Savings Program: Accountable
Care Organizations
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule addresses changes to the Medicare Shared
Savings Program including provisions relating to the payment of
Accountable Care Organizations participating in the Medicare Shared
Savings Program. Under the Medicare Shared Savings Program, providers
of services and suppliers that participate in an Accountable Care
Organizations continue to receive traditional Medicare fee-for-service
payments under Parts A and B, but the Accountable Care Organizations
may be eligible to receive a shared savings payment if it meets
specified quality and savings requirements.
DATES: Effective Dates: With the exception of the amendments to
Sec. Sec. 425.312, 425.704, and 425.708, the provisions of this final
rule are effective on August 3, 2015. The amendments to Sec. 425.312
and Sec. 425.708 are effective November 1, 2015. The amendments to
Sec. 425.704 are effective January 1, 2016.
Applicability Dates: In the SUPPLEMENTARY INFORMATION section of
this final rule, we provide a table (Table 1) that lists key changes in
this final rule that have an applicability date other than the
effective date of this final rule.
FOR FURTHER INFORMATION CONTACT: Dr. Terri Postma or Elizabeth
November, 410-786-8084, Email address: [email protected].
SUPPLEMENTARY INFORMATION:
Table 1 lists key changes that have an applicability date or
effective date other than 60 days after the date of publication of this
final rule. By indicating a provision is applicable to a performance
year (PY) or agreement period, activities related to implementation of
the policy may precede the start of the performance year (in the case
of an upcoming year) or agreement period or follow the conclusion of
the performance year (in the case of a past year) or the agreement
period.
Table 1--Applicability and Effective Dates of Select Provisions of the
Final Rule
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Section title/ Effective Applicability
Preamble section description date date
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II.B.1............ Agreement ........... PY 2017 and
Requirements (Sec. subsequent
425.116(a) and (b)). performance
years.
II.D.2............ Provision of ........... PY 2016 and
Aggregate and subsequent
Beneficiary performance
Identifiable Data years.
(Sec.
425.702(c)(1)(ii)).
II.D.3............ Claims Data Sharing 1/1/2016 ................
(Sec. 425.704).
II.D.3............ Beneficiary 11/1/2015 ................
Opportunity to
Decline Claims Data
Sharing (Sec.
425.312 and Sec.
425.708).
II.E.3............ Definitions of ........... PY 2016 and
Primary Care subsequent
Physician and performance
Primary Care years.
Services (Sec.
425.20).
II.E.4............ Consideration of ........... PY 2016 and
Physician subsequent
Specialties and Non- performance
Physician years.
Practitioners in the
Assignment Process
(Sec. 425.402(b)).
II.F.2............ Modifications to the ........... Agreement
Track 2 Financial periods
Model (Sec. starting on or
425.606(b)(1)(ii)). after January
1, 2016.
II.F.7............ Waivers of payment ........... PY 2017 and
rules or other subsequent
Medicare performance
requirements (Sec. years.
425.612).
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Table of Contents
To assist readers in referencing sections contained in this
preamble, we are providing a table of contents.
I. Executive Summary and Background
A. Executive Summary
1. Purpose
2. Summary of the Major Provisions
3. Summary of Costs and Benefits
B. Background
1. General Background
2. Statutory Basis for the Medicare Shared Savings Program
3. Overview of the Medicare Shared Savings Program
II. Provisions of the Proposed Regulations and Analysis of Responses
to Public Comments
A. Definitions
1. Proposed Definitions
2. Proposed Revisions to Existing Definitions
B. ACO Eligibility Requirements
1. Agreement Requirements
a. Overview
b. Proposed Revisions
2. Sufficient Number of Primary Care Providers and Beneficiaries
a. Overview
b. Proposed Revisions
3. Identification and Required Reporting of ACO Participants and
ACO Providers/Suppliers
a. Overview
b. Proposed Revisions
(1) Certified List of ACO Participants and ACO Providers/
Suppliers
(2) Managing Changes to ACO Participants
(3) Managing Changes to ACO Providers/Suppliers
(4) Update of Medicare Enrollment Information
4. Significant Changes to an ACO
a. Overview
b. Proposed Revisions
5. Consideration of Claims Billed by Merged/Acquired Medicare-
Enrolled Entities
a. Overview
b. Proposed Revisions
6. Legal Structure and Governance
a. Legal Entity and Governing Body
(1) Overview
(2) Proposed Revisions
b. Fiduciary Duties of Governing Body Members
(1) Overview
(2) Proposed Revisions
c. Composition of the Governing Body
(1) Overview
(2) Proposed Revisions
7. Leadership and Management Structure
a. Overview
b. Proposed Revisions
8. Required Process To Coordinate Care
a. Overview
b. Accelerating Health Information Exchange
c. Proposed Revisions
9. Transition of Pioneer ACOs Into the Shared Savings Program
a. Overview
b. Proposed Revisions
C. Establishing and Maintaining the Participation Agreement With
the Secretary
1. Background
2. Application Deadlines
a. Overview
b. Proposed Revisions
[[Page 32693]]
3. Renewal of Participation Agreements
a. Overview
b. Proposed Revisions
4. Changes to Program Requirements During the 3-Year Agreement
a. Overview
b. Proposed Revisions
D. Provision of Aggregate and Beneficiary Identifiable Data
1. Background
2. Aggregate Data Reports and Limited Identifiable Data
a. Overview
b. Proposed Revisions
3. Claims Data Sharing and Beneficiary Opportunity To Decline
Claims Data Sharing
a. Overview
b. Proposed Revisions
E. Assignment of Medicare FFS Beneficiaries
1. Background
2. Basic Criteria for a Beneficiary To Be Assigned to an ACO
3. Definition of Primary Care Services
a. Overview
b. Proposed Revisions
4. Consideration of Physician Specialties and Non-Physician
Practitioners in the Assignment Process
a. Overview
b. Proposed Revisions
(1) Including Primary Care Services Furnished by Non-Physician
Practitioners in Step 1
(2) Excluding Services Provided by Certain Physician Specialties
From Step 2
(3) Other Assignment Methodology Considerations
5. Assignment of Beneficiaries to ACOs That Include FQHCs, RHCs,
CAHs, or ETA Hospitals
a. Assignment of Beneficiaries to ACOs That Include FQHCs and
RHCs
(1) Overview
(2) Proposed Revisions
b. Assignment of Beneficiaries to ACOs That Include CAHs
c. Assignment of Beneficiaries to ACOs That Include ETA
Hospitals
6. Applicability Date for Changes to the Assignment Algorithm
F. Shared Savings and Losses
1. Background
2. Modifications to the Existing Payment Tracks
a. Overview
b. Transition From the One-Sided to Two-Sided Model
(1) Second Agreement Period for Track 1 ACOs
(2) Eligibility Criteria for Continued Participation in Track 1
(3) Maximum Sharing Rate for ACOs in a Second Agreement Period
Under Track 1
(4) Eligibility for Continued Participation in Track 1 by
Previously Terminated ACOs
c. Modifications to the Track 2 Financial Model
3. Creating Options for ACOs That Participate in Risk-Based
Arrangements
a. Overview
b. Assignment of Beneficiaries Under Track 3
(1) Prospective Versus Retrospective Assignment
(2) Exclusion Criteria for Prospectively Assigned Beneficiaries
(3) Timing of Prospective Assignment
(4) Interactions Between Prospective and Retrospective
Assignment Models
c. Determining Benchmark and Performance Year Expenditures Under
Track 3
d. Risk Adjusting the Updated Benchmark for Track 3 ACOs
e. Final Sharing/Loss Rate and Performance Payment/Loss
Recoupment Limit Under Track 3
f. Minimum Savings Rate and Minimum Loss Rate in Track 3
g. Monitoring for Gaming and Avoidance of At-Risk Beneficiaries
4. Modifications to Repayment Mechanism Requirements
a. Overview
b. Amount and Duration of the Repayment Mechanism
c. Permissible Repayment Mechanisms
5. Methodology for Establishing, Updating, and Resetting the
Benchmark
a. Overview
b. Modifications to the Rebasing Methodology
(1) Equally Weighting the Three Benchmark Years
(2) Accounting for Shared Savings Payments When Resetting the
Benchmark
c. Use of Regional Factors in Establishing, Updating and
Resetting Benchmarks
6. Technical Adjustments to the Benchmark and Performance Year
Expenditures
7. Ways To Encourage ACO Participation in Performance-Based Risk
Arrangements
a. Payment Requirements and Other Program Requirements That May
Need To Be Waived in Order To Carry Out the Shared Savings Program
(1) SNF 3-Day Rule
(2) Billing and Payment for Telehealth Services
(3) Homebound Requirement Under the Home Health Benefit
(4) Waivers for Referrals to Post-Acute Care Settings
(5) Solicitation of Comment on Specific Waiver Options
b. Other Options for Improving the Transition to Two-Sided
Performance-Based Risk Arrangements.
(1) Beneficiary Attestation
(2) Solicitation of Comment on a Step-Wise Progression for ACOs
To Take on Performance Based Risk
G. Additional Program Requirements and Beneficiary Protections
1. Background
2. Public Reporting and Transparency
a. Overview
b. Proposed Revisions
3. Terminating Program Participation
a. Overview
b. Proposed Revisions
(1) Grounds for Termination
(2) Close-Out Procedures and Payment Consequences of Early
Termination
4. Reconsideration Review Process
a. Overview
b. Proposed Revisions
5 Monitoring ACO Compliance With Quality Performance Standards
III. Collection of Information Requirements
IV. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
1. Effects on the Medicare Program
a. Assumptions and Uncertainties
b. Detailed Stochastic Modeling Results
c. Further Considerations
2. Effects on Beneficiaries
3. Effect on Providers and Suppliers
4. Effect on Small Entities
5. Effect on Small Rural Hospitals
6. Unfunded Mandates
D. Alternatives Considered
E. Accounting Statement and Table
F. Conclusion
Regulations Text
Acronyms
ACO Accountable Care Organization
CAHs Critical Access Hospitals
CCM Chronic Care Management
CEHRT Certified Electronic Health Record Technology
CG-CAHPS Clinician and Group Consumer Assessment of Health Providers
and Systems
CHIP Children's Health Insurance Program
CMP Civil Monetary Penalties
CMS Centers for Medicare & Medicaid Services
CNM Certified Nurse Midwife
CMS-HCC CMS Hierarchal Condition Category
CPT [Physicians] Current Procedural Terminology (CPT codes,
descriptions and other data only are copyright 2013 American Medical
Association. All rights reserved.)
CWF Common Working File
DHHS Department of Health and Human Services
DOJ Department of Justice
DSH Disproportionate Share Hospital
DUA Data Use Agreement
EHR Electronic Health Record
ESRD End Stage Renal Disease
ETA Electing Teaching Amendment
FFS Fee-for-service
FQHCs Federally Qualified Health Centers
FTC Federal Trade Commission
GPCI Geographic Practice Cost Index
GPRO Group Practice Reporting Option
HCC Hierarchal Condition Category
HCPCS Healthcare Common Procedure Coding System
HICN Health Insurance Claim Number
HIPAA Health Insurance Portability and Accountability Act of 1996
(Pub. L. 104-191)
HVBP Hospital Value-based Purchasing
IPA Independent Practice Association
IPPS Inpatient Prospective Payment System
IRS Internal Revenue Service
MA Medicare Advantage
MedPAC Medicare Payment Advisory Commission
MLR Minimum Loss Rate
MSP Medicare Secondary Payer
MSR Minimum Savings Rate
MU Meaningful Use
NCQA National Committee for Quality Assurance
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NP Nurse Practitioner
NPI National Provider Identifier
NQF National Quality Forum
OIG Office of Inspector General
PA Physician Assistant
PACE Program of All Inclusive Care for the Elderly
PECOS Provider Enrollment, Chain, and Ownership System
PFS Physician Fee Schedule
PGP Physician Group Practice
PHI Protected Health Information
PPS Prospective Payment System
PQRS Physician Quality Reporting System
PRA Paperwork Reduction Act
PSA Primary Service Areas
PY Performance year
RHCs Rural Health Clinics
RIA Regulatory Impact Analysis
SNFs Skilled Nursing Facilities
SSA Social Security Act
SSN Social Security Number
TIN Taxpayer Identification Number
VM Value Modifier
CPT (Current Procedural Terminology) Copyright Notice
Throughout this final rule, we use CPT codes and descriptions to
refer to a variety of services. We note that CPT codes and descriptions
are copyright 2013 American Medical Association. All Rights Reserved.
CPT is a registered trademark of the American Medical Association
(AMA). Applicable Federal Acquisition Regulations (FARs) and Defense
Federal Acquisition Regulations (DFARs) apply.
I. Executive Summary and Background
A. Executive Summary
1. Purpose
Section 1899 of the Social Security Act (the Act) established the
Medicare Shared Savings Program (Shared Savings Program), which
promotes accountability for a patient population, fosters coordination
of items and services under parts A and B, and encourages investment in
infrastructure and redesigned care processes for high quality and
efficient health care service delivery. On December 8, 2014, a proposed
rule entitled ``Medicare Shared Savings Program: Accountable Care
Organization'' appeared in the Federal Register (79 FR 72760) (December
2014 proposed rule). The final rule entitled ``Medicare Program;
Medicare Shared Savings Program: Accountable Care Organizations,''
which appeared in the Federal Register on November 2, 2011 (76 FR
67802) (November 2011 final rule) established the original regulations
implementing Shared Savings Program. In the December 2014 proposed
rule, we proposed to make revisions to some key policies adopted in the
November 2011 final rule (76 FR 67802) to incorporate in our
regulations certain guidance that we have issued since the Shared
Savings Program was established, and to add new policies to support
program compliance and growth.
Our intent in this rulemaking is to make refinements to the Shared
Savings Program, to encourage continued and enhanced stakeholder
participation, to reduce administrative burden for ACOs while
facilitating their efforts to improve care outcomes, and to maintain
excellence in program operations while bolstering program integrity.
2. Summary of the Major Provisions
The policies adopted in this final rule codify existing guidance,
reduce administrative burden and improve program function and
transparency in the following areas: (1) Data-sharing requirements; (2)
eligibility and other requirements related to ACO participants and ACO
providers/suppliers including clarification of definitions, ACO
participant and ACO provider/supplier agreement requirements,
identification and reporting of ACO participants and ACO providers/
suppliers, including managing changes to the list of ACO participants
and ACO providers/suppliers; (3) clarifications and updates to
application requirements; (4) eligibility requirements related to the
ACO's number of beneficiaries, required processes for coordinating
care, the ACO's legal structure and governing body, and its leadership
and management structure; (5) the assignment methodology; (6)
methodology for determining ACO financial performance; (7) issues
related to program integrity and transparency such as public reporting,
terminations, and reconsideration review. To achieve these goals, we
proposed and are making the following major modifications to our
current program rules:
Clarifying and codifying current guidance related to ACO
participant agreements and issues related to the ACO participant and
ACO provider/supplier lists. For example, we are finalizing rules for
modifying the ACO participant list and requirements related to specific
language that must appear in the ACO participant agreements.
Adding a process for an ACO to renew its 3-year
participation agreement for an additional agreement period.
Specifically, we articulate rules for renewing the 3 year agreement,
including factors that CMS will use to determine whether an ACO may
renew its 3-year agreement, such as the ACO's history of compliance
with program rules.
Adding, clarifying, and revising the beneficiary
assignment algorithm, including the following:
++ Updating the CPT codes that will be considered to be primary
care services. Specifically, we are finalizing a policy that includes
TCM codes (CPT codes 99495 and 99496) and the CCM code (CPT code 99490)
in the definition of primary care services.
++ Modifying the treatment of claims submitted by certain physician
specialties, NP, PAs, and CNSs in the assignment algorithm.
Specifically, we are finalizing a policy that would use primary care
services furnished by primary care physicians, NPs, PAs, and CNSs under
step 1 of the assignment process, after having identified beneficiaries
who received at least one primary care service by a physician in the
ACO. Additionally, we are finalizing a policy that would exclude
certain services provided by certain physician specialties from step 2
of the assignment process.
++ Clarifying how primary care services furnished in federally
qualified health centers (FQHCs) and rural health clinics (RHCs) are
considered in the assignment process.
Expanding the kinds of beneficiary-identifiable data that
will be made available to ACOs in various reports under the Shared
Savings Program as well as simplifying the process for beneficiaries to
decline claims data sharing to reduce burden and confusion.
Adding or changing policies to encourage greater ACO
participation in risk-based models by--
++ Offering the opportunity for ACOs to continue participating
under a one-sided participation agreement after their first 3-year
agreement. Specifically, we are finalizing a policy that would permit
ACOs to participate in an additional agreement period under one-sided
risk with the same sharing rate (50 percent) as was available to them
under the first agreement period; and
++ Modifying the existing two-sided performance-based risk track
(Track 2). Specifically, under Track 2, an ACO will have the choice of
several symmetrical MSR/MLR options that will apply for the duration of
its 3-year agreement period.
++ Offering an alternative performance-based risk model referred to
as Track 3. Specifically, we are finalizing the option for ACOs to
participate under a two-sided risk model that would incorporate a
higher sharing rate (75 percent), prospective assignment of
beneficiaries, and the opportunity to apply for a programmatic waiver
of the 3-day SNF rule in order to permit payment for otherwise-
[[Page 32695]]
covered SNF services when a prospectively assigned beneficiary is
admitted to a SNF without a prior 3-day inpatient stay. ACOs in this
track will also have the choice of several symmetrical MSR/MLR options
that will apply for the duration of their 3-year agreement period.
In addition, in the December 2014 proposed rule we sought comment
on a number of options that we had been considering in order to
encourage ACOs to take on two-sided performance-based risk under the
Shared Savings Program. Based on public comments, we are finalizing the
following:
Resetting the benchmark in a second or subsequent
agreement period by integrating previous financial performance and
equally weighting benchmarks for subsequent agreement periods; and
The use of programmatic waiver authority to improve
participation in Track 3 by offering regulatory relief from
requirements related to the SNF 3-day stay rule.
We intend to address other modifications to program rules
in future rulemaking in the near term to improve ACO willingness to
take on performance-based risk including: Modifying the assignment
methodology to hold ACOs accountable for beneficiaries that have
designated ACO practitioners as being responsible for their care;
waiving the geographic requirement for use of telehealth services; and
modifying the methodology for resetting benchmarks by incorporating
regional trends and costs.
3. Summary of Costs and Benefits
As detailed in Table 10 in section IV. of this final rule, by
including the changes detailed in this final rule, the total aggregate
median impact would increase to $780 million in net federal savings for
CYs 2016 through 2018. Such median estimated federal savings are $240
million greater than the $540 million median net savings estimated at
baseline absent the changes adopted in this final rule. A key driver of
the anticipated increase in net savings is improved ACO participation
levels in a second agreement period. We estimate that at least 90
percent of eligible ACOs will renew their participation in the Shared
Savings Program when presented with the new options, primarily under
Track 1 and, to a lesser extent, under Track 3. This expansion in the
number of ACOs willing to continue their participation in the program
is estimated to result in additional improvements in care efficiency of
a magnitude significantly greater than the reduced shared loss receipts
estimated at baseline and the added shared savings payments flowing
from a higher sharing rate in Track 3 and continued one-sided sharing
available in Track 1, with all three tracks operating under generally
more favorable rebasing parameters including equal base year weighting
and adding a portion of savings from the prior agreement period to the
baseline.
In addition, at the anticipated mean participation rate of ACOs in
the Shared Savings Program, participating ACOs may experience an
estimated aggregate average start-up investment and ongoing operating
cost of $822 million for CYs 2016 through 2018. Lastly, we estimate an
aggregate median impact of $1,130 million in shared savings payments to
participating ACOs in the Shared Savings Program for CYs 2016 through
2018. The 10th and 90th percentiles of the estimate distribution, for
the same time period, yield shared savings payments to ACOs of $960
million and $1,310 million, respectively. Therefore, the total median
ACO shared savings payments of $1,130 million during CYs 2016 through
2018, net of a median $30 million shared losses, coupled with the
aggregate average start-up investment and ongoing operating cost of
$822 million yields a net private benefit of $278 million.
B. Background
1. General Background
On March 23, 2010, the Patient Protection and Affordable Care Act
(Pub. L. 111-148) was enacted, followed by enactment of the Health Care
and Education Reconciliation Act of 2010 (Pub. L. 111-152) on March 30,
2010, which amended certain provisions of Pub. L. 111-148. Collectively
known as the Affordable Care Act, these public laws include a number of
provisions designed to improve the quality of Medicare services,
support innovation and the establishment of new payment models, better
align Medicare payments with provider costs, strengthen Medicare
program integrity, and put Medicare on a firmer financial footing.
2. Statutory Basis for the Medicare Shared Savings Program
Section 3022 of the Affordable Care Act amended Title XVIII of the
Act (42 U.S.C. 1395 et seq.) by adding new section 1899 to the Act to
establish a Shared Savings Program. This program is a key component of
the Medicare delivery system reform initiatives included in the
Affordable Care Act and is a new approach to the delivery of health
care.
3. Overview of the Medicare Shared Savings Program
The purpose of the Shared Savings Program is to promote
accountability for a population of Medicare beneficiaries, improve the
coordination of FFS items and services, encourage investment in
infrastructure and redesigned care processes for high quality and
efficient service delivery, and promote higher value care. ACOs that
successfully meet quality and savings requirements share a percentage
of the achieved savings with Medicare. Under the Shared Savings
Program, ACOs share in savings only if they meet both the quality
performance standards and generate shareable savings. Consistent with
the purpose of the Shared Savings Program, we focused on developing
policies aimed at achieving the three-part aim consisting of: (1)
Better care for individuals; (2) better health for populations; and (3)
lower growth in expenditures.
We viewed the November 2011 final rule as a starting point for the
program, and because of the scope and scale of the program and our
limited experience with shared savings initiatives under FFS Medicare,
we built a great deal of flexibility into the program rules. We
anticipated that subsequent rulemaking for the Shared Savings Program
would be informed by lessons learned from our experience with the
program as well as from testing through the Pioneer ACO Model and other
initiatives conducted by the Center for Medicare and Medicaid
Innovation (CMS Innovation Center) under section 1115A of the Act.
Over 400 organizations are now participating in the Shared Savings
Program. We are gratified by stakeholder interest in this program. As
evidenced by the high degree of interest in participation in the Shared
Savings Program, we believe that the policies adopted in the November
2011 final rule are generally well-accepted. However, in light of
additional experience we have gained during the first few years of the
Shared Savings Program, we identified several policy areas for revision
in the December 2014 proposed rule (79 FR 72760).
II. Provisions of the Proposed Rule and the Analysis of and Responses
to Public Comments
We received a total of 275 timely comments on the December 8, 2014
proposed rule (79 FR 72760). Stakeholders offered comments that
addressed both high level issues related to the goals of the Shared
Savings Program as well as our specific proposals and request for
comment. We
[[Page 32696]]
extend our deep appreciation to the public for their interest in the
program and the many thoughtful comments that were made to our proposed
policies. In some instances, the public comments offered were outside
the scope of the proposed rule (for example, suggested revisions to the
physician fee schedule or comments regarding the delivery of specific
health care services under other Medicare payment systems). These
comments will not be addressed in this final rule, but we have shared
them with the appropriate subject matter experts in CMS. Summaries of
the public comments that are within the scope of this rule and our
responses to those comments are set forth in the various sections of
this final rule under the appropriate headings. In the introduction to
section II of this final rule, we address several global comments
related to the Shared Savings Program. The remainder of this section of
the final rule is organized to give an overview of each issue and the
relevant proposals, to summarize and respond to public comments on the
proposals, and to describe our final policy decisions based upon our
review of the public comments received.
Comment: Several commenters discussed the future of the Shared
Savings Program and its sustainability over the long term. Some
commenters requested that CMS articulate a clear plan for the future of
the program. Others recommended that CMS engage stakeholders in a
dialogue on how CMS intends to design a sustainable Accountable Care
Organization (ACO) model that would permit continued participation by
ACOs. While some commenters were supportive of and looked at the
proposed rule as a good beginning in the dialogue on how to improve the
sustainability of the program, other commenters suggested that the
proposed rule did not go far enough to correct what they described as
the program's misguided design elements.
Several commenters offered opinions or suggestions about the
interrelationship of the Shared Savings Program and other Medicare
programs and models such as Medicare Advantage, the Pioneer ACO Model,
the bundled payment model, and others. Some commenters advocated for
speedy incorporation of alternative payment models under section
1899(i) of the Act's authority while others suggested that CMS engage
in additional discussion with stakeholders and testing before
implementing such changes into the Shared Savings Program in order to
ensure protection of the Trust Fund and beneficiaries.
Commenters suggested that CMS continue to consider alignment with
other Medicare initiatives and payment models, and to coordinate with
commercial payers to align requirements for multi-payer ACOs. In
particular, some commenters explained the need for CMS to ensure a
level playing field and align the requirements that apply to ACOs and
Medicare Advantage plans, particularly with respect to the following:
Availability of programmatic waivers (and more generally
regulatory flexibility).
Benchmarks (particularly benchmarks based on regional
costs).
Risk adjustment.
Financial reserve requirements
Quality standards.
Beneficiary satisfaction.
Beneficiary choice.
Commenters expressed concern that misalignment between the Shared
Savings Program, other Medicare programs, and commercial programs could
have unintended effects on healthcare market dynamics and for the care
of beneficiaries.
Response: In 2011, Medicare made almost no payments to providers
through alternative payment models, but today such payments represent
approximately 20 percent of Medicare payments. Earlier this year, the
Secretary announced the ambitious goal of tying 30 percent of Medicare
FFS payments to quality and value by 2016 and by 2018 making 50 percent
of payments through alternative payment models, such as the Shared
Savings Program, created by the Affordable Care Act (http://www.hhs.gov/news/press/2015pres/03/20150325b.html). With over 400 ACOs
serving over 7 million beneficiaries, the Shared Savings Program plays
an important role in meeting the Secretary's recently articulated goal.
As stated during the 2011 rulemaking process, we continue to
believe that the Shared Savings Program should provide an entry point
for all willing organizations who wish to move in a direction of
providing value-driven healthcare. We are also interested in
encouraging these organizations to progress to greater performance-
based risk to drive quality improvement and efficiency in care
delivery. For this reason, we established both a shared savings only
(one-sided) model and a shared savings/losses (two-sided) model. This
structure provides a pathway for organizations to increasingly take on
performance-based risk. In this final rule, we build on these
principles and are finalizing a set of policies that we believe aligns
with and will advance the Secretary's goals.
Taken together, the comments illuminate overarching issues which
require a balance of competing factors and the specific interests of
many different stakeholders. We agree with stakeholders that the Shared
Savings Program must be structured in a way that that balances various
stakeholder interests in a way that both encourages new and continued
provider participation in the program and protects beneficiaries with
original FFS Medicare and the Medicare Trust Funds. We believe that
many design elements discussed in the proposed rule hold promise and
deserve continued consideration. We note that many of these suggestions
raised by stakeholders are already in the planning stage or being
tested in various CMS Innovation Center models, such as the Pioneer
Model and the Next Generation ACO Model (announced on March 10, 2015).
Testing these designs in various payment models through the CMS
Innovation Center is important because it will permit us to make
adjustments as needed to ensure that the models work for providers and
protect beneficiaries and the Trust Funds. CMS Innovation Center
testing will also permit a transparent and fulsome articulation of the
design elements in future rulemaking that allows for sufficient public
notice and comment prior to broader implementation in the Shared
Savings Program. We fully intend to raise many of the design elements
suggested by commenters in future rulemaking as the program matures.
We also continue to believe in the importance of maintaining
distinctions between the accountable care model in the Shared Savings
Program and managed care, such as Medicare Advantage. In the November
2011 final rule (76 FR 67805), we stated that the Shared Savings
Program is not a managed care program like the Medicare Advantage
program. Medicare FFS beneficiaries retain all rights and benefits
under traditional Medicare. Medicare FFS beneficiaries retain the right
to see any physician of their choosing, and they do not enroll in the
Shared Savings Program. Unlike managed care settings, the assignment of
beneficiaries to a Shared Savings Program ACO does not mean that
beneficiaries must receive care only from ACO providers/suppliers, nor
does it mean that beneficiaries must enroll in the ACO or the Shared
Savings Program. The Shared Savings Program is also not a capitated
model; providers and suppliers continue to bill and receive FFS
payments rather than receiving
[[Page 32697]]
lump sum payments based upon the number of assigned beneficiaries. The
Shared Savings Program is designed to enhance patient-centered care.
For example, it encourages physicians, through the eligibility
requirements (for example, the care processes required at Sec.
425.112), to include their patients in decision-making about their
health care. While we frequently relied on our experience in other
Medicare programs, including Medicare Advantage, to help develop
program requirements and design elements for the Shared Savings
Program, many Shared Savings Program requirements deviate from those in
the other programs precisely because the intent of this program is not
to recreate or replace Medicare Advantage.
Finally, we appreciate commenters' concerns that misalignment in
incentives across Medicare initiatives has the potential to create
unintended consequences for healthcare market dynamics (for example,
between Medicare FFS and Medicare Advantage) and for the care of
beneficiaries. We believe these concerns underscore the need to take a
measured approach to implementing changes into the Shared Savings
Program. We also appreciate commenters' enthusiasm for multipayer ACOs,
including recommendations for greater alignment between Medicare and
private sector initiatives. We are interested in engaging private
sector leaders to build on the success of the Shared Savings Program
and other alternative payment models to make value-driven care scalable
outside of Medicare's purview. To accomplish this, the Secretary
recently announced the creation of a Health Care Payment Learning and
Action Network. Through the Learning and Action Network, HHS will work
with private payers, employers, consumers, providers, states and state
Medicaid programs, and other partners to expand alternative payment
models through their own aligned work. As articulated by the Secretary,
the public and private sectors have a common interest in building a
health care system that delivers better care, spends health care
dollars more wisely, and results in healthier people.\1\ Beginning with
the November 2011 final rule, we have sought to align with other CMS
and private sector initiatives, beginning with our selection of quality
measures. As the program evolves, we look forward to learning from the
Learning and Action Network as well as various CMS Innovation Center
initiatives that are planning or already testing multipayer concepts
and we intend to revisit this issue in future rulemaking.
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\1\ March 25, 2015 HHS press release. http://www.hhs.gov/news/press/2015pres/03/20150325b.html.
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Comment: Many commenters were supportive of both the Shared Savings
Program and our proposals in the December 2014 proposed rule. However,
many commenters expressed general concerns related to the financial
model as currently designed, stating that the Shared Savings Program
places too much risk and burden on providers with too little
opportunity for reward in the form of shared savings. Commenters
encouraged CMS to modify the Shared Savings Program rules, particularly
in a manner that would increase the financial opportunities for ACOs
and attract more participants, which would sustain and improve long
term participation. A few commenters suggested that CMS act quickly in
improving the program's financial models, absent which existing ACOs
may decide that the financial risks outweigh the benefits and choose to
withdraw from the program.
Commenters offered a variety of specific suggestions for improving
the financial sustainability of the program, many of which are related
to our proposals and request for comment and are addressed in section
II.F. of this final rule. Some commenters recommended that CMS combine
various design elements, stating that such changes would be key to
encouraging ongoing participation in the program and driving meaningful
change by ACOs. Some commenters offered specific suggestions for
improving provider or ACO participation. For example, some commenters
recommended that CMS provide up-front funding, consider the effect of
seasonal commuter beneficiaries (``snowbirds'') on an ACO's performance
cost calculations, permit providers to participate in more than one
Medicare initiative involving shared savings, or permit certain groups
(such as rural ACOs) to participate in Track 1 indefinitely or create a
special rural-only track.
Several commenters suggested that the program incorporate more
explicit financial incentives for higher quality performance (for
example, modifying the ACO's Minimum Savings Rate (MSR), while others
requested retention of the current approach but suggested that CMS
offer an even higher sharing rate to ACOs demonstrating high quality.
Others recommended rewarding high quality organizations regardless of
their financial performance.
Response: We believe the changes to the Shared Savings Program
tracks and other design elements that recognize an ACO's efforts
finalized in section II.F. of this final rule address commenters'
requests for improvements to the program's tracks and program
sustainability overall. As explained in detail in section II.F., this
final rule creates additional opportunities for ACOs to be financially
rewarded for their achievement of the three-part aim, including the
following:
A second agreement period under the one-sided model for
eligible Track 1 ACOs, with the opportunity to achieve a maximum
sharing rate of 50 percent.
Greater flexibility in choice of MSR/Minimum Loss Rate
(MLR) under a two-sided model; and the chance for greater reward (in
relation to greater risk) under the newly established Track 3.
Additionally, we are finalizing policies related to resetting ACO
benchmarks, including equal weighting the benchmark years, and
accounting for shared savings generated under the prior agreement
period. The revisions to the methodology for resetting the benchmark
are expected to slow the rate at which the benchmark decreases in
comparison to rebasing under the program's current methodology.
Finally, we note that many ACOs that are currently participating in the
program have had access to up-front funding through the CMS Innovation
Center Advance Payment Model. The CMS Innovation Center is currently
offering additional qualified ACOs the opportunity to apply for up-
front funding through the ACO Investment Model. We believe these
changes, taken together, will improve the opportunity for ACOs to
realize rewards under the program.
We intend to continue to update and revise the Shared Savings
Program over time as we gain experience and gain insights from testing
that is ongoing in the CMS Innovation Center. In particular, as
discussed in more detail in section II.F. of this final rule, based on
the comments we received in the proposed rule and our own continued
analysis, we believe that in order to encourage ACOs to achieve and
maintain savings, it is important to move quickly to a benchmarking
methodology that sets and updates ACO benchmarks largely on the basis
of trends in regional FFS costs, rather than ACO's historical costs.
For this reason we intend to propose and seek comment on a new
benchmarking methodology later this summer. We anticipate that the
revised benchmark rebasing methodology incorporating the ACO's
historical costs and regional FFS costs and trends would apply to ACOs
beginning new agreement periods in 2017 or later. ACOs beginning a new
[[Page 32698]]
agreement period in 2016 would convert to the revised methodology at
the start of their third agreement period in 2019.
Comment: Several commenters expressed concern regarding the timing
of the finalization of program rules in relation to the ability of an
ACO or applicant to adjust to them, or the impact that may have on the
willingness of organizations to take on greater performance-based risk.
Commenters were particularly concerned that ACOs with agreement periods
ending in 2015 would not have an adequate amount of time to understand
the implications of the final regulations (particularly if moving to
two-sided risk) before having to seek renewal of their agreements
during the summer of 2015.
Response: We are aware of the timing concerns expressed by
stakeholders and strive to give ACOs ample time to make decisions that
are in the best interest of their patients, providers and organization.
Therefore, we intend to implement final policies with these timing
considerations in mind. Most of the policies will take effect for the
2016 performance year; for example, our assignment methodology changes.
However, we will defer implementation of some policies, recognizing
that ACOs may need more time to come into compliance with the
requirements. For example, we believe that modifying agreements with
ACO participants and ACO providers/suppliers to comply with the
requirements of new Sec. 425.116 may take time. Accordingly, we will
not require ACOs to comply with Sec. 425.116(a) and (b) until the 2017
performance year in the case of ACO participants and ACO providers/
suppliers that have already agreed to participate in the Shared Savings
Program. Similarly, we will not require organizations that are applying
or renewing for a January 1, 2016 start date to submit agreements with
the updated language as part of the 2016 application and renewal
process which occurs the summer and fall of 2015. However, we will
expect and require that ACO participant agreements submitted for our
review for purposes of adding new ACO participants to the ACO's list of
ACO participants for performance years 2017 and subsequent years will
comply with the new rules. For example, if an ACO submits a request to
add an ACO participant to its ACO participant List for the 2017
performance year during 2016, the ACO participant agreement must meet
the requirements established in this final rule. Similarly, because of
the operational complexity of the SNF 3-day rule waiver, we will defer
implementation of that policy to no earlier than the 2017 performance
year. We intend to develop and update guidance and operational
documents as the new policies become effective.
Comment: Several commenters suggested ways for the Shared Savings
Program to increase or ensure beneficiary engagement. For example,
commenters suggested permitting ACOs to financially reward
beneficiaries for choosing low cost options or healthy behaviors,
allowing ACOs to remove non-engaged beneficiaries by permitting the ACO
to dismiss ``non-compliant'' beneficiaries, allowing ACOs more
flexibility to interact with their beneficiary population to generate a
more patient-centric program, and excluding certain vulnerable patient
populations from ACO costs until ACOs develop a better track record of
treating these patients.
Several commenters made comments related to Medicare beneficiaries
and their interaction with the ACO. A commenter stated that one of the
major challenges for ACOs is ``getting beneficiaries to understand that
they are a part of an ACO'' and that they are encouraged to receive all
of their health care from ACO participating professionals and
suppliers. The commenter suggested that CMS develop educational
documents/resources for assigned beneficiaries that clearly outline the
advantages and benefits of obtaining health care from their assigned
ACO. On the other hand, a few other commenters expressed concerns that
the Shared Savings Program regulations do not reinforce the concept
that beneficiaries can get care outside the ACO. A few commenters
requested that CMS perform various forms of monitoring activities to
ensure that ACOs are providing open access to all beneficiaries.
Commenters requested that we strictly monitor both referral patterns
and any avoidance activities in order that all beneficiaries have
access to quality care.
Response: We recognize that beneficiary engagement is an important
element in the ACO's ability to meet its goal of improving quality and
reducing costs. For this reason, the statute and our program rules
require ACOs to develop a process to promote patient engagement. We
believe patient engagement works best at the point of care and the
development of the patient-doctor relationship. Several ACOs that
achieved first year success in the program have observed that patient
engagement improves when engaged providers improve patient care.
However, we will continue to consider how CMS can best support ACO
efforts while ensuring beneficiary and Trust Funds protections.
Additionally, as noted in this section and by some commenters, the
Shared Savings Program is not a managed care program. Medicare FFS
beneficiaries in the Shared Savings Program retain all rights and
benefits under traditional Medicare. Medicare FFS beneficiaries retain
the right to see any physician of their choosing, and they do not
enroll in the Shared Savings Program. Unlike a managed care program,
the assignment of beneficiaries to a Shared Savings Program ACO does
not mean that beneficiaries must receive care only from ACO providers/
suppliers, nor does it mean that beneficiaries must enroll in the ACO
or the Shared Savings Program. Therefore, we develop patient materials
with the assistance of the ombudsman's office (for example, the
Medicare and You Handbook, required ACO notifications, fact sheets)
that state the rights and freedoms of beneficiaries under traditional
FFS Medicare. We do not agree that it is appropriate for ACOs or CMS to
require beneficiaries to receive all of their care from ACO
participating professionals and suppliers. Rather, it is a program
requirement that the ACO develop a process to promote care coordination
across and among providers and suppliers both inside and outside the
ACO.
Finally, although beneficiaries that receive services from ACO
professionals continue to retain the freedom to choose their providers,
CMS monitors ACOs for prohibited behaviors such as avoidance of at-risk
beneficiaries. Several other protections are in place, including a
prohibition on beneficiary inducements and on certain required
referrals and cost shifting Sec. 425.304. Moreover, providers and
suppliers that seek to participate in an ACO undergo screening for
program integrity history and may be denied participation in the Shared
Savings Program based on the results.
Comment: Many commenters were concerned with what they identified
as either a lack of communication from CMS on specific questions or an
overall lack of information about the program. Comments requested that
CMS provide both general and detailed programmatic information. Others
commenters recommended that the best practices that have resulted in
shared savings be shared with ACOs and that CMS provide a detailed
account of best practices that have been observed by ACOs that
generated savings.
Response: We believe that program transparency is important. For
this reason, many of the current and newly finalized policies in this
rule are designed to promote transparency for
[[Page 32699]]
beneficiaries and providers. For example, we have updated our public
reporting requirements, codified and updated our requirements for ACO
participant agreements, clarified numerous policies, and posted quality
and financial information about ACOs on our Web site and Physician
Compare (http://www.medicare.gov/physiciancompare/aco/search.html).
There are many other methods we use to answer questions and assist ACOs
participating in the program, including the following:
Each ACO has a designated CMS Coordinator that develops an
ongoing relationship with the ACO and is a direct resource to help ACOs
navigate program requirements and deadlines.
Operational guidance documents and FAQs that are available
to ACOs on the ACO portal.
Weekly newsletters with important information including
deadline reminders.
A dedicated CMS Web page (https://www.cms.gov/sharedsavingsprogram/) with program information, timelines, FAQs.
A dedicated email box for ACOs to submit questions for
subject matter experts to address.
Frequent webinars that provide detailed information on
program operations and methodologies, the opportunity to speak with CMS
staff, and peer-to-peer learning sessions. We recognize that in spite
of these efforts, there may be additional opportunities to improve
program transparency. Therefore, we thank the commenters for their
suggestions and will continue to look for ways we can engage with ACOs.
We also note that we invite all ACOs to participate in learning
best practices through ACO Learning System activities. The ACO Learning
System was developed to provide ACOs with peer-to-peer learning
opportunities that are in the form of in-person learning sessions and
regularly scheduled webinars. This forum provides a unique mechanism
for ACOs to share their challenges and successes with other ACOs.
Summaries and slides from past sessions are available to participating
ACOs through the ACO portal.
A. Definitions
In the November 2011 final rule (76 FR 67802), we adopted
definitions of key terms for purposes of the Shared Savings Program at
Sec. 425.20. These terms are used throughout this final rule. We
encourage readers to review these definitions. Based on our experiences
thus far with the Shared Savings Program and inquiries we received
regarding the defined terms, we proposed some additions to the
definitions and a few revisions to the existing definitions.
1. Proposed Definitions
We proposed to add several new terms to the definitions in Sec.
425.20. First, we proposed to add a definition of ``participation
agreement.'' Specifically, we proposed to define the term to mean the
written agreement required under Sec. 425.208(a) between the ACO and
CMS that, along with the regulations at part 425, governs the ACO's
participation in the Shared Savings Program. We further proposed to
make conforming changes throughout part 425, replacing references to an
ACO's agreement with CMS with the defined term ``participation
agreement.'' In addition, we proposed to make a conforming change in
Sec. 425.204(c)(1)(i) to remove the incorrect reference to
``participation agreements'' and replace it with ``ACO participant
agreements.''
We proposed to add the related definition of ``ACO participant
agreement.'' Specifically, we proposed to define ``ACO participant
agreement'' to mean the written agreement between an ACO and an ACO
participant required at Sec. 425.116 in which the ACO participant
agrees to participate in, and comply with, the requirements of the
Shared Savings Program.
As discussed in section II.F. of the proposed rule, we proposed to
add a definition for ``assignment window,'' to mean the 12-month period
used to assign beneficiaries to an ACO. This definition was added to
accommodate the 12 month period used to assign beneficiaries to Track 1
and 2 ACOs based on a calendar year as well as the off-set 12 month
period used to assign beneficiaries prospectively to an ACO in Track 3.
Comment: Many commenters were supportive of the addition of
definitions for ``participation agreement'' and ``ACO participant
agreement.'' Several commenters explicitly stated support for the
proposal to define an ``assignment window''.
Response: We appreciate stakeholder support for incorporating new
definitions in to the Shared Savings Program.
FINAL ACTION: We are finalizing the new definitions of
``participation agreement'', ``ACO participant agreement'', and
``assignment window'' as proposed in Sec. 425.20. We believe these
definitions will facilitate transparency and a better understanding of
the program rules.
2. Proposed Revisions to Existing Definitions
We proposed several revisions to existing definitions. First, we
proposed to revise the definition of ``ACO participant'' to clarify
that an ACO participant is an ``entity'' identified by a Medicare-
enrolled TIN. Additionally, we proposed to correct a grammatical error
by revising the definition to indicate that one or more ACO
participants ``compose,'' rather than ``comprise'' an ACO. We noted
that a related grammatical error would be corrected at Sec.
425.204(c)(1)(iv). These proposed changes to the definition of ``ACO
participant'' were not intended to alter the way the Shared Savings
Program currently operates.
We proposed to revise the definition of ``ACO professional'' to
remove the requirement that an ACO professional be an ACO provider/
supplier. We also proposed to revise the definition of ``ACO
professional'' to indicate that an ACO professional is an individual
who bills for items or services he or she furnishes to Medicare fee-
for-service beneficiaries under a Medicare billing number assigned to
the TIN of an ACO participant in accordance with Medicare regulations.
We proposed these modifications because there may be ACO professionals
who furnished services billed through an ACO participant's TIN in the
benchmarking years but are no longer affiliated with the ACO
participant and therefore are not furnishing services billed through
the TIN of the ACO participant during the performance years. These
proposed changes to the definition of ``ACO professional'' are not
intended to alter the way the Shared Savings Program currently
operates.
We proposed to modify the definition of ``ACO provider/supplier''
to clarify that an individual or entity is an ACO provider/supplier
only when it is enrolled in the Medicare program, bills for items and
services furnished to Medicare FFS beneficiaries during the agreement
period under a Medicare billing number assigned to the TIN of an ACO
participant, and is included on the list of ACO providers/suppliers
that is required under the proposed regulation at Sec. 425.118. We
stated our belief that an individual or entity should be considered an
ACO provider/supplier if he or she previously (for example, during the
benchmarking years) reassigned the right to receive Medicare payment to
a prospective ACO participant, but is not participating in the
activities of the ACO during the ACO's agreement period by furnishing
care to Medicare FFS beneficiaries that
[[Page 32700]]
is billed through the TIN of an ACO participant. The proposed
modification was intended to clarify that a provider or supplier must
bill for items or services furnished to Medicare FFS beneficiaries
through the TIN of an ACO participant during the ACO's agreement period
in order to be an ACO provider/supplier.
We proposed to modify the definition of ``assignment'' to mean the
operational process by which CMS determines whether a beneficiary has
chosen to receive a sufficient level of the requisite primary care
services from ``ACO professionals.'' In the proposed rule, we explained
that that for purposes of defining assignment, we stated our belief
that it is more appropriate to use the term ``ACO professional,''
rather than the term ``ACO provider/supplier,'' because a physician or
other practitioner can only be an ACO provider/supplier if he or she
bills for items and services through the TIN of an ACO participant
during the ACO's agreement period and is included on the list of ACO
providers/suppliers required under our regulations. However, there may
be an ACO professional who furnishes services billed through an ACO
participant's TIN in the performance or benchmarking years but is
either not listed on the ACO providers/suppliers list or is no longer
billing through the ACO participant's TIN during the performance years
and therefore cannot be considered an ACO provider/supplier.
In the interests of clarity, we therefore proposed to modify the
definition of assignment to reflect that our assignment methodology
takes into account claims for primary care services furnished by ACO
professionals, not solely claims for primary care services furnished by
physicians in the ACO. This revision would ensure consistency with
program operations and alignment with the definition of ``ACO
professional'' since it is the aggregation of the ACO professionals'
claims that impacts assignment. We stated that the proposed
modification to the definition of ``assignment'' would more accurately
reflect the use of claims for primary care services furnished by ACO
professionals that are submitted through an ACO participant's TIN in
determining beneficiary assignment in the ACO's benchmark and
performance years. Additionally, we proposed to make conforming changes
as necessary to the regulations governing the assignment methodology in
part 425 subpart E, to revise the references to ``ACO provider/
supplier'' to read ``ACO professional.''
We proposed a technical revision to the definition of ``hospital''
for purposes of the Shared Savings Program. Section 1899(h)(2) of the
Act provides that, for purposes of the Shared Savings Program, the term
``hospital'' means a subsection (d) hospital as defined in section
1886(d)(1)(B) of the Act. In the November 2011 final rule (76 FR
67812), we finalized a definition of ``hospital'' that included only
acute care hospitals paid under the hospital inpatient prospective
payment system (IPPS). Under this definition, Maryland acute care
hospitals would not be considered to be ``hospitals'' for purposes of
the Shared Savings Program because they are subject to a waiver from
the Medicare payment methodologies under which they would otherwise be
paid. We proposed to clarify that a Maryland acute care hospital is a
``hospital'' for purposes of the Shared Savings Program. Specifically,
we proposed to revise the definition of ``hospital'' for purposes of
the Shared Savings Program to mean a hospital as defined in section
1886(d)(1)(B) of the Act. The proposed regulation is consistent with
both the statutory definition of ``hospital'' for purposes of the
Shared Savings Program in section 1899(h)(2) of the Act and the
position we have taken in other contexts in referring to subsection (d)
hospitals.
We proposed to modify the definition of ``primary care services.''
We refer the reader to section II.E.3. of this final rule for a more
detailed discussion of the proposed revision to this definition, which
is relevant to the assignment of a Medicare beneficiary to an ACO, as
well as responses to comments received on this proposal.
As discussed in greater detail in section II.F. of the proposed
rule, we proposed revisions to the definitions of ``continuously
assigned beneficiary'' and ``newly assigned beneficiary.'' These
definitions relate to risk adjustment for the assigned population and
required minor modification to accommodate the newly proposed Track 3.
Specifically, we proposed to replace the reference in these definitions
to ``most recent prior calendar year'' with a reference to ``the
assignment window for the most recent prior benchmark or performance
year.'' Thus, for Track 3 the reference period for determining whether
a beneficiary is newly or continuously assigned would be the most
recent prior prospective assignment window (the off-set 12 months)
before the assignment window for the current performance year and the
reference period for determining whether a Track 1 or 2 beneficiary is
newly or continuously assigned would continue to be the most recent
prior assignment window (the most recent calendar year).
Finally, in connection with our discussion of the applicability of
certain changes that are made to program requirements during the
agreement period, we proposed revisions to the definition of
``agreement period.'' Readers should refer to section II.C.4. of this
final rule for a discussion of the proposed changes to the definition
as well as the responses to comments received on the proposal.
Comment: Many commenters expressed general support for
modifications to the definitions. Several commenters expressed support
for our proposed revision to the definition of ``ACO participant'' but
suggested that CMS clarify that some ACO participants could be
individual providers billing under his or her own Social Security
Number, rather than the TIN of an ACO participant. A few commenters
expressed support for our proposal to modify the definition of
``hospital,'' stating that this modification will result in clarity for
Maryland acute care facility participation in the Shared Savings
Program and provide an equal opportunity for all hospitals to form
ACOs. A commenter expressed concern that the definitions of ``ACO
professional, ACO participant and ACO provider/supplier'' would
``restructure the intended roles of providers within ACOs'' and
encouraged CMS to develop definitions that would be inclusive rather
than exclusive to ``protect the inclusive intent of the legislation
which recognizes NPs as ACO professionals.''
Response: We appreciate the comments we received in favor of our
proposals to modify certain definitions. We believe these modifications
will improve program transparency and understanding of program rules
and respond to stakeholder inquiries. We believe the definitions
support and lend transparency to the program rules, are consistent with
statutory language, and inclusive of Medicare enrolled providers and
suppliers that furnish services to Medicare FFS beneficiaries. We are
unclear what the commenter is referring to regarding the ``inclusive
intent'' of the statute and believe we have developed definitions that
are consistent with the statutory language. Our definition of an ACO
participant includes Medicare enrolled billing TINs through which one
or more ACO providers/suppliers bill Medicare. As such, ACOs may
include the TIN of solo practitioners on its list of ACO participants
because Social Security Numbers (SSNs) and Employer Identification
Numbers (EINs) are types of Taxpayer Identification Numbers.
Furthermore, we agree with commenters that aligning the program
definition of
[[Page 32701]]
hospital with the statutory definition will permit Maryland hospitals
to form an ACO under our program rules, although we note that current
program rules permit such hospitals to be an ACO participant along with
other ACO participants that have joined to form an ACO.
FINAL ACTION: We are finalizing the proposed modifications to the
definitions of ACO participant, ACO professional, ACO provider/
supplier, assignment, hospital, and newly assigned beneficiary and
continuously assigned beneficiary, along with necessary conforming
changes. We refer the reader to sections II.C. and II.E. of this final
rule for a review of comments, responses, and final actions regarding
the definitions of ``agreement period'' and ``primary care services.''
B. ACO Eligibility Requirements
1. Agreement Requirements
a. Overview
Section 1899(b)(2)(B) of the Act requires participating ACOs to
``enter into an agreement with the Secretary to participate in the
program for not less than a 3-year period.'' If the ACO is approved for
participation in the Shared Savings Program, an executive who has the
ability to legally bind the ACO must sign and submit a participation
agreement to CMS (Sec. 425.208(a)(1)). Under the participation
agreement with CMS, the ACO agrees to comply with the regulations
governing the Shared Savings Program (Sec. 425.208(a)(2)). In
addition, the ACO must require its ACO participants, ACO providers/
suppliers, and other individuals or entities performing functions or
services related to the ACO's activities agree to comply with the
Shared Savings Program regulations and all other applicable laws and
regulations (Sec. 425.208(b) and Sec. 425.210(b)) and to commit to
the participation agreement (Sec. 425.306(a)). The ACO must provide a
copy of its participation agreement with CMS to all ACO participants,
ACO providers/suppliers, and other individuals and entities involved in
ACO governance (Sec. 425.210(a)). As part of its application, we
currently require each ACO to submit a sample of the agreement it
executes with each of its ACO participants (the ``ACO participant
agreement''). Also, as part of its application and when requesting the
addition of new ACO participants, we require an ACO to submit evidence
that it has a signed written agreement with each of its ACO
participants. (See guidance on our Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/Memo_Additional_Guidance_on_ACO_Participants.pdf ). An ACO's
application to participate in the Shared Savings Program and any
subsequent request to add new ACO participants will not be approved if
the ACO does not have an agreement in place with each of its ACO
participants in which each ACO participant agrees to participate in the
Shared Savings Program and to comply with the requirements of the
Shared Savings Program.
In our review of applications to participate in the Shared Savings
Program, we received many ACO participant agreements that were not
properly executed, were not between the correct parties, lacked the
required provisions, contained incorrect information, or failed to
comply with Sec. 425.304(c) relating to the prohibition on certain
required referrals and cost shifting. When we identified such
agreements, ACOs experienced processing delays, and in some cases, we
were unable to approve the ACO applicant and its ACO participant or
both to participate in the Shared Savings Program. Consequently, we
issued guidance for ACO applicants in which we stated the required
elements for ACO participant agreements and strongly recommended that
ACOs employ good contracting practices to ensure that each of their ACO
participant agreements met our requirements (see http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/Tips-ACO-Developing-Participant-Agreements.pdf).
The ACO participant agreements are necessary for purposes of
program transparency and to ensure an ACO's compliance with program
requirements. Moreover, many important program operations (including
calculation of shared savings, assignment of beneficiaries, and
financial benchmarking) use claims and other information that are
submitted to CMS by the ACO participant. Our guidance clarifies that
ACO participant agreements and any agreements with ACO providers/
suppliers must contain the following:
An explicit requirement that the ACO participant or the
ACO provider/supplier will comply with the requirements and conditions
of the Shared Savings Program (part 425), including, but not limited
to, those specified in the participation agreement with CMS.
A description of the ACO participants' and ACO providers'/
suppliers' rights and obligations in and representation by the ACO.
A description of how the opportunity to get shared savings
or other financial arrangements will encourage ACO participants and ACO
providers/suppliers to follow the quality assurance and improvement
program and evidence-based clinical guidelines.
Remedial measures that will apply to ACO participants and
ACO providers/suppliers who do not comply with the requirements of
their agreements with the ACO.
Our guidance also requires that the ACO participant agreements be
made directly between the ACO and the ACO participant. We believe it is
important that the parties entering into the agreement have a direct
legal relationship to ensure that the requirements of the agreement are
fully and directly enforceable by the ACO, including the ability of the
ACO to terminate an agreement with an ACO participant that is not
complying with the requirements of the Shared Savings Program.
Therefore, we believe a direct contractual relationship is important.
Additionally, a direct contractual relationship ensures that the ACO
participant may, if necessary, terminate the agreement with the ACO
according to the terms of the agreement without interrupting other
contracts or agreements with third parties. Therefore, the ACO and the
ACO participant must be the only parties to an ACO participant
agreement; the agreements may not include a third party to the
agreement. For example, the agreement may not be between the ACO and
another entity, such as an independent practice association (IPA) or
management company that in turn has an agreement with one or more ACO
participants. Similarly, ACOs should not use existing contracts between
ACOs and ACO participants that include third parties.
We recognize that contractual agreements do exist between entities
(for example, contracts that permit organizations like IPAs to
negotiate contracts with health care payers on behalf of individual
practitioners). However, because it is important to ensure that there
is a direct contractual relationship between the ACO and the ACO
participant evidenced by a written agreement, and because ACO
participants continue to bill and receive payments as usual under the
Medicare FFS rules (that is, there is no negotiation for payment under
the program) we believe that typical IPA contracts are inappropriate
and unnecessary for purposes of participation in the Shared Savings
Program. An ACO and ACO participant may use a contract unrelated to the
Shared Savings Program as an
[[Page 32702]]
ACO participant agreement only when it is between the two parties and
is amended to satisfy the requirements for ACO participant agreements
under the Shared Savings Program.
It is the ACO's responsibility to make sure that each ACO
participant agreement identifies the parties entering into the
agreement using their correct legal names, specifies the term of the
agreement, and is signed by both parties to the agreement. We validate
the legal names of the parties based on information the ACO submitted
in its application and the legal name of the entity associated with the
ACO participant's TIN in the Provider Enrollment Chain & Ownership
System (PECOS). We reject an ACO participant agreement if the party
names do not match our records. It may be necessary for the ACO to
execute a new or amended ACO participant agreement.
Although the ACO participant must ensure that each of its ACO
providers/suppliers (as identified by a National Provider Identifier
(NPI)) has agreed to participate in the ACO and will comply with
program rules, the ACO has the ultimate responsibility for ensuring
that all the ACO providers/suppliers that bill through the TIN of the
ACO participant have also agreed to participate in the Shared Savings
Program and comply with our program regulations. The ACO may ensure
this by directly contracting with each ACO provider/supplier (NPI) or
by contractually requiring the ACO participant to ensure that all ACO
providers/suppliers that bill through its TIN have agreed to
participate in, and comply with the requirements of, the Shared Saving
Program. If the ACO chooses to contract directly with the ACO
providers/suppliers, the agreements must meet the same requirements as
the agreements with ACO participants. We emphasize that even if an ACO
chooses to contract directly with the ACO providers/suppliers (NPIs),
it must still have the required ACO participant agreement. In other
words, the ACO must be able to produce valid written agreements for
each ACO participant and each ACO provider/supplier. Furthermore, since
we use TINs (and not merely some of the NPIs that make up the entity
identified by a TIN) as the basis for identifying ACO participants, and
we use all claims submitted under an ACO participant's TIN for
financial calculations and beneficiary assignment, an ACO may not
include an entity as an ACO participant unless all Medicare enrolled
providers and suppliers billing under that entity's TIN have agreed to
participate in the ACO as ACO providers/suppliers.
We proposed to codify much of our guidance regarding the content of
the ACO participant and ACO provider/supplier agreements.
b. Proposed Revisions
First, we proposed to add new Sec. 425.116 to set forth the
requirements for agreements between an ACO and an ACO participant or
ACO provider/supplier. We stated our belief that the new provision
would promote a better general understanding of the Shared Savings
Program and transparency for ACO participants and ACO providers/
suppliers. It was our intent to provide requirements that would
facilitate and enhance the relationships between ACOs and ACO
participants, and reduce uncertainties and misunderstandings leading to
rejection of ACO participant agreements during application review.
Specifically, we proposed to require that ACO participant agreements
satisfy the following criteria:
The ACO and the ACO participant are the only parties to
the agreement.
The agreement must be signed on behalf of the ACO and the
ACO participant by individuals who are authorized to bind the ACO and
the ACO participant, respectively.
The agreement must expressly require the ACO participant
to agree, and to ensure that each ACO provider/supplier billing through
the TIN of the ACO participant agrees, to participate in the Shared
Savings Program and to comply with the requirements of the Shared
Savings Program and all other applicable laws and regulations
(including, but not limited to, those specified at Sec. 425.208(b)).
The agreement must set forth the ACO participant's rights
and obligations in, and representation by, the ACO, including without
limitation, the quality reporting requirements set forth in Subpart F,
the beneficiary notification requirements set forth at Sec. 425.312,
and how participation in the Shared Savings Program affects the ability
of the ACO participant and its ACO providers/suppliers to participate
in other Medicare demonstration projects or programs that involve
shared savings.
The agreement must describe how the opportunity to receive
shared savings or other financial arrangements will encourage the ACO
participant to adhere to the quality assurance and improvement program
and evidence-based medicine guidelines established by the ACO.
The agreement must require the ACO participant to update
enrollment information with its Medicare Administrative Contractor
using the PECOS, including the addition and deletion of ACO
professionals billing through the TIN of the ACO participant, on a
timely basis in accordance with Medicare program requirements. The
agreement must also require ACO participants to notify the ACO within
30 days after any addition or deletion of an ACO provider/supplier.
The agreement must permit the ACO to take remedial action
against the ACO participant, and must require the ACO participant to
take remedial action against its ACO providers/suppliers, including
imposition of a corrective action plan, denial of shared savings
payments (that is, the ability of the ACO participant or ACO provider/
supplier to receive a distribution of the ACO's shared savings) and
termination of the ACO participant agreement, to address non-compliance
with the requirements of the Shared Savings Program and other program
integrity issues, including those identified by CMS.
The term of the agreement must be for at least 1
performance year and must articulate potential consequences for early
termination from the ACO.
The agreement must require completion of a close-out
process upon the termination or expiration of the ACO's participation
agreement that requires the ACO participant to furnish data necessary
to complete the annual assessment of the ACO's quality of care and
addresses other relevant matters.
Although we proposed that the term of an ACO participant agreement
be for at least 1 performance year, we stated that we did not intend to
prohibit early termination of the agreement. We recognized that there
may be legitimate reasons to terminate an ACO participant agreement.
However, because care coordination and quality improvement requires
commitment from ACO participants, we stated our belief that a minimum
requirement of 1 year would improve the likelihood of success in the
Shared Savings Program. We also stated that we were considering whether
and how ACO participant agreements should encourage participation to
continue for subsequent performance years. We sought comment on this
issue.
In the case of an ACO that chooses to contract directly with its
ACO providers/suppliers, we proposed virtually identical requirements
for its agreements with ACO providers/suppliers. We noted that, unlike
agreements between the ACO and an ACO participant, agreements with ACO
providers/suppliers would not be required to be for a term of at least
1 year, because we did not want to impede individual practitioners from
activities such as retirement, reassignment of billing rights, or
[[Page 32703]]
changing employers. In the case of ACO providers/suppliers that do not
contract directly with the ACO, we considered requiring each ACO to
ensure that its ACO participants contract with or otherwise arrange for
the services of its ACO providers/suppliers on the same or similar
terms as those required for contracts made directly between the ACO and
ACO providers/suppliers.
In addition, we proposed to add at Sec. 425.204(c)(6) a
requirement that, as part of the application process and upon request
thereafter, the ACO must submit documents demonstrating that its ACO
participants, ACO providers/suppliers, and other individuals or
entities performing functions or services related to ACO activities are
required to comply with the requirements of the Shared Savings Program.
In the case of ACO participants, we proposed that the evidence to be
submitted must, consistent with our past guidance, include sample form
agreements together with the first and last (signature) page of each
form agreement that has been fully executed by the parties to the
agreement. However, we proposed to reserve the right to request all
pages of an executed ACO participant agreement to confirm that it
conforms to the sample form agreement submitted by the ACO. In
addition, we proposed at Sec. 425.116(c) that executed ACO participant
agreements would also be submitted when an ACO seeks approval to add
new ACO participants. The agreements would be submitted in the same
form and manner as set forth in Sec. 425.204(c)(6). Finally, although
we would not routinely request an ACO to submit copies of executed
agreements the ACO or ACO participants have with the ACO providers/
suppliers or other individuals or entities performing functions or
services related to ACO activities as part of the ACO's application or
continued participation in each performance year, we proposed to
reserve our right to request this information during the application or
renewal process and at any other time for audit or monitoring purposes
in accordance with Sec. 425.314 and Sec. 425.316.
We stated our belief that the proposed requirements regarding
agreements between ACOs and ACO participants, together with our earlier
guidance regarding good contracting practices, would enhance
transparency between the ACO, ACO participants, and ACO professionals,
reduce turnover among ACO participants, prevent misunderstandings
related to participation in the Shared Savings Program, and assist
prospective ACOs in submitting complete applications and requests for
adding ACO participants. We stated our belief that codifying these
requirements would assist the ACO, ACO participants, and ACO providers/
suppliers in better understanding the program and their rights and
responsibilities while participating in the program. We solicited
comment on the proposed requirements and on whether we should consider
additional elements to include in the agreements the ACO has with its
ACO participants and ACO providers/suppliers.
Comment: Most commenters agreed with the CMS proposed criteria for
ACO participant agreements stating that it is important for each ACO
participant to understand its obligations and rights. Additionally,
commenters stated that it is ``crucial'' for all practitioners
participating in the ACO to agree to both program participation and
compliance with all relevant laws and regulations, and that
transparency in the opportunity to receive shared savings is essential
for expectations. Some commenters agreed with our proposal for ACO
participant agreements to require that ACO participants update
enrollment information with their Medicare Administrative Contractor
using PECOS within 30 days of any addition/deletion of an ACO provider/
supplier. However, several commenters expressed concerns with the
general requirement discussed later in this section that ACOs be held
responsible for ensuring that ACO participants and ACO providers/
suppliers appropriately update PECOS.
Response: We appreciate the general support for our proposals
related to ACO participant agreements. We agree with commenters that
transparency between ACOs and ACO participants is important. We agree
with commenters that it is important for all practitioners
participating in the ACO to explicitly agree to both participation and
compliance with all relevant laws and regulations. We believe it is
important for ACOs to encourage and enforce compliance with all
Medicare laws and regulations, including the requirement that Medicare
enrolled entities keep Medicare enrollment records updated. Since
Medicare already requires enrollment information to be updated within
30 days of a change, we do not believe the 30 day requirement for
Medicare enrolled entities to alert PECOS of any additions/deletions is
overly burdensome. Moreover, including this requirement in the ACO
participant agreement will assist the ACO in reinforcing this
requirement as a condition of participation in the ACO and enable the
ACO to comply with program rules.
Comment: A commenter stated CMS to include a requirement for ACO
participant agreements to specify that a portion of shared savings be
shared with ACO providers/suppliers, especially specialists.
Response: We believe maintaining transparency regarding the
opportunity to receive shared savings is essential in order to set
appropriate expectations for all parties. For this reason, we strongly
urge ACOs to be transparent in the agreements that are developed for
ACO participants, for example, by clearly articulating expectations for
how shared savings will be distributed to ACO participants and ACO
providers/suppliers. However, we do not require ACOs to distribute
shared savings in a particular manner. We believe it is important to
permit ACOs the flexibility to use and distribute shared savings, as
long as the methodology complies with applicable law. As explained in
the November 2011 final rule, we do not believe we have the legal
authority to dictate how shared savings are distributed; however, we
believe it is consistent with the purpose and intent of the statute to
require the ACO to indicate how it plans to use potential shared
savings to meet the goals of the program. We encourage ACOs to be
transparent about this plan in its agreements with ACO participants.
Comment: A commenter stated that forcing an entity to remain in an
ACO for the duration of the performance year would compromise the goals
of the ACO and contribute to administrative burden. Another commenter
suggested that CMS finalize an additional requirement for ACO
participants to notify the ACO if they wish to terminate prior to the
CMS deadlines for subsequent year changes.
Response: We believe it is important for each ACO participant to
understand its obligations and rights in detail. We also note that
program rules currently require each ACO participant to commit to the
3-year participation agreement that the ACO makes with CMS (Sec.
425.306(a)). As we stated in the proposed rule, because care
coordination and quality improvement requires commitment from ACO
participants, we believe that a minimum 1-year term requirement would
improve the likelihood of success of the ACO and its ACO participants.
For these reasons, we believe it is important to require ACO
participant agreements to include the requirement that the agreement
must be for at least 1 performance year and address potential
consequences for early termination. Rather than compromising the goals
of the ACO, we believe this enhances the ACO's ability to achieve its
goals. We
[[Page 32704]]
may consider in future rulemaking the suggestion to require ACO
participants and ACO providers/suppliers to provide some prior notice
of termination to the ACO. However, even in the absence of such a
requirement, we believe that ACOs will, as a matter of prudent business
contracting, incorporate a requirement that ACO participants and ACO
providers/suppliers must provide some prior notice of termination to
the ACO.
Comment: A commenter requested that CMS more thoroughly consider
the required close-out procedures so ACOs could incorporate specific
details into the ACO participant agreements.
Response: We will not prescribe additional close-out requirements
at this time. However, ACOs may choose to incorporate additional
requirements into their ACO participant agreements regarding timing of
agreement termination. Additionally, we are pleased that ACOs wish to
incorporate additional details related to close-out procedures and
intend to make details available through guidance and other operational
documents. We encourage, but will not require, ACOs to incorporate
these details into their ACO participant agreements once the guidance
becomes available.
Comment: A commenter requested that CMS not incorporate proposed
language regarding ``other individuals or entities performing functions
or services related to ACO activities are required to comply with the
requirements of the Shared Savings Program'' into program rules at
Sec. 425.204(c)(6) because they believe it would add unnecessary
burden.
Response: Under Sec. 425.210(b) of the Shared Savings Program
rules, we currently require that contracts or arrangements between or
among the ACO, ACO participants, ACO providers/suppliers, and other
individuals or entities performing functions or services related to ACO
activities must require compliance with the requirements and conditions
of the Shared Savings Program. This is not a new proposal; however, we
have proposed to incorporate this requirement in Sec. 425.204(c)(6).
Because this is not a new requirement, and we do not anticipate
routinely requesting executed documents, we do not believe it imposes
any additional burden on ACOs.
Comment: Some commenters expressed concern that our proposals for
ACO participant agreement requirements may lead some readers to
conclude that CMS is prohibiting ACO participants from participating in
an IPA and in an ACO concurrently. Others requested reconsideration of
the proposed ACO participant agreement requirements and instead permit
`typical contracts' between providers and IPAs to qualify. These
commenters stated that the proposed regulation would erect a barrier
for ACO participation by independent practices that would have to spend
time and money reviewing new contracts when they may already have a
contract in place that binds them to ``all the terms necessary'' for
ACO participation.
Response: Our example of the requirement for ACOs to have a direct
contractual relationship with ACO participants was not intended to
suggest that ACO participants may not also have contractual
relationships with other entities such as IPAs. We also emphasize that
existing IPA contracts we have seen during the application process are
insufficient to satisfy the requirements necessary for an ACO
participant agreement. For example, typical existing contracts permit
IPAs to negotiate with payers on behalf of the independent practice,
make no mention of the Shared Savings Program, and do not require
independent practices or their practitioners to agree to participate
and comply with program rules. Under the Shared Savings Program,
payments for services rendered by the independent practices for FFS
beneficiaries are not negotiated because such practices continue to
bill Medicare for the services the furnish to FFS beneficiaries as they
normally would in the absence of the ACO. Additionally, based on
previous experience, we believe it is extremely important that each ACO
participant and each ACO provider/supplier explicitly understand and
acknowledge their participation in the program, how their participation
may result in shared savings, their obligations regarding quality
reporting, their obligation to comply with all program rules, and other
important details of the program. Based on our experience, if ACO
participants who are also part of an IPA wish to form an ACO, it is
likely that they will have to develop an ACO participant agreement that
satisfies the requirements of the Shared Savings Program, and not rely
on agreements that have already been executed between the IPA and
Medicare-enrolled providers or suppliers for purposes of participating
in the IPA.
FINAL ACTION: We will finalize our proposals at Sec. 425.116 for
ACO participant and ACO provider/supplier agreement criteria with
slight modifications regarding the applicability date. We believe the
new regulation will promote a better general understanding of the
Shared Savings Program and transparency for ACO participants and ACO
providers/suppliers. We believe that the new requirements regarding
agreements between ACOs and ACO participants, together with our earlier
guidance regarding good contracting practices, will enhance
transparency between the ACO, ACO participants, and ACO professionals,
reduce turnover among ACO participants, prevent misunderstandings
related to participation in the Shared Savings Program, and assist
prospective ACOs in submitting complete applications and requests for
adding ACO participants. We believe that codifying these requirements
will assist the ACO, ACO participants, and ACO providers/suppliers in
better understanding the program and their rights and responsibilities
while participating in the program.
In addition, we will finalize our proposal to add at Sec.
425.204(c)(6) a requirement that, as part of the application process
and upon request thereafter, the ACO must submit documents
demonstrating that its ACO participants, ACO providers/suppliers, and
other individuals or entities performing functions or services related
to ACO activities are required to comply with the requirements of the
Shared Savings Program, including executed agreements for all ACO
participants. Although we will not routinely request an ACO to submit
copies of executed agreements the ACO or its ACO participants have with
ACO providers/suppliers or other individuals or entities performing
functions or services related to ACO activities as part of the ACO's
application or continued participation in each performance year, we
reserve our right to request this information during the application or
renewal process and at any other time for audit or monitoring purposes
in accordance with Sec. Sec. 425.314 and 425.316. Specifically, The
ACO is ultimately responsible for ensuring that each ACO provider/
supplier billing through the TIN of an ACO participant has agreed to
participate in and comply with the Shared Savings Program rules. The
ACO can fulfill this obligation either by direction contracting with
each ACO provider/supplier (NPI) or contractually requiring the ACO
participant to ensure that all ACO providers/suppliers that bill
through its TIN have agreed to participate in, and comply with the
requirements of, the Shared Saving Program. If the ACO chooses to
contract directly with the ACO providers/suppliers, the agreements must
meet
[[Page 32705]]
virtually the same requirements as the agreements with ACO
participants, and the ACO must still have an ACO participant agreement
in place with the TIN through which the ACO providers/suppliers bill.
Because of the timing of publication of this final rule, we
recognize that ACOs may struggle to incorporate these requirements in
time to submit 2016 applications or requests for renewal by the
applicable deadlines which will occur during the summer and fall of
2015. While we encourage ACOs to incorporate these requirements into
their ACO participant agreements as soon as possible, we will not
require these changes to be incorporated into any ACO participant
agreements that are submitted to CMS for the 2016 performance year.
ACOs that submit requests to add ACO participants for inclusion on the
2017 performance year list of ACO participants will be required to have
a corresponding ACO participant agreement that meets the new
requirements.
2. Sufficient Number of Primary Care Providers and Beneficiaries
a. Overview
Section 1899(b)(2)(D) of the Act requires participating ACOs to
``include primary care ACO professionals that are sufficient for the
number of Medicare fee-for-service beneficiaries assigned to the ACO .
. .'' and that at a minimum, ``the ACO must have at least 5,000 such
beneficiaries assigned to it. . . .'' Under Sec. 425.110(a)(2), an ACO
is deemed to have initially satisfied the requirement to have at least
5,000 assigned beneficiaries if the number of Medicare beneficiaries
historically assigned to the ACO participants in each of the 3 years
before the start of the agreement period is 5,000 or more.
Under the beneficiary assignment methodology set forth in the
regulations at part 425, subpart E, the assignment of beneficiaries to
a particular ACO for a calendar year is dependent upon a number of
factors, including where the beneficiary elected to receive primary
care services and whether the beneficiary received primary care
services from ACO professionals participating in one or more Shared
Savings Program ACOs. We note that to ensure no duplication in shared
savings payments for care provided to the same beneficiaries,
assignment of a beneficiary may also be dependent on whether the
beneficiary has been assigned to another initiative involving shared
savings, such as the Pioneer ACO Model (Sec. 425.114(c)). While a
final assignment determination can be made for the first 2 benchmark
years (BY1 and BY2, respectively) for an ACO applying to participate in
the Shared Savings Program, it is not possible to determine the final
assignment for the third benchmark year (BY3) (that is, the calendar
year immediately prior to the start of the agreement period) because
application review and determination of whether the ACO has met the
required 5,000 assignment must take place during BY3 before all claims
are submitted for the calendar year. Furthermore, there is a lag period
after the end of a calendar year during which additional claims for the
year are billed and processed. Therefore, the final historical
benchmark for the 3-year period and the preliminary prospective
assignment for PY1 must be determined after the ACO's agreement period
has already started. We note that we currently estimate the number of
historically assigned beneficiaries for the third benchmark year for
Tracks 1 and 2 by using claims with dates of service for the last 3
months of benchmark year 2 (October through December) and the first 9
months of benchmark year 3 (January through September, with up to 3
months claims run out, as available). We use this approach to calculate
the number of assigned beneficiaries for BY3 in order to be as
consistent as possible with the timeframes (that is, 12 month period)
and claims run out used for the BY1 and BY2 calculations.
Section 425.110(b) provides that an ACO that falls below 5,000
assigned beneficiaries at any time during the agreement period will be
allowed to continue in the program, but CMS must issue a warning letter
and place the ACO on a corrective action plan (CAP). The purpose of
this provision is to ensure that the ACO is aware that its number of
assigned beneficiaries is below 5,000, is notified of the consequences
of remaining under 5,000, and that the ACO is taking appropriate steps
to correct the deficiency.
Section 425.110(b)(1) provides that, while under the CAP, the ACO
will remain eligible to share in savings for the performance year in
which it fell below the 5,000, and the MSR will be adjusted according
to the number of assigned beneficiaries determined at the time of
reconciliation. For example, according to Table 6 in the November 2011
final rule (42 FR 67928), a Track 1 ACO with an assigned population of
5,000 would have an MSR of 3.9. If the ACO's number of assigned
beneficiaries falls below 5,000, we would work with the CMS Office of
the Actuary to determine the MSR for the number of beneficiaries below
5,000, set at the same 90 percent confidence interval that is used to
determine an ACO's MSR when the ACO has a smaller assigned beneficiary
population. If the number of beneficiaries assigned to the ACO remains
less than 5,000 by the end of the next performance year, the ACO is
terminated and is not be permitted to share in savings for that
performance year (Sec. 425.110(b)(2)).
b. Proposed Revisions
We proposed to revise Sec. 425.110(a)(2) to clarify the data used
during the application review process to estimate the number of
beneficiaries historically assigned in each of the 3 years of the
benchmarking period. Specifically, we proposed that the number of
assigned beneficiaries would be calculated for each benchmark year
using the assignment methodology set forth in part 425 subpart E, and
in the case of BY3, we would use the most recent data available with up
to a 3-month claims run out to estimate the number of assigned
beneficiaries. This proposed revision would reflect current operational
processes under which we assign beneficiaries to ACOs using complete
claims data for BY1 and BY2 but must rely on incomplete claims data for
BY3. We would continue to estimate the number of historically assigned
beneficiaries for the third benchmark year by using claims with dates
of service for the last 3 months of BY2 and the first 9 months of BY3,
with up to 3 months claims run out. However, that could vary from year
to year depending on data availability during the application review
process. As discussed previously, we stated our belief that using this
approach to calculate the number of assigned beneficiaries for BY3
would be consistent with the timeframes and claims run out used for BY1
and BY2 calculations because we would be using a full 12 months of
claims, rather than only the available claims for the calendar year,
which would be less than 12 months.
The estimates of the number of assigned beneficiaries would be used
during the ACO application review process to determine whether the ACO
exceeds the 5,000-assigned beneficiary threshold for each year of the
historical benchmark period. We stated that if based upon these
estimates, we determined that an ACO had at least 5,000 assigned
beneficiaries in each of the benchmark years, it would be deemed to
have initially satisfied the eligibility requirement that the ACO have
at least 5,000 assigned beneficiaries. The specific data to be used for
computing these initial
[[Page 32706]]
estimates during the ACO application review process would be designated
through program instructions and guidance. Although unlikely, it is
possible that when final benchmark year assignment numbers are
generated after the ACO has been accepted into the program, the number
of assigned beneficiaries could be below 5,000. In this event, we
stated that the ACO would be allowed to continue in the program, but
may be subject to the actions set forth in Sec. 425.110(b).
Given our experience with the program and the timing of performance
year determinations regarding beneficiary assignment provided during
reconciliation, we wish to modify our rules to provide greater
flexibility to address situations in which an ACO's assigned
beneficiary population falls below 5,000 assigned beneficiaries.
Specifically, we stated we had concerns that in some cases it may be
very difficult for an ACO to increase its number of assigned
beneficiaries by the end of the next performance year, as currently
required by Sec. 425.110(b)(2). We noted that increasing the number of
assigned beneficiaries involves adding new ACO participants and ACO
providers/suppliers or both. However, in certain circumstances, by the
time the ACO had been notified that its assigned beneficiary population
had fallen below 5,000 beneficiaries, it would have been too late for
the ACO to add new ACO participants for PY2, leaving the ACO with more
limited options for timely correction of the deficit. We stated our
belief that Sec. 425.110(b) should be modified to provide ACOs with
adequate time to successfully complete a CAP. Therefore, we proposed to
revise Sec. 425.110(b)(2) to state that CMS will specify in its
request for a CAP the performance year during which the ACO's assigned
population must meet or exceed 5,000 beneficiaries. This modification
would permit some flexibility for ACOs whose assigned populations fall
below 5,000 late in a performance year to take appropriate actions to
address the deficit.
Additionally, we stated that we did not believe it would be
necessary to request a CAP from every ACO whose assigned beneficiary
population falls below 5,000. For example, we stated our belief that we
should have the discretion not to impose a CAP when the ACO has already
submitted a request to add ACO participants effective at the beginning
of the next performance year and CMS has a reasonable expectation that
the addition of these new ACO participants would increase the assigned
beneficiary population above the 5,000 minimum beneficiary thresholds.
Therefore, we proposed to revise Sec. 425.110(b) to indicate that we
have the discretion whether to impose any remedial measures or to
terminate an ACO for failure to satisfy the minimum assigned
beneficiary threshold. Specifically, we proposed to revise Sec.
425.110(b) to state that the ACO ``may'' be subject to any of the
actions described in Sec. 425.216 (actions prior to termination,
including a warning letter or request for CAP) and Sec. 425.218
(termination). However, we noted that although we proposed to retain
discretion as to whether to impose remedial measures or terminate an
ACO whose assigned beneficiary population falls below 5,000, we
recognized that the requirement that an ACO have at least 5,000
assigned beneficiaries is a condition of eligibility to participate in
the Shared Savings Program under section 1899(b)(2)(D) of the Act, and
would exercise our discretion accordingly and consistently.
Comment: Several commenters commented on our proposal allowing
greater flexibility for ACOs who fall below the 5,000 threshold and the
CAP. Most commenters supported our proposed modifications, and were
supportive of our proposal for CMS to determine the timeframe within
which the CAP must be completed when an ACO drops below the 5,000
beneficiary threshold. A commenter supported the proposal but suggested
that the calculation of the number of assigned beneficiaries fall
``after reconciliation so prospective new members could see actual
results.'' Another commenter supported the proposal for an ACO to avoid
a CAP when an ACO has already submitted a request to add ACO
participants effective at the beginning of the next performance year
and CMS has a reasonable expectation that such addition would increase
the assigned beneficiary population above the 5,000 thresholds.
Response: We agree with the comments received in support of a more
reasonable timeframe for ACOs to correct a situation whereby the
assigned beneficiary population falls below the 5,000 beneficiary
threshold. We also agree with the comments received regarding CMS using
discretion in issuing a CAP when an ACO has already submitted a request
to add ACO participants and CMS has a reasonable expectation that the
additional ACO participants will increase the number of beneficiaries
above the 5,000 thresholds. We believe that the ACO should be given
notification when it falls below 5,000 as soon as possible so that the
ACO can take immediate steps to correct the deficit. Therefore, we do
not agree that it would be better to wait until after reconciliation to
determine the number of beneficiaries assigned to an ACO or to notify
an ACO if it fell below the 5,000 threshold.
Comment: A number of commenters suggested that CMS ensure that ACOs
include sufficient number or types of providers, such as pediatricians
and geriatricians, to care for the number and the needs of children and
elderly managed by the ACO.
Response: As stated in the November 2011 final rule, we do not
believe we should be prescriptive in setting any requirements for the
number, type, and location of the ACO providers/suppliers that are
included in the ACO. Unlike managed care models that require
beneficiaries to receive care from a network of providers,
beneficiaries assigned to an ACO may receive care from providers and
suppliers both inside and outside the ACO. Therefore, we believe that
ACOs should have the flexibility to create an organization and design
their models in a manner they believe will achieve the three-part aim,
and we do not believe it would be useful to announce specific
requirements regarding the number, type, and location of ACO providers/
suppliers that are included in the ACO.
FINAL ACTION: We are finalizing our proposed policies as proposed
related to the requirement that the ACO have at least 5,000 assigned
beneficiaries.
We received no comments on our proposed revisions to Sec.
425.110(a)(2) that the number of assigned beneficiaries would be
calculated for each benchmark year using the assignment methodology set
forth in part 425 subpart E, and in the case of BY3, we will use the
most recent data available with up to a 3 month claims run out to
estimate the number of assigned beneficiaries. We are finalizing these
provisions as proposed.
Given our experience with the program and the timing of performance
year determinations regarding beneficiary assignment provided during
reconciliation, we are modifying our rules to provide greater
flexibility to address situations in which an ACO's assigned
beneficiary population falls below 5,000 assigned beneficiaries.
Therefore, we are finalizing our proposed revision at Sec.
425.110(b)(2) to state that CMS will specify in its request for a CAP
the performance year during which the ACO's assigned population must
meet or exceed 5,000 beneficiaries.
Additionally, we are also finalizing our proposed revisions to
Sec. 425.110(b) which give CMS discretion regarding whether to impose
any remedial measures or to terminate an ACO for
[[Page 32707]]
failure to satisfy the minimum assigned beneficiary threshold. However,
it is important to note that ACOs must have at least 5,000 assigned
beneficiaries as a condition of eligibility to participate in the
Shared Savings Program under section 1899(b)(2)(D) of the Act.
Therefore we will exercise its discretion accordingly and consistently.
3. Identification and Required Reporting of ACO Participants and ACO
Providers/Suppliers
a. Overview
For purposes of the Shared Savings Program, an ACO is an entity
that is identified by a TIN and composed of one or more Medicare-
enrolled TINs associated with ACO participants (see Sec. 425.20). The
Medicare-enrolled TINs of ACO participants, in turn, are associated
with Medicare enrolled individuals and entities that bill through the
TIN of the ACO participant. (For example, in the case of a physician,
the physician has reassigned to the TIN of the ACO participant his or
her right to receive Medicare payments, and their services to Medicare
beneficiaries are billed by the ACO participant under a billing number
assigned to the TIN of the ACO participant).
As part of the application process and annually thereafter, the ACO
must submit a certified list identifying all of its ACO participants
and their Medicare-enrolled TINs (the ``ACO participant list'') (Sec.
425.204(c)(5)(i)). Additionally, for each ACO participant, the ACO must
submit a list identifying all ACO providers/suppliers (including their
NPIs or other provider identifiers) that bill Medicare during the
agreement period under a billing number assigned to the TIN of an ACO
participant (the ``ACO provider/supplier list'') (Sec.
425.204(c)(5)(i)(A)). Our regulations require the ACO to indicate on
the ACO provider/supplier list whether an individual is a primary care
physician as defined at Sec. 425.20. All Medicare enrolled individuals
and entities that bill through an ACO participant's TIN during the
agreement period must be on the certified ACO provider/supplier list
and agree to participate in the ACO. ACOs are required to maintain,
update, and annually furnish the ACO participant and ACO provider/
supplier lists to CMS at the beginning of each performance year and at
such other times as may be specified by CMS (Sec. 425.304(d)).
We use TINs identified on the ACO participant list to identify
claims billed to Medicare in order to support the assignment of
Medicare fee-for-service beneficiaries to the ACO, the implementation
of quality and other reporting requirements, and the determination of
shared savings and losses (see section 1899(b)(2)(E) of the Act). We
also use the ACO's initial (and annually updated) ACO participant list
to: Identify parties subject to the screenings under Sec. 425.304(b);
determine whether the ACO satisfies the requirement to have a minimum
of 5,000 assigned beneficiaries; establish the historical benchmark;
perform financial calculations associated with quarterly and annual
reports; determine preliminary prospective assignment for and during
the performance year; determine a sample of beneficiaries for quality
reporting; and coordinate participation in the Physician Quality
Reporting System (PQRS) under the Shared Savings Program. Both the ACO
participant and ACO provider/supplier lists are used to ensure
compliance with program requirements. We refer readers to our guidance
at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Updating-ACO-Participant-List.html for more
information.
In this section, we discuss current policy and procedures regarding
the identification and required reporting of ACO participants and ACO
providers/suppliers. In addition, we proposed revisions to our
regulations to improve program transparency by ensuring that all ACO
participants and ACO providers/suppliers are accurately identified.
b. Proposed Revisions
In the proposed rule, we stated that in order to administer the
Shared Savings Program, we need to accurately identify the ACO
participants and ACO providers/suppliers associated with each ACO that
participates in the program. An accurate understanding of the ACO
participants is critical for assignment of beneficiaries to the ACO as
well as assessing the quality of care provided by the ACO to its
assigned beneficiaries. An accurate understanding of the ACO providers/
suppliers is also critical for ensuring compliance with program rules.
We explained our belief that this information is equally critical to
the ACO for its own operational and compliance purposes. Thus, both CMS
and the ACO need to have a common understanding of the individuals and
entities that comprise the ACO participants and ACO providers/
suppliers. We obtain this common understanding by requiring the ACO to
certify the accuracy of its ACO participant and ACO provider/supplier
lists prior to the start of each performance year and to update the
lists as changes occur during the performance year. Because we rely on
these lists for both operational and program integrity purposes, we
must have a transparent process that results in the accurate
identification of all ACO participants and ACO providers/suppliers that
compose each ACO in the Shared Savings Program.
We proposed to add a new Sec. 425.118 to reflect with more
specificity the requirements for submitting ACO participant and ACO
provider/supplier lists and the reporting of changes to those lists. In
addition, we proposed to revise Sec. 425.204(c)(5) and to remove Sec.
425.214(a) and Sec. 425.304(d) because these provisions are addressed
in new Sec. 425.118.
(1) Certified Lists of ACO Participants and ACO Providers/Suppliers
In the proposed rule, we stated that we intended to continue to
require ACOs to maintain, update and submit to CMS accurate and
complete ACO participant and ACO provider/supplier lists, but we
proposed to establish new Sec. 425.118 to set forth the requirements
and processes for maintaining, updating, and submitting the required
ACO participant and ACO provider/supplier lists. New Sec. 425.118
would consolidate and revise provisions at Sec. 425.204(c)(5), Sec.
425.214(a) and Sec. 425.304(d) regarding the ACO participant and ACO
provider/supplier lists. Specifically, we proposed at Sec. 425.118(a)
that prior to the start of the agreement period and before each
performance year thereafter, the ACO must provide CMS with a complete
and certified list of its ACO participants and their Medicare-enrolled
TINs. We would use this ACO participant list to identify the Medicare-
enrolled individuals and entities that are affiliated with the ACO
participant's TIN in PECOS, the CMS enrollment system. We proposed that
all individuals and entities currently billing through the Medicare
enrolled TIN identified by the ACO as an ACO participant, must be
included on the ACO provider/supplier list. We would provide the ACO
with a list of all ACO providers/suppliers (NPIs) that we have
identified in PECOS as associated with each ACO participant's Medicare-
enrolled TIN. In accordance with Sec. 425.118(a), the ACO would be
required to review the list, make any necessary corrections, and
certify the lists of all of its ACO participants and ACO providers/
suppliers (including their TINs and NPIs) as true, accurate, and
complete. In addition, we proposed that an ACO must submit certified
ACO participant and ACO provider/supplier
[[Page 32708]]
lists at any time upon CMS request. We noted that all NPIs that
reassign their right to receive Medicare payment to an ACO participant
must be on the certified list of ACO providers/suppliers and must agree
to be ACO providers/suppliers. We proposed to clarify this point in
regulations text at Sec. 425.118(a)(4).
Finally, in accordance with developing and certifying the ACO
participant and provider/supplier lists, we proposed at Sec.
425.118(d) to require the ACO to report changes in ACO participant and
ACO provider/supplier enrollment status in PECOS within 30 days after
such changes have occurred (for example, to report changes in an ACO
provider's/supplier's reassignment of the right to receive Medicare
payment or revocation of billing rights). This requirement would
correspond with our longstanding policy that requires enrolled
providers and suppliers to notify their Medicare Administrative
Contractors through PECOS within specified timeframes for certain
reportable events. We recognized that PECOS is generally not accessible
to ACOs to make these changes directly because most ACOs are not
enrolled in Medicare. Therefore, we stated that an ACO may satisfy the
requirement to update PECOS throughout the performance year by
requiring its ACO participants to submit the required information
directly in PECOS within 30 days after the change, provided that the
ACO participant actually submits the required information within 30
days. We proposed to require ACOs to include language in their ACO
participant agreements (discussed in section II.B.1. of this final
rule) to ensure compliance with this requirement. We did not propose to
change the current 30-day timeframe required for such reporting in
PECOS. These changes would be consistent with the current requirements
regarding ACO participant and ACO provider/supplier list updates under
Sec. 425.304(d), and we explained our belief that they would enhance
transparency and accuracy within the Shared Savings Program. We further
proposed to remove Sec. 425.304(d) because the requirements, although
not modified, would be incorporated into new Sec. 425.118(d).
In the proposed rule, we stated this revised process should afford
the ACO the opportunity to work with its ACO participants to identify
its ACO providers/suppliers and to ensure compliance with Shared
Savings Program requirements. We also noted that currently, we also
require the ACO to indicate whether the ACO provider/supplier is a
primary care physician as defined in Sec. 425.20. Because this
information is derived from the claims submitted under the ACO
participant's TINs (FQHCs and RHCs being the exception), we stated we
found this rule unnecessary to implement the program, so we proposed to
remove this requirement, which currently appears in Sec.
425.204(c)(5)(i)(A).
Comment: A few commenters commented on our proposals to establish
new Sec. 425.118 to set forth requirements and processes for
maintaining, updating, and submitting the required ACO participant and
ACO provider/supplier lists. Several commenters agreed with our
proposals. A commenter specifically agreed with the proposal but
encouraged CMS to consider an extension or transition of the period in
which ACOs are required to update their lists, noting that many
commercial arrangements permit up to 6 months for ACOs to report
relevant changes. A commenter supported the proposal that ACOs must
comply with a CMS request for these certified lists contingent that CMS
provides a reasonable timeframe in which to comply with such a request.
A commenter specifically encouraged CMS to consider an extension or
transition of the period in which ACOs are required to update their
provider lists. Another commenter stated that CMS should provide ACOs
with specific guidance on the process to submit, update, and maintain
lists of ACO participants and ACO providers/suppliers as soon as
possible to minimize the burden of notification.
Response: The certification of a complete list of ACO participants
and their Medicare-enrolled TINs is imperative to ensuring appropriate
assignment and ultimately reconciliation for all ACOs. It is important
that ACOs take responsibility for maintaining and have the ability to
produce these certified ACO participant and ACO provider/supplier lists
at any time upon CMS request. We continue to refine the ACO Participant
list change process and will inform ACOs about changes to the
submission and review process during each performance year. Detailed
guidance on this process can be found at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Updating-ACO-Participant-List.html. As noted in the guidance, ACOs have several
opportunities during the year to make changes that become effective for
the next performance year. We therefore believe the timeframe is
reasonable for notifying CMS of changes to the list. Furthermore, it is
important that ACOs make such changes by the deadline specified by CMS
so that operations such as beneficiary assignment and benchmarking can
be completed and communicated to ACOs prior to the next performance
year. Therefore, it is not possible to grant an ``extension'' or
``transition'' for this due date, unless ACOs are willing to receive
benchmarking and assignment information well after the performance year
has begun. It is our experience that ACOs prefer to have as much
information in advance of a performance year as possible, and so for
this reason, we must strictly enforce the due date for changes to the
ACO provider list. We believe the deadlines for final notification of
changes and certification of the ACO participant list are reasonable
because they balance stakeholder desire to notify us as late as
possible in the year with stakeholder desire to have beneficiary
assignment and benchmarks calculated prior to the next performance
year. A longer time period would require either earlier notification of
changes or delay information for the next performance year.
Comment: Many commenters supported our proposal to remove the
requirement (except for FQHCs and RHCs) to indicate whether an ACO
provider/supplier is a primary care physician as defined at Sec.
425.20. Several commenters agreed with our proposal to require the ACO
to report changes in ACO participant and ACO provider/suppliers
enrollment status in PECOS within 30 days after changes have occurred
and to include this requirement in their ACO participant agreements to
ensure compliance. A few commenters suggested that CMS incorporate a
more reasonable timeframe by which the ACO participants and providers/
suppliers must be submitted into PECOS. A commenter requested that CMS
provide ACOs with specific guidance on this process as soon as possible
and seek to minimize the burden associated with this notification
requirement while another comment suggested that an ACO may not be
notified and be able to in turn notify CMS of these changes within this
same 30-day time period. The time period for the separate notification
by the ACO of changes made in the PECOS system by ACO participants and
ACO provider/suppliers should be modified to be ``within 30 days of ACO
learning of such changes from an ACO Participant. Comments received
agreed with our proposal that requires ACOs to include language in
their ACO participant agreements (discussed in section II.B.1.
[[Page 32709]]
of this final rule) to ensure compliance with this requirement.
Response: Transparency and accuracy of the list of ACO participants
and ACO providers/suppliers is of the highest importance to the success
and integrity of the program. As previously described, it is our
longstanding policy to require any changes to an ACO's participants or
providers/suppliers be updated in PECOS within 30 days of such
addition. This aligns with the Medicare requirement that requires
enrolled providers and suppliers to notify their Medicare
Administrative Contractors through PECOS within specified timeframes
for certain reportable events. ACO participants and ACO providers/
suppliers must make these changes; the ACO cannot make the changes
directly in PECOS. However, the proposal to require ACOs to include
language in their ACO participant agreements (discussed in section
II.B.1. of this final rule) to comply with this requirement will
strengthen the ACO's ability to educate and direct their ACO
participants and ACO providers/suppliers to adhere to this Medicare
requirement.
FINAL ACTION: We are finalizing policies as proposed at Sec.
425.118 to set forth the requirements and processes for maintaining,
updating, and submitting the required ACO participant and ACO provider/
supplier lists.
Specifically, we are finalizing Sec. 425.118(a) that prior to the
start of the agreement period and before each performance year
thereafter, the ACO must provide CMS with a complete and certified list
of its ACO participants and their Medicare-enrolled TINs. All
individuals and entities currently billing through the Medicare
enrolled TIN identified by the ACO as an ACO participant, must be
included on the ACO provider/supplier list. We would provide the ACO
with a list of all ACO providers/suppliers (NPIs) that we have
identified in PECOS as associated with each ACO participant's Medicare-
enrolled TIN. In accordance with Sec. 425.118(a), the ACO would be
required to review the list, make any necessary corrections, and
certify the lists of all of its ACO participants and ACO providers/
suppliers (including their TINs and NPIs) as true, accurate, and
complete. In addition, we are also finalizing our proposal at Sec.
425.118 that an ACO must submit certified ACO participant and ACO
provider/supplier lists at any time upon CMS request. These changes are
consistent with the current requirements regarding ACO participant and
ACO provider/supplier list updates under Sec. 425.304(d) which will be
incorporated into new Sec. 425.118(d).
We are also finalizing our proposals at Sec. 425.118(d) to require
the ACO to report changes in ACO participant and ACO provider/supplier
enrollment status in PECOS within 30 days after such changes have
occurred (for example, to report changes in an ACO provider's/
supplier's reassignment of the right to receive Medicare payment or
revocation of billing rights). This requirement aligns with our
longstanding policy that requires enrolled providers and suppliers to
notify their Medicare Administrative Contractors through PECOS within
specified timeframes for certain reportable events. Therefore, the ACO
participant and ACO providers/suppliers must make this change within 30
days, not the ACO itself. However, the ACO is responsible for ensuring
the ACO participant or ACO providers/suppliers make the change within
the required 30 day time period. We are finalizing our policy to
require ACOs to include language in their ACO participant agreements
(discussed in section II.B.1. of this final rule) to improve the
ability of the ACO to ensure compliance with this requirement.
Finally, we are finalizing the proposal to remove the requirement
which currently appears in Sec. 425.204(c)(5)(i)(A) that the ACO
indicate primary care physicians on its application to the program.
(2) Managing Changes to ACO Participants
Except for rare instances, such as the cessation of ACO participant
operations or exclusion from the Medicare program, we expect ACO
participants to remain in the ACO for the entire 3-year agreement
period. We believe that care coordination and quality improvement
require the commitment of ACO participants. Moreover, as noted
previously, we utilize the ACO participant list, among other things,
for assigning beneficiaries to the ACO, determining the ACO's benchmark
and performance year expenditures, and drawing the sample for ACO
quality reporting. We understand that there are legitimate reasons why
an ACO may need to update its list of ACO participants during the 3-
year agreement period. Thus, under current Sec. 425.214(a), an ACO may
add or remove ACO participants (identified by TINs) throughout a
performance year, provided that it notifies CMS within 30 days of such
addition or removal.
If such changes occur, we may, at our discretion, adjust the ACO's
benchmark, risk scores, and preliminary prospective assignment (Sec.
425.214(a)(3)). We articulated the timing of these changes in our
guidance (http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Updating-ACO-Participant-List.html), which states
that we adjust the ACO's historical benchmark at the start of a
performance year if the ACO participant list that the ACO certified at
the start of that performance year differs from the one it certified at
the start of the prior performance year. We use the updated certified
ACO participant list to assign beneficiaries to the ACO in the
benchmark period (the 3 years prior to the start of the ACO's agreement
period) in order to determine the ACO's adjusted historical benchmark.
Our guidance provides that, as a result of changes to the ACO's
certified ACO participant list, we may adjust the historical benchmark
upward or downward. We use the new annually certified list of ACO
participants and the adjusted benchmark for the following program
operations: The new performance year's assignment; quality measurement
and sampling; reports for the new performance year; and financial
reconciliation. We provide ACOs with the adjusted Historical Benchmark
Report reflecting these changes.
However, our guidance stated that absent unusual circumstances,
changes in ACO participants that occur in the middle of a performance
year will not result in midyear changes to assignment, sampling for
quality reporting, financial reconciliation, or other matters.
As indicated in our guidance, the midyear removal of an entity from
the ACO participant list due to program integrity issues is one unusual
circumstance that could result in midyear changes to assignment and
other matters. Finally, our guidance states that we do not make
adjustments upon Medicare payment changes such as wage-index
adjustments, or the addition or deletion of ACO participants during the
course of the performance year made by the ACO and ACO participants.
We proposed to add new provisions at Sec. 425.118(b) to address
the procedures for adding and removing ACO participants during the
agreement period. These proposals would revise the regulations to
incorporate some of the important policies that we have implemented
through our operational guidance as well as some additional proposals
to ease the administrative burden generated by the magnitude of changes
made to ACO participant lists to date.
[[Page 32710]]
We proposed under Sec. 425.118(b)(1) that an ACO must submit a
request to add a new entity to its ACO participant list in the form and
manner specified by CMS and that CMS must approve additions to the ACO
participant list before they can become effective. We stated our belief
that ACO participants should be admitted into the program if, for
example, the screening conducted under Sec. 425.304(b) reveals that
the entity has a history of program integrity issues, or if the ACO
participant agreement with the entity does not comply with program
requirements, or if the entity is participating in another Medicare
shared savings initiative (Sec. 425.114). If CMS denies the request to
add an entity to the ACO participant list, then the entity would not be
eligible to participate in the ACO for the upcoming performance year.
We proposed that, if CMS approves the request, the entity would be
added to the ACO participant list at the beginning of the following
performance year. That is, entities that are approved for addition to
the ACO participant list would not become ACO participants, and their
claims would not be considered for purposes of benchmarking, assignment
and other operational purposes, until the beginning of the next
performance year. For example, if an ACO notifies CMS of the addition
of an entity in June of the second performance year (PY2), the entity
would not become an ACO participant and its claims would not be
included in program operations until January 1 of PY3 if CMS approves
the entity's addition.
We proposed that an ACO must notify CMS no later than 30 days after
the date of termination of the entity's ACO participant agreement,
although the ACO may notify CMS in advance of such termination. We
proposed that the ACO must submit the notice of removal, which must
include the date of termination, in the form and manner specified by
CMS. We proposed that the removal of the ACO participant from the ACO
participant list would be effective on the date of termination of the
ACO participant agreement.
We proposed at Sec. 425.118(b)(3)(i) that changes made by an ACO
to its annually certified ACO participant list would result in
adjustments to its historical benchmark, assignment, quality reporting
sample, and the obligation of the ACO to report on behalf of eligible
professionals for certain CMS quality initiatives. We would annually
adjust the ACO's benchmark calculations to include (or exclude) the
claims submitted during the benchmark years by the newly added (or
removed) ACO participants. In other words, the annually certified ACO
participant list would be used for purposes of subparts E (assignment
of beneficiaries), F (quality performance assessment), and G
(calculation of shared savings/losses) for the performance year. For
example, if an ACO began program participation in 2013, the PY1
certified list would be used to generate an historical benchmark
calculated from claims submitted by the TINs on the PY1 certified list
during CY 2010, 2011, and 2012. If the ACO adds ACO participants during
2013 and certifies an updated list for PY2 reflecting those additions,
we would adjust the historical benchmark to accommodate those changes
by recalculating the benchmark using the claims submitted by the PY2
list of certified ACO participants during the ACO's same benchmark
years (CYs 2010, 2011, and 2012). In this way, the ACO's benchmark
would continue to be based on the same 3 years prior to the start of
the ACO's agreement, but our proposal would ensure that the changes in
ACO composition and performance year calculations retain a consistent
comparison between benchmark and performance during the agreement
period.
As noted previously, adjustment to the ACO's historical benchmark
as a result of changes to the ACO's certified ACO participant list may
move the benchmark upward or downward. We would use the annual
certified ACO participant list and the adjusted benchmark for the new
performance year's beneficiary assignment, quality measurement and
other operations that are dependent on the ACO participant list as
outlined in our guidance. We would provide ACOs with an adjusted
Historical Benchmark Report that reflects the new certified ACO
participant list. We proposed to add this requirement at Sec.
425.118(b)(3).
We proposed at Sec. 425.118(b)(3)(ii) to codify the policy we
established in guidance that, absent unusual circumstances, the removal
of an ACO participant from the ACO participant list during the
performance year must not affect certain program calculations for the
remainder of the performance year in which the removal becomes
effective. Namely, the removal of an entity from the ACO participant
list during the performance year would not affect the ACO's beneficiary
assignment or, by extension, such program operations as the calculation
of the ACO's historical benchmark, financial calculations for quarterly
and annual reporting, the sample of beneficiaries for quality
reporting, or the obligation of the ACO to report on behalf of eligible
professionals for certain quality initiatives. In other words, absent
unusual circumstances, CMS would use only the ACO participant list that
is certified at the beginning of a performance year to assign
beneficiaries to the ACO under subpart E and to determine the ACO's
quality and financial performance for that performance year under
subparts F and G. We gave examples of unusual circumstances that might
justify midyear changes, including the midyear removal of an ACO
participant due to evidence of avoidance of at-risk beneficiaries or
other program integrity issues.
For example, if an ACO participant is on the ACO's certified list
of ACO participants for the second performance year, and the ACO timely
notifies CMS of the termination of the entity's ACO participant
agreement effective June 30th of PY2, the ACO participant would be
removed from the ACO participant list effective June 30th of PY2.
However, the former ACO participant's TIN would still be used for
purposes of calculating the quality reporting requirements, financial
reports, benchmarking, assignment and reporting of PQRS, meaningful use
of EHR, and the value-based modifier. The ACO participant list that was
certified at the start of the performance year governs the assessment
of the ACO's financial and quality performance for that year,
regardless of changes to the list during the performance year. We
explained our belief that this is necessary to help create some
stability in the assessment of the ACO's quality and financial
performance for each performance year. If CMS had to modify underlying
program operations each time an ACO added or removed a TIN from its
list of ACO participants, the ACO would not be able to rely on
information (such as the calculation of the historical benchmark) that
we provide before the beginning of the performance year.
We stated our belief that it is important for ACOs to communicate
effectively with ACO participants that seek to join an ACO so that they
understand the potential impact to the ACO, the ACO participant, and
the ACO providers/suppliers affiliated with the ACO participant when an
ACO participant leaves during a performance year. For example, it is
likely that the ACO would be required to report quality data for
beneficiaries that were seen by the former ACO participant in the
previous 12 months. The ACO must work with the former ACO participant
to obtain the necessary quality reporting data. Additionally, the ACO
participant would not be able to qualify for PQRS
[[Page 32711]]
incentive payment or avoid the PQRS payment adjustment separately from
the ACO for that performance year. Therefore, we stated that it is in
the best interest of both parties to understand this in advance and to
commit to working together to fulfill the obligations for the
performance year. To assist ACO and ACO participants, we proposed
criteria for ACO participant agreements addressing this issue (see
section II.B.1. of this final rule).
Comment: Many commenters supported our proposals related to adding
and removing an ACO participant TIN midyear and having these added TINs
become effective for the benchmark, assignment, and other operational
processes on January 1 of the following year of the agreement period. A
few commenters encouraged CMS to allow participant TINs to be added at
any point in the agreement period and to be automatically reflected in
a ACOs benchmarking and assignment. A few commenters recommended that
CMS only alter the ACO's benchmark, risk score, and assignment if there
is a substantial change to the ACO participant list. Others commenters
supported the proposal to limit removal of ACO participants to once a
year, except in the event of a compliance issue or business failure.
Response: As noted, these proposals are consistent with current
operational guidance. Given the high number of requests for
modification to ACO participant lists, we believe these policies are
necessary to create stability in the assessment of ACOs. It is not
feasible to modify underlying program operations each time an ACO adds
or removes a TIN from its list of ACO participants. If we were to do
this, the ACO would have unwanted midyear fluctuations in the
preliminary prospectively assigned beneficiary population, benchmark,
and quality sample. Given that we are finalizing other proposed changes
in other sections of this rule in response to ACO requests for
stability in operations, permitting midyear changes in TINs that affect
operations during the performance year would be counterproductive.
However, not making such modifications at the beginning of each
performance year to account for changes to the ACO participant list
could create disparities between the benchmark and performance year
financial calculations, either disproportionately advantaging or
disadvantaging the ACO. Additionally, because there is no uniformity in
the number of ACO providers/suppliers that bill through the TIN of an
ACO participant, we will not adjust benchmarks to account only for
substantial changes to the ACO participant list. Therefore, we are
finalizing our proposal to update the ACO's assignment and benchmark at
the start of each new performance year to reflect modifications that
the ACO makes to its certified list of ACO participants. We believe
this policy is both fair and reduces the opportunity for gaming.
Comment: A commenter noted that the requirement for ACO
participants that are removed during a performance year to continue to
assist the ACO with quality reporting, sometimes months after leaving
the ACO, can create problems for ACO quality data collection.
Response: As previously discussed, we believe it is important for
ACOs to transparently communicate expectations to prospective ACO
participants and that both the ACO and its ACO participants make a
commitment to the 3-year agreement. In this way, there will be no
misunderstandings regarding required close-out procedures, including
required quality reporting. To assist the ACO in this regard, we are
finalizing certain requirements for ACO participant agreements as
discussed in section II.B.1 of this final rule, including the
obligation of the ACO participant and ACO to complete close-out
procedures which include quality reporting requirements.
Comment: Some commenters requested that ACOs be allowed to add
participants any time during a performance year up until November 30th
while others objected to having to certify ACO participant lists prior
to January 1 of the next performance year. Another commenter, disagreed
with the requirement that an ACO participant TIN be screened and
approved for participation by CMS before being added to the ACO
participant list, stating this adds burden for the ACO.
Response: Timelines for final submission of changes to the ACO
participant list at the end of a performance year are established in
order to properly screen, obtain certified lists for the new
performance year, and determine new benchmarks and assignments for the
new performance year. Delaying these timelines would result in delays
of issuance of new performance year information for the ACO. We will
continue to evaluate this issue and our timelines to ensure the best
balance between the timing of end of year changes and creation of
information for the ACO's next performance year. Finally, to protect
the integrity of the Shared Savings Program, we must screen all ACO
participant TINs that are added during a performance year without
exception. Such screening takes time, although it is done as quickly as
possible, but we do not agree that this necessity imposes undue burden
for ACOs.
FINAL ACTION: We are finalizing our proposals at Sec. 425.118(b)
related to changes in the ACO participant list. Specifically, we are
finalizing our proposal under Sec. 425.118(b)(1) that an ACO must
submit a request to add a new entity to its ACO participant list in the
form and manner specified by CMS and that CMS must approve additions to
the ACO participant list before they can become effective on January 1
of the following performance year. We are also finalizing our proposal
at Sec. 425.118(b)(2) that an ACO must notify CMS no later than 30
days after the termination of an ACO participant agreement and that the
notice must be submitted in the form and manner specified by CMS and
must include the date of the termination date of the ACO participant
agreement. The entity will be deleted from the ACO participant list as
of the termination date of the ACO participant agreement. Finally, we
are finalizing our proposal at Sec. 425.118(b)(3)(i) that any changes
made by an ACO to its annually certified ACO participant list would
result in adjustments to its historical benchmark, assignment, quality
reporting sample, and the obligation of the ACO to report on behalf of
eligible professionals for certain CMS quality initiatives.
Additionally, absent any public comment and for the reasons noted in
the proposed rule, we are finalizing our proposal at Sec.
425.118(b)(3)(ii) to codify the policy we established in guidance that,
absent unusual circumstances, the removal of an ACO participant from
the ACO participant list during the performance year must not affect
certain program calculations for the remainder of the performance year
in which the removal becomes effective. However, we are making a minor
revision to the text of the provisions at both Sec. 425.118(b)(3)(i)
and Sec. 425.118(b)(3)(ii) to replace the references to ACO providers/
suppliers with a reference to ``eligible professionals that bill under
the TIN of an ACO participant.'' We believe this change is necessary to
clarify that the requirement that the ACO report on behalf of these
eligible professionals applies even if they are not included on the ACO
provider/supplier list. For example, an ACO must still report quality
data for services billed under the TIN of an ACO participant by an
eligible professional that was an ACO provider/
[[Page 32712]]
supplier for a portion of the performance year but was removed from the
ACO provider/supplier list midyear when he or she started a new job and
ceased billing under the TIN of the ACO participant.
(3) Managing Changes to ACO Providers/Suppliers
We recognize that ACO providers/suppliers may terminate their
affiliation with an ACO participant or affiliate with new or additional
Medicare-enrolled TINs (which may or may not be ACO participants) on a
frequent basis. Thus, the annual certified ACO provider/supplier list
may quickly become outdated. In order to ensure that CMS and the ACO
have a common understanding of which NPIs are part of the ACO at any
particular point in time, our regulations at Sec. 425.214 set forth
requirements for managing changes to the ACO during the term of the
participation agreement. Specifically, Sec. Sec. 425.214(a)(2) and
425.304(d)(2) require an ACO to notify CMS within 30 days of the
addition or removal of an ACO provider/supplier from the ACO provider/
supplier list.
We proposed new Sec. 425.118(c) on how to report changes to the
ACO provider/supplier list that occur during the performance year.
Under proposed Sec. 425.118(c), ACOs would continue to be required to
report these changes within 30 days. As discussed later in this
section, we would require the ACO to ensure that changes in ACO
participant and ACO provider/supplier enrollment status are reported in
PECOS. However, because the lists of ACO providers/suppliers cannot be
maintained in PECOS, we proposed to require ACOs to notify CMS' Shared
Savings Program separately, in the form and manner specified by CMS, of
the addition or removal of an ACO provider/supplier. In the proposed
rule, we stated our expectation that ACOs would be required to send
such notifications via electronic mail and that specific guidance
regarding this notification process would be provided by the Secretary
on the CMS Web site and through the ACO intranet portal or both.
We proposed that an ACO may add an individual or entity to the ACO
provider/supplier list if it notifies CMS within 30 days after the
individual or entity became a Medicare-enrolled provider or supplier
that bills for items and services it furnishes to Medicare fee-for-
service beneficiaries under a billing number assigned to the TIN of an
ACO participant. We proposed that if the ACO provided such notice by
the 30-day deadline, the addition of an ACO provider/supplier would be
effective on the date specified in the notice furnished to CMS but no
earlier than 30 days before the date of notice. If the ACO failed to
provide timely notice to CMS regarding the addition of an individual or
entity to the ACO provider/supplier list, then the addition would
become effective on the date CMS receives notice from the ACO. However,
we noted that when an individual has begun billing through the TIN of
an ACO participant but is not on the ACO provider/supplier list, the
individual would satisfy the definition of ``ACO professional,'' in
which case his or her claims for services furnished to Medicare fee-
for-service beneficiaries would be considered for assignment and other
operational purposes previously described.
Each potential ACO provider/supplier that reassigns his or her
billing rights under the TIN of an ACO participant is screened by CMS
through the enrollment process and PECOS system. Additionally, the
Shared Savings Program conducts additional screening on a biannual
basis for each ACO provider/supplier through the CMS Fraud Prevention
System. In spite of this, we stated our concern that the proposed
effective date for the addition of an individual or entity to the ACO
provider/supplier list would prevent us from conducting a robust
program integrity screening of such individuals and entities.
Therefore, we considered whether to delay the effective date of any
additions to the ACO provider/supplier list until after we have
completed a program integrity screening of the individuals or entities
that the ACO wishes to add to the list. For example, we considered
whether to delay the effective date of additions to the ACO provider/
supplier list until the start of the next performance year, similar to
the timing for adding TINs of ACO participants to the list of ACO
participants. In this way, a complete yearly screening, including
screening for program integrity issues, could occur at one time for
both the ACO participant list and the ACO provider/supplier list. As
previously noted, until the individual or entity has been officially
designated as an ACO provider/supplier, that individual or entity would
be an ACO professional because of its billing relationship with the ACO
participant. Thus, any claims billed by the ACO professional through
the TIN of the ACO participant would be used for assignment and related
activities during the performance year in which the change takes place,
regardless of whether the individual or entity subsequently becomes an
ACO provider/supplier. We sought comment on this proposal.
We proposed to remove an ACO provider/supplier from the ACO
provider/supplier list, an ACO must notify CMS no later than 30 days
after the individual or entity ceases to be a Medicare-enrolled
provider or supplier that bills for items and services it furnishes to
Medicare fee-for-service beneficiaries under a billing number assigned
to the TIN of an ACO participant. The individual or entity would be
removed from the ACO provider/supplier list effective as of the date
the individual or entity terminates its affiliation with the ACO
participant.
Comment: A few commenters commented on our proposed addition at
Sec. 425.118(c) regarding requirements for changes to the ACO
provider/supplier list and were in agreement with our proposals. A
commenter expressed concern about the time frames, specifically having
to receive notification from the ACO provider/supplier and then
notifying CMS within the required 30 days of such a change. In
addition, this commenter suggested the regulations be modified to
require notification to CMS within 30 days of notification to the ACO
by the ACO participant.
Response: We appreciate the support for these proposals and will
finalize them as proposed. We believe the requirement for an ACO to
notify CMS within 30 days of a change is appropriate because it is
consistent with PECOS enrollment requirements and current program
rules. We note that if the ACO provider/supplier is not formally added
to the ACO's list of ACO providers/suppliers, the individual billing
through the TIN of an ACO participant would be an ACO professional and
as such, his or her claims would be included in operations related to
such things as beneficiary assignment during the performance year in
which the entity begins billing. However, the ACO must develop internal
processes to identify such entities to comply with program rules.
FINAL ACTION: We are finalizing our proposals at Sec. 425.118(c)
as proposed for managing changes to ACO providers/suppliers.
Specifically, we are finalizing our proposal that an ACO must
notify CMS within 30 days after the individual or entity becomes a
Medicare-enrolled provider or supplier that bills for items and
services it furnishes to Medicare fee-for-service beneficiaries under a
billing number assigned to the TIN of an ACO participant. The addition
of an ACO provider/supplier would be
[[Page 32713]]
effective on the date specified in the notice furnished to CMS but no
earlier than 30 days before the date of notice. Additionally, we are
finalizing our proposal that an ACO must notify CMS no later than 30
days after the individual or entity ceases to be a Medicare-enrolled
provider or supplier that bills for items and services it furnishes to
Medicare fee-for-service beneficiaries under a billing number assigned
to the TIN of an ACO participant. The removal of an individual or
entity from the ACO provider/supplier list is effective as of the date
the individual or entity ceases to be a Medicare-enrolled provider or
supplier that bills for items and services furnished to Medicare fee-
for-service beneficiaries under a billing number assigned to the TIN of
the an ACO participant. Notices must be submitted in the form and
manner specified by CMS.
(4) Update of Medicare Enrollment Information
We proposed at Sec. 425.118(d) to require the ACO to ensure that
changes in ACO participant and ACO provider/supplier enrollment status
are reported in PECOS consistent with Sec. 424.516 (for example,
changes in an ACO provider's/supplier's reassignment of the right to
receive Medicare payment or revocation of billing rights). As
previously discussed in detail, this proposed requirement would
correspond with our longstanding policy that requires enrolled
providers and suppliers to notify their Medicare Administrative
Contractors through PECOS within specified timeframes for certain
reportable events.
Comment: A commenter requested that we not finalize the proposed
requirement because ACOs cannot ensure that third parties will report
changes in PECOS and ACOs do not have the legal authority to enforce
this requirement. Another commenter suggested that CMS provide ACOs
with specific guidance on this process as soon as possible to minimize
burden associated with the notification requirement.
Response: We believe it is important that the ACO ensure that
changes in ACO participant and ACO provider/supplier enrollment status
are reported in PECOS consistent with current Medicare rules at Sec.
424.516. This requirement ensures that both the ACO and CMS have a
complete and accurate understanding of precisely which individuals and
entities are treating Medicare beneficiaries in the Shared Savings
Program and are therefore subject to the requirements of part 425.
Under new Sec. 425.116, ACO participant and ACO provider/supplier
agreements must require the ACO participant and ACO provider/supplier
to update enrollment information in a timely manner and to notify the
ACO of such changes within 30 days. Thus, through its agreements with
ACO participants and ACO providers/suppliers, ACOs will have the
ability to require timely reporting of enrollment changes and to
enforce this requirement.
FINAL ACTION: We are finalizing our proposal at Sec. 425.118(d) to
require the ACO to ensure that changes in ACO participant and ACO
provider/supplier enrollment status are reported in PECOS consistent
with Sec. 424.516 (for example, changes in an ACO provider's/
supplier's reassignment of the right to receive Medicare payment or
revocation of billing rights).
4. Significant Changes to an ACO
a. Overview
Section 425.214(b) requires an ACO to notify CMS within 30 days of
any significant change. A significant change occurs when an ACO is no
longer able to meet the Shared Savings Program eligibility or program
requirements (Sec. 425.214(b)). Upon receiving an ACO's notice of a
significant change, CMS reviews the ACO's eligibility to continue
participating in the Shared Savings Program and, if necessary, may
terminate the ACO's participation agreement (Sec. 425.214 (c)). In
addition, Sec. 425.214(c)(2) provides that CMS may determine that a
significant change has caused the ACO's structure to be so different
from what was approved in the ACO's initial application that it is no
longer able to meet the eligibility or program requirements. Under such
circumstances, CMS would terminate the ACO's participation agreement,
and permit the ACO to submit a new application for program
participation. In the November 2011 final rule (76 FR 67840), we noted
that changes to an ACO participant list could constitute a significant
change to an ACO if, for example, the removal of a large primary care
practice from the list of ACO participants caused the number of
assigned beneficiaries to fall below 5,000.
b. Proposed Revisions
In light of changes proposed in the section II.B.3. of this final
rule, we proposed to redesignate Sec. 425.214(b) and (c) as Sec.
425.214(a) and (b). Second, we proposed to describe when certain
changes to the ACO constitute a significant change to the ACO. We
believe that a change in ownership of an ACO or the addition or
deletion of ACO participants could affect an ACO's compliance with the
governance requirements in Sec. 425.106 or other eligibility
requirements. We noted that some changes to the ACO participant list
may be of such a magnitude that the ACO is no longer the same entity as
when it was originally approved for program participation. In addition,
depending on the nature of the change in ownership, the ACO would need
to execute a new participation agreement with CMS if the existing
participation agreement is no longer with the correct legal entity. We
stated that such changes would constitute significant changes and
should be subject to the actions outlined under Sec. 425.214(b).
Therefore, we proposed to specify at Sec. 425.214(a) that a
significant change occurs when the ACO is no longer able to meet the
eligibility or other requirements of the Shared Savings Program, or
when the number or identity of ACO participants included on the ACO
participant list, as updated in accordance with Sec. 425.118, changes
by 50 percent or more during an agreement period. For example, in the
case of an ACO whose initial certified ACO participant list contained
10 ACO participants, five of which gradually left the ACO and either
were not replaced or were replaced with five different ACO
participants, the ACO would have undergone a significant change because
the number or identity of its ACO participants changed by 50 percent.
Similarly, if an ACO's initial certified ACO participant list contains
20 ACO participants, and the ACO incrementally adds 10 new ACO
participants for a total of 30 ACO participants, it would have
undergone a significant change with the addition of the 10th new ACO
participant.
Upon notice from an ACO that experienced a significant change, we
would evaluate the ACO's eligibility to continue participating in the
Shared Savings Program and make one of the determinations listed in the
provision we proposed to redesignate as Sec. 425.214(b). We may
request additional information to determine whether and under what
terms the ACO may continue in the program. We noted that a
determination that a significant change has occurred would not
necessarily result in the termination of the ACO's participation
agreement. We proposed to modify Sec. 425.214 to provide that an ACO's
failure to notify CMS of a significant change must not preclude CMS
from determining that the ACO has experienced a significant change.
In addition, we sought comment on whether we should consider
amending our regulations to clarify that the ACO
[[Page 32714]]
must provide notice of a significant change prior to the occurrence of
the significant change. We believe some significant changes could
require a longer notice period, particularly in the case of a change of
ownership that causes the ACO to be unable to comply with program
requirements. Therefore, we sought comment on whether ACOs should be
required to provide 45 or 60 days' advance notice of a significant
change. We also sought comment on what changes in the ACO participant
list should constitute a significant change.
Comment: Many commenters agreed with our proposals which specify at
Sec. 425.214(a) that a significant change occurs when the ACO is no
longer able to meet the eligibility or other requirements of the Shared
Savings Program, or when the number or identity of ACO participants
included on the ACO participant list, as updated in accordance with
Sec. 425.118, changes by 50 percent or more during an agreement
period. However, we received several comments from stakeholders that
opposed or questioned how a change in ACO participant TINs might
represent a significant change. Several commenters stated that a simple
50 percent threshold does not necessarily identify a major change and
recommended that CMS take into consideration that a 50 percent change
for a small ACO could be the turnover a very small number of TINs.
Commenters suggested an alternative approach that looks at a percentage
change in ACO providers/suppliers or assigned beneficiaries as opposed
to changes in ACO participant TINs. A commenter noted that changes in
ACO participant TINs should not be confused with the ability of the ACO
to meet eligibility requirements.
Response: At the inception of the program, we did not anticipate
that ACOs would make changes to ACO participant TINs to the extent they
have because program rules require the ACO and its ACO participants to
make a commitment to the 3-year participation agreement according to
Sec. 425.306(a). Such changes raise concerns that are unrelated to the
ability of an ACO to meet eligibility requirements, such as gaming or
the ability of the ACO participants to develop and adhere to the care
coordination processes established by the ACO that are necessary to
succeed in the ACO's goals of improving quality and reducing growth in
costs for its assigned population. However, although we still have
reservations about ACOs that have dramatic ACO participant list
changes, we understand that the use of the 50 percent measure may not
be the best mechanism for determining whether an ACO has undergone a
significant change. Therefore at this time we will not finalize the
proposed change that would designate an ACO as undergoing a significant
change if its ACO participant list changes by 50 percent or more during
an agreement period. However, we intend to monitor such changes and may
audit and request additional information from ACOs that undergo changes
in their list of ACO participant TINs over the course of the agreement
period in order to better understand the implications and impacts of
such changes. We may revisit this issue in future rulemaking, pending
additional experience with the program.
Comment: A number of commenters noted it is not always possible for
an ACO to provide advance notice of a significant change because some
changes may not actually come to fruition or may happen on a tight
schedule. These commenters suggested that, if finalized, advanced
notice of a significant change should only be required when possible or
on a case-by-case basis. A commenter stated that CMS should give ACOs a
minimum of 45 days advance notice when the ACO has undergone a
significant change to permit sufficient time for the ACO to make
appropriate modifications.
Response: We thank stakeholders for responding to our request for
comment on whether we should consider amending our regulations to
clarify that the ACO must provide notice of a significant change prior
to the occurrence of the significant change. At this time, we will
continue to require ACOs to notify us within 30 days after the
occurrence of a significant change. Because it may not be possible to
provide sufficient advance notice of a significant change, we will not
require ACOs to give us advanced notice of such events, but we strongly
encourage ACOs to alert us in advance when, for example, significant
organizational changes occur or are likely to occur that may impact the
ability of the ACO to continue to meet eligibility requirements.
Notifying us in advance of such changes gives us the opportunity to
work with the ACO to ensure compliance and avoid unanticipated
operational pitfalls for the ACO. Similarly, if we become aware of a
significant change that has occurred to an ACO, we will alert the ACO
as soon as possible and indicate the timeframe in which it is necessary
for the ACO to comply.
FINAL ACTION: We are finalizing our proposal to redesignate Sec.
425.214(b) and (c) as Sec. 425.214(a) and (b). We are also finalizing
our proposal to modify Sec. 425.214 to continue to require an ACO to
alert us when a significant change occurs and to provide that an ACO's
failure to notify CMS of a significant change does not preclude CMS
from determining that the ACO has experienced a significant change.
Finally, based on comments, we are not finalizing our proposal to
specify at Sec. 425.214(a) that a significant change occurs when the
number or identity of ACO participants included on the ACO participant
list, as updated in accordance with Sec. 425.118, changes by 50
percent or more during an agreement period. However, we will continue
to monitor this issue and may audit or otherwise request information
from ACOs with changes to the ACO participant list during the agreement
period. Although we are not at this time requiring advanced notice of
significant changes, we believe that it is in the best interest of the
ACO to contact us in advance if it believes that an organizational
change, such as a change in ownership, may occur so that we can work
with the ACO to ensure continued compliance and avoid operational
pitfalls.
5. Consideration of Claims Billed by Merged/Acquired Medicare-Enrolled
Entities
a. Overview
As discussed in the November 2011 final rule (76 FR 67843), we do
not believe that mergers and acquisitions by ACO providers and
suppliers are the only way for an entity to become an ACO. The statute
and our regulations permit ACO participants that form an ACO to use a
variety of collaborative organizational structures, including
collaborations other than merger. We reject the proposition that an
entity under single control, that is, an entity formed through a
merger, would be more likely to meet the goals of improved health at a
lower cost. However, we have received questions from industry
stakeholders regarding how previous mergers and acquisitions of
entities with Medicare enrolled billing TINs will be treated for
purposes of the Shared Savings Program. In particular, some applicants
have inquired whether the claims billed to Medicare in previous years
by an entity that has since been merged with, or acquired by, a
different entity could be used to determine whether an applicant meets
the requirement to have at least 5,000 beneficiaries assigned to it in
each of the benchmark years (Sec. 425.110) and to establish the ACO's
historical benchmark and preliminary prospective
[[Page 32715]]
assignment. To illustrate, suppose a large group practice that is a
prospective ACO participant recently purchased two small primary care
practices, and the primary care practitioners from those small
practices have reassigned the right to receive Medicare payment to the
larger group practice Medicare-enrolled TIN. In this instance, it is
likely that the primary care providers will continue to serve the same
patient population they served before the practices were purchased, and
that their patients may appear on the ACO's list of assigned
beneficiaries at the end of the performance year. Therefore, applicants
and established ACOs have inquired whether there is a way to take into
account the claims billed by the Medicare-enrolled TINs of practices
acquired by sale or merger for purposes of meeting the minimum assigned
beneficiary threshold and creating a more accurate benchmark and
preliminary prospective list of assigned beneficiaries for the upcoming
performance year. Similarly, an established ACO may request
consideration of the claims billed by the Medicare-enrolled TINs of
entities acquired during the course of a performance year for the same
purposes.
In response to questions from industry stakeholders, we provided
additional guidance on our Web site to all Shared Savings Program
applicants about the requirements related to mergers and acquisitions
(see http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/Merger-Acquisitions-FAQ.pdf ). In this
guidance, we indicated that under the following circumstances, we may
take the claims billed under TINs of entities acquired through purchase
or merger into account for purposes of beneficiary assignment and the
ACO's historical benchmark:
The ACO participant must have subsumed the acquired
entity's TIN in its entirety, including all the providers and suppliers
that reassigned the right to receive Medicare payment to that acquired
entity's TIN.
All the providers and suppliers that previously reassigned
the right to receive Medicare payment to the acquired entity's TIN must
reassign that right to the TIN of the acquiring ACO participant.
The acquired entity's TIN must no longer be used to bill
Medicare.
In order to attribute the billings of merged or acquired TINs to
the ACO's benchmark, the ACO applicant must--
Submit the acquired entity's TIN on the ACO participant
list, along with an attestation stating that all providers and
suppliers that previously billed under the acquired entity's TIN have
reassigned their right to receive Medicare payment to an ACO
participant's TIN;
Indicate the acquired entity's TIN and which ACO
participant acquired it; and
Submit supporting documentation demonstrating that the
entity's TIN was acquired by an ACO participant through a sale or
merger and submit a letter attesting that the acquired entity's TIN
will no longer be used to bill Medicare.
We noted in the proposed rule that we require an applicant's list
of ACO providers/suppliers to include all individuals who previously
billed under the acquired entity's TIN to have reassigned their right
to receive Medicare payment to an ACO participant's TIN.
We stated that the policies set forth in our guidance were
necessary to ensure that these entities have actually been completely
merged or acquired and that it would be likely that the primary care
providers will continue to serve the same patient population. In this
way, the beneficiary assignments and the benchmarks would be more
accurate for ACOs that include merged or acquired Medicare-enrolled
TINs under which their ACO professionals billed during application or
updates to the ACO participant list.
b. Proposed Changes
In the proposed rule, we stated that current guidance and processes
are working well and benefit both CMS (for example, by providing
assurance that an entity's Medicare-enrolled billing TIN have actually
been acquired through sale or merger) and the affected ACOs (for
example, by allowing for an increase in the ACO's number of
appropriately assigned beneficiaries and providing for a more accurate
financial benchmark). To avoid uncertainty and to establish a clear and
consistent process for the recognition of the claims previously billed
by the TINs of acquired entities, we proposed to codify the current
operational guidance on this topic at Sec. 425.204(g) with some minor
revisions to more precisely and accurately describe our proposed
policy. Proposed Sec. 425.204(g) would add the option for ACOs to
request consideration of claims submitted by the Medicare-enrolled TINs
of acquired entities as part of their application, and would address
the documentation requirements for such requests. We noted that
although this provision is added in Sec. 425.204 regarding the content
of the initial application, we proposed to permit ACOs to annually
request consideration of claims submitted by the TINs of entities
acquired through sale or merger upon submission of the ACO's updated
list of ACO participants.
Comment: All commenters supported our proposal to allow ACOs to
request consideration of claims submitted by the Medicare-enrolled TINs
of acquired entities as part of their application and to permit ACOs to
annually request consideration of claims submitted by the TINs of
entities acquired through sale or merger upon submission of the ACO's
updated list of ACO participants. A commenter encouraged CMS to provide
as much flexibility as possible to take the billings of merged or
acquired TINs into account because the ACO marketplace may undergo
significant changes in the future (for example, mergers and
acquisitions of ACOs).
Response: We appreciate the comments supporting our proposals. We
agree that finalizing these proposals will establish a clear and
consistent process for the recognition of the claims previously billed
by the TINs of acquired entities. We believe we are providing as much
flexibility as possible at this time, although we are open to
considering additional flexibilities in future rulemaking. We invite
stakeholders to let us know what specific additional flexibilities may
be warranted in the future.
FINAL ACTION: We are finalizing our proposal to codify the current
operational guidance on consideration of claims billed by merged or
acquired TINs at Sec. 425.204(g), including our proposals for minor
revisions to more precisely and accurately describe our policy.
Specifically, we are finalizing the proposal at Sec. 425.204(g) to add
the option for ACOs to request consideration of claims submitted by the
Medicare-enrolled TINs of acquired entities as part of their
application, and address the documentation requirements for such
requests. We are finalizing at Sec. 425.118(a)(2) our proposal to
permit ACOs to annually request consideration of claims submitted by
the TINs of entities acquired through sale or merger upon submission of
the ACO's updated list of ACO participants. Specifically, Sec.
425.118(a)(2) provides that such requests may be made in accordance
with the process set forth at Sec. 425.204(g). More detailed
information on the manner, format, and timelines for ACOs to submit
such requests will be found in operational documents and guidance.
[[Page 32716]]
6. Legal Structure and Governance
Section 1899(b)(1) of the Act requires ACO participants to have
established a ``mechanism for shared governance'' in order to be
eligible to participate as ACOs in the Shared Savings Program. In
addition, section 1899(b)(2)(C) of the Act requires the ACO to have a
formal legal structure that allows the organization to receive and
distribute shared savings payments to ACO participants and ACO
providers/suppliers. We believe the formal legal structure should be
designed and implemented to protect against conflicts of interest or
other improper influence that may otherwise arise from the receipt and
distribution of payments or other ACO activities. We proposed
clarifications to our rules related to the ACO's legal entity and
governing body. The purpose of these proposed changes was to clarify
our regulations and to ensure that ACO decision-making is governed by
individuals who have a fiduciary duty, including a duty of loyalty, to
the ACO alone and not to any other individuals or entities. We believe
the proposed changes are relatively minor and would not significantly
impact the program as currently implemented.
a. Legal Entity and Governing Body
(1) Overview
As specified in the November 2011 final rule (76 FR 67816) and at
Sec. 425.104(a), an ACO must be a legal entity, formed under
applicable state, federal, or tribal law, and authorized to conduct
business in each state in which it operates for the following purposes:
Receiving and distributing shared savings.
Repaying shared losses or other monies determined to be
owed to CMS.
Establishing, reporting, and ensuring provider compliance
with health care quality criteria, including quality performance
standards.
Fulfilling other ACO functions identified in this part.
Additionally, under Sec. 425.104(b), an ACO formed by two or more
``otherwise independent'' ACO participants must be a legal entity
separate from any of its ACO participants. Our regulations at Sec.
425.106(b)(4) further specify that when an ACO comprises ``multiple,
otherwise independent ACO participants,'' the governing body of the ACO
must be ``separate and unique to the ACO.'' In contrast, if the ACO is
an ``existing legal entity,'' the ACO governing body may be the same as
the governing body of that existing legal entity, provided it satisfies
all other requirements of Sec. 425.106, including provisions regarding
the fiduciary duties of governing body members, the composition of the
governing body, and conflict of interest policies (Sec.
425.106(b)(5)).
We noted in the proposed rule that some applicants questioned when
an ACO needs to be formed as a separate legal entity, particularly the
meaning in Sec. 425.104(b) of ``otherwise independent'' ACO
participants. Specifically, applicants questioned whether multiple
prospective ACO participants are ``otherwise independent'' when they
have a prior relationship through, for example, an integrated health
system. In addition, we received some questions regarding compliance
with the governing body requirements set forth in Sec. 425.106(b)(4)
and (5). For example, we received questions from some IPAs, each of
which wanted to apply to the Shared Savings Program as an ACO using its
existing legal structure and governing body. In some cases, the IPA
represented many group practices, but not every group practice
represented by an IPA had agreed to be an ACO participant. In the
proposed rule, we stated that that such an IPA would need to organize
its ACO as a separate legal entity with its own governing body to
ensure that the governing body members would have a fiduciary duty to
the ACO alone, as required by Sec. 425.106(b)(3), and not to an entity
comprised in part by entities that are not ACO participants.
(2) Proposed Revisions
We proposed to clarify our regulation text regarding when an ACO
must be formed as a separate legal entity. Specifically, we proposed to
remove the reference to ``otherwise independent ACO participants'' in
Sec. 425.104(b). The revised regulation would provide that an ACO
formed by ``two or more ACO participants, each of which is identified
by a unique TIN,'' must be a legal entity separate from any of its ACO
participants. For example, if an ACO is composed of three ACO
participants, each of whom belongs to the same health system or IPA,
the ACO must be a legal entity separate and distinct from any one of
the three ACO participants.
In addition, we proposed to clarify Sec. 425.106(a), which sets
forth the general requirement that an ACO have an identifiable
governing body with the ultimate authority to execute the functions of
an ACO. Specifically, we proposed that the governing body must satisfy
three criteria. First, the governing body of the ACO must be the same
as the governing body of the legal entity that is the ACO. Second, in
the case of an ACO that comprises multiple ACO participants, the
governing body must be separate and unique to the ACO and must not be
the same as the governing body of any ACO participant. Third, the
governing body must satisfy all other requirements set forth in Sec.
425.106, including the fiduciary duty requirement. We noted that the
second criterion incorporates the requirement that currently appears at
Sec. 425.106(b)(4), which provides that the governing body of the ACO
must be separate and unique to the ACO in cases where there are
multiple ACO participants. Accordingly, we proposed to remove Sec.
425.106(b)(4). We further proposed to remove Sec. 425.106(b)(5), which
provides that if an ACO is an existing legal entity, its governing body
may be the same as the governing body of that existing entity, provided
that it satisfies the other requirements of Sec. 425.106. In light of
our proposed revision to Sec. 425.106(a), we believe this provision is
unnecessary and should be removed to avoid confusion. In proposing that
the governing body be the same as the governing body of the ACO legal
entity and that the governing body has ultimate authority to execute
the function of the ACO we intended to preclude:
Delegation of all ACO decision-making authority to a
committee of the governing body. We recognize that the governing body
of the legal entity that is the ACO may wish to organize committees
that address certain matters pertaining to the ACO, but we do not
believe that such committees can constitute the governing body of the
ACO.
Retention of ACO decision-making authority by a parent
company. We recognize that a parent organization may wish to retain
certain authorities to protect the parent company and ensure the
subsidiary's success. However, the ACO's governing body must retain the
ultimate authority to execute the functions of an ACO. As stated in the
regulations, we believe such functions include such things as
developing and implementing the required processes under Sec. 425.112
and holding leadership and management accountable for the ACO's
activities. We also believe this authority extends to such activities
including the appointment and removal of members of the governing body,
leadership, and management, and determining how shared savings are used
and distributed among ACO participants and ACO providers/suppliers.
The purpose of the new provision precluding the governing body of
the ACO from being the same as the governing body of an ACO participant
is
[[Page 32717]]
to ensure that the interests of individuals and entities other than the
ACO do not improperly influence decisions made on behalf of the ACO. In
order to comply with the requirement that the governing body be
separate and unique to the ACO, it must not be responsible for
representing the interests of any entity participating in the ACO or
any entity that is not participating in the ACO. Thus, we proposed the
requirement that an ACO's governing body must not be the same as the
governing body of any of the ACO participants.
Comment: Several commenters noted that an ACO formed by ``two or
more ACO participants, each of which is identified by a unique TIN,''
must be a legal entity separate from any of its ACO participants. A
commenter indicated that requirement for a separate legal entity with a
governing body unaffiliated with the ACO participants creates
unnecessary administrative burdens and leads to inconsistencies in the
application of policies and procedures that are necessary to manage
population health, coordinate care, and control costs.
Some commenters were supportive of the three criteria. A commenter
stated that the governance requirements are overly intrusive and that
CMS should moderate the proposed requirements to allow providers to use
their current structures, rather than requiring them to develop a
separate entity and governing body. Some commenters disagreed with the
requirement that the ACO governing body retain ultimate authority to
care out ACO activities in cases where the ACO has a parent company
because they believe this requirement would erode the parent company's
ability to protect its own interests.
Response: Section 1899(b)(2)(C) of the Act requires the ACO to have
a formal legal structure that allows the organization to receive and
distribute shared savings payments to ACO participants and ACO
providers/suppliers. As stated in the November 2011 final rule, we
continue to believe that the requirement for an ACO to have a legal
entity and governing body that is separate from any of the ACO
participants that have joined to form the ACO is essential to promote
program integrity broadly, including protecting against fraud and
abuse, and to ensure the ACO is accountable for its responsibilities
under the Shared Savings Program. We do not believe that the formation
of a separate legal entity is overly burdensome. The proposal would
codify current policy which all participating ACOs have satisfied.
Rather than trying to integrate the policies and procedures from
multiple participants, the ACO and its governing body (made up and
directed by the ACO participants that joined to form the ACO) is in the
best position to determine what uniform policies and procedures to
apply across the ACO. We note that the legal entities of many ACOs and
their governing bodies oversee operations for participation in private
payer ACOs in addition to participation in the Shared Savings Program.
Shared Savings Program ACOs may do this, so long as their governing
bodies meet the fiduciary duty requirements as discussed later. Our
proposal was not intended to repudiate our existing policy (and the
corollary of proposed Sec. 425.104(b)) that an ACO formed by a single
ACO participant need not form a separate legal entity to operate the
ACO and is permitted to use its existing governing body, as long as it
can meet the other eligibility and governance requirements of the
program. We will add a new paragraph (c) at Sec. 425.104 to clarify
this point.
As stated in the November 2011 final rule, we believe it is
important for the ACO to establish an identifiable governing body that
that retains ultimate authority because the ACO is ultimately
responsible for its success or failure. The criteria are also important
to help insulate against conflicts of interest that could potentially
put the interest of an ACO participant or parent company before the
interests of the ACO. We note that many ACOs have been developed with
the assistance of parent organizations that desire to protect their own
interests. However, the parent company's own interests must not
interfere with the ACO's ultimate authority and obligation to comply
with the requirements of the Shared Savings Program. Nor must those
interests interfere with the fiduciary duty of the ACO's governing body
as discussed later in this section. Therefore, we will finalize the
proposed criteria. However, in response to the commenters, we will
clarify the regulation text at Sec. 425.106(a)(2)(ii) to provide that,
the governing body of an ACO formed by a single ACO participant would
be the governing body of the ACO participant.
FINAL ACTION: We are finalizing our proposal to remove the
reference to ``otherwise independent ACO participants'' in Sec.
425.104(b). The revised regulation would provide that an ACO formed by
``two or more ACO participants, each of which is identified by a unique
TIN,'' must be a legal entity separate from any of its ACO
participants. In response to the commenters, we are adding new Sec.
425.104(c) to clarify that an ACO formed by a single ACO participant
may use its existing legal entity and governing body, provided it
satisfies the other requirements in Sec. Sec. 425.104 and 425.106.
Additionally, we are finalizing at Sec. 425.106(a)(2) our proposal
that the governing body must satisfy three criteria: First, the
governing body of the ACO must be the same as the governing body of the
legal entity that is the ACO. Second, in the case of an ACO that
comprises multiple ACO participants the governing body must be separate
and unique to the ACO, except as provided in Sec. 425.104(c). Third,
the governing body must satisfy all other requirements set forth in
Sec. 425.106, including the fiduciary duty requirement. We are
finalizing our proposal to remove Sec. Sec. 425.106(b)(4) and (5).
b. Fiduciary Duties of Governing Body Members
(1) Overview
Our current regulations at Sec. 425.106(b)(3) require that the
governing body members have a fiduciary duty to the ACO and must act
consistent with that duty. We have clarified in guidance that the
governing body members cannot meet the fiduciary duty requirement if
the governing body is also responsible for governing the activities of
individuals or entities that are not part of the ACO (See ``Additional
Guidance for Medicare Shared Savings Program Accountable Care
Organization (ACO) Applicants'' located online at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/Memo_Additional_Guidance_on_ACO_Participants.pdf ). For
example, in the case of an IPA that applies as an ACO to the Shared
Savings Program, we believe it would be difficult for the members of
the IPA's governing body to make decisions in the best interests of the
ACO if only some of the group practices that compose the IPA are ACO
participants; decisions affecting the ACO may be improperly influenced
by the interests of group practices that are part of the IPA but are
not ACO participants. For this reason, our regulations require the IPA
to establish the ACO as a separate legal entity. This new legal entity
must have a governing body whose members have a fiduciary
responsibility to the ACO alone and not to any other individual or
entity.
(2) Proposed Revisions
We proposed to clarify in Sec. 425.106(b)(3) that the fiduciary
duty owed to an ACO by its governing body
[[Page 32718]]
members includes the duty of loyalty. The purpose of the proposal was
to emphasize that the ACO's governing body decisions must be free from
the influence of interests that may conflict with the ACO's interests.
This proposal does not represent a change in policy and is simply
intended to underscore that members of an ACO governing body must not
have divided loyalties; they must act only in the best interests of the
ACO and not another individual or entity, including the individual
interests of ACO participants, ACO professionals, ACO providers/
suppliers, or other individuals or entities.
Comment: Several commenters expressed specific support for the
concept that the fiduciary duty owed to an ACO by its governing body
members includes the duty of loyalty. A commenter recommended
clarification that the requirement would not preclude members of the
governing body from participating either on governing bodies or in
senior management roles of other organizations.
Response: We appreciate the comments received on our proposal to
include the duty of loyalty as one of the fiduciary duties owed to the
ACO by the members of its governing body. We believe that it is
possible for members of the ACO's governing body to hold similar
leadership positions in other organizations. However, when acting on
behalf of the ACO, each governing body member must act in the best
interests of the ACO. We note that the ACO governing body is required
under Sec. 425.106(d) to have a conflict of interest policy that
requires each member of the governing body to disclose relevant
financial interests, provide a procedure for determining whether a
conflict of interest exists and set forth a process to address any
conflicts that arise. Additionally, the conflict of interest policy
must address remedial action for members of the governing body that
fail to comply with the policy. We believe this safeguard can ensure
that governing body members act with a duty of loyalty.
FINAL ACTION: We will finalize our proposal to clarify at Sec.
425.106(b)(3) that the fiduciary duty owed to an ACO by its governing
body members includes the duty of loyalty.
c. Composition of the Governing Body
(1) Overview
Section 1899(b)(1) of the Act requires an ACO to have a ``mechanism
for shared governance'' among ACO participants. Section 425.106(c)(1)
of the regulations requires an ACO to provide for meaningful
participation in the composition and control of the ACO's governing
body for ACO participants or their designated representatives. As we
explained in the November 2011 final rule (76 FR 67819), we believe
that an ACO should be operated and directed by Medicare-enrolled
entities that directly provide health care services to beneficiaries.
However, we acknowledged that small groups of providers often lack both
the capital and infrastructure necessary to form an ACO and to
administer the programmatic requirements of the Shared Savings Program
and could benefit from partnerships with non-Medicare enrolled
entities. For this reason, we proposed (76 FR 19541) that to be
eligible for participation in the Shared Savings Program, the ACO
participants must have at least 75 percent control of the ACO's
governing body. In the November 2011 final rule, we explained that this
requirement would ensure that ACOs remain provider-driven, but also
leave room for non-providers to participate in the program.
In addition, to provide for patient involvement in the ACO
governing process, we specified at Sec. 425.106(c)(2) that an ACO's
governing body must include a Medicare beneficiary served by the ACO
who does not have a conflict of interest with the ACO. We acknowledged
in the November 2011 final rule that beneficiary representation on an
ACO's governing body might not always be feasible. For example,
commenters raised concerns that requiring a beneficiary on the
governing body could conflict with state corporate practice of medicine
laws or other local laws regarding governing body requirements for
public health or higher education institutions (76 FR 67821). As a
result, we believe it was appropriate to provide some flexibility for
us to permit an ACO to adopt an alternative structure for its governing
body, while still ensuring that ACO participants and Medicare FFS
beneficiaries are involved in ACO governance.
Accordingly, our existing regulations offer some flexibility to
permit an ACO to participate in the Shared Savings Program even if its
governing body fails to include a beneficiary or satisfy the
requirement that 75 percent of the governing body be controlled by ACO
participants. Specifically, Sec. 425.106(c)(5) provides that if an
ACO's governing body does not meet either the 75 percent threshold or
the requirement regarding beneficiary representation, it must describe
in its application how the proposed structure of its governing body
would involve ACO participants in innovative ways in ACO governance or
provide a meaningful opportunity for beneficiaries to participate in
the governance of the ACO. For example, under this provision, we
anticipated that exceptions might be needed for ACOs that operate in
states with Corporate Practice of Medicine restrictions to structure
beneficiary representation accordingly. We contemplated that this
provision could also be used by an existing entity to explain why it
should not be required to reconfigure its board if it had other means
of addressing the requirement to include a consumer perspective in
governance (see 76 FR 67821).
(2) Proposed Revisions
We proposed to revise Sec. 425.106(c)(1) to state the statutory
standard in section 1899(b)(1) of the Act requiring an ACO to have a
``mechanism for shared governance'' among ACO participants. Although in
the November 2011 final rule we did not announce a requirement that
each ACO participant be a member of the ACO's governing body (76 FR
67818), the governing body must represent a mechanism for shared
governance among ACO participants. Therefore, the governing body of an
ACO that is composed of more than one ACO participant should not, for
example, include representatives from only one ACO participant. For
ACOs that have extensive ACO participant lists, we would expect to see
representatives from many different ACO participants on the governing
body. Our proposal to state the statutory standard for shared
governance in our regulations at Sec. 425.106(c)(1) does not
constitute a substantive change to the program.
We also proposed to revise Sec. 425.106(c)(2) to explicitly
prohibit an ACO provider/supplier from being the beneficiary
representative on the governing body. Some ACO applicants have proposed
that one of their ACO providers/suppliers would serve as the
beneficiary representative on the governing body. We believe it would
be very difficult for an ACO provider/supplier who is a Medicare
beneficiary to represent only the interests of beneficiaries, rather
than his or her own interests as an ACO provider/supplier, the
interests of other ACO providers/suppliers, or the interests of the ACO
participant through which he or she bills Medicare.
We proposed to revise Sec. 425.106(c)(5) to remove the flexibility
for ACOs to deviate from the requirement that at least 75 percent
control of an ACO's governing body must be held by ACO participants.
Based on our experience to date with implementing the program,
[[Page 32719]]
we have learned that ACO applicants do not have difficulty meeting the
requirement under Sec. 425.106(c)(3) that ACO participants maintain 75
percent control of the governing body. We have not denied participation
to any ACO applicants solely on the basis of failure to comply with
this requirement, and it has not been necessary to grant any exceptions
to this rule under Sec. 425.106(c)(5). To the contrary, we have found
the 75 percent control requirement to be necessary and protective of
the ACO participant's interests. Accordingly, we believe there is no
reason to continue to offer an exception to the rule.
We believe that it is important to maintain the flexibility for
ACOs to request innovative ways to provide meaningful representation of
Medicare beneficiaries on ACO governing bodies. Based on our
experience, some ACOs have been unable to include a beneficiary on
their governing body, and these entities have used the process under
Sec. 425.106(c)(5) to establish that they satisfy the requirement for
meaningful beneficiary representation through the use of patient
advisory bodies that report to the governing body of the ACO.
Comment: We received a few comments in support of our proposal to
revise Sec. 425.106(c)(5) to remove the flexibility for ACOs to
deviate from the requirement that at least 75 percent control of an
ACO's governing body must be held by ACO participants. However, several
commenters recommended retention of this flexibility. The commenters
opposed to its removal stated that such flexibility, although not
currently used or required, could be necessary for future applicants. A
commenter noted that true decision-making by an ACO governing body that
broadly represents ACO participants could be achieved in a number of
ways.
Response: As stated in the November 2011 final rule, we believe the
75-percent control requirement is necessary to ensure that ACOs are
provider driven. Therefore, we finalized this requirement but permitted
an exception in case there were state laws or other impediments that
would limit an ACO's ability to comply with it. However, our experience
over several application cycles has demonstrated that stakeholder
concern over conflicts with laws governing the composition of tax-
exempt or state-licensed entities does not appear to have been a factor
in the ability of ACOs to comply with this requirement. Moreover, our
experience to date leads us to conclude that this requirement ensures
that the ACO participants who have joined to form the ACO have direct
and primary influence and input on the required functions of the ACO,
rather than external third parties. However, given that the program is
still in the early stages of implementation and our relatively limited
experience with ACOs in two-sided risk tracks, we will retain the
flexibility for an ACO to request an exception to the 75-percent
control requirement. We anticipate permitting such exceptions only in
very limited circumstances (for example, when the ACO demonstrates that
it is unable to comply because of a conflict with other laws).
Comment: Several commenters agreed with our proposed revision to
Sec. 425.106(c)(2) to explicitly prohibit an ACO provider/supplier
from being the beneficiary representative on the governing body. A
commenter stated that CMS to strengthen the requirements for meaningful
involvement of consumer/beneficiary representatives increase the number
of beneficiaries on the governing body and to exercise greater
oversight to ensure the success of beneficiary engagement efforts.
Several commenters offered additional suggestions for members of the
governing body, including requiring the ACO to involve patient/family
representatives on ACO quality and safety improvement committees or
considering a requirement that consumer advocates, employers, labor
organizations and other community organizations or ``other entities''
(such as post-acute care providers) be represented on the governing
body. A commenter opposed the flexibility afforded under Sec.
425.106(c)(5) for the ACO to differ from the requirement to have a
beneficiary on the governing body stating that this section creates a
loophole for ACOs to avoid the requirement. In addition, this commenter
further suggested that all ACO applications should be required to
include details regarding how the ACO intends to involve Medicare
beneficiaries in innovative and meaningful ways that enhance patient
engagement and coordination of care.
Response: We appreciate the comments received on this proposal. As
stated in the November 2011 final rule (FR 76 67821), we believe that a
focus on the beneficiary in all facets of ACO governance are critical
for ACOs to achieve the three-part aim and believe that beneficiary
representation is important. Therefore, we continue to encourage ACOs
to consider seriously how to provide opportunities for beneficiaries
and others to be involved in ACO governance through both governing body
representation and other appropriate mechanisms. However, as
articulated in the November 2011 final rule, we believe our current
regulations balance our overall objectives for the program while
permitting ACOs flexibility to structure their governing bodies
appropriately; therefore, we are unable to incorporate suggestions to
increase the beneficiary representation requirement and suggestions for
governing body representation of other consumer or provider entities.
As we noted in the November 2011 final rule, we recognize there may
be state corporate practice of medicine laws or other reasons why it
may not be feasible for a beneficiary to be represented on the ACO's
governing body and therefore finalized a policy that permits an ACO to
apply for an exception to the rule that an ACO must have a beneficiary
on the governing body. Very few of these exceptions have been granted
to date. In these few cases, ACOs have developed patient advisory
committees that report directly to the ACO's governing body. ACOs have
reported that such a committee can have a very strong influence on
governing body decisions and involve more beneficiary voices than would
have otherwise been able by having a single beneficiary on the
governing body. Therefore, we believe it is important to continue to
permit flexibility for ACOs to deviate from this requirement.
FINAL ACTION: Because we received no comments on our proposed
revision to Sec. 425.106(c)(1), we are finalizing our proposal to
modify that provision to state the statutory standard in section
1899(b)(1) of the Act, which requires an ACO to have a ``mechanism for
shared governance'' among ACO participants. We are also finalizing our
proposed revision at Sec. 425.106(c)(2) to explicitly prohibit an ACO
provider/supplier from being the beneficiary representative on the
governing body.
We are not finalizing our proposal to remove Sec. 425.106(c)(5),
which offers flexibility for ACOs to deviate from the requirement that
ACO participants must hold at least 75 percent control of an ACO's
governing body. However, we note that we anticipate permitting such
exceptions only in very limited circumstances. We may revisit this
issue in future rulemaking.
7. Leadership and Management Structure
a. Overview
Section 1899(b)(2)(F) of the Act requires an eligible ACO to ``have
in place a leadership and management structure that includes clinical
and administrative systems.'' Under this
[[Page 32720]]
authority, we incorporated certain leadership and management
requirements into the Shared Savings Program, as part of the
eligibility requirements for program participation. In the November
2011 final rule (76 FR 67822), we stated that an ACO's leadership and
management structure should align with and support the goals of the
Shared Savings Program and the three-part aim of better care for
individuals, better health for populations, and lower growth in
expenditures.
In the November 2011 final rule (76 FR 67825), we established the
requirement that the ACO's operations be managed by an executive,
officer, manager, general partner, or similar party whose appointment
and removal are under the control of the ACO's governing body and whose
leadership team has demonstrated the ability to influence or direct
clinical practice to improve efficiency, processes, and outcomes (see
Sec. 425.108(b)). In addition, under Sec. 425.108(c), clinical
management and oversight must be managed by a senior-level medical
director who is one of the ACO providers/suppliers, who is physically
present on a regular basis in an established ACO location (clinic,
office or other location participating in the ACO), and who is a board-
certified physician licensed in a state in which the ACO operates. In
Sec. 425.204(c)(1)(iii), we require ACO applicants to submit materials
documenting the ACO's organization and management structure, including
senior administrative and clinical leaders specified in Sec. 425.108.
In the November 2011 final rule (76 FR 67825), we provided
flexibility for ACOs to request an exception to the leadership and
management requirements set forth under Sec. 425.108(b) and (c). We
believe that affording this flexibility was appropriate in order to
encourage innovation in ACO leadership and management structures. In
accordance with Sec. 425.108(e), we may give consideration to an
innovative ACO leadership and management structure that does not comply
with the requirements of Sec. 425.108(b) and (c).
We stated in the proposed rule that we continued to believe that
having these key leaders (operational manager and clinical medical
director) is necessary for a well-functioning and clinically integrated
ACO. We noted that after four application cycles, it appeared that ACO
applicants do not have difficulty in meeting the operational manager
and clinical medical director requirements. Only one ACO had requested
an exception to the medical director requirements. In that case, the
ACO sought the exception in order to allow a physician, who had retired
after a long tenure with the organization to serve as the medical
director of the ACO. We approved this request because, although the
retired physician was not an ACO provider/supplier because the retired
physician was no longer billing for physician services furnished during
the agreement period, he was closely associated with the clinical
operations of the ACO, familiar with the ACO's organizational culture,
and dedicated to this one ACO.
In addition, we noted that we had received a number of questions
from ACO applicants regarding the other types of roles for which CMS
requires documentation under Sec. 425.204(c)(1)(iii) to evaluate
whether an applicant has a ``. . . leadership and management structure
that includes clinical and administrative systems'' that support the
purposes of the Shared Savings Program and the aims of better care for
individuals, better health for populations, and lower growth in
expenditures, as articulated at Sec. 425.108(a)). We stated that in
response to such inquiries we considered an ACO's ``. . . leadership
and management structure that includes clinical and administrative
systems'' to be composed of the operational manager and clinical
medical director (referenced under Sec. 425.108(b) and (c)) as well as
the qualified healthcare professional that is required under Sec.
425.112(a) to be responsible for the ACO's quality assurance and
improvement program.
b. Proposed Revisions
We proposed to amend Sec. 425.108 to provide some additional
flexibility regarding the qualifications of the ACO medical director
and to eliminate the provision permitting some ACOs to enter the
program without satisfying the requirements at Sec. 425.108(b) and (c)
for operations and clinical management. In addition, we proposed to
amend Sec. 425.204(c)(iii) to clarify that applicants must submit
materials regarding the qualified health care professional responsible
for the ACO's quality assurance and improvement program.
We stated our belief that it was appropriate to amend the medical
director requirement at Sec. 425.108(c) to allow some additional
flexibility. Specifically, we proposed to remove the requirement that
the medical director be an ACO provider/supplier. This change would
permit an ACO to have a medical director who was, for example,
previously closely associated with an ACO participant but who is not an
ACO provider/supplier because he or she does not bill through the TIN
of an ACO participant and is not on the list of ACO providers/
suppliers. Alternatively, we considered retaining the requirement that
an ACO's medical director be an ACO provider/supplier, but permitting
ACOs to request CMS approval to designate as its medical director a
physician who is not an ACO provider/supplier but who is closely
associated with the ACO and satisfies all of the other medical director
requirements. We sought comment on whether an ACO medical director who
is not an ACO provider/supplier must have been closely associated with
the ACO or an ACO participant in the recent past. In addition, we
proposed to clarify that the medical director must be physically
present on a regular basis ``at any clinic, office, or other location
of the ACO, an ACO participant or an ACO provider/supplier.''
Currently, the provision incorrectly refers only to locations
``participating in the ACO.''
However, we stated we continued to believe that the medical
director of the ACO should be directly associated with the ACO's
clinical operations and familiar with the ACO's organizational culture.
We noted that this is one purpose of the provision requiring medical
directors to be physically present on a regular basis at any clinic,
office, or other ACO location. A close working relationship with the
ACO and its clinical operations is necessary in order for the medical
director to lead the ACO's efforts to achieve quality improvement and
cost efficiencies.
Additionally, we proposed to eliminate Sec. 425.108(e), which
permits us to approve applications from innovative ACOs that do not
satisfy the leadership and management requirements related to
operations management and clinical management and oversight set forth
at Sec. 425.108(b) and (c). Based on our experience with the program
and the proposed change to the medical director requirement, we stated
our belief that it was unnecessary to continue to allow ACOs the
flexibility to request an exception to the leadership and management
requirements related to operations management and clinical management
and oversight (Sec. 425.108(b) and (c)). We noted that these
requirements are broad and flexible and have not posed a barrier to
participation in the Shared Savings Program; in fact, in only one
instance has an ACO requested an exception to the operations management
criterion (Sec. 425.108(b)). We were unaware of any alternative
operations management structure that might be considered acceptable,
and we proposed to modify Sec. 425.108(c) to accommodate the one
exception we
[[Page 32721]]
have granted to date. Accordingly, we proposed to revise the
regulations by striking Sec. 425.108(e) to eliminate the flexibility
for ACOs to request an exception to the leadership and management
requirements at Sec. 425.108(b) and (c).
Finally, to clarify questions that have been raised by ACO
applicants and to reduce the need for application corrections, we
proposed to modify Sec. 425.204(c)(1)(iii) to require a Shared Savings
Program applicant to submit documentation regarding the qualified
healthcare professional responsible for the ACO's quality assurance and
improvement program (as required by Sec. 425.112(a)).
We sought comment on these changes to the requirements for ACO
leadership and management.
Comment: Many commenters supported our proposal revision to Sec.
425.108(c) to permit more flexibility for the medical director of an
ACO. These commenters stated that a medical director should not be
limited to being a current ACO provider/supplier because the ACO should
have flexibility to conduct a nationwide search for the best candidate.
Moreover, these commenters noted that many potentially qualified
physicians have navigated away from patient care toward more
administrative activities, thereby developing expertise in areas
desirable in a medical director and necessary for ACO success. However,
several commenters opposed the proposal to introduce flexibility. These
commenters believe that a successful ACO medical director is one who is
directly associated with the clinical operations of the ACO and
familiar with its organizational culture, or should otherwise be able
to provide direct patient care.
A few commenters urged CMS to allow even more flexibility than what
was proposed. These commenters suggested alternative criteria for
qualifications of the medical director. For example, some commenters
suggested that we permit the medical director position to be filled by
individuals other than physicians, such as an advance practice nurse or
other qualified health professional.
Response: As stated in the November 2011 final rule, we believe
physician leadership of clinical management and oversight is important
to the ACO's ability to achieve the three-part aim. We agree with
commenters who indicate that flexibility may be necessary for the ACO
to select the best qualified physician for this role. We also agree
with commenters that the best physician for the role of medical
director may be one who has an intimate knowledge of the ACO's
organizational culture or who is actively implementing (through direct
patient care activities) the clinical processes established by the ACO.
We believe it is important to ensure that the medical director is
familiar with the day-to-day operations of the ACO. We believe our
proposals balanced these perspectives by eliminating the requirement
that the medical director be an ACO provider/supplier while also
clarifying the requirement that the medical director be physically
present on a regular basis ``at any clinic, office, or other location
of the ACO, ACO participant or ACO provider/supplier.'' We will
therefore finalize the modifications as proposed and permit ACOs to
choose a medical director who best suits the ACO's goals and needs.
We appreciate additional suggestions for modifications in the
criteria for the ACO's medical director and will keep them in mind in
future rulemaking. Specifically, we appreciate the comments suggesting
that the medical director could be any qualified health professional.
We will not modify our requirements for the medical director in this
manner because ACOs report that physician leadership is an important
key to the success of the ACO. Additionally, the ACO is required to
have a qualified healthcare professional responsible for the ACO's
quality assurance and improvement program, in addition to the medical
director and may choose to appoint non-physician clinical leaders to
this role. We discuss modifications to this requirement later in this
section.
Comment: A number of commenters provided feedback on the proposed
elimination of Sec. 425.108(e), which permits CMS to approve
applications from innovative ACOs that do not satisfy the leadership
and management requirements related to operations management and
clinical management and oversight set forth at Sec. 425.108(b) and
(c). A commenter supported the removal of this provision, although
other commenters suggested this flexibility could be necessary for
future applicants for the program.
Response: In the November 2011 final rule, we finalized a policy in
which CMS retained the right to give consideration to innovative ACOs
that did not include: (1) operations managed by an executive, officer,
manager, general partner, or similar party; and (2) clinical management
and oversight by a senior-level medical director. Given our experience
with the program, the additional flexibility provided in this final
rule regarding the medical director qualifications, and the fact that
these requirements are already so broad and flexible, we do not believe
that any additional flexibility is necessary or even possible.
Therefore, we are finalizing our proposal to eliminate Sec.
425.108(e). As noted previously, we clarified that we consider the
qualified health professional referenced in Sec. 425.112(a) to be part
of the ACO's leadership and management team and as such, we proposed to
modify Sec. 425.204(c)(1)(iii) to require a Shared Savings Program
applicant to submit documentation regarding this person, if the role is
not filled by the medical director.
Comment: Some commenters agreed with CMS' proposal and requested
that CMS consider providing more guidance that would describe suitable
training, experience, and knowledge for how to run an effective quality
assurance and improvement program. Other commenters disagreed with our
proposal, stating that CMS should not require documentation of the
qualifications of such a professional.
Response: We believe it is important for the ACO to include a
person within its clinical leadership team that is directly responsible
for the ACO's quality assurance and improvement program. This person,
as discussed in the November 2011 final rule, may be a physician or any
other qualified health professional. We clarify that this role may be
filled by the ACO's medical director. Currently, in the ACO's
application to the Shared Savings Program, we request certain
information about the ACO's organization and management structure.
Because the quality assurance and improvement program is integral to
the ACO's ability to meet participation requirements, we also believe
the healthcare professional responsible for it must be considered a
part of the ACO's clinical leadership. Therefore, we are finalizing our
proposal that the ACO submit information about this person as part of
its application to the program.
FINAL ACTION: We are finalizing, as proposed, our policies related
to the ACO's leadership and management. Specifically, we are amending
Sec. 425.108 to provide some additional flexibility regarding the
qualifications of the ACO medical director and to eliminate the
provision permitting ACOs to request consideration to enter the program
without satisfying the requirements at Sec. 425.108(b) and (c) for
operations and clinical management. In addition, we are amending Sec.
425.204(c)(iii) to require that applicants must submit materials at the
time of application regarding the ACO's leadership and management team,
including the qualified health care
[[Page 32722]]
professional responsible for the ACO's quality assurance and
improvement program.
8. Required Process To Coordinate Care
a. Overview
Section 1899(b)(2)(G) of the Act requires an ACO to ``define
processes to . . . coordinate care, such as through the use of
telehealth, remote patient monitoring, and other such enabling
technologies.'' In the November 2011 final rule (76 FR 67829 through
67830), we established requirements under Sec. 425.112(b)(4) that ACOs
define their care coordination processes across and among primary care
physicians, specialists, and acute and post-acute providers. As part of
this requirement, an ACO must define its methods and processes to
coordinate care throughout an episode of care and during its
transitions. In its application to participate in the Shared Savings
Program, the ACO must submit a description of its individualized care
program, along with a sample care plan, and explain how this program is
used to promote improved outcomes for, at a minimum, its high-risk and
multiple chronic condition patients. In addition, an ACO's application
must describe target populations that would benefit from individualized
care plans.
In developing these policies for the November 2011 final rule (76
FR 67819), we received comments acknowledging that requiring ACOs to
define processes to promote coordination of care is vital to the
success of the Shared Savings Program. Commenters stressed the
importance of health information exchanges in coordination of care
activities and recommended that CMS allow ACOs the flexibility to use
any standards-based electronic care coordination tools that meet their
needs. Other commenters suggested that the proposed rule anticipated a
level of functional health information exchange and technology adoption
that may be too aggressive.
As stated in Sec. 425.204(c)(1)(ii), applicants to the Shared
Savings Program must provide a description, or documents sufficient to
describe, how the ACO will implement the required processes and
patient-centeredness criteria under Sec. 425.112, including
descriptions of the remedial processes and penalties (including the
potential for expulsion) that will apply if an ACO participant or an
ACO provider/supplier fails to comply with and implement these
processes. Under Sec. 425.112(b), an ACO must establish processes to
accomplish the following:
Promote evidence-based medicine.
Promote patient engagement.
Develop an infrastructure to internally report on quality
and cost metrics required for monitoring and feedback.
Coordinate care across and among primary care physicians,
specialists and acute and post-acute providers and suppliers.
In addition to the processes described previously, we believe it is
important for applicants to explain how they will develop the health
information technology tools and infrastructure to accomplish care
coordination across and among physicians and providers Adoption of
health information technology is important for supporting care
coordination by ACO participants and other providers outside the ACO in
the following ways:
Secure, private sharing of patient information.
Reporting on quality data and aggregating data across
providers and sites to track quality measures.
Deploying clinical decision support tools that provide
access to alerts and evidence based-guidelines.
As ACOs establish more mature processes for risk management,
information technology infrastructure allows ACOs and providers to
conduct robust financial management of beneficiary populations, deliver
cost and quality feedback reporting to individual providers, and
streamline the administration of risk based contracts across multiple
payers. We believe that requiring ACOs to address health information
technology infrastructure in their application to the Shared Savings
program would support more careful planning and increased focus on this
issue.
b. Accelerating Health Information Exchange
We believe all patients, their families, and their healthcare
providers should have consistent and timely access to their health
information in a standardized format that can be securely exchanged
between the patient, providers, and others involved in the patient's
care. (HHS August 2013 Statement, ``Principles and Strategies for
Accelerating Health Information Exchange'') HHS is committed to
accelerating health information exchange (HIE) through the use of EHRs
and other types of health information technology (HIT) across the
broader care continuum through a number of initiatives including--
Establishing a coordinated governance framework and
process for nationwide health IT interoperability;
Improving technical standards and implementation guidance
for sharing and using a common clinical data set;
Enhancing incentives for sharing electronic health
information according to common technical standards, starting with a
common clinical data set; and
Clarifying privacy and security requirements that enable
interoperability. These initiatives are designed to encourage HIE among
health care providers, including professionals and hospitals eligible
for the Medicare and Medicaid EHR Incentive Programs and those
ineligible for such programs to improve care delivery and coordination
across the entire care continuum.
For example, the Transition of Care Measure #2 in Stage 2 of the
Medicare and Medicaid EHR Incentive Programs requires HIE to share
summary records for at least 10 percent of care transitions. Most
recently, the Office of the National Coordinator for Health Information
Technology (ONC) released a document entitled ``Connecting Health and
Care for the Nation: A Shared Nationwide Interoperability Roadmap''
(available at http://www.healthit.gov/sites/default/files/nationwide-interoperability-roadmap-draft-version-1.0.pdf) which further describes
a shared agenda for achieving interoperability across the current
health IT landscape. In the near term, the Roadmap focuses on actions
that will enable a majority of individuals and providers across the
care continuum to send, receive, find and use a common set of
electronic clinical information at the nationwide level by the end of
2017.
We believe that HIE and the use of certified EHRs can effectively
and efficiently help ACOs and participating providers improve internal
care delivery practices, support management of patient care across the
continuum, and support the reporting of electronically specified
clinical quality measures (eCQMs).
c. Proposed Revisions
In the proposed rule, we continue to believe that ACOs should
coordinate care between all types of providers and across all services,
and that the secure, electronic exchange of health information across
all providers and suppliers is of the utmost importance for both
effective care coordination activities and the success of the Shared
Savings Program. We clarify that such care coordination could include
coordination with community-based organizations that provide services
that address social determinants of health. We understand that ACOs
will differ in their ability to adopt the appropriate
[[Page 32723]]
health information exchange technologies, but we continued to
underscore the importance of robust health information exchange tools
in effective care coordination.
In the proposed rule, ACOs have reported how important access to
real time data is for providers to improve care coordination across all
sites of care, including outpatient, acute, and post-acute sites of
care. We believe that providers across the continuum of care are
essential partners to primary care physicians in the management of
patient care. ACOs participating in the program indicate that they are
actively developing the necessary infrastructure and have been
encouraging the use of technologies that enable real time data sharing
among and between sites of care. We believe having a process and plan
in place to coordinate a beneficiary's care by electronically sharing
health information improves care, and that this helps all clinicians
involved in the care of a patient to securely access the necessary
health information in a timely manner. It also can also be used to
engage beneficiaries in their own care. We further believe that Shared
Savings Program applicants should provide, as part of the application,
their plans for improving care coordination by developing, encouraging,
and using enabling technologies and electronic health records to make
health information electronically available to all practitioners
involved in a beneficiary's care.
Therefore, we proposed to add a new requirement to the eligibility
requirements under Sec. 425.112(b)(4)(ii)(C) which would require an
ACO to describe in its application how it will encourage and promote
the use of enabling technologies for improving care coordination for
beneficiaries. Such enabling technologies and services may include
electronic health records and other health IT tools (such as population
health management and data aggregation and analytic tools), telehealth
services (including remote patient monitoring), health information
exchange services, or other electronic tools to engage patients in
their care. We also proposed to add a new provision at Sec.
425.112(b)(4)(ii)(D) to require the applicant to describe how the ACO
intends to partner with long-term and post-acute care providers to
improve care coordination for the ACO's assigned beneficiaries.
Finally, we proposed to add a provision under Sec.
425.112(b)(4)(ii)(E) to require that an ACO define and submit major
milestones or performance targets it will use in each performance year
to assess the progress of its ACO participants in implementing the
elements required under Sec. 425.112(b)(4). For instance, providers
would be required to submit milestones and targets such as: Projected
dates for implementation of an electronic quality reporting
infrastructure for participants; the number of providers expected to be
connected to health information exchange services by year; or the
projected dates for implementing elements of their care coordination
approach, such as alert notifications on emergency department and
hospital visits or e-care plan tools for virtual care teams. We believe
this information would allow us to better understand and support ACOs'
plans to put into place the systems and processes needed to deliver
high quality care to beneficiaries.
We also noted that ACOs have flexibility to use telehealth
services, as they deem appropriate for their efforts to improve care
and avoid unnecessary costs. Some ACOs have already reported that they
are actively using telehealth services to improve care for their
beneficiaries. We welcomed information from ACOs and other stakeholders
about the use of such technologies. We sought comment on the specific
services and functions of this technology that might be appropriately
adopted by ACOs. For example, do the use of telehealth services and
other technologies necessitate any additional protections for
beneficiaries? Are these technologies necessary for care coordination
or could other methods be used for care coordination? If a particular
technology is necessary, under what circumstances?
Comment: Several commenters supported our proposed new provision at
Sec. 425.112(b)(4)(ii)(D) to require the applicant to describe how the
ACO intends to partner with long-term and post-acute care providers to
improve care coordination for the ACO's assigned beneficiaries. A
commenter noted that recent studies have established that use of post-
acute care contributes to the most variation in expenditures for
Medicare beneficiaries. Another commenter suggested that CMS evaluate
whether the requirement for ACOs to define a process to promote care
coordination is sufficiently patient-centered.
Commenters also stated that post-acute care should include both
community-based and facility-based long-term services and other
supporting practitioners. Several commenters noted their belief that
primary care physicians are the key to improving care coordination. A
commenter noted that nurse practitioners play a contributing role in
the implementation of care coordination activities across ACO
professionals within the ACO. A few commenters recommended that CMS
create an additional requirement for ACOs to describe how it will
provide beneficiaries with palliative care services.
A few commenters disagreed with the addition of any requirements,
stating that they believe this requirement would add administrative
burden to ACOs and distract from coordination of care. A commenter
opposed care coordination requirements and the current requirement at
Sec. 425.112(a)(3)(i) for ACOs to outline remedial processes and
penalties that would apply for provider non-compliance and suggested
CMS eliminate them.
Response: We appreciate the broad support for the program rules
requiring ACOs to develop a process to promote patient-centered care
coordination, including the requirements for the ACO to define this
process across sites of care. We believe that our current rules place a
strong emphasis on patient-centeredness and refer the reader to the
November 2011 proposed and final rules for a more fulsome discussion of
this important issue. Our current rules require ACOs to define,
establish, implement, evaluate, and periodically update its care
processes, including its process to coordinate care across and among
primary care physicians, specialists, and acute and post-acute
providers and suppliers. When engaging beneficiaries and in shared
decision-making, the ACO must take into account the beneficiaries'
unique needs, preferences, values, and priorities. Individualized care
plans must take into account community resources available to the
individual. Therefore, we believe that the ACO's care coordination
efforts could include both community-based and facility-based long-term
services and other supporting practitioners. Furthermore, we agree that
primary care practitioners are central to the ACO's efforts to improve
care coordination for the assigned beneficiary population and that many
clinical and administrative personnel, including nurse practitioners
and other non-physician practitioners, play an important contributing
role in the implementation of care coordination activities for the ACO.
Our rules at Sec. 425.112(a)(3)(i) require each ACO to explain how it
will require ACO participants and ACO providers/suppliers to comply
with and implement each process (and all sub-elements of each process),
including remedial processes and penalties (including the potential for
expulsion)
[[Page 32724]]
applicable to ACO participant and ACO providers/suppliers for failure
to comply with their implementation. We believe this is necessary
because the processes are so integral to ACO participation and the
mission of an ACO. We believe that compliance with these processes can
indicate whether an ACO participant or ACO provider/supplier has made a
meaningful commitment to the mission and success of the ACO.
We are not including other specific requirements at this time
because we believe ACOs should have flexibility within the current
rules to define care processes that are appropriate for their unique
patient population. Therefore, we are finalizing the proposed policy
without change.
Comment: Many commenters supported our proposed revision to add a
new eligibility requirement under Sec. 425.112(b)(4)(ii)(C) which
would require an ACO to describe in its application how it will
encourage and promote the use of enabling technologies for improving
care coordination for beneficiaries. Commenters specifically encouraged
CMS to require ACOs to use specific technologies such as EHRs, image
sharing, mobile devices, electronic access for beneficiaries, HIT-
enabled monitoring of performance on patient-reported outcomes, and
remote patient monitoring. A commenter suggested requiring ACOs to give
beneficiaries the ability to view, download, and transmit their health
information in a manner consistent with Meaningful Use requirements.
Supporters suggested modifications to the proposed provision such as
recognizing that care coordination tools may be part of EHR
functionality that care coordination tools may include innovative
electronic care coordination applications, or that care coordination
tools can be designed to assist both providers and beneficiaries. A
commenter recommended that use of EHRs be a requirement for
participation in the program, rather than a description in the
application. Several commenters offered specific suggestions, such as
requiring inpatient facilities to notify a patient's primary care
provider immediately upon presentation to the emergency department,
prior to admission, and on a daily basis when the patient has been
admitted. A commenter recommended that CMS require ACOs to describe how
it would use enabling technologies to engage patients. Another
commenter encouraged CMS to consider the cultural needs, health
literacy, and technological literacy of the community as components in
the promotion of enabling technologies. A commenter suggested CMS
support transparency by evaluating and reporting on the best enabling
technology outcomes to encourage ACO adoption of best practices.
Another commenter made the statement that to enhance patient engagement
and caregiver engagement of care, patient-facing information and
communication platforms should be accessible to those with visual,
hearing, cognitive, and communication impairments.
Several commenters raised concerns about the proposal stating that
ACOs should have flexibility to work with their participating
physicians and other health professionals on how best to deploy
technology in a manner that drives efficiency and quality improvement.
These commenters viewed the proposed policy as overly restrictive and a
deterrent to the development of innovative enabling technologies. Some
commenters agreed that health IT is a critical component of ACO
success, but warned that a requirement such as this would just increase
ACO burden and not ensure that health IT would actually be used
effectively to transform care, in other words, enabling technologies
should be understood as a means for care coordination and not an end
unto itself. Commenters also raised a concern about the costs of such
technologies and suggested CMS offer financial awards or bonuses to
ACOs to defray the costs of acquiring technologies or hiring care
coordinators to better implement care coordination processes.
Response: We appreciate the support of those that recognize the
importance of encouraging ACO adoption of enabling technologies to
improve care coordination. We agree that enabling technologies should
be adopted thoughtfully with the goal of improving care, and not just
adoption for its own sake. We are not finalizing additional specific
requirements because we agree with commenters that ACOs should have
flexibility to define their care coordination processes and use of
enabling technologies. We believe this flexibility can encourage
innovative methods of engaging both beneficiaries and providers in the
coordination of a patient's care. ACOs should also have flexibility
because of differences in the rate of adoption of enabling
technologies, cultural needs and health literacy of the ACO's
population. Additionally, we believe this flexibility is needed because
it is too early in the adoption of enabling technologies to determine
what processes or technologies produce the best outcomes for patients.
We therefore disagree with commenters that view the proposal as overly
restrictive. As use of such technologies becomes more established, best
practices may emerge in the future which CMS may consider. While we
encourage ACO efforts to improve care coordination throughout episodes
of care and during care transitions, we agree with commenters that
additional requirements on providers would be burdensome. Therefore, at
this time to we will not require inpatient facilities to notify primary
care providers of emergency room visits or admissions. However, we note
that inpatient facilities have an interest in coordinating the care of
beneficiaries to reduce avoidable admissions and encourage ACOs to
develop relationships with local hospitals to improve these
transitions.
We continue to believe ACOs should coordinate care between all
types of providers and suppliers across all services, and secure,
electronic exchange of health information across all providers in a
community is of the utmost importance for both effective care
coordination activities and the success of the Shared Savings Program.
We believe having a process and plan in place to coordinate a
beneficiary's care by electronically sharing health information
improves care, and that this helps all clinicians involved in the care
of a patient to securely access the necessary health information in a
timely manner. We further believe that Shared Savings Program
applicants should provide, as part of the application, their plans for
improving care coordination by developing, encouraging, and using
enabling technologies and electronic health records to make health
information electronically available to all practitioners involved in a
beneficiary's care, both within the ACO and with other practitioners
and sites of care outside of the ACO involved in the care of a
beneficiary. Therefore, we are finalizing our proposal to add a new
requirement to the eligibility requirements under Sec.
425.112(b)(4)(ii)(C) which will require an ACO to describe in its
application how it will encourage and promote the use of enabling
technologies for improving care coordination for beneficiaries.
Specifically, such enabling technologies and services may include
electronic health records and other health IT tools (such as population
health management and data aggregation and analytic tools), telehealth
services, remote patient monitoring, health information exchange
services or other electronic tools to engage patients in their care.
[[Page 32725]]
In response to the comment suggesting that communications and
information be accessible to people with impairments, we note that
according to Sec. 425.208(b), the ACO must agree, and must require its
ACO participants, ACO providers/suppliers, and other individuals or
entities performing functions or services related to the ACO's
activities to comply with all applicable laws, including laws such as
the Rehabilitation Act of 1973, to ensure access to enabling
technologies for individuals with disabilities.
Comment: Several commenters supported our proposal to add a
provision under Sec. 425.112(b)(4)(ii)(E) to require that an ACO
define and submit major milestones or performance targets that it will
use in each performance year to assess the progress of its ACO
participants in implementing the elements required under Sec.
425.112(b)(4). However, a majority of commenters opposed this proposal.
Commenters who supported the proposal indicated that they believe that
milestones would be important to keep the ACO and ACO participants
accountable to their care coordination plan. Others requested
clarification on what the penalties would be if targets and milestones
are not met as well as how often these targets and milestones must be
reported by ACOs. Commenters who were opposed to the proposal stated
that additional eligibility requirements would be an administrative
burden and distract from the actual coordination of care. A commenter
suggested the CMS amend this proposal to require that the ACO take into
account the cultural needs, and health and technological literacy of
the community when setting milestones. Another commenter wondered if
this requirement would apply to ACOs renewing their participation
agreements.
Response: We believe that setting milestones is important for an
ACO to track its progress and the progress of its ACO participants in
implementing care coordination activities and the use of enabling
technologies. However, we agreed with commenters who believe the
requirement to be overly burdensome. We note that although we are not
finalizing this specific requirement at this time, ACOs are currently
required under Sec. 425.112(b)(4), as a condition of program
eligibility and participation, to ``define, establish, implement,
evaluate, and periodically update'' processes to promote care
coordination among primary care physicians, specialist, and acute and
post-acute providers and suppliers. We believe that the obligation to
evaluate such processes necessarily entails an evaluation of the ACO's
progress in achieving care coordination. We will continue to monitor
ACO progress on HIT infrastructure as part of program administration.
In addition, we will assess general progress through ACO performance on
measures related to HIT adoption and use, for instance, the current
MSSP quality measure around participation in the EHR Incentives
program, or a future measure which would reflect ACO providers' ability
to electronically exchange data to support care transitions. We also
encourage providers to monitor the degree of interoperability and
exchange across providers in their ACO, which could include evaluating
performance on the transition of care or health information exchange
measures in the EHR Incentives Program.
FINAL ACTION: For the reasons previously discussed, we are
finalizing our proposal to add a new requirement to the eligibility
requirements under Sec. 425.112(b)(4)(ii)(C) which will require an ACO
to describe in its application how it will encourage and promote the
use of enabling technologies for improving care coordination for
beneficiaries. Specifically, such enabling technologies and services
may include electronic health records and other health IT tools (such
as population health management and data aggregation and analytic
tools), telehealth services, remote patient monitoring, health
information exchange services, or other electronic tools to engage
patients in their care. We note that in section II.F. of this final
rule we consider payment rule waivers for such things as telehealth
services.
Additionally, we are finalizing our proposal to add a new provision
at Sec. 425.112(b)(4)(ii)(D) to require the applicant to describe how
the ACO intends to partner with long-term and post-acute care providers
to improve care coordination for the ACO's assigned beneficiaries. We
note that in section II.F.7. of this final rule we discuss and finalize
a waiver of the SNF 3-day rule.
Finally, based on comments, we will not finalize our proposal to
add a provision under Sec. 425.112(b)(4)(ii)(E) to require that an ACO
define and submit major milestones or performance targets it will use
in each performance year to assess the progress of its ACO participants
in implementing the elements required under Sec. 425.112(b)(4).
Although this requirement is not being finalized, ACOs are currently
required under Sec. 425.112(b)(4), as a condition of program
eligibility and participation, to ``define, establish, implement,
evaluate, and periodically update'' processes to promote care
coordination among primary care physicians, specialist, and acute and
post-acute providers and suppliers. We believe that the obligation to
evaluate such processes necessarily entails an evaluation of the ACO's
progress in achieving care coordination.
9. Transition of Pioneer ACOs Into the Shared Savings Program
a. Overview
The Center for Medicare and Medicaid Innovation (the CMS Innovation
Center) was established by section 1115A of the Act (as added by
section 3021 of the Affordable Care Act) for the purpose of testing
``innovative payment and service delivery models to reduce program
expenditures . . . while preserving or enhancing the quality of care''
for those individuals who receive Medicare, Medicaid, or Children's
Health Insurance Program (CHIP) benefits. The Pioneer ACO Model is a
CMS Innovation Center initiative designed for organizations with
experience operating as ACOs or in similar arrangements. Among the
design elements being tested by the Pioneer ACO Model is the impact of
using two-sided risk and different payment arrangements in to achieve
the goals of providing better care to patients, and reducing Medicare
costs. Under section 1899(b)(4) of the Act, to be eligible to
participate in the Shared Savings Program, a provider of services or
supplier may not also be participating in a program or demonstration
project that involves shared savings, such as the Pioneer ACO Model.
Thus, Pioneer ACOs are not permitted to participate concurrently in the
Shared Savings Program. As Pioneer ACOs complete the model test (the
agreement is for a minimum of 3 years with an option to participate for
an additional 2 years), they would have an opportunity to transition to
the Shared Savings Program. We believe it would be appropriate to
establish an efficient process to facilitate this transition in a way
that minimizes any unnecessary burdens on these ACOs and on CMS.
b. Proposed Revisions
In order to do this, we proposed to use a transition process that
is similar to the transition process we established previously for
Physician Group Practice (PGP) demonstration participants applying to
participate in the Shared Savings Program. The PGP demonstration,
authorized under section 1866A of the Act, was our first experience
with a shared savings program in Medicare and served as a
[[Page 32726]]
model for many aspects of the Shared Savings Program.
In the November 2011 final rule (76 FR 67834), we finalized Sec.
425.202(b), which provides that PGP sites applying for participation in
the Shared Savings Program will be given the opportunity to complete a
condensed application form. This condensed application form requires a
PGP site to provide the information that was required for the standard
Shared Savings Program application but that was not already obtained
through its application for or via its participation in the PGP
demonstration. Also, a PGP participant would be required to update any
information contained in its application for the PGP demonstration that
was also required on the standard Shared Savings Program application.
Former PGP participants qualified to use a condensed application form
if their ACO legal entity and TINs of ACO participant were the same as
those that participated under the PGP demonstration.
We noted that, as we continue to implement the Shared Savings
Program, we will likely have a similar situation with regard to Pioneer
ACOs that have completed their current agreement and wish to transition
to the Shared Savings Program. Given that we have been working with and
have a level of familiarity with these organizations similar to that
with the PGP participants, we stated our belief that it was appropriate
to consider offering some latitude with regard to the process for
applying to the Shared Savings Program for these ACOs.
Thus, we proposed to revise Sec. 425.202(b) to offer Pioneer ACOs
the opportunity to apply to the Shared Savings Program using a
condensed application if three criteria are satisfied. First, the
applicant ACO must be the same legal entity as the Pioneer ACO. Second,
all of the TINs on the applicant's ACO participant list must have
appeared on the ``Confirmed Annual TIN/NPI List'' (as defined in the
Pioneer ACO Model Innovation Agreement with CMS) for the applicant
ACO's last full performance year in the Pioneer ACO Model. Third, the
applicant must be applying to participate in a two-sided model. We
noted that, consistent with the statute and our regulation at Sec.
425.114, any Pioneer ACO transitioning to the Shared Savings Program
must apply to participate in the Shared Savings Program for an
agreement period that would start after its participation in the
Pioneer ACO Model has ceased. We further noted that Pioneer ACOs
transitioning to the Shared Savings Program would be subject to the
standard program integrity screening and an evaluation of their history
of compliance with the requirements of the Pioneer ACO Model.
Regarding the second criterion, we recognized that there are
differences between the Pioneer ACO Model and the Shared Savings
Program, and that only some of the NPIs within a TIN might have
participated in the Pioneer ACO. Therefore, for purposes of determining
whether a condensed application will be appropriate under the Shared
Savings Program, we stated we would compare only the TINs and not NPIs.
We also recognized that some TINs may not be able to obtain the consent
of all NPIs billing through the TIN to participate in the Shared
Savings Program, which disqualifies the TIN from participating in the
program. Therefore, unlike with the PGP demonstration sites, we
proposed to allow the ACO applicant to complete a condensed application
form even if it drops TINs that participated in its Pioneer ACO.
However, we proposed that if the applicant ACO includes TINs that were
not on the Pioneer ACO's Confirmed Annual TIN/NPI List for its last
full performance year in the Pioneer ACO Model, the applicant would be
required to use the standard application for the Shared Savings
Program. A Pioneer ACO applying to the Shared Savings Program using a
condensed application form would be required to include a narrative
description of the modifications they need to make to fulfill our
requirements (for example, making changes to the governing body and
obtaining or revising agreements with ACO participants and ACO
providers/suppliers).
Because the Pioneer ACO Model is a risk-bearing model designed for
more experienced organizations, the third proposed criterion would
permit Pioneer ACOs to use the condensed application only if they apply
to participate in the Shared Savings Program under a two-sided model.
We established Track 1 of the Shared Savings Program as an on-ramp for
ACOs while they gain experience and become ready to accept risk. In
this case, the Pioneer ACOs are already experienced and will have
already accepted significant financial risk. Therefore, under this
proposal, former Pioneer ACOs would not be permitted to enter the
Shared Savings Program under Track 1. We further noted that the rules
and methodologies used under the Pioneer ACO Model to assess
performance-based risk are different than under the Shared Savings
Program. Therefore, we encourage former Pioneer Model ACOs to carefully
consider the risk-based track to which they apply under the Shared
Savings Program, and to be cognizant of the differences in rules and
methodologies.
We sought comments on this proposal to establish a condensed
application process for Pioneer ACOs applying to participate in the
Shared Savings Program and to require such Pioneer ACOs to participate
under a track that includes performance-based risk. We noted that
Pioneer ACOs that do not meet criteria for the condensed application
would have to apply through the regular application process.
Comment: Commenters supported our proposal to revise Sec.
425.202(b) to offer Pioneer ACOs the opportunity to apply to the Shared
Savings Program using a condensed application. A commenter expressed
concern that a transition to the Shared Savings Program might
``disenfranchise both nurse practitioners and their patients'' because
of the statutory criterion that beneficiaries be assigned to Shared
Savings Program ACOs based on primary care services rendered by
physicians. Another commenter supported the proposals but recommended
that CMS require Pioneer ACOs to complete a narrative detailing the
modifications the ACO would make to comply with Shared Savings Program
rules.
Response: We appreciate the support for our proposal to allow
Pioneer ACOs to enter the Medicare Share Saving Program using a
condensed application. We recognize there are differences between the
Pioneer ACO Model and the Shared Savings Program requirements and
methodologies, such as the assignment methodology, that may alter
whether beneficiaries seen by certain provider types become assigned to
a Shared Savings Program ACO. We believe that the commenter's concern
regarding the differences in assignment methodologies and the
``disenfranchisement'' it may cause is not a sufficient reason to deny
Pioneer ACOs the opportunity to use a condensed application when
transitioning to the Shared Savings Program. Additionally, we intend to
ensure that all applicants to the program are appropriately screened
and meet eligibility requirements prior to participation, including
applicants that may qualify to use a condensed application. As stated
previously, the condensed application form will require the Pioneer ACO
to describe the modifications it will need to make to fulfill our
requirements (for example, making changes to the governing body and
obtaining or revising agreements
[[Page 32727]]
with ACO participants and ACO providers/suppliers).
Comment: A few commenters suggested that CMS alter the criterion
that a Pioneer ACO may use a condensed application if the applicant ACO
is the same legal entity as the entity that participated under the
Pioneer ACO Model. These commenters suggested that the criterion should
be revised so that a former Pioneer ACO may demonstrate that it is
either the same legal entity or that the majority of its ACO
participants would remain the same. Several commenters requested that
the criteria be modified to require a full application only if there is
a 50 percent or greater change in the TIN makeup of the ACO. Another
commenter recommended elimination of this criterion but did not provide
details for the reason.
Response: We appreciate the suggestion; however, we believe the
best way to determine if the organization is the same entity that is
transitioning to the Shared Savings Program from the Pioneer ACO Model
is to establish that its legal entity has the same TIN. As articulated
by commenters in response to our proposal under Sec. 425.214(a) to
quantify a significant change in the ACO participant list, a simple
percent threshold does not necessarily identify a 50 percent change,
and a majority change could easily occur with the addition or removal
of a very small number of TINs if the ACO is small. Similarly, we
believe assessing whether the organization is the same on the basis of
a percentage of a consistent cohort of ACO participant TINs is
problematic. Therefore, we will finalize the criterion that a Pioneer
ACO may use a condensed application if the applicant ACO is the same
legal entity as the entity that participated under the Pioneer ACO
Model.
Comment: Several commenters suggested CMS either eliminate or
modify the criterion that in order to qualify to use the condensed
application, all TINs on the applicant's ACO participant list must have
appeared on the ``Confirmed Annual TIN/NPI List'' (as defined in the
Pioneer ACO Model Innovation Agreement with CMS) for the applicant
ACO's last full performance year in the Pioneer ACO Model. A few
commenters suggested that Pioneer ACOs should be allowed to also
include any TINs that they planned to add midyear (that is, during the
application period). Several commenters supported comparing only ACO
participant TINs and not ACO provider/supplier (NPI) lists because of
the different rules under the two initiatives.
Response: We agree with commenters that supported the proposal to
compare only TINs and not NPIs when assessing the ability of a Pioneer
ACO that seeks to use a condensed application when transitioning to the
Shared Savings Program. As we noted in the proposed rule, we recognized
that there are differences between the Pioneer ACO Model and the Shared
Savings Program, and that only some of the NPIs within a TIN might have
participated in the Pioneer ACO. Therefore, for purposes of determining
whether a condensed application will be appropriate under the Shared
Savings Program, we stated we would compare only the TINs and not NPIs.
We also recognized that some TINs may not be able to obtain the consent
of all NPIs billing through the TIN to participate in the Shared
Savings Program, which disqualifies the TIN from participating in the
program. Therefore, unlike with the PGP demonstration sites, we
proposed to allow the ACO applicant to complete a condensed application
form even if it drops TINs that participated in its Pioneer ACO. While
we understand the desire for organizations to annually update the ACO
participants list, we have concerns that that permitting an ACO to add
TINs during the application cycle during its transition to the Shared
Savings Program would erode our ability to determine if the ACO closely
approximates the same organization that is currently participating in
the Pioneer ACO Model and thus its ability to qualify for using a
condensed application. We welcome such ACOs to apply through the normal
application process which permits both additions and deletions to the
ACO participant list during the course of application review.
Comment: Many commenters strongly encouraged CMS not to define
which track the applicant ACO must enter. Commenters suggested that
although a Pioneer ACO participated in the more ``advanced'' program,
there are different program rules in the Shared Savings Program.
Additionally, a Pioneer ACO transitioning to the Shared Savings Program
may not have been comfortable with the risk levels taken in Pioneer
ACOs and may believe it should have the opportunity to move into a
lower risk track.
Response: We clarify that we are not defining what track a
transitioning Pioneer ACO must enter. Instead, we are offering the
opportunity, when certain criteria are met, for such organizations to
seamlessly transition to the Shared Savings Program using a condensed
application, similar to the application offered to PGP demonstration
sites as they transitioned from the PGP demonstration to the Shared
Savings Program. We believe these criteria are necessary and important
to provide us with some assurance that the organization that is
participating in the Pioneer ACO Model will be the same organization
that will participate in the Shared Savings Program. We note that
several former Pioneer ACOs that participated in the early years of the
model were not comfortable with the increased risk that was phased in
under the model after terminating their participation in the model;
they used the normal application process to enter the Shared Savings
Program under Track 1. We clarify that our proposal to use a condensed
application was intended to assist Pioneer ACOs that are currently
participating in the Pioneer ACO Model to transition seamlessly to the
Shared Savings Program. We acknowledge that there are methodological
differences between the two initiatives; however, because the Pioneer
ACOs are currently participating in the model under performance-based
two-sided risk, we do not believe such entities should be permitted to
apply under Track 1. We recognize that such entities may wish to modify
aspects of their organization, such as adding or removing certain
Medicare-enrolled TINs from participation, or for other reasons may no
longer be comfortable continuing to take two-sided risk. Such entities
may not meet criteria for completing a condensed application or could
choose to apply to the program through the normal application process.
Such ACOs would then have the opportunity to elect to participate under
Track 1. We also note that, similar to the process for offering PGP
demonstration sites the opportunity to transition to the Shared Savings
Program using a condensed application, we anticipate that this
opportunity would be time-limited. In other words, because the Pioneer
ACO Model is scheduled to end after next year, we anticipate that the
only organizations transitioning would be those that apply in the
summer of 2015 for a 2016 start date and those that apply in the summer
of 2016 for a 2017 start date.
FINAL ACTION: We are finalizing and clarifying our proposal to use
a transition process that is similar to the transition process we
established previously for Physician Group Practice (PGP) demonstration
participants applying to participate in the Shared Savings Program.
Specifically we are finalizing our proposal to revise Sec.
425.202(b) to offer Pioneer ACOs the opportunity to apply to the Shared
Savings Program using a
[[Page 32728]]
condensed application if certain criteria are satisfied. First, the
applicant ACO must be the same legal entity as the Pioneer ACO. Second,
all of the TINs on the applicant's ACO participant list must have
appeared on the ``Confirmed Annual TIN/NPI List'' (as defined in the
Pioneer ACO Model Innovation Agreement with CMS) for the applicant
ACO's last full performance year in the Pioneer ACO Model. Third, the
applicant must be applying to participate in a two-sided model. We note
that, consistent with the statute and our regulation at Sec. 425.114,
any Pioneer ACO transitioning to the Shared Savings Program must apply
to participate in the Shared Savings Program for an agreement period
that would start after its participation in the Pioneer ACO Model has
ceased. We further note that Pioneer ACOs transitioning to the Shared
Savings Program would be subject to the standard program integrity
screening and an evaluation of their history of compliance with the
requirements of the Pioneer ACO Model.
C. Establishing and Maintaining the Participation Agreement With the
Secretary
1. Background
The November 2011 final rule established procedures for applying to
participate in the Shared Savings Program, including the need to submit
a complete application, the content of the application, and our
criteria for evaluating applications (see Sec. Sec. 425.202 through
425.206). In addition, Sec. 425.212 specifies which changes to program
requirements will apply during the term of an ACO's participation
agreement. In this section we discuss our proposals to clarify and to
supplement the rules related to these requirements.
The current regulations address certain issues with respect to ACOs
that wish to reapply after termination or experiencing a loss during
their initial agreement period (Sec. Sec. 425.222 and 425.600(c),
respectively). However, the regulations are silent with respect to the
procedures that apply to ACOs that successfully complete a 3-year
agreement and would like to reapply for a subsequent agreement period
in the Shared Savings Program. In this section, we discuss our proposal
to establish the procedure for an ACO to renew its participation
agreement for a subsequent agreement period.
2. Application Deadlines
a. Overview
To obtain a determination on whether a prospective ACO meets the
requirements to participate in the Shared Savings Program, our rules at
Sec. 425.202(a) require that an ACO submit a complete application in
the form and manner required by CMS by the deadline established by CMS.
Information on the required content of applications can be found in
Sec. 425.204, as well as in guidance published at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Application.html. Among other requirements, applications must include
certain information such as an ACO's prior participation in or
termination from the program (Sec. 425.204(b)); documents such as
participation agreements, employment contracts and operating policies
(Sec. 425.204(c)(1)(i)); and a list of all ACO participants and their
Medicare-enrolled TINs (Sec. 425.204(c)(5)(i)).
We determine and publish in advance on our Web site the relevant
due dates for the initial submission of applications for each
application cycle. While we expect ACOs to submit a completed
application by the initial application due date specified on our Web
site, we recognize that there may be portions of the application where
additional information is necessary for CMS to make a determination.
Therefore, according to Sec. 425.206(a)(2), we notify an applicant
when additional information is needed and provide an opportunity to
submit information to complete the application by a deadline specified
by CMS in the notice.
As stated in Sec. 425.206(a), CMS evaluates an ACO's application
on the basis of the information contained in and submitted with the
application. Applications that remain incomplete after the deadline
specified by CMS are denied. It is incumbent upon the ACO applicant to
submit timely the information that is required for CMS to decide
whether the applicant is eligible to participate in the program.
Finally, under Sec. 425.202(c), CMS determines whether an
applicant satisfies the requirements and is qualified to participate in
the Shared Savings Program.
b. Proposed Revisions
In implementing the Shared Savings Program, we found that some
applicants misunderstood our application process and the need to submit
all required information by a specified deadline for submission of
applications and supporting information. Thus, we proposed to revise
our application review process set forth at Sec. 425.206(a) to better
reflect our review procedures.
We proposed to consolidate at Sec. 425.206 two similar provisions
regarding application review. Currently, Sec. 425.202(c)(1) regarding
application review provides that CMS determines whether an applicant
satisfies the requirements of part 425 and is qualified to participate
in the Shared Savings Program, and Sec. 425.202(c)(2) provides that
CMS approves or denies applications accordingly. We proposed to amend
Sec. 425.206(a)(1) to address the concept of application review
currently set forth at Sec. 425.202(c)(1), and we proposed to amend
Sec. 425.202(c) by replacing the existing text with language
clarifying that CMS reviews applications in accordance with Sec.
425.206.
We also proposed to revise Sec. 425.206(a) to better reflect our
application review process and the meaning of the reference to
``application due date.'' Specifically, we proposed to revise Sec.
425.206(a)(1) to clarify that CMS approves or denies an application on
the basis of the following:
Information contained in and submitted with the
application by a deadline specified by CMS.
Any supplemental information submitted in response to CMS'
request for information and by a deadline specified by CMS.
Other information available to CMS (including information
on the ACO's program integrity history).
In addition, we proposed to amend Sec. 425.206(a)(2) to clarify
our process for requesting supplemental information and to add a new
paragraph (a)(3) to specify that CMS may deny an application if an ACO
applicant fails to submit supplemental information by the deadlines
specified by CMS. We believe that additional clarity may result in more
timely submission of the information necessary to evaluate
applications. Moreover, it is critical that ACOs submit information on
a timely basis so that we can perform other necessary operational
processes before the start of the approved ACO's first performance year
(for example, determining the number of beneficiaries assigned to the
ACO, screening prospective ACO participants and ACO providers/
suppliers, identifying the preliminary prospective list of assigned
beneficiaries, and calculating the ACO's historical benchmark).
Comment: A few commenters supported our proposed changes as
written. One of the commenters stated that it is important for ACOs to
have definitive deadlines, and requested that CMS make clear all
deadlines necessary for ACOs to meet all program
[[Page 32729]]
requirements, for example, deadlines for making public certain
information.
Response: We agree with commenters that it is important to clearly
communicate deadlines to ACOs. Specific application deadlines will
continue to be posted on our Web site on an annual basis, and deadlines
for the submission of supplemental information provided in response to
a CMS' request will be communicated directly with applicants throughout
the application review process. For ACOs that have been accepted into
the program, we make announcements directly to ACOs through our weekly
newsletter and the ACO's CMS coordinator. Deadlines are also indicated
in guidance documents and the calendar posted on the ACO portal.
FINAL ACTION: We are finalizing our proposal to consolidate at
Sec. 425.206(a)(1) two similar provisions regarding application review
found at Sec. 425.202(c)(1) and Sec. 425.202(c)(2). Therefore, we are
finalizing our proposals to revise Sec. 425.206(a)(1) to clarify that
CMS approves or denies an application on the basis of the following:
The information contained in and submitted with the
application by the deadline.
Any supplemental information submitted in response to a
CMS request and by the specified deadline .
Other information available to CMS (including information
on the ACO's program integrity history).
Since incomplete applications prevent us from making a timely
evaluation of whether the ACO satisfies the requirements of our
regulations, we are also finalizing as proposed the policies related to
application procedures and deadlines. Specifically, we are finalizing
our proposals to amend Sec. 425.206(a)(2) to clarify our process for
requesting supplemental information and to add a new paragraph (a)(3)
to specify that CMS may deny an application if an ACO applicant fails
to submit information by the deadlines specified by CMS.
3. Renewal of Participation Agreements
a. Overview
For ACOs that would like to continue participating in the Shared
Savings Program after the expiration of their current agreement period,
we proposed a process for renewing their existing participation
agreements, rather than requiring submission of a new or condensed
application for continued program participation. Specifically, we
proposed to add new Sec. 425.224 to establish procedures for renewing
the participation agreements of ACOs. In addition, we proposed (in
section II.C.4. of the proposed rule) to modify the definition of
``agreement period'' at Sec. 425.20 to clarify its meaning in the
context of participation agreement renewals.
b. Proposed Revisions
Under proposed Sec. 425.224(a), an ACO would be permitted to
request renewal of its participation agreement prior to its expiration
in a form and manner and by a deadline specified by CMS in guidance. We
proposed that an ACO executive who has the authority to legally bind
the ACO must certify that the information contained in the renewal
request is accurate, complete, and truthful. Further, we proposed that
an ACO that seeks renewal of its participation agreement and was newly
formed after March 23, 2010, as defined in the Antitrust Policy
Statement, must agree that CMS can share a copy of its renewal request
with the Antitrust Agencies (as defined at Sec. 425.20). We
anticipated that our operational guidance will outline a process
permitting renewal requests during the last performance year of an
ACO's participation agreement. For example, we stated that an ACO with
a participation agreement ending on December 31, 2015 would be offered
the opportunity to renew its participation agreement sometime during
the 2015 calendar year in preparation to begin a new 3-year agreement
period on January 1, 2016. To streamline program operations, we
anticipated specifying a timeframe for submission and supplementation
of renewal requests that would coincide with the deadlines applicable
to submission and supplementation of applications by new ACO applicants
under Sec. 425.202.
Under proposed Sec. 425.224(b), we proposed to evaluate an ACO's
participation agreement renewal based on all of the following factors:
Whether the ACO satisfies the criteria for operating under
the selected risk model.
The ACO's history of compliance with the requirements of
the Shared Savings Program.
Whether ACO established that it is in compliance with the
eligibility and other requirements of the Shared Savings Program,
including the ability to repay losses, if applicable.
Whether the ACO met the quality performance standards
during at least 1 of the first 2 years of the previous agreement
period.
Whether an ACO under a two-sided model repaid losses owed
to the program that it generated during the first 2 years of the
previous agreement period.
The results of a program integrity screening of the ACO,
its ACO participants, and its ACO providers/suppliers (conducted in
accordance with Sec. 425.304(b)).
We solicited comments on these criteria and any additional criteria
that would help ensure the success of the program.
We further proposed to approve or deny a renewal request based on
the information submitted in the request and other information
available to CMS. We proposed to notify the ACO when the initial
request is incomplete or inadequate and to provide an opportunity for
the ACO to submit supplemental information to correct the deficiency.
Under the proposal, the ACO must submit both the renewal request and
any additional information needed to evaluate the request in the form
and manner and by the deadlines specified by CMS.
Under Sec. 425.224(c), we proposed to notify each ACO in writing
of our determination to approve or deny the ACO's renewal request. If
we were to deny the renewal request, the notice would specify the
reasons for the denial and inform the ACO of any rights to request
reconsideration review in accordance with the procedures specified in
part 425 subpart I.
We stated our belief that a simple renewal process would reduce the
burden for ACOs that wish to continue in the program and minimize the
administrative burden on CMS, which would allow us to focus our
attention on new applicants that have not yet established their
eligibility to participate. We stated our intention to establish the
deadlines and other operational details for this renewal process
through guidance and instructions. Finally, we noted that under our
proposal to modify the definition of the participation ``agreement
period'' (section II.C.4 of this final rule), a new agreement period
would begin upon the start of the first performance year of the renewed
participation agreement.
Comment: A few stakeholders expressed support for our efforts to
develop a renewal process. A commenter stated that the proposed
criteria were appropriate and adequate to ensure the success of the
program and to reduce the administrative burden on CMS and ACOs. Some
offered specific comments related to the criteria for permitting an ACO
to renew its agreement. For example, some commenters agreed that the
renewal process should review the ACO's
[[Page 32730]]
history of compliance and quality performance. Some commenters
suggested that CMS consider additional criteria for renewing current
agreements, including the following:
The stability of leadership.
Attainment of certain levels of EHR implementation or
accreditation.
Establishment of a partnership with Geriatric Workforce
Enhancement Programs.
Other criteria related to the ACO's ability to perform
utilization review and accept performance-based risk.
A commenter recommended that an ACO changing its legal entity or
undergoing substantial changes in its ACO participant list be permitted
to use the renewal application, rather than having to submit an
application as a new ACO applicant.
Response: We agree with the commenters regarding the advantages of
providing a more flexible renewal process for current ACOs who meet our
specific criteria. We appreciate the support for our proposed renewal
criteria and the suggested criteria; however, we do not believe that
additional criteria are necessary at this time. As stated in the
proposed rule, we believe the criteria as proposed will both ensure
continued compliance with program rules and reduce the burden for ACOs
that wish to continue in the program and minimize the administrative
burden on CMS, which will allow us to focus our attention on new
applicants that have not yet established their eligibility to
participate. We clarify that ACOs seeking to renew agreements must be
entities that have previously participated in the Shared Savings
Program. In other words, the same legal entity that previously
participated in the program may renew its agreement for a subsequent
agreement period. New organizations that have not previously
participated in the Shared Savings Program may apply using the
established application process. We believe it is important to conduct
a complete review of any new legal entity that wishes to apply for
participation in the program.
FINAL ACTION: We are finalizing our policies as proposed regarding
the renewal process. Specifically, we are finalizing our proposal to
add new Sec. 425.224 to establish procedures for renewal of the
participation agreements of ACOs. Under Sec. 425.224(a), an ACO will
be permitted to request renewal of its participation agreement prior to
its expiration in a form and manner and by a deadline specified by CMS
in guidance. An ACO executive who has the authority to legally bind the
ACO must certify that the information contained in the renewal request
is accurate, complete, and truthful. Further, an ACO that seeks renewal
of its participation agreement and was newly formed after March 23,
2010, as defined in the Antitrust Policy Statement, must agree that CMS
can share a copy of its renewal request with the Antitrust Agencies. To
streamline program operations, we anticipate specifying in guidance a
timeframe for submission and supplementation of renewal requests that
will coincide with the deadlines applicable to submission and
supplementation of applications by new ACO applicants under Sec.
425.202.
Under Sec. 425.224(b), CMS will evaluate an ACO's participation
agreement renewal based on all of the following factors:
Whether the ACO satisfied the criteria for operating under
the selected risk model.
The ACO's history of compliance with the requirements of
the Shared Savings Program.
Whether the ACO established that it is in compliance with
the eligibility and other requirements of the Shared Savings Program,
including the ability to repay losses, if applicable.
Whether the ACO met the quality performance standards
during at least 1 of the first 2 years of the previous agreement
period.
Whether an ACO under a two-sided model repaid losses owed
to the program that it generated during the first 2 years of the
previous agreement period.
The results of a program integrity screening of the ACO,
its ACO participants, and its ACO providers/suppliers (conducted in
accordance with Sec. 425.304(b)).
CMS approves or denies a renewal request based on the information
submitted in the request and other information available to CMS and
notifies the ACO when the request is incomplete or inadequate to
provide an opportunity for the ACO to submit supplemental information
to correct the deficiency. The ACO must submit both the renewal request
and any additional information needed to evaluate the request in the
form and manner and by the deadlines specified by CMS.
Under Sec. 425.224(c), we are finalizing our proposal to notify
each ACO in writing of our determination to approve or deny the ACO's
renewal request. If we deny the renewal request, the notice will
specify the reasons for the denial and inform the ACO of any rights to
request reconsideration review in accordance with the procedures
specified in part 425 subpart I.
4. Changes to Program Requirements During the 3-Year Agreement
a. Overview
In the November 2011 final rule (76 FR 67838), we recognized the
potential for changes to the Shared Savings Program regulations that
would become effective while participating ACOs are in the middle of an
agreement period. Therefore, we promulgated a rule to specify under
what conditions an ACO would be subject to regulatory changes that
become effective after the start of its agreement period. Specifically,
we finalized Sec. 425.212(a)(2), which provided that ACOs are subject
to all regulatory changes with the exception of changes to the
eligibility requirements concerning ACO structure and governance, the
calculation of the sharing rate, and the assignment of beneficiaries.
We did not exempt ACOs from becoming immediately subject to other
regulatory changes. For example, we did not exempt changes such as
those related to quality measures because of our belief that requiring
ACOs to adhere to changes related to quality measures would ensure that
they keep pace with changes in clinical practices and developments in
evidence-based medicine.
The November 2011 final rule did not require ACOs to be subject to
any regulatory changes regarding beneficiary assignment that become
effective during an agreement period because we recognized that changes
in the beneficiary assignment methodology could necessitate changes to
ACOs' financial benchmarks. At the time we published the November 2011
final rule (76 FR 67838), we had not developed a methodology for
adjusting an ACO's benchmark to reflect changes in the beneficiary
assignment methodology during an agreement period. We anticipated that
ACOs would complete their 3-year agreement period with a relatively
stable set of ACO participants. Therefore, they would all have stable
benchmarks during the 3-year agreement period that would require
updates only to reflect annual national FFS trends and changes in
beneficiary characteristics, consistent with statutory requirements.
Without a methodology for adjusting benchmarks to reflect changes in
the beneficiary assignment methodology during the agreement period, we
were reluctant to subject ACOs to immediate regulatory changes that
could impact their benchmarks during the term of a participation
agreement. However, in light of the extensive changes ACOs made to
their lists of ACO participants during the first 2 performance years,
the significant
[[Page 32731]]
effect these changes had upon beneficiary assignment, and our
subsequent development of policies regarding benchmark adjustment at
the start of each performance year to reflect such changes (see http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Updating-ACO-Participant-List.html), we proposed
to revise the types of regulatory changes an ACO would become subject
to during its agreement period. We also proposed to clarify Sec.
425.212(a) regarding the applicability of certain regulatory changes
and to clarify the definition of ``agreement period'' under Sec.
425.20.
b. Proposed Revisions
We proposed to modify Sec. 425.212(a) to provide that ACOs are
subject to all regulatory changes ``that become effective during the
agreement period,'' except for regulations regarding certain specified
program areas (specifically, the eligibility requirements concerning
the structure and governance of ACOs and calculation of the sharing
rate), ``unless otherwise required by statute.'' This proposed revision
corrects the omission of temporal language in the requirement regarding
regulatory changes. In addition, it clarifies that ACOs would be
subject to regulatory changes regarding ACO structure and governance,
and calculation of the sharing rate during an agreement period if CMS
is mandated by statute to implement such changes by regulation in the
middle of a performance year.
In addition, we proposed to modify the definition of ``agreement
period'' at Sec. 425.20. The term ``agreement period'' is currently
defined at Sec. 425.20 to mean ``the term of the participation
agreement which begins at the start of the first performance year and
concludes at the end of the final performance year.'' However, in light
of our proposal to renew participation agreements (see section II.C.3.
of this final rule), the reference to ``final performance year'' in the
existing definition is ambiguous. For example, if the ``final
performance year'' of the agreement period includes the last
performance year of a renewed participation agreement, an ACO would
never be subject to regulatory changes regarding ACO structure and
governance or calculation of the sharing rate. Therefore, we proposed
to amend the definition to provide that the agreement period would be
3-performance years, unless otherwise specified in the participation
agreement. Thus, an ACO whose participation agreement is renewed for a
second or subsequent agreement period would be subject, beginning at
the start of that second or subsequent agreement period, to any
regulatory changes regarding ACO structure and governance that became
effective during the previous 3 years (that is, during the preceding
agreement period).
Also, we proposed to require ACOs to be subject to any regulatory
changes regarding beneficiary assignment that become effective during
an agreement period. Specifically, we proposed to remove beneficiary
assignment as an exception under Sec. 425.212(a). Consistent with our
authority under section 1899(d)(1)(B)(ii) of the Act to adjust the
benchmark ``for beneficiary characteristics and other factors as the
Secretary determines appropriate,'' we have now developed operational
policies under which we are able to adjust the benchmark on a yearly
basis to account for changes in beneficiary assignment resulting from
changes in the ACO's list of ACO participants. For more detailed
information on these policies see http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Updating-ACO-Participant-List.html. Given that these operational policies enable annual
adjustments to ACO benchmarks to account for changes in beneficiary
assignment resulting from changes in ACO participants, we believe we
would also be able to adjust an ACO's benchmark to account for
regulatory changes regarding beneficiary assignment methodology that
become effective during an agreement period. Accordingly, we do not
believe our proposal to make regulatory changes regarding beneficiary
assignment applicable to ACOs during an agreement period would
inappropriately affect the calculation of an ACO's benchmark or shared
savings for a given performance year. Rather, our adjustment
methodology will ensure continued and appropriate comparison between
benchmark and performance year expenditures.
Under this proposal, regulatory changes regarding beneficiary
assignment would apply to all ACOs, including those ACOs that are in
the middle of an agreement period. However, as discussed in section
II.E.6. of this final rule, we also proposed that any final regulations
that affect beneficiary assignment would not be applicable until the
start of the next performance year. We believe that implementing any
revisions to the assignment methodology at the beginning of a
performance year is reasonable and appropriate because it would permit
time for us to make the necessary programming changes and would not
disrupt the assessment of ACOs for the current performance year.
Moreover, we would adjust all benchmarks at the start of the first
performance year in which the new assignment rules are applied so that
the historical benchmark for an ACO reflects the use of the same
assignment rules that would apply in the performance year.
We also noted that we would carefully consider the timing and
effect on both current and future ACOs of any new regulatory proposal,
and when promulgating new regulatory changes through rulemaking, we
would solicit comment on these matters. Additionally, when implementing
a final rule that changes our processes and methodologies, we stated
that we would alert current and prospective ACOs of such changes via
CMS communications and updates to guidance.
Comment: Ae commenter recommended a uniform start of January 1 of
the year following changes in regulations to allow ACOs to adequately
plan, budget, recruit, and make the necessary staffing adjustments to
meet new requirements. Another commenter suggested that CMS proceed
cautiously when making regulatory changes that would impact an ACO in
the middle of an agreement period. Finally, another commenter
recommended that CMS permit ACOs to exit the MSSP during a performance
year if the ACO believes the regulatory changes are detrimental to the
ACO's performance goals.
Response: We appreciate the comments regarding regulatory changes
and their impact on ACOs that are currently participating in the
program. We agree with stakeholders that January 1 of a performance
year is a logical time to make regulatory changes effective for
beneficiary assignment. We also agree that regulatory changes that
impact ACOs during an agreement should be considered carefully, and the
rulemaking process will provide ACOs with an opportunity to comment on
the effective date for such changes. Finally, we note that an ACO is
permitted under Sec. 425.212(d) to terminate its participation
agreement in those instances where statutory or regulatory standards
are established during the agreement period which the ACO believes will
impact its ability to continue participating in the Shared Savings
Program.
Comment: A few commenters agreed with our proposed revision of the
definition of an agreement period as written. Several commenters
specifically supported the revision because they believe this would
give CMS flexibility to extend the agreement
[[Page 32732]]
period from three to five years as discussed in greater detail in
section II.F.2. of this final rule.
Response: We appreciate the support for the revision to the
definition of an agreement period and will finalize as proposed. As
further discussed in section II.F.3. of this final rule, we do not at
this time intend to extend the term of an ACO's agreement period. In
accordance with Sec. 425.200(b)(2)(ii), the term of the agreement
period is three years for ACOs that are approved to participate in the
Shared Savings Program for 2013 and all subsequent years.
FINAL ACTION: We are finalizing our policies as proposed.
Specifically, we are finalizing our modification of Sec. 425.212(a) to
provide that ACOs are subject to all regulatory changes ``that become
effective during the agreement period,'' except for regulations
regarding certain specified program areas, ``unless otherwise required
by statute.'' This proposed revision corrects the omission of temporal
language in the requirement regarding regulatory changes and clarifies
that ACOs are subject to regulatory changes regarding ACO structure and
governance, and calculation of the sharing rate during an agreement
period if CMS is mandated by statute to implement such changes by
regulation in the middle of a performance year.
In addition, we are finalizing our modification of the definition
of ``agreement period'' at Sec. 425.20. Thus, an ACO whose
participation agreement is renewed for a second or subsequent agreement
period would be subject, beginning at the start of that second or
subsequent agreement period, to any regulatory changes regarding ACO
structure and governance that became effective during the previous 3
years (that is, during the preceding agreement period).
Also, we are finalizing our proposal to remove beneficiary
assignment as an exception under Sec. 425.212(a). Regulatory changes
regarding beneficiary assignment will apply to all ACOs, including
those ACOs that are in the middle of an agreement period. However, as
discussed in section II.E.6. of this final rule, any final policies
that affect beneficiary assignment will not apply until the start of
the next performance year. We believe that implementing any revisions
to the assignment methodology at the beginning of a performance year is
reasonable and appropriate, because it will allow us to make the
necessary programming changes and will not disrupt the assessment of
ACOs for the current performance year. Moreover, we will adjust all
benchmarks at the start of the first performance year in which the new
assignment rules are applied so that the historical benchmark for an
ACO reflects the use of the same assignment rules that will apply in
the performance year.
D. Provision of Aggregate and Beneficiary Identifiable Data
1. Background
Under section 1899(b)(2)(A) of the Act, an ACO must ``be willing to
become accountable for the quality, cost, and overall care of the
Medicare fee-for-service beneficiaries assigned to it.'' Furthermore,
in order to be eligible to participate in the Shared Savings Program,
section 1899(b)(2)(G) of the Act states an ``ACO shall define processes
to . . . report on quality and cost measures, and coordinate care. . .
.'' However, section 1899 of the Act does not address what data, if
any, we should make available to ACOs on their assigned beneficiary
populations to support them in evaluating the performance of ACO
participants and ACO providers/suppliers, conducting quality assessment
and improvement activities, or conducting population-based activities
relating to improved health.
As we explained in the November 2011 final rule (76 FR 67844), in
agreeing to become accountable for a group of Medicare beneficiaries,
and as a condition of participation in the Shared Savings Program, we
expect that ACOs will have, or are working towards having, processes in
place to independently identify and produce the data they believe are
necessary to best evaluate the health needs of their patient
population, improve health outcomes, monitor provider/supplier quality
of care and patient experience of care, and produce efficiencies in
utilization of services. Therefore, it is our expectation that ACOs are
actively working on developing and refining these processes. Moreover,
we continue to believe this ability to independently identify and
produce data for evaluating, improving, and monitoring the health of
their patient population is a critical skill for each ACO to develop,
leading to an understanding of the patient population that it serves.
Once the ACO achieves an understanding of its patient population, it
can work toward redesigning appropriate care processes to address the
specific needs of its patient population.
However, as we noted previously (76 FR 67844), while an ACO
typically should have, or at least be moving towards having complete
information for the services its ACO providers/suppliers furnish to
Medicare FFS beneficiaries, we recognize that the ACO may not have
access to information about services provided to its assigned
beneficiaries by health care providers and suppliers outside the ACO--
information that may be key to the ACO's coordination of care efforts.
Therefore, during the original rulemaking process for the Shared
Savings Program, we proposed and made final a policy--
To distribute aggregate-level data reports to ACOs;
Upon request from the ACO, to share limited identifying
information about beneficiaries who are preliminarily prospectively
assigned to the ACO and whose information serves as the basis for the
aggregate reports; and
Upon request from the ACO, to share certain beneficiary
identifiable claims data with the ACO to enable it to conduct quality
assessment and improvement activities, care coordination, or both, on
its own behalf as a covered entity, or on behalf of its ACO
participants and ACO providers/suppliers that are covered entities,
unless the beneficiary chooses to decline to share his or her claims
data.
As we stated in the November 2011 final rule (76 FR 67844), we
believe that access to beneficiary identifiable information would
provide ACOs with a more complete picture about the care their assigned
beneficiaries receive, both within and outside the ACO. In addition, it
is our view that this information would help ACOs evaluate providers'/
suppliers' performance, conduct quality assessment and improvement
activities, perform care coordination activities, and conduct
population-based activities relating to improved health.
In the April 2011 proposed rule (76 FR 19558), we described the
circumstances under which we believe that the HIPAA Privacy Rule would
permit our disclosure of certain Medicare Part A and B data to ACOs
participating in the Shared Savings Program. Specifically, under the
Shared Savings Program statute and regulations, ACOs are tasked with
working with their ACO participants and ACO providers/suppliers to
evaluate their performance, conduct quality assessment and improvement
activities, perform care coordination activities, and conduct
population-based activities relating to improved health for their
assigned beneficiary population. When done by or on behalf of a covered
entity, these are functions and activities that would qualify as
``health care
[[Page 32733]]
operations'' under the first and second paragraphs of the definition of
health care operations at 45 CFR 164.501. As such, these activities can
be done by an ACO either on its own behalf, if it is itself a covered
entity, or on behalf of its covered entity ACO participants and ACO
providers/suppliers, in which case the ACO would be acting as the
business associate of its covered entity ACO participants and ACO
providers/suppliers. Accordingly we concluded that the disclosure of
Part A and B claims data would be permitted by the HIPAA Privacy Rule
provisions governing disclosures for ``health care operations,''
provided certain conditions are met.
As we also discussed, upon receipt of a request for protected
health information (PHI), a covered entity or its business associate is
permitted to disclose PHI to another covered entity or its business
associate for the requestor's health care operations if both entities
have or had a relationship with the subject of the records to be
disclosed (which is true in the Shared Savings Program), the records
pertain to that relationship (which is also true in the Shared Savings
Program), and the recipient states in its request for the data that it
plans to use the records for a ``health care operations'' function that
falls within the first two paragraphs of the definition of ``health
care operations'' in the HIPAA Privacy Rule and that the data requested
are the ``minimum necessary'' to carry out those health care
operations. (See, the HIPAA Privacy regulations at 45 CFR 164.502(b)
and 164.506(c)(4)). The first two paragraphs of the definition of
health care operations under 45 CFR 164.501 include evaluating a
provider's or supplier's performance, conducting quality assessment and
improvement activities, care coordination activities, and conducting
population-based activities relating to improved health.
With respect to the relationship requirements in 45 CFR
164.506(c)(4), we have a relationship with the individuals who are the
subjects of the requested PHI because they are Medicare beneficiaries.
The ACO has a relationship with such individuals, either as a covered
entity itself or on behalf of its covered entity ACO participants and
ACO providers/suppliers as a business associate, because the
individuals are either preliminarily prospectively assigned to the ACO
or have received a primary care service during the past 12-month period
from an ACO participant upon whom assignment is based. We note that
when we refer to an ACO participant ``upon whom assignment is based,''
we are referring to an ACO participant that submits claims for primary
care service used to determine the ACO's assigned population under 42
CFR part 425 subpart E. In addition, the requested PHI pertains to the
individuals' relationship with both CMS and the ACO, in that we provide
health care coverage for Medicare FFS beneficiaries and have an
interest in ensuring that they receive high quality and efficient care,
and the ACO is responsible for managing and coordinating the care of
these individuals, who are part of the ACO's assigned beneficiary
population.
Beneficiary identifiable Medicare prescription drug information
could also be used by ACOs to improve the care coordination of their
patient populations. Accordingly, consistent with the regulations
governing the release of Part D data, in the April 2011 proposed rule
(76 FR 19559), we also proposed to make available the minimum Part D
data necessary to allow for the evaluation of the performance of ACO
participants and ACO providers/suppliers, to conduct quality assessment
and improvement, to perform care coordination, and to conduct
population-based activities relating to improved health.
In the November 2011 final rule (76 FR 67846 and 67851), we adopted
a policy that defined when we would share beneficiary identifiable
information (including Part A and B claims data and Part D prescription
drug event data) for preliminarily prospectively assigned beneficiaries
and those beneficiaries who have a primary care visit with an ACO
participant that is used to assign beneficiaries to the ACO. As a basic
requirement, in order to receive such data an ACO that chooses to
access beneficiary identifiable data is required under 42 CFR 425.704
to request the minimum data necessary for the ACO to conduct health
care operations work, either as a HIPAA-covered entity in its own
right, or as the business associate of one or more HIPAA-covered
entities (where such covered entities are the ACO participants and ACO
providers/suppliers), for ``health care operations'' activities that
fall within the first or second paragraph of the definition of health
care operations at 45 CFR 164.501. As part of their application to
participate in the Shared Savings Program, ACOs certify whether they
intend to request beneficiary identifiable information, and that the
requested data reflects the minimum necessary for the ACO to conduct
health care operations either on its own behalf or on behalf of its
covered entity ACO participants and ACO provider/suppliers. Thus, the
ACO's formal request to receive data is accomplished at the time of its
application to the Shared Savings Program. The ACO must also enter into
a data use agreement (DUA) with CMS. If all of these conditions are
satisfied, CMS makes available certain limited PHI regarding the
preliminarily prospectively assigned beneficiaries whose data were used
to generate the aggregate data reports provided to the ACO under Sec.
425.702(b) and other beneficiaries who have a primary care visit during
the performance year with an ACO participant upon whom assignment is
based. In order to enhance transparency and beneficiary engagement, we
also finalized a policy that before ACOs may start receiving PHI in the
form of beneficiary identifiable claims data, they must give
beneficiaries the opportunity to decline sharing of their claims data
as required under Sec. 425.708.
As we stated in the proposed rule, since the publication of the
November 2011 final rule, we have gained further experience with
sharing data with ACOs participating in the Shared Savings Program. We
explained in the proposed rule that we continue to believe that
distributing aggregate reports, paired with making available certain
beneficiary identifiable information related to preliminarily
prospectively assigned beneficiaries, as well as making available the
claims data for preliminarily prospectively assigned FFS beneficiaries
and other FFS beneficiaries who have primary care service visits with
ACO participants that submit claims for primary care services that are
used to determine the ACO's assigned population, is worthwhile and
consistent with the goals of the Shared Savings Program. The aggregate
data reports and the beneficiary identifiable information related to
preliminarily prospectively assigned beneficiaries give ACOs valuable
information that can be used to better understand their patient
population, redesign care processes, and better coordinate the care of
their beneficiaries. ACOs participating in the Shared Savings Program
have reported that the beneficiary identifiable claims data that they
receive from us are being used effectively to better understand the FFS
beneficiaries who are served by their ACO participants and ACO
providers/suppliers. These data give ACOs valuable insight into
patterns of care for their beneficiary population; enable them to
improve care coordination among and across providers and suppliers and
sites of care, including providers and suppliers and sites of care
[[Page 32734]]
not affiliated with the ACO; and allow them to identify and address
gaps in patient care.
However, based upon our experiences administering the Shared
Savings Program and feedback from stakeholders, we stated in the
proposed rule that we believe that we can improve our data sharing
policies and processes to streamline access to such data to better
support the overall program, ACO functions and goals, and to better
serve Medicare beneficiaries. Therefore, we proposed a number of
modifications to our data sharing policies and procedures under the
Shared Savings Program.
We received several general comments about data sharing under the
Shared Savings Program.
Comment: A commenter suggested that we engage with the HHS
interoperability roadmap work currently underway to ensure that the
needs for sharing and integration of high quality, timely and
interoperable data needed to support ACO functions are addressed. Some
commenters requested that CMS share with ACOs the same type and amount
of data that is routinely shared with MA plans and with the same
frequency; for example, some commenters requested that we provide
information to ACOs when a beneficiary's Medicare eligibility is
checked by a provider or supplier. Some commenters stated they believe
that the assignment methodology should be modified because it is
responsible for creating delays in the provision of data, including
claims data, quarterly data, and annual performance data.
Response: As noted in the November 2011 final rule, we expect that
ACOs will have, or will be working towards having, processes in place
to independently identify and produce the data they believe are
necessary to best evaluate the health needs of their patient
population, improve health outcomes, monitor provider/supplier quality
of care and patient experience of care, and produce efficiencies in
utilization of services. We believe that with a robust health
information exchange infrastructure and improved communication among
ACO participants and the ACO's neighboring health care providers, ACOs
will be better equipped to access data in a timeframe that is closer to
``real time.'' Many ACOs are developing innovative solutions to share
``real time'' information across sites of care and are actively
engaged, as are we, in the HHS-wide discussions currently underway.
However, we recognize that information from the CMS claims system
could supplement an ACO's understanding of its patient population.
Although we understand that ACOs would like to obtain data as services
are performed, as we explained in the April 2011 proposed rule (76 FR
19558), there is an inherent lag between when a service is performed
and when the service is submitted for payment in FFS Medicare. Thus,
our inability to provide data in real time to ACOs is not due to our
methodology for assigning beneficiaries to ACOs, and ACOs participating
in the Shared Savings Program are unlike managed care plans where
preauthorization may be required for services. Although there is a
mechanism by which external entities such as ACOs and providers can
verify the Medicare enrollment status of a beneficiary through the
HIPAA Eligibility Transaction System (HETS), our preliminary analysis
suggests that the HETS eligibility checks through do not reliably
predict what services or when, how, or by whom a service may be
furnished to a beneficiary with FFS Medicare. Therefore, we believe the
HETS information would be of limited value to an ACO.
Comment: A commenter requested that CMS make the data reports
provided to ACOs available to independent researchers to support
additional analysis of the impact of the Shared Savings Program.
Response: We recognize the public interest in obtaining this type
of information. For this reason, we have made a set of Shared Savings
Program research identifiable files available through the Research Data
Assistance Center (ResDAC). To learn more about these files visit the
ResDAC Web site: http://www.resdac.org/news/shared-savings-program-aco-research-identifiable-files/2015/01-0.
2. Aggregate Data Reports and Limited Identifiable Data
a. Overview
Under Sec. 425.702, we share aggregate reports with ACOs at the
beginning of the agreement period based on beneficiary claims used to
calculate the benchmark, each quarter thereafter based on the quarterly
assignment window, and in conjunction with the annual reconciliation.
The aggregate reports provided under Sec. 425.702(a) and (b) contain
certain de-identified beneficiary information including all of the
following:
Aggregated metrics on the ACO's preliminarily
prospectively assigned beneficiary population, including
characteristics of the assigned beneficiary population, the number of
primary care services provided to the assigned beneficiary population
by the ACO, and the proportion of primary care services provided to the
assigned beneficiary population by ACO participants upon whom
assignment is based.
Expenditure data for the ACO's assigned beneficiary
population by Medicare enrollment type (ESRD, disabled, aged/dual
eligible, aged/non-dual eligible) and type of service (for example,
inpatient hospital, physician, etc.).
Utilization data on select metrics for the assigned
population, such as ambulatory care sensitive conditions discharge
rates per 1,000 beneficiaries for conditions such as congestive heart
failure (CHF), and utilization rates for imaging, emergency department
visits, hospitalizations, and primary care services.
In addition, under Sec. 425.702(c), we also provide a report that
includes certain beneficiary identifiable information about the
beneficiaries who are preliminarily prospectively assigned to the ACO
and whose data were used to generate the de-identified aggregate data
reports. The information currently contained in this assignment report
includes the beneficiary name, date of birth, HICN, and sex. These
beneficiary identifiable data are made available to an ACO that has met
the conditions previously discussed in detail for purposes of carrying
out population-based activities related to improving health or reducing
growth in health care costs, process development (such as care
coordination processes), case management, and care coordination for the
beneficiary population assigned to the ACO. Under Sec. 425.708(d)
these data points are not subject to the requirement that an ACO give
beneficiaries an opportunity to decline claims data sharing.
As we stated in the proposed rule, feedback we received since the
November 2011 final rule was issued and during implementation of the
Shared Savings Program, has confirmed there is a strong desire among
ACOs and their ACO participants and ACO providers/suppliers to have as
much information about their patients as is possible, in as timely a
manner as possible, to better coordinate care and target care
strategies toward individual beneficiaries. Moreover, ACOs are actively
using the reports provided under Sec. 425.702 to conduct their health
care operations work with the expectation that it will result in higher
quality and more efficient care for their assigned beneficiary
populations. However, ACOs and their ACO participants and ACO
providers/
[[Page 32735]]
suppliers have also reported that the four data elements currently made
available on the assignment reports severely limit their care redesign
efforts. They have indicated that additional data elements are
necessary in order to conduct health care operations work under the
first or second paragraph of the definition of health care operations
at 45 CFR 164.501. For example, an ACO reported that having data not
only on the frequency of hospitalizations but also on which specific
beneficiaries were hospitalized and in which specific hospitals would
better enable it to identify the effectiveness and outcomes of its
post-hospitalization care coordination processes. Some stakeholders
have made suggestions for beneficiary identifiable data that should be
included in the quarterly reports in addition to the current four data
elements, such as risk profiles or information on whether the
beneficiary had a hospital visit in the past year. Some stakeholders
suggested that the report be expanded to include information not only
for the beneficiaries who received a plurality of their primary care
services from ACO professionals, but also for all FFS beneficiaries who
received a primary care service from an ACO participant in the past
year. These stakeholders stated that understanding the entire FFS
patient population served by the ACO and its ACO participants would
improve their ability to redesign care, and reduce the uncertainty
associated with a list of preliminarily prospectively assigned
beneficiaries that fluctuates from quarter to quarter, based on the
population's use of primary care services.
b. Proposed Revisions
In the proposed rule, we considered what additional beneficiary
identifiable data might be the minimum necessary to support the ACOs'
health care operations work. Based on our discussions with ACOs and ACO
participants and ACO providers/suppliers, we explained our belief that
making additional information available to ACOs about the FFS
beneficiaries they serve, including for example, on whether a
beneficiary visited an emergency room or was hospitalized, would help
support such efforts. Thus, we proposed to expand the information made
available to ACOs under Sec. 425.702(c) to include certain additional
beneficiary identifiable data subject to the existing requirements of
Sec. 425.702(c)(2), which incorporates the requirements under HIPAA
governing the disclosure of PHI. Specifically, in addition to the four
data elements (name, date of birth, HICN, and sex) that we currently
make available for preliminarily prospectively assigned beneficiaries,
we proposed to expand the beneficiary identifiable information that is
made available under existing Sec. 425.702(c)(1) to include these data
elements (name, date of birth, HICN, and sex) for each beneficiary who
has a primary care service visit with an ACO participant that bills for
primary care services that are considered in the assignment process in
the most recent 12-month period.
Additionally, we proposed to expand the beneficiary identifiable
information made available for preliminarily prospectively assigned
beneficiaries to include additional data points. The information would
be derived from the same claims used to determine the preliminary
prospective assigned beneficiary list. Specifically, we proposed that
we would make available the minimum data set necessary for purposes of
the ACO's population-based activities related to improving health or
reducing health care costs, required process development (under Sec.
425.112), care management, and care coordination for its preliminarily
prospectively assigned beneficiary population, at the following times:
At the beginning of the agreement period.
At the beginning of each performance year and quarterly
thereafter.
In conjunction with the annual reconciliation.
We stated that we would articulate the data elements associated
with the minimum data set in operational guidance, and update as needed
to reflect changes in the minimum data necessary for ACOs to perform
these activities. The information would fall under the following
categories:
Demographic data such as enrollment status.
Health status information such as risk profile, and
chronic condition subgroup.
Utilization rates of Medicare services such as the use of
evaluation and management, hospital, emergency, and post-acute
services, including dates and place of service.
Expenditure information related to utilization of
services.
We explained our belief that under this approach the data made
available in the aggregate data reports under Sec. 425.702(c) would
generally constitute the minimum data necessary for covered entity ACOs
or for ACOs serving as the business associate of their covered entity
ACO participants and ACO providers/suppliers, to evaluate providers'
and suppliers' performance, conduct quality assessment and improvement
activities, and conduct population-based activities relating to
improved health.
Finally, we noted in the proposed rule that these proposals for
expansion of the data reports provided under Sec. 425.702(c) to
include each FFS beneficiary who has a primary care visit with an ACO
participant that submits claims for primary care services that are
considered in the assignment process, would apply only to ACOs
participating in Tracks 1 and 2, where beneficiaries are assigned in a
preliminarily prospective manner with retrospective reconciliation.
This is because ACOs in Tracks 1 and 2 have an incentive to redesign
care processes for all FFS beneficiaries who receive care from their
ACO participants, due to the nature of the preliminarily prospective
assignment methodology with retrospective reconciliation. Under our
proposal for Track 3, which is discussed in detail in section II.F.3.a.
of this final rule, we explained our belief that the minimum data
necessary for ACOs to perform health care operations as defined under
the first and second paragraphs of the definition of health care
operations at 45 CFR 164.501, would not extend beyond data needed for
health operations related to the prospective list of assigned
beneficiaries. We expressed our belief that a prospective assignment
approach incentivizes targeting of the specific FFS beneficiaries on
the list for care improvement, rather than redesigning care processes
for all FFS beneficiaries seen by the ACO participants. As such, the
minimum data necessary required for Track 3 ACOs to perform health care
operations work would be limited to the data for beneficiaries who are
prospectively assigned for a performance year. Thus, for Track 3, we
proposed to limit the beneficiary identifiable data included in the
reports made available under Sec. 425.702(c) to only those
beneficiaries who appear on the ACO's prospective list of beneficiaries
at the beginning of a performance year. Specifically, under our
proposal, Track 3 ACOs would have access to beneficiary identifiable
data elements associated with the list of categories under Sec.
425.702(c) for beneficiaries prospectively assigned to the ACO, but
would not be able to request any information related to other Medicare
FFS beneficiaries who receive primary care services that are considered
in the assignment process from ACO participants. We explained our
belief that this limitation was
[[Page 32736]]
reasonable because, under Track 3, the prospectively assigned
beneficiary list would encompass all beneficiaries for whom the ACO
would be held accountable in a given performance year, in contrast to
ACOs in Tracks 1 and 2 that would be held accountable for any FFS
beneficiaries who choose to receive a plurality of their primary care
services from ACO professionals billing through the TINs of ACO
participants.
We sought comment on our proposal to expand the data set made
available to ACOs under Sec. 425.702(c). We sought comment on the
categories of information that we proposed to include and on any other
beneficiary identifiable information that should be offered in the
aggregate reports provided under Sec. 425.702(c) in order to allow
ACOs as covered entities or as the business associate of their covered
entity ACO participants and ACO providers/suppliers to conduct health
care operations work under paragraphs one or two of the definition of
health care operations at 45 CFR 164.501. We also specifically sought
comment on our proposal to expand the list of beneficiaries for which
data are made available under Sec. 425.702(c) to ACOs participating in
Track 1 and Track 2 to include all beneficiaries who had a primary care
service visit with an ACO participant that submits claims for primary
care services that are considered in the assignment process. We
received a number of comments on these proposals. In general, there was
overwhelming support for our proposal to expand the beneficiary
identifiable information that is made available under existing Sec.
425.702(c)(1) to include name, date of birth, HICN, and sex for each
beneficiary who has a primary care service visit with an ACO
participant that bills for primary care services that are considered in
the assignment process in the most recent 12-month period. However,
there were also suggestions on how we might improve the structure,
content, and provision of both the de-identified and beneficiary
identifiable information in the aggregate data reports made available
under Sec. 425.702.
Comment: Many commenters supported the proposed expansion of the
beneficiary identifiable data made available to ACOs in the aggregate
data reports. Numerous commenters made specific requests to expand the
information made available under Sec. 425.702(b) and (c) to include
various other identifiable and de-identified data elements, including
but not limited to:
Beneficiary demographic information, including contact
information.
Beneficiary eligibility information, including the date of
the beneficiary's original Medicare eligibility and the date of any
change in eligibility status.
Aggregate information about the expenditures and
utilization rates of claims that are missing from the claims files, for
example, for beneficiaries who have declined claims data sharing.
Health status data, such as Hierarchical Condition
Category (HCC) scores for each beneficiary or quarterly analysis
showing changes in beneficiaries' HCC scores.
An indicator of the beneficiary's institutional/hospice
status.
Substance abuse expenditure data (in aggregate).
Expanded utilization information for primary care versus
non-primary care services.
Information about ancillary services.
Information from Part D pharmacy claims.
Response: We appreciate the commenters' support for our proposal to
expand the data made available to ACOs and we are finalizing our policy
as proposed. We also appreciate the commenters' thoughtful suggestions
regarding additional data elements that should be made available under
Sec. 425.702(b) and (c). Many of the specific suggestions to expand
the data elements available to ACOs are already covered in the four
categories of information that we proposed to include: Demographic
data, health status information, utilization rates, and expenditure
information related to utilization of services. Therefore, we will
consider commenters' suggestions as we determine the specific data
points to include in our program reports. We will articulate the data
elements associated with the minimum data set in operational guidance
and update as needed to reflect changes in the minimum data necessary
for ACOs to perform health care operations activities. However, we note
that although we are finalizing our proposal to make available health
status information, such as risk profile and chronic condition
subgroup, at this time we do not intend to release beneficiary
identifiable HCC risk score data to ACOs participating in the Shared
Savings Program because this is not information that CMS has
historically shared through the MA program or any other model or
demonstration. We believe that providing the risk profile and chronic
condition subgroups associated with a beneficiary will be more helpful
to ACOs in identifying higher acuity beneficiaries and beneficiaries
with multiple chronic conditions that could benefit from more intensive
care coordination. We note that receiving this information would not
preclude an ACO from calculating HCC risk scores based on its own
claims data and publicly available software. We also do not intend to
release contact information for individual beneficiaries. As we are
eliminating the option for ACOs to notify beneficiaries by mail
regarding the opportunity to decline data sharing, we believe there is
no need for CMS to share beneficiary contact information with ACOs.
Comment: Many commenters requested that we expand the availability
of beneficiary identifiable data under Sec. 425.702(c) to Track 3 ACOs
beyond the list of beneficiaries prospectively assigned to the ACOs.
Some commenters suggested that prospective assignment be applied to all
three tracks, which would obviate the need to distribute information
beyond this list. A commenter suggested that we include on the reports
under Sec. 425.702(c) beneficiaries who have had a primary care
service visit with an ACO participant used in the assignment
methodology within the past 24 months, instead of the previous 12
months.
Response: In section II.F.3. of this final rule, we are finalizing
our proposal to assign beneficiaries prospectively to Track 3 ACOs. As
discussed previously, we believe the minimum data necessary for Track 3
ACOs to perform health care operations as defined under the first and
second paragraphs of the definition of health care operations at 45 CFR
164.501 would not extend beyond data needed for health care operations
related to the prospective list of assigned beneficiaries because the
prospective assignment list would encompass all beneficiaries for whom
the ACO would be held accountable in a given performance year.
Therefore, we will limit the information provided under Sec.
425.702(c)(1)(ii)(A) and (c)(1)(ii)(B) to the Track 3 ACO's list of
prospectively assigned beneficiaries. In addition, we believe it is
important to provide information to ACOs participating in Tracks 1 and
2 about beneficiaries who have had at least one primary care service
visit with an ACO participant that is used in the assignment
methodology because, at the time of retrospective reconciliation, the
ACO may be determined responsible for their care during the performance
year. We believe a 12 month look-back is sufficient for these purposes,
but we may revisit this issue in future rulemaking.
Comment: Many commenters requested that we provide detailed
documentation regarding the definition
[[Page 32737]]
and calculation of each of the metrics in the reports provided under
Sec. 425.702(b) and examples of how these metrics can be calculated
from the Claim and Claim Line Feed (CCLF) files. Commenters requested
that we make available these calculations and examples to new ACOs
prior to their start date in the Shared Savings Program. A commenter
recommended that we use open source methods for all data and
calculations in the Shared Savings Program. Another commenter suggested
providing Shared Savings Program ACOs with the same summary reports
given to Pioneer ACOs. Several commenters requested that we provide the
aggregate reports under Sec. 425.702 to ACOs in a user-friendly format
or more often--for example, monthly. Several commenters requested that
the quarterly reports include an update to the ACO's benchmark based on
changing HCC scores and enrollment mix relative to the benchmark
period.
Response: We recognize that certain reports provided under the
Shared Savings Program, such as benchmark reports, are difficult to
reproduce based on the claims data. However, our goal is to encourage
transparency and understanding of these calculations, and we provide
webinars and have developed other educational materials to help ACOs
better understand the claims data files and other reports. At this
time, we do not intend to share the software or source code used to
create these reports with the public. However, we will continue to
provide user guides, templates, and information packets detailing the
metrics and valid data values contained in each of our program reports.
These documents are available to ACOs shortly after they are accepted
and agree to participate in the Shared Savings Program, and they are
available in a user-friendly spreadsheet format. We will continue to
work to improve the utility of these reports and will consider these
comments as we do so. The quarterly aggregate reports we provide are
based on the most recent 12 months of data. The quarterly reports are
not calendar year reports; therefore, they do not provide benchmark
calculations, which are developed based on the 3 calendar years prior
to an ACO's agreement start date.
FINAL ACTION: We are finalizing our policies in Sec. 425.702(c) as
proposed. The existing requirements will continue to apply to aggregate
reports generated for PY 2015, which will include any quarterly reports
or annual reconciliation reports for PY 2015 generated during CY 2016.
The new requirements will apply to reports that are generated for PY
2016, including any PY 2016 reports that are generated in CY 2015 or CY
2017. To ensure the timing of these reports is understood, we have
retained the existing rules under Sec. 425.702(c)(1)(i). The rules
that apply for PY 2016 and subsequent performance years as finalized
have been designated at Sec. 425.702(c)(1)(ii). Specifically, for ACOs
in Tracks 1 and 2, we are expanding the list of beneficiaries for which
data are made available under Sec. 425.702(c)(1) to include all
beneficiaries who had a primary care service visit during the previous
12 months with an ACO participant that submits claims for primary care
services that are considered in the assignment process. We are also
expanding the beneficiary identifiable information made available for
preliminarily prospectively assigned beneficiaries to include
additional data points in the following categories: Demographic
information, health status information, utilization rates of Medicare
services, and expenditures related to utilization of services. We will
articulate the data elements associated with the minimum data set in
operational guidance and update as needed to reflect changes in the
minimum data necessary for ACOs to perform health care operations
activities. For Track 3 ACOs, the beneficiary identifiable data
included in the reports made available under Sec. 425.702(c) will be
limited to the ACO's prospectively assigned beneficiaries.
3. Claims Data Sharing and Beneficiary Opportunity To Decline Claims
Data Sharing
a. Overview
Because Medicare FFS beneficiaries have the freedom to choose their
health care providers and suppliers, and are not required to receive
services from providers and suppliers participating in the ACO, the
patients of ACO participants and ACO providers/suppliers often receive
care from other providers and suppliers that are not affiliated with
the ACO. As a result, ACOs and their ACO participants and ACO
providers/suppliers may not be aware of all of the services an assigned
beneficiary is receiving. Furthermore, under Tracks 1 and 2, we perform
a retrospective reconciliation at the end of each performance year to
determine an ACO's assigned beneficiary population based on
beneficiaries' use of primary care services using the assignment
algorithm described at Sec. 425.402 of the regulations. Therefore,
under Tracks 1 and 2, it is often the case that an ACO's preliminary
prospective assigned beneficiary list is not complete and does not
include all the beneficiaries who would ultimately be assigned to the
ACO at the end of the performance year--that is, all of the
beneficiaries for which the ACO ultimately would be held accountable.
As we discussed in the April 2011 proposed rule (76 FR 19558) and in
the November 2011 final rule (76 FR 67844), we were concerned about
ACOs' ability to do their work in the absence of information about
services delivered outside of the ACO. We stated our belief at that
time that it would be important to give ACOs appropriate access to a
beneficiary's identifiable claims data when the beneficiary has
received a primary care service billed through the TIN of an ACO
participant, and is thus a candidate for assignment at the time of
retrospective reconciliation for the performance year. We explained our
belief that sharing beneficiary identifiable claims data would enable
ACOs to better coordinate and target care strategies towards the
individual beneficiaries seen by ACO participants and ACO providers/
suppliers.
We ultimately concluded that the bases for disclosure under the
HIPAA Privacy Rule were broad enough to cover our disclosure of
Medicare Parts A and B claims data to ACOs for health care operations
work when certain conditions are met. Similarly, we concluded that the
Part D regulations governing the release of Part D data on prescription
drug use would permit the release of Part D prescription drug event
data to ACOs for purposes of supporting care coordination, quality
improvement, and performance measurement activities. Thus, we concluded
that we are permitted to disclose the minimum Medicare Parts A, B, and
D data necessary to allow ACOs to conduct the health care operations
activities that fall into the first or second paragraph of the
definition of health care operations under the HIPAA Privacy Rule when
such data is requested by the ACO as a covered entity or as the
business associate of its covered entity ACO participants and ACO
providers/suppliers. Accordingly, in the November 2011 final rule (76
FR 67851), we adopted a policy under which an ACO may request Part A
and Part B claims data and Part D prescription drug event data for
preliminarily prospectively assigned beneficiaries and other
beneficiaries who receive primary care services from an ACO participant
upon whom assignment is based. In accordance with the terms of the DUA
that the ACO must enter into with CMS, data received from CMS under the
data sharing provisions of the Shared
[[Page 32738]]
Savings Program may only be used for the purposes of clinical
treatment, care management and coordination, quality improvement
activities, and provider incentive design and implementation. In
providing the claims data subject to these limitations, we explained
our belief that we would ensure compliance with the requirements of the
HIPAA Privacy Rule and the regulations governing the release of Part D
data.
While the disclosure of claims data in this manner is within the
bounds of the applicable laws, we also noted concerns about
beneficiaries' interests in controlling access to their individually
identifiable health information. Thus, even though we believed that we
had legal authority to make the contemplated disclosures without the
consent of beneficiaries, in the November 2011 final rule (76 FR 67849)
we implemented the additional requirement at Sec. 425.708 that ACOs
offer beneficiaries an opportunity to decline to have their claims data
shared with the ACO. We note that in the November 2011 final rule we
discussed alternative approaches, such as requiring beneficiary opt-in
prior to claims data sharing, however, as stated, we believe that
either approach, done well, offers equivalent control for beneficiaries
over their personal health information. Moreover, an opt-in would
significantly increase paperwork burden. We therefore believe that an
opt-out approach is sufficient and appropriate. As such, before
requesting access to the beneficiary's data and as part of its broader
activities to notify patients that their health care provider or
supplier is participating in an ACO, the ACO is required to inform
beneficiaries that the ACO may request access to their claims data, and
give beneficiaries an opportunity to decline such claims data sharing.
Under the current process for allowing beneficiaries to decline
claims data sharing, once the ACO formally requests beneficiary
identifiable claims data through the application process, enters into a
DUA with CMS, and begins its first performance year, the ACO must
supply beneficiaries with a written notification explaining their
opportunity to decline claims data sharing. Offering beneficiaries the
opportunity to decline claims data sharing may take two forms under
current Sec. 425.708. First, if the ACO has formally requested
beneficiary identifiable claims data as part of the application
process, the ACO must notify each FFS beneficiary of the opportunity to
decline claims data sharing when the beneficiary has his or her first
visit with an ACO participant upon whom assignment is based. During
this visit, the beneficiary must be provided with written notification
informing him or her of the ACO provider/supplier's participation in
the ACO and that the ACO may request claims information from CMS in
order to better coordinate the beneficiary's care and for other health
operations activities. This written notification contains template
language created by CMS with the assistance of the Medicare Ombudsman's
office and with input from beneficiaries, and explains the
beneficiary's option to decline claims data sharing. Once the
beneficiary has expressed a preference at the point of care, the ACO
may immediately inform CMS of the beneficiary's data sharing
preference. If the beneficiary has not declined data sharing, CMS makes
that beneficiary's data available to an ACO.
However, we recognized that beneficiaries may not seek primary care
services until later in the performance year. Because of this, we
offered an alternative option to ACOs who meet the requirements for
receiving beneficiary identifiable claims data. Under the alternative
option, ACOs may contact beneficiaries via a mailed notification that
is sent to all preliminarily prospectively assigned beneficiaries to
notify them of their health care provider's participation in an ACO
under the Shared Savings Program, and the ACO's intent to request
beneficiary identifiable claims data. The mailed notification contains
template language that was developed in conjunction with the Medicare
Ombudsman's office with input from beneficiaries. If the beneficiary
wishes to decline claims data sharing, the beneficiary is instructed to
sign the mailed notification and return it to the ACO or call 1-800-
Medicare directly. If the ACO chooses to contact beneficiaries via a
mailed notification, rather than waiting to notify them at the point of
care, the ACO must wait 30 days before submitting the beneficiary's
preference and receiving access to the data for those beneficiaries who
have chosen not to decline claims data sharing. The 30-day waiting
period provides beneficiaries with an opportunity to mail back the
notification or to call 1-800-Medicare before the ACO receives access
to their claims data. In addition, in order to ensure transparency,
beneficiary engagement and meaningful choice, the notification and
opportunity to decline claims data sharing must be repeated at the
beneficiary's first primary care visit with an ACO participant upon
whom assignment is based (76 FR 67850 and 67851). Finally, in addition
to the point of care and mailed notifications provided by ACOs, all
Medicare FFS beneficiaries are notified through the Medicare & You
Handbook about ACOs and the opportunity to decline claims data sharing
by contacting CMS directly at 1-800-Medicare.
Once the ACO has notified the beneficiaries according to program
rules, and any applicable wait periods are over, the ACO submits the
beneficiaries' data sharing preferences to CMS. Beneficiary preferences
submitted by ACOs are combined with preferences received by CMS through
1-800-Medicare. Based on these beneficiary preferences, we generate
claims files containing the beneficiary identifiable claims data for
beneficiaries who have not declined data sharing. These claims files
are then made available for ACO access on a monthly basis.
Once a beneficiary has declined data sharing, the beneficiary may
choose to reverse the decision by signing another form and sending it
to the ACO (which in turn notifies CMS of the beneficiary's updated
preference) or by calling 1-800-Medicare directly. We then include the
beneficiary's claims data in the claims file provided to the ACO the
following month.
In the November 2011 final rule (76 FR 67849), we acknowledged that
it is possible that a beneficiary may decline to have his or her claims
data shared with an ACO but would choose to continue to receive care
from ACO participants and ACO providers/suppliers. In such a case, the
ACO would still be responsible for that beneficiary's care, and, as
such, although the beneficiary's claims data would not be shared with
the ACO, CMS would continue to use the beneficiary's claims data in its
assessment of the ACO's quality and financial performance.
In the November 2011 final rule (76 FR 67849 through 67850) we
expressed our view that beneficiaries should be notified of their
health care provider's participation in an ACO in order to have some
control over who has access to their health information for purposes of
the Shared Savings Program. We further indicated that the requirement
that an ACO provider/supplier engage patients in a discussion about the
inherent benefits, as well as the potential risks, of claims data
sharing provided an opportunity for true patient-centered care and
would create incentives for ACOs, ACO participants, and ACO providers/
suppliers to develop positive relationships with each beneficiary under
their care. Additionally, we stated
[[Page 32739]]
that this policy would provide ACO participants and ACO providers/
suppliers the opportunity to engage with beneficiaries by explaining
the Shared Savings Program and its potential benefits for both the
beneficiaries and the health care system as a whole.
Since implementation of the Shared Savings Program, we have shared
claims data on over 7 million beneficiaries with 375 Shared Savings
Program ACOs. As we noted in the proposed rule, we have received
informal feedback from ACOs that are putting into practice the claims
data sharing notification requirements, and from beneficiaries who have
received notifications from an ACO that wanted to request access to
their claims data. We learned the following from this feedback:
The option for ACOs to mail notifications and then conduct
the in-office follow-up adds to ACOs' financial costs and delays their
ability to access claims data in a timely manner. ACOs must wait until
January 1 of their first performance year to send out mailings. After
waiting the requisite 30 days, the earliest the ACO may submit
beneficiary preferences to CMS is in February. The first set of claims
data is then available in mid-March. In addition, some ACOs struggle
with obtaining current mailing information for preliminarily
prospectively assigned beneficiaries, which can delay the mailing of
notifications to later in the performance year. Thus, the earliest
opportunity for ACOs to receive claims data is mid-February, and that
is only the claims data for beneficiaries who visited primary care
providers in early January and were given the opportunity to decline
claims data sharing at the point of care.
Stakeholders, including ACOs, ACO participants, and ACO
providers/suppliers, continually confuse the notification regarding the
ACO's intent to request access to claims data with the separate
requirement that all FFS beneficiaries must be notified of ACO
participants' and ACO providers/suppliers' participation in the
program. Beneficiaries must be notified at the point of care of the ACO
participants' and ACO providers/suppliers' participation in an ACO,
regardless of whether the ACO has requested or intends to request
access to claims data.
ACOs have commented that beneficiaries are confused about
why their providers do not already have access to information regarding
other care they may receive, which potentially erodes rather than
strengthens the patient-provider relationship. Beneficiaries often
assume their providers have all the information they need to care for
them. However, as noted previously, the ACO, its ACO participants, and
ACO providers/suppliers would not have claims data for services
rendered outside the ACO, and would not necessarily have knowledge
about that care.
Beneficiaries that are preliminarily prospectively or
prospectively assigned to an ACO can choose to receive care from any
Medicare-enrolled provider or supplier, whether inside or outside the
ACO, so beneficiaries may receive notices regarding data sharing from
more than one ACO. This is most likely to occur in markets with high
ACO penetration where a beneficiary may receive primary care services
from several different ACO professionals, each participating in
different ACOs. Beneficiaries report confusion, concern, and annoyance
over receiving multiple mailings from ACOs, and question why their
health care providers do not already have the information they need to
appropriately coordinate their care.
Beneficiaries receiving the notifications giving them the
opportunity to decline claims data sharing may mistakenly believe the
notification is a request to ``opt-out'' of ACO care or Medicare FFS,
or both, or that they have been placed in a managed care plan without
their consent.
Beneficiaries who receive the letters in the mail
notifying them of their provider's participation in an ACO and offering
them the opportunity to decline claims data sharing often mistakenly
believe that these letters are fraudulent and do not know what to do.
Many ACOs are entities that have been newly formed by providers and
suppliers for purposes of participating in the Shared Savings Program.
While the beneficiary may have a strong relationship with his or her
primary care provider, the beneficiary may not recognize the name of
the newly formed ACO. Therefore the beneficiary may have concerns and
question the legitimacy of the notification.
Our most recent data indicate that approximately 3 percent
of beneficiaries have declined claims data sharing.
As previously discussed, beneficiaries currently have the
opportunity to decline claims data sharing by responding to the letters
that ACOs send to their preliminarily prospectively assigned
beneficiaries, by informing an ACO provider/supplier during a face-to-
face primary care service visit, or by contacting 1-800-Medicare
directly. We continue to be committed to offering beneficiaries some
control over ACO access to their beneficiary identifiable information
for purposes of the Shared Savings Program. However, in light of the
feedback we received, we were motivated to review our claims data
sharing policies and processes to determine what refinements we could
make to mitigate the concerns raised by stakeholders regarding the
burden imposed on both beneficiaries and those entities participating
in the Shared Savings Program. We considered several aspects of our
claims data sharing policies, including the use of various formats to
communicate with beneficiaries regarding claims data sharing under the
program such as: Mailed notifications to the list of preliminarily
prospectively assigned beneficiaries by the ACO; face-to-face
discussions with healthcare providers during primary care visits; and
CMS' use of 1-800-Medicare and the Medicare & You Handbook. As
discussed in the proposed rule, as well as the April 2011 proposed rule
(76 FR 19558) and the November 2011 final rule (76 FR 67846), we are
convinced by stakeholders that Medicare claims data provide an
important supplement to the data to which the ACO and its ACO
participants and ACO providers/suppliers already have access. Current
law allows CMS to share certain beneficiary identifiable claims data
with ACOs when those data are necessary for purposes of certain health
care operations. HIPAA does not require that beneficiaries be presented
with an opportunity to decline claims data sharing before their PHI can
be shared. Moreover, several other CMS initiatives, including the
Medicare Health Support demonstration, the Multi-Payer Advanced Primary
Care Practice demonstration, the Physician Group Practice
demonstration, and the Physician Group Practice Transition
demonstration, have successfully shared claims data with providers in
the absence of an opportunity for beneficiaries to decline claims data
sharing. Therefore, we considered how to retain meaningful beneficiary
choice in claims data sharing while reducing the confusion and burden
caused by our current claims data sharing policies. As we stated in the
proposed rule, we believe meaningful beneficiary choice in claims data
sharing is maintained when the purpose and rationale for such claims
data sharing are transparent and communicated to beneficiaries, and
there is a mechanism in place for beneficiaries to decline claims data
sharing. Thus, in revisiting our claims data sharing policies, we
sought to maintain claims data sharing transparency and a mechanism for
[[Page 32740]]
beneficiaries to decline claims data sharing.
b. Proposed Revisions
Based on our experiences with data sharing under the Shared Savings
Program to date, we proposed to modify our processes and policy for
claims data sharing while remaining committed to retaining meaningful
beneficiary choice over claims data sharing with ACOs. First, we
proposed to provide beneficiaries with the opportunity to decline
claims data sharing directly through 1-800-Medicare, rather than
through the ACO. We noted that 1-800-Medicare has the capability for
beneficiaries to use accessible alternative or appropriate assistive
technology, if needed. We would continue to maintain a list of
beneficiaries who have declined data sharing and ensure that their
claims information is not included in the claims files shared with
ACOs. Second, we proposed to provide advance notification to all FFS
beneficiaries about the opportunity to decline claims data sharing with
ACOs participating in the Shared Savings Program through CMS materials
such as the Medicare & You Handbook. The Handbook would include
information about the purpose of the program, describe the opportunity
for ACOs to request beneficiary identifiable claims data for health
care operations purposes, and provide instructions on how beneficiaries
may decline claims data sharing by contacting CMS directly through 1-
800-Medicare. The Handbook would also contain instructions on how a
beneficiary may reverse his or her preference to decline claims data
sharing by contacting 1-800-Medicare. Third, to reduce burden for both
beneficiaries and ACOs, we proposed to remove the option for ACOs to
mail notifications to beneficiaries and for beneficiaries to sign and
return the forms to the ACO in order to decline claims data sharing.
This process would be replaced by a simpler, direct process through
notification at the point of care and through 1-800-Medicare as
described previously.
We also proposed to continue to require that ACO participants
notify beneficiaries in writing at the point of care that their
providers and suppliers are participating in the Shared Savings Program
as required under Sec. 425.312(a). We proposed that ACO participants
would continue to be required to post signs in their facilities using
required template language. Rather than requiring ACO participants
furnishing primary care services to provide a written form regarding
claims data sharing to all beneficiaries who have a primary care
service office visit, we proposed to update the required notification
template language for these signs to include information regarding
claims data sharing. We would update the template language with the
assistance of the Medicare Ombudsman's Office and beneficiary input to
inform beneficiaries about both the Shared Savings Program and also
that the ACO may request access to beneficiary identifiable claims data
from CMS in order to perform health care operations as defined under
the first and second paragraphs of the definition of health care
operations at 45 CFR 164.501. The signs would also provide
beneficiaries with information about their opportunity to decline this
data sharing and instructions to call 1-800-Medicare if they would
prefer that we not share their claims data with an ACO and its ACO
participants and ACO providers/suppliers. The signs would likewise
include instructions for how beneficiaries may reverse their decision
to decline claims data sharing through 1-800-Medicare, if they
determine in the future they would prefer to have their claims data
made available to ACOs and their ACO participants and ACO providers/
suppliers. Because ACO participants are required to post these signs in
their facilities at all times, this written notification through the
signs would occur at each visit, including the first visit the
beneficiary has with an ACO participant during a performance year.
We also noted in the proposed rule that we anticipate that some
beneficiaries may continue to want to have the ability to take the
information home or into their visit with their primary care provider
for further discussion. Therefore, in addition to the signs, we
proposed to retain our policy that ACO participants that submit claims
for primary care services used to determine the ACO's assigned
beneficiary population be required to make a separate written
notification form available to the beneficiary upon request. We
proposed to modify Sec. Sec. 425.312 and 425.708 for clarity and to
reflect these revised notification policies.
Finally, under Tracks 1 and 2, we proposed to make beneficiary
identifiable claims data available in accordance with applicable law on
a monthly basis for beneficiaries who are either preliminarily
prospectively assigned to the ACO based on the quarterly assignment
window or who have received a primary care service from an ACO
participant upon whom assignment is based. Because Tracks 1 and 2 use a
preliminary prospective assignment methodology with retrospective
reconciliation, we stated our belief that ACOs, ACO participants, and
ACO providers/suppliers in Tracks 1 and 2 would benefit from access to
beneficiary identifiable claims information for all FFS beneficiaries
who may be assigned to the ACO at the end of the performance year. In
contrast, under Track 3, we proposed to make beneficiary identifiable
claims data available only for beneficiaries who are prospectively
assigned to an ACO, because the beneficiaries on the prospective
assignment list are the only beneficiaries for whom the ACO would be
held accountable at the end of the performance year. Consistent with
the existing requirements at Sec. 425.704, in order to request
beneficiary identifiable claims data, and regardless of track, an ACO
must do all of the following:
Certify that it is a covered entity or the business
associate of a covered entity that has provided a primary care service
to the beneficiary in the previous 12 months.
Enter into a DUA with CMS prior to the receipt of these
beneficiary identifiable data.
Submit a formal request to receive beneficiary
identifiable claims data for such beneficiaries at the time of
application to the Shared Savings Program.
Certify that the request reflects the minimum data
necessary for the ACO to conduct either its own health care operations
work that falls within the first or second paragraph of the definition
of health care operations at 45 CFR 164.501 or health care operations
work on behalf of its ACO participants and ACO providers/suppliers that
are covered entities (as the business associate of these covered
entities) that falls within the first or second paragraph of the
definition of health care operations at 45 CFR 164.501.
We explained our belief that these proposed modifications to our
data sharing rules would significantly improve the claims data sharing
process. First, we stated our belief that the modified process would
reduce burden for beneficiaries who would no longer have to mail back
forms. In addition, it would minimize beneficiary confusion in
situations where an ACO may be newly formed and may not yet have
established a relationship with the beneficiary. Instead, the
beneficiary would be able decline claims data sharing, and reverse a
decision to decline claims sharing, by contacting CMS directly using 1-
800-Medicare. We stated our belief that beneficiaries would be more
comfortable expressing
[[Page 32741]]
their claims data sharing preferences directly through CMS, an agency
with which beneficiaries have an existing relationship. Moreover, we
stated our belief that our proposals would streamline ACO operations
and would allow ACOs to access beneficiary identifiable claims data
earlier in the performance year than is possible under our current
policies. Beneficiary identifiable claims data would still be available
on a monthly basis, but the new process would be operationally more
efficient and less expensive for ACOs. By removing the 30-day delay
before ACOs may request beneficiary identifiable claims data for their
preliminarily prospectively assigned beneficiaries under Tracks 1 and 2
and prospectively assigned beneficiaries under Track 3, and reducing
operational complexities associated with providing these data, ACOs
would have access to beneficiary identifiable claims data in a more
timely fashion. This could allow ACOs to intervene in the care of
beneficiaries earlier during the performance year. In addition, as
discussed previously, while we initially believed that requiring ACOs
to notify beneficiaries of the opportunity to decline claims data
sharing would improve engagement between ACO providers/suppliers that
furnish primary care services and their patients, we realized that this
policy unintentionally created burden and confusion for both ACOs and
beneficiaries, as many beneficiaries assume that their health care
providers already have the information needed to optimally coordinate
their care, even though this is not always the case. We stated our
belief that the proposed revisions to our claims data sharing policy
would reduce beneficiary confusion about the Shared Savings Program and
the role an ACO plays in assisting the beneficiary's health care
providers to improve their health and health care experience, while
still retaining a beneficiary's meaningful opportunity to decline
claims data sharing.
We also noted in the proposed rule that, since implementation of
the program, a small percentage of FFS beneficiaries have requested
that their identifiable claims data not be shared and have done so
either by notifying the ACO or by contacting 1-800-Medicare to decline
claims data sharing. We stated that none of our proposed revisions
would have any effect on any existing beneficiary preferences.
Previously recorded beneficiary preferences would continue to be
honored, unless and until a beneficiary changes his or her preference
by contacting 1-800-Medicare. Accordingly, we noted that our proposal
not only would preserve the beneficiary's ability to decline claims
data sharing by directly contacting CMS, but it also would have no
effect on existing beneficiary claims data sharing preferences, unless
the beneficiary subsequently amends his or her preferences to allow
claims data sharing.
We noted that the beneficiary identifiable information that is made
available under Sec. 425.704 would include Parts A, B and D data, but
would exclude any information related to the diagnosis and treatment of
alcohol or substance abuse. As we discussed in the April 2011 proposed
rule (76 FR 19557), 42 U.S.C. 290dd-2 and the implementing regulations
at 42 CFR part 2 restrict the disclosure of patient records by
federally conducted or assisted substance abuse programs. Such data may
be disclosed only with the prior written consent of the patient, or as
otherwise provided in the statute and regulations. We stated that we
may revisit this approach as technology in the area of consent
management advances.
We sought comment on these proposals, as well as other specific
modifications that could be made to our existing policies on data
sharing to improve the ability of ACOs to access beneficiary
identifiable claims data, and to reduce burden and confusion for ACOs,
ACO participants, ACO providers/suppliers, and beneficiaries. We
received many comments regarding these proposals.
Comment: Commenters supported our proposal to provide beneficiaries
the opportunity to decline claims data sharing directly through 1-800-
MEDICARE, rather than through the ACO. Stakeholders commented that the
proposed modifications to the claims data sharing process would result
in ACOs obtaining claims data sooner; which would allow certain
services such as care coordination activities to begin much sooner in
the program year. Commenters noted that the modified process would
negate the cumbersome process that is currently used by ACOs to track
and maintain beneficiary opt out preferences as well as the monthly
file transfers of those preferences between the ACO and CMS. A few
commenters stated that 1-800-MEDICARE should not be the sole method for
a beneficiary to decline data sharing. A commenter suggested developing
a Web site that beneficiaries could use to decline claims data sharing
electronically.
Response: We appreciate the strong support for our proposals to
simplify both the process for beneficiaries to decline claims data
sharing and the process for ACOs to notify beneficiaries about this
opportunity. We agree with commenters that the modified process will
result in the ACO obtaining claims information earlier than is
currently possible, which could in turn allow the ACO to intervene in a
beneficiary's care earlier in the performance year. However, we do not
believe that ACOs should wait for this data before implementing
appropriate care coordination and other processes as required under the
program rules. We note that defining certain required processes under
Sec. 425.112, including processes to coordinate care, and promote
evidence-based medicine and patient engagement, and having these
processes in place is a requirement for program eligibility. We believe
that using 1-800-MEDICARE is an efficient and effective way for
beneficiaries to let CMS know directly that they wish to decline claims
data sharing because beneficiaries are accustomed to contacting 1-800
Medicare with questions and comments. In addition, 1-800-MEDICARE is
staffed with customer service representatives who can answer questions
beneficiaries may have about ACOs and claims data sharing. We are
finalizing this simplified process for declining claims data sharing
and we anticipate it will reduce ACO and beneficiary burden and
confusion. Finally, we recognize that although most current
beneficiaries are used to contacting 1-800 Medicare with questions and
comments, use of the internet and smart phones is becoming ubiquitous,
and a new generation of computer-savvy baby-boomers is now becoming
eligible for Medicare. Therefore, we will explore whether to establish
in the future alternate means by which beneficiaries can elect to
decline claims data sharing, such as, for example, through an
appropriately secure transaction via the Internet.
Comment: Commenters were supportive of the proposal to notify FFS
beneficiaries about the opportunity to decline claims data sharing with
ACOs participating in the Shared Savings Program through CMS materials
such as the Medicare & You Handbook. Several commenters suggested that
CMS take the opportunity to revise and redesign CMS publications to
incentivize healthy behaviors and encourage beneficiary engagement with
ACOs.
Several commenters stated that CMS should not continue to require
ACO participants to provide written notification of their participation
in the
[[Page 32742]]
Shared Savings Program at the point of care, including notification of
the opportunity to decline claims data sharing. However, a few
commenters supported the requirement for the ACO and its providers and
suppliers to provide written notification at the point of care
regarding their participation in the program and the beneficiary's
ability to seek care from any FFS provider and the opportunity to
decline claims data sharing. A few commenters suggested that CMS
require ACOs to develop language for the notifications that would
clearly describe why and how the beneficiary's health information would
be stored, exchanged, used and protected, along with the beneficiary's
opportunity to decline claims data sharing. A commenter suggested that
the notification language clearly identify the type of data sharing
that would be subject to the opt-out.
A few commenters stated that our proposals should not preclude
providers from actively engaging in conversations with beneficiaries
regarding the sharing of their claims data and how their claims data
will be utilized and stored, or from providing relevant publications
regarding beneficiary opt-out opportunities.
Response: We encourage ACOs to work with their ACO participants and
ACO providers/suppliers to fully engage their FFS beneficiary
population. Also, under the modified beneficiary notification and
opportunity to decline data sharing processes, which we are finalizing,
we will continue to make available written information for ACO
participants to give to beneficiaries at the point of care, which
explains what an ACO is and what beneficiaries can expect when their
providers are ACO providers/suppliers participating in an ACO. These
materials are available to all participating ACOs through the ACO
portal.
Additionally, we agree with commenters that ACOs and their
participating providers and suppliers should be required at the point
of care and in writing to notify beneficiaries of their participation
in the program and to provide an opportunity for beneficiaries to
decline data sharing. We believe the transparency provided by such
notification is important. For this reason, we are also finalizing our
proposal that beneficiaries be notified in writing by Medicare
regarding the Shared Savings Program and the opportunity to decline
claims data sharing in accordance with Sec. 425.708 and by the ACO
participant at the point of care that their ACO providers/suppliers are
participating in the Shared Savings Program and the opportunity to
decline data sharing in accordance with Sec. 425.312. With respect to
the comment about ACOs providing detailed notification about how they
handle beneficiary health information, we note that the HIPAA Privacy
Rule requires covered entities, including covered health care
providers, to provide a notice of privacy practices that describes how
they may use and disclose PHI and the individual's rights with respect
to PHI. (See 45 CFR 164.520.) Therefore, we believe healthcare
providers should already be providing information that describes how
beneficiary's health information may be used and disclosed and is
protected under the HIPAA Privacy Rule.'
Furthermore, we believe the information contained in the Medicare &
You Handbook and the signs posted in ACO participant facilities will
prompt beneficiaries to ask questions and engage with their providers
concerning their provider's participation in an ACO and the
beneficiary's opportunity to decline data sharing. We do not believe
these policies will limit or impede a provider's ability or opportunity
to engage with beneficiaries at the point of care, and we encourage ACO
participants to speak with their beneficiaries about the Shared Savings
Program and claims data sharing, including how the ACO uses, stores,
and accesses beneficiary data.
Comment: A commenter requested that CMS develop and share with ACOs
a list of beneficiaries who have declined to share their claims data,
and that CMS analyze this list for the overall impact on the Shared
Savings Program.
Response: Currently, for an ACO receiving CCLFs, we provide a
monthly file that indicates what beneficiaries have declined data
sharing and have held webinars to explore the impact of withheld
claims. We intend to continue to provide that information under the new
process implemented as a result of this final rule. Additionally, we
intend to continue educating ACOs through webinars and other methods
regarding the impact of withheld claims.
Comment: Commenters made suggestions related to the type and format
of claims data that we share with ACOs, including that CMS:
Eliminate the suppression of claims data related to
alcohol and substance abuse diagnosis and treatment.
Include a beneficiary demographic file in the monthly
claim line feeds.
Establish a test file process where changes to data sets
can be provided in a test file to an ACO in advance of these changes
being incorporated into the live claim feeds.
Response: We noted in the proposed rule that the beneficiary
identifiable information that is made available under Sec. 425.704
will include Parts A, B and D data, but will exclude any information
related to the diagnosis and treatment of alcohol or substance abuse.
As we discussed in the April 2011 proposed rule (76 FR 19557), 42
U.S.C. 290dd-2 and the implementing regulations at 42 CFR part 2
restrict the disclosure of patient records by federally conducted or
assisted substance abuse programs. Such data may be disclosed only with
the prior written consent of the patient, or as otherwise provided in
the statute and regulations. We also noted in the proposed rule, as
well as the November 2011 final rule (76 FR 67844), that we expect ACOs
will have, or will be working towards having, processes in place to
independently identify and produce the data they believe are necessary
to best evaluate the health needs of their patient population,
including the desired beneficiary demographic data. A robust health
information exchange infrastructure and improved communication among
ACO participants and the ACO's neighboring health care providers could
also result in better access to beneficiary demographic data. We
believe the ACO professionals who are providing the plurality of a
beneficiary's primary care services have the most up-to-date data. To
assist ACOs in identifying the best sources for beneficiary medical
record data', we provide the ACO with the TIN and NPI of the ACO
participant and ACO professionals that provided the most recent primary
care service to the beneficiary on each quarterly report. We also make
mock CCLF files available to all ACOs that are eligible to receive
claims data. Whenever we make modifications to the CCLF file layouts,
we update and supply these mock files to ACOs before we make
modifications to the CCLF file layouts.
Comment: Several commenters requested that we make claims data
sharing 'automatic' for prospectively assigned beneficiaries and not
dependent on an ACO's request for data. Commenters suggested that
claims data should be made available for all beneficiaries that are
eligible for assignment to an ACO. A commenter requested that CMS
provide 3 years of claims data prior to the start of an agreement
period rather than the most recent 12-month period at the start of the
agreement period.
Response: As we discussed in detail in the December 2014 proposed
rule and
[[Page 32743]]
the April 2011 proposed rule, we have concluded that we are permitted
to disclose the minimum Medicare Parts A, B, and D data necessary to
allow ACOs to conduct the health care operations activities that fall
into the first or second paragraph of the definition of health care
operations under the HIPAA Privacy Rule when such data is requested by
the ACO as a covered entity or as the business associate of its covered
entity ACO participants and ACO providers/suppliers. Since CMS requires
a request to ensure the ACO has met the applicable HIPAA conditions for
disclosure, our provision of claims data to ACOs cannot be 'automatic.'
``Consistent with the existing requirements at Sec. 425.704, in order
to request beneficiary identifiable claims data, and regardless of
track, an ACO must take all of the following steps:
Certify that it is a covered entity or the business
associate of a covered entity that has provided a primary care service
to the beneficiary in the previous 12 months.
Enter into a DUA with CMS prior to the receipt of these
beneficiary identifiable data.
Submit a formal request to receive beneficiary
identifiable claims data for such beneficiaries at the time of
application to the Shared Savings Program.
Certify that the request reflects the minimum data
necessary for the ACO to conduct either its own health care operations
work that falls within the first or second paragraph of the definition
of health care operations at 45 CFR 164.501 or health care operations
work on behalf of its ACO participants and ACO providers/suppliers that
are covered entities (as the business associate of these covered
entities) that falls within the first or second paragraph of the
definition of health care operations at 45 CFR 164.501.
Thus, the ACO's formal request to receive data is accomplished at
the time of its application to the Shared Savings Program and does not
delay the receipt of claims data.
We proposed and are finalizing a policy under Tracks 1 and 2 to
make beneficiary identifiable claims data available in accordance with
applicable law on a monthly basis for beneficiaries who are either
preliminarily prospectively assigned to the ACO or who have received a
primary care service from an ACO participant upon whom assignment is
based during the most recent 12-month period. Because Tracks 1 and 2
use a preliminary prospective assignment methodology with retrospective
reconciliation, we believe that ACOs, ACO participants, and ACO
providers/suppliers in Tracks 1 and 2 will benefit from access to
beneficiary identifiable claims information for all FFS beneficiaries
who may be assigned to the ACO at the end of the performance year.
Furthermore, we believe this policy is consistent with commenters'
desire to have access to claims information for a majority of
beneficiaries that are eligible to be assigned to the ACO. In contrast,
under Track 3, we proposed to make beneficiary identifiable claims data
available only for beneficiaries who are prospectively assigned to an
ACO, because the beneficiaries on the prospective assignment list are
the only beneficiaries for whom the ACO will be held accountable at the
end of the performance year.
With respect to the comment about providing 3 years of claims data
prior to the start of the agreement period, we continue to believe
providing the most recent 12 months of claims data prior to the start
of the agreement period is appropriate and sufficient to allow ACOs to
coordinate care for their patient population. Our proposals were not
intended to revise or extend the ``look back'' for claims data that we
currently provide to ACOs for beneficiaries who have not declined
claims data sharing. We also have concerns that expanding the look back
period from 12 months prior to the agreement period to 3 years as
suggested by the commenter will create barriers for some ACOs because
stakeholders have told us that the current CCLF files are large and
require sophisticated systems to accept even the 12-months' worth of
claims data we provide.
FINAL ACTION: We are finalizing our claims data sharing policies as
proposed. Specifically, we are finalizing our proposal in Sec. 425.704
to begin sharing beneficiary identifiable claims data with ACOs
participating under Tracks 1 and 2 that request claims data on
beneficiaries who are included on their preliminary prospective
assigned beneficiary list or that have received a primary care service
from an ACO participant upon whom assignment is based during the most
recent 12-month period, at the start of the ACO's agreement period,
provided all other requirements for claims data sharing under the
Shared Savings Program and HIPAA regulations are met. In addition, we
are finalizing our proposal to share beneficiary identifiable claims
data with ACOs participating under Track 3 that request beneficiary
identifiable claims data on beneficiaries who are included on their
prospectively assigned beneficiary list. These changes are effective
January 1, 2016 in order to give ACOs in the middle of their 3-year
participation agreements some time to make necessary adjustments in
light of the new rules. For example, ACOs may need to improve their
ability to accept larger amounts of claims data. ACOs will also need
some time to finalize the collection and notification to CMS of any
beneficiary notifications mailed prior to November 1. The timing will
also coincide with a new cohort of ACOs and the issuance of the 2016
Medicare & You Handbook that will notify beneficiaries of the
opportunity to decline claims data sharing through 1-800 Medicare. We
are finalizing our proposed modifications to Sec. 425.708 to reflect
the streamlined process by which beneficiaries may decline claims data
sharing. We are finalizing our proposals in Sec. 425.312(a) and Sec.
425.708 to require ACO participants to use CMS-approved template
language to notify beneficiaries regarding participation in an ACO and
the opportunity to decline data sharing. We are also finalizing our
proposal in Sec. 425.708(c) to honor any beneficiary request to
decline claims data sharing that is received under Sec. 425.708 until
such time as the beneficiary may reverse his or her claims data sharing
preference to allow data sharing. These changes are effective November
1, 2015, to enable ACOs that choose to mail notifications under the
current requirements to mail notifications to beneficiaries up until
the end of October; permit the 30-day window for ACOs to receive
notifications from beneficiaries that choose to decline claims data
sharing; and give ACOs one last opportunity to notify CMS, in turn, of
`beneficiaries' preferences in December 2015.
E. Assignment of Medicare FFS Beneficiaries
1. Background
Section 1899(c) of the Act requires the Secretary to ``determine an
appropriate method to assign Medicare fee-for-service beneficiaries to
an ACO based on their utilization of primary care services provided
under this title by an ACO professional described in paragraph
(h)(1)(A).'' Section 1899(h)(1)(A) of the Act constitutes one element
of the definition of the term ``ACO professional.'' Specifically, this
provision establishes that ``a physician (as defined in section
1861(r)(1) of the Act)'' is an ``ACO professional'' for purposes of the
Shared Savings Program. Section 1861(r)(1) of the Act in turn defines
``physician'' as ``a doctor of medicine or osteopathy legally
authorized to practice medicine and surgery by the State in which he
[[Page 32744]]
performs such function or action''. In addition, section 1899(h)(1)(B)
of the Act defines ``ACO professional'' to include practitioners
described in section 1842(b)(18)(C)(i) of the Act, such as physician
assistants (PAs) and nurse practitioners (NPs).
As we explained in the November 2011 final rule (76 FR 67851), the
term ``assignment'' refers only to an operational process by which
Medicare determines whether a beneficiary has chosen to receive a
sufficient level of the requisite primary care services from physicians
associated with a specific ACO so that the ACO may be appropriately
designated as exercising basic responsibility for that beneficiary's
care. Consistent with section 1899(b)(2)(A) of the Act, an ACO is held
accountable ``for the quality, cost, and overall care of the Medicare
fee-for-service beneficiaries assigned to it.'' The ACO may also
qualify to receive a share of any savings that are realized in the care
of these assigned beneficiaries due to appropriate efficiencies and
quality improvements that the ACO may be able to achieve. The term
``assignment'' for purposes of the Shared Savings Program in no way
implies any limits, restrictions, or diminishment of the rights of
Medicare FFS beneficiaries to exercise freedom of choice in the
physicians and other health care providers and suppliers from whom they
receive their services.
In developing the process for assigning Medicare beneficiaries to
ACOs, in addition to the definition of an ACO professional (76 FR
67851), we also considered the following elements:
The operational definition of an ACO (see the discussion
of the formal and operational definitions of an ACO in section II.B. of
this final rule) so that ACOs can be efficiently identified,
distinguished, and associated with the beneficiaries for whom they are
providing services.
The definition of primary care services for purposes of
determining the appropriate assignment of beneficiaries.
Whether to assign beneficiaries to ACOs prospectively, at
the beginning of a performance year on the basis of services rendered
prior to the performance year, or retrospectively, on the basis of
services actually rendered by the ACO during the performance year.
The proportion of primary care services that is necessary
for a beneficiary to receive from an ACO in order to be assigned to
that ACO for purposes of this program.
In the November 2011 final rule (76 FR 67851 through 67870), we
finalized the methodology that we currently use to assign beneficiaries
to ACOs for purposes of the Shared Savings Program. Beneficiaries are
assigned to a participating ACO using the assignment methodology in
part 425, subpart E of our regulations. In addition, since the final
rule was issued, we have provided additional guidance and more detailed
specifications regarding the beneficiary assignment process in
operational instructions which are available to the public on the CMS
Web site. (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Financial-and-Assignment-Specifications.html).
In this section of this final rule, we summarize certain key
policies and methodological issues to provide background for several
revisions to the assignment methodology that we proposed based on our
initial experiences with the program and questions from stakeholders.
2. Basic Criteria for a Beneficiary To Be Assigned to an ACO
As discussed in detail in the proposed rule (79 FR 72791 and 72792)
and consistent with previous guidance (see guidance at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/Shared-Savings-Losses-Assignment-Spec-v2.pdf.), we proposed to add a new provision at Sec. 425.401(a) of the
regulations to outline the criteria that a beneficiary must meet in
order to be eligible to be assigned to an ACO. Specifically, we
proposed that a beneficiary would be eligible to be assigned to a
participating ACO, for a performance year or benchmark year, if the
beneficiary meets all of the following criteria during the assignment
window (defined in section II.F. of this final rule as the 12-month
period used for assignment):
Has at least 1 month of Part A and Part B enrollment and
does not have any months of Part A only or Part B only enrollment.
Does not have any months of Medicare group (private)
health plan enrollment.
Is not assigned to any other Medicare shared savings
initiative.
Lives in the U.S. or U.S. territories and possessions as
determined based on the most recent available data in our beneficiary
records regarding the beneficiary's residence at the end of the
assignment window.
If a beneficiary meets all of the criteria in Sec. 425.401(a),
then the beneficiary would be eligible to be assigned to an ACO in
accordance with the two-step beneficiary assignment methodology in
Sec. 425.402 and Sec. 425.404. We also proposed to make a conforming
change to Sec. 425.400 to reflect the addition of this new provision.
We sought comment on our proposal.
Comment: Commenters generally agreed that the proposed beneficiary
eligibility criteria are consistent with the statute, and agreed that
their explicit inclusion within the regulations would help to promote a
clearer understanding of the assignment process for purposes of such
operations as benchmarking, preliminary prospective assignment
(including quarterly updates), retrospective reconciliation, and
prospective assignment.
Response: We agree that revising the regulations to include these
eligibility criteria will help promote understanding of the assignment
methodology. We are also make a conforming change to Sec. 425.400 to
clarify that the assignment methodology applies for purposes of
benchmarking, preliminary prospective assignment (including quarterly
updates), retrospective reconciliation, and prospective assignment.
Comment: A number of commenters suggested additional criteria such
as removing the beneficiary if he/she moves from the ACO's service
region or otherwise lives in two or more geographic locations during
the year. Some commenters requested a policy that geographically
defines and pre-identifies the target population for ACOs willing to
take financial risk. Commenters suggested such a policy could be
defined by distance based on miles, out of state residence, or if one
of these geographic factors is combined with attribution, on a limited
number of attributing services billed over a short period of time. To
illustrate, some commenters suggested that to be eligible for ACO
assignment, beneficiaries should receive a large majority (for example,
75 to 95 percent) of their qualified primary care services delivered in
the ACO's service area. Another commenter suggested that CMS implement
a beneficiary assignment appeals process to allow for removal of
beneficiaries from assignment to an ACO if they meet certain conditions
such as move out of the area or select a new non-ACO physician. These
commenters believe that ACOs should not be financially accountable for
patients who live outside of their service area, such as those who move
during the year or otherwise live in two or more geographic locations
during the year. In such cases, commenters noted that it may be
difficult for the ACO to which the patient is assigned to manage
effectively the beneficiary's care throughout the year. In addition,
that
[[Page 32745]]
ACO will be held accountable for the cost and quality of the care
provided to the beneficiary in the alternate location, which may have
different standards of practice. A few commenters requested that
beneficiaries who opt out of sharing their data should also not be
assigned to an ACO.
Response: We greatly appreciate the varied suggestions for
additional criteria for excluding beneficiaries from assignment. We
explored some of these suggestions and performed an initial analysis on
the specific suggestion for removal of beneficiaries who move out of
the ACO's service area and determined there is a very small number of
beneficiaries who will meet the criteria for exclusion on this basis,
and these beneficiaries will not represent a significant portion of the
ACO's list. We further point out that for Tracks 1 and 2, beneficiaries
who move may drop off an ACO's assignment list since the lists are
retrospectively reconciled. Under Tracks 1 and 2, a beneficiary only
gets retrospectively assigned to an ACO if he/she received a plurality
of primary care services from ACO professionals at the ACO. Therefore,
we believe the ACO can reasonably be held accountable for the overall
cost and quality of the care furnished to that beneficiary during that
performance year. This policy has an additional advantage of providing
an incentive for ACOs to coordinate care and provide for an appropriate
hand-off when beneficiaries move out of their service area. Likewise,
we believe that continuing to include those beneficiaries who have not
permanently moved, but who otherwise live in two or more geographic
locations during the year, on the ACO's assignment list during the
performance year provides an excellent opportunity for ACOs to make
sure the care for such beneficiaries is coordinated. Finally, regarding
the suggestion that beneficiaries who opt out of sharing their data
should not be assigned to an ACO, we believe the assignment methodology
adequately indicates which beneficiaries should be assigned to an ACO
on the basis of the primary care services furnished by ACO
professionals. In addition, ACOs will have their own clinical
information about the patient that they may share and use as permitted
by HIPAA and other applicable laws. Therefore, we believe the
beneficiary should remain assigned to the ACO even if the beneficiary
does not choose to permit us to disclose his/her PHI in the form of
claims data. We intend to monitor and assess the impact of not
excluding these beneficiaries from assignment and, if appropriate, may
consider making adjustments in future rulemaking.
Comment: A commenter suggested exclusion of Medicare beneficiaries
who are already deceased at the time of their initial assignment to an
ACO. The commenter stated that ACOs are prevented from coordinating the
care of these beneficiaries and from learning from their claims
experience. The commenter noted that this is a critical issue because
many studies have shown that Medicare beneficiaries spend a
disproportionate share of their lifetime medical expenses in the last
few months of life. The commenter believes that assigning such
beneficiaries to an ACO is an unfair burden on their financial
performance under the Shared Savings Program and their fair opportunity
to earn shared savings.
Response: We appreciate this comment. However, we are not revising
the program's assignment methodology to remove beneficiaries with a
date of death during the assignment window. Including beneficiaries
with a date of death during the assignment window helps to reduce the
introduction of actuarial bias when comparing the ACO's benchmark and
performance year expenditures. Beneficiaries who are deceased will only
be assigned to an ACO under either a prospective or retrospective
assignment methodology if the ACO had previously been treating the
beneficiary and providing the beneficiary's plurality of primary care
services. Further, a purpose of sharing the preliminary list of
assigned beneficiaries is to give the ACO information about their
Medicare FFS patient population. On the reports we give to ACOs, we
indicate if a beneficiary is deceased. The ACO can learn about the
beneficiary's experience by seeking information from both the ACO
providers/suppliers as well as any of the beneficiary's other Medicare-
enrolled providers and suppliers that cared for the beneficiary during
the assignment window to the extent permitted by HIPAA and other
applicable laws, and by reviewing the monthly beneficiary-identifiable
claims line feeds (if the ACO properly requested these data). We
believe it is' better to include deceased beneficiaries for the sake of
completeness. Further, we do not believe it is unfair to the ACO
because such beneficiaries are represented in both benchmark and
performance years. Accordingly, we believe it is appropriate that ACOs
be held accountable for beneficiaries who pass away during a
performance year.
Comment: A few commenters suggested that the criterion that a
beneficiary not have any months of Medicare group (private) health plan
enrollment during the assignment window be revised to not more than 3
to 6 months, to account for certain situations where beneficiaries,
such as dual eligible, might change, enroll in or disenroll from plans
more frequently. This would allow such beneficiaries to remain
attributed to the ACO.
Response: Section 1899(c) of the Act requires the Secretary to
``determine an appropriate method to assign Medicare fee-for-service
beneficiaries to an ACO''. As required by section 1899(c) of the Act,
and consistent with the definition of Medicare FFS beneficiary in
section 1899(h)(3) of the Act Sec. 425.20 of the regulations, only
beneficiaries enrolled in traditional Medicare FFS under Parts A and B
are eligible to be assigned to an ACO participating in the Shared
Savings Program. We believe our current policy is consistent with these
requirements because under our current approach, only beneficiaries
enrolled in traditional Medicare FFS under Parts A and B throughout the
full performance year are eligible to be assigned to an ACO, and
therefore, we will not revise the policy at this time. However, we plan
to consider this issue further and we may address this issue in future
rulemaking.
FINAL ACTION: We are finalizing our proposal to codify the criteria
that a beneficiary must meet in order to be eligible to be assigned to
an ACO. Specifically, a beneficiary will be eligible to be assigned to
an ACO, for a performance year or benchmark year, if the beneficiary
meets all of the following criteria during the assignment window:
Has at least 1 month of Part A and Part B enrollment and
does not have any months of Part A only or Part B only enrollment.
Does not have any months of Medicare group (private)
health plan enrollment.
Is not assigned to any other Medicare shared savings
initiative.
Lives in the U.S. or U.S. territories and possessions as
determined based on the most recent available data in our beneficiary
records regarding the beneficiary's residence at the end of the
assignment window.
We are also finalizing our proposal to add a new provision at Sec.
425.401(a) of the regulations outlining these criteria. If a
beneficiary meets all of the criteria in Sec. 425.401(a), then the
beneficiary will be eligible to be assigned to an ACO in accordance
with the two-step beneficiary assignment methodology in Sec. 425.402
and Sec. 425.404. We also are finalizing the conforming change to
Sec. 425.400 to reflect the addition of this new provision and
additional
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conforming changes to Sec. 425.400 to clarify that these revisions
apply for purposes of benchmarking, preliminary prospective assignment
(including quarterly updates which are in turn used to determine a
sample of beneficiaries for purposes of assessing the ACO's quality
performance), retrospective reconciliation, and prospective assignment.
3. Definition of Primary Care Services
a. Overview
As discussed in the proposed rule (79 FR 72792), we currently
define ``primary care services'' for purposes of the Shared Savings
Program in Sec. 425.20 as the set of services identified by the
following HCPCS/CPT codes: 99201 through 99215, 99304 through 99340,
99341 through 99350, the Welcome to Medicare visit (G0402), and the
annual wellness visits (G0438 and G0439). In addition, as we will
discuss later in this section, we have established a crosswalk for
these codes to certain revenue center codes used by FQHCs (prior to
January 1, 2011) and RHCs so that their services can be included in the
beneficiary assignment process.
As we explained in the proposed rule (79 FR 72792), we established
the current list of codes that constitute primary care services because
of our belief that the listed codes represented a reasonable
approximation of the kinds of services that are described by the
statutory language at section 1899(c) of the Act, which refers to
assignment of ``Medicare fee-for-service beneficiaries to an ACO based
on their utilization of primary care services'' furnished by
physicians. In addition, we selected this list to be largely consistent
with the definition of ``primary care services'' in section 5501 of the
Affordable Care Act, which establishes the Primary Care Incentive
Payment Program (PCIP). The PCIP was established to expand access to
primary care services, and thus its definition of ``primary care
services'' provides a compelling precedent for adopting a similar list
of codes for purposes of the beneficiary assignment process under the
Shared Savings Program. We slightly expanded the list of codes found in
section 5501 of the Affordable Care Act to include the Welcome to
Medicare visit (HCPCS code G0402) and the annual wellness visits (HCPCS
codes G0438 and G0439) as primary care services since these codes
clearly represent primary care services frequently received by Medicare
beneficiaries, and in the absence of the special G codes the services
provided during these visits would be described by one or more of the
regular office visit codes that are included in the list under section
5501 of the Affordable Care Act.
b. Proposed Revisions
As discussed in detail in the proposed rule (79 FR 72792 through
72794), we proposed to update the definition of primary care services
at Sec. 425.20 to include the transitional care management (TCM) codes
(CPT codes 99495 and 99496) and the chronic care management (CCM) code
HCPCS code GXXX1, which was replaced by CPT 99490 in the 2015 Medicare
Physician Fee Schedule final rule. (See discussion at 79 FR 67716). We
also proposed to include these codes in our beneficiary assignment
methodology under Sec. 425.402.
Specifically, effective January 1, 2013, Medicare pays for two CPT
codes (99495 and 99496) that are used to report physician or qualifying
non-physician practitioner TCM services for a patient following a
patient's discharge to a community setting from an inpatient hospital
or skilled nursing facility (SNF) or from outpatient observation status
in a hospital or partial hospitalization. These codes were established
to pay a patient's physician or practitioner to coordinate the
patient's care in the 30 days following a hospital or SNF stay.
In addition, effective January 1, 2015, Medicare pays for CCM
services (see 79 FR 67715 through 67728). CCM services generally
include regular development and revision of a plan of care,
communication with other treating health professionals, and medication
management.
Further, in order to promote flexibility for the Shared Savings
Program and to allow the definition of primary care services used in
the Shared Savings Program to respond more quickly to HCPCS/CPT coding
changes made in the annual PFS rulemaking process, we proposed to make
any future revisions to the definition of primary care service codes
through the annual PFS rulemaking process. Accordingly, we also
proposed to amend the definition of primary care services at Sec.
425.20 to include additional codes that we designated as primary care
services for purposes of the Shared Savings Program, including new
HCPCS/CPT codes or revenue codes and any subsequently modified or
replacement codes. We sought comments on these proposals.
As discussed in detail in the proposed rule (79 FR 72792 through
72793), we also welcomed comment from stakeholders on the implications
of retaining certain evaluation and management (E&M) codes used for
physician services furnished in SNFs and other nursing facility
settings (CPT codes 99304 through 99318) in the definition of primary
care services. As we noted in the proposed rule, in some cases,
hospitalists that perform E&M services in SNFs have requested that
these codes be dropped from the definition of primary care services so
that their ACO participant TIN need not be exclusive to only one ACO
based on the exclusivity policy established in the November 2011 final
rule (76 FR 67810 through 67811). The requirement under Sec.
425.306(b) that an ACO participant TIN be exclusive to a single ACO
applies when the ACO participant TIN submits claims for primary care
services that are considered in the assignment process. However, ACO
participant TINs upon which beneficiary assignment is not dependent
(that is, ACO participant TINs that do not submit claims for primary
care services that are considered in the assignment process) are not
required to be exclusive to a single ACO. We indicated in the proposed
rule that we continued to believe that it is reasonable to conclude
that services provided in SNFs with CPT codes 99304 through 99318
represent basic E&M services that would ordinarily be provided in
physician offices if the beneficiaries were not residing in nursing
homes and should continue to be included in the definition of primary
care services used for purposes of beneficiary assignment to an ACO
participating in the Shared Savings Program.
Finally, we sought comments as to whether there are any additional
existing HCPCS/CPT codes that we should consider adding to the
definition of primary care services in future rulemaking for purposes
of assignment of beneficiaries to ACOs under the Shared Savings
Program.
Comment: Almost all commenters supported the proposal to include
TCM and CCM in the definition of primary care, agreeing that the care
coordination and care management services included under these codes
are consistent with the delivery of primary care and will assist ACOs
in lessening fragmentation and improving care coordination. A very
small number of commenters opposed including these codes, suggesting
that because they are new codes still untested in the market place,
there could be unintended consequences, such as that there could be a
propensity to double-pay for these services if attribution rules are
not written properly since the possibility exists that beneficiaries
may be seeing multiple providers in different locations. A commenter
suggested there
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should be a minimum of 1 year experience under the new codes available
before they are used for assignment in the performance year. Another
commenter believes that inclusion of CCM should be delayed until other
concerns are addressed. For example, this commenter suggested that an
ACO should be permitted to control utilization of CCM for its assigned
beneficiaries, allowing an ACO to bill for CCM directly (assuming that
all the requirements for billing the CCM code are met by the ACO) and
superseding claims submitted by ACO providers/suppliers. A commenter
pointed out that in the 2015 Medicare Physician Fee Schedule final
rule, CMS opted to use CPT code 99490 for the CCM services instead of
HCPCS code GXXX1.
Response: For the reasons discussed in the proposed rule, we agree
with commenters who believe that the care coordination and care
management services included under these codes are consistent with the
delivery of primary care and will assist ACOs in lessening
fragmentation and improving care coordination. We agree that we should
use CPT code 99490 for the Chronic Care Management (CCM) services
instead of HCPCS code GXXX1. (See the discussion at 79 FR 67716). We do
not believe it is necessary to allow for a transition period for ACOs
and their ACO participants to gain experience with these codes before
incorporating them into the assignment process. We believe the coding
definitions and other criteria that have been developed by CPT and CMS
will facilitate use of these codes by ACO participants. Further, we do
not believe it is appropriate for ACOs to use these or any other codes
as a way to control utilization by the ACO participants.
Comment: A commenter recommended that emergency department visits
count as primary care visits for purposes of assignment and that ACO
participants should be encouraged to modify delivery of care in the ED
to provide 24-hour access to care, but with a redesigned payment and
delivery system that promotes primary care, meets the needs of rural
communities and keeps costs down. Another commenter requested inclusion
of inpatient E&M codes: Observation--99218-99220/Initial, 99224-99226/
Subsequent; Hospital Inpatient--99221- 99223/Initial, 99231-99233/
Subsequent; and Hospital Inpatient Consultation--99251-99255.
Response: For the reasons we discussed in the initial Shared
Savings Program final rule (76 FR 67853), we continue to believe that
the services represented by these codes do not represent the kind of
general evaluation and management of a patient that will constitute
primary care. In addition, we will also note that these codes were not
included in the definition of ``primary care services'' in section 5501
of the Affordable Care Act. That section establishes an incentive
program to expand access to primary care services, and thus the
definition of ``primary care services'' under that program provides a
compelling reason for adopting a similar definition and list of codes
for purposes of the Shared Savings Program.
Comment: A commenter requested clarification of how CMS would be
modifying the ETA processes to reflect a change in coding policy under
the Outpatient Hospital Prospective Payment System (OPPS) effective for
services furnished on or after January 1, 2014.
Response: Effective January 1, 2014, CPT codes 99201 through 99205
and 99211 through 99215 are no longer recognized for payment under the
OPPS. Under the OPPS, outpatient hospitals have been instructed to use
HCPCS code G0493 and may no longer use 99201 through 99205 and 99211
through 99215. (For example, see our Web site at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM8572.pdf, page 3). This coding change
under OPPS affects our ETA operational processes under the Shared
Savings Program. This new information about how clinic visits are
billed under OPPS came to light after the issuance of the December 2014
proposed rule. Therefore, we need to reconsider our ETA hospital-
related proposal and intend to address the issue in future rulemaking.
We discuss the primary care codes we use for ETA hospitals in section
II.E.5. of this final rule.
Comment: Some commenters-- in response to the discussion in the
proposed rule regarding including the codes for SNF visits, CPT codes
99304 through 99318 in the definition of primary care services--
objected to inclusion of SNF visit codes because they believe a SNF is
more of an extension of the inpatient setting rather than a component
of the community based primary care setting. These commenters believe
that ACOs are often inappropriately assigned patients who've had long
SNF stays but would not otherwise be aligned to the ACO and with whom
the ACO has no clinical contact after their SNF stay. Some commenters
draw a distinction between the services represented by these codes when
provided in two different places of service, POS 31 (SNF) and POS 32
(NF). While the same CPT visit codes are used to describe these
services in SNFs (POS 31) and NFs (POS 32), the patient population is
arguably quite different. These commenters suggest excluding SNF visit
codes furnished in POS 31 to relieve ACO participants that bill for the
services of hospitalists from the requirement that they must be
exclusive to a single ACO if their services are considered in
assignment. Patients in SNFs (POS 31) are shorter stay patients who are
receiving continued acute medical care and rehabilitative services.
While their care may be coordinated during their time in the SNF, they
are then transitioned back to the community. Patients in a SNF (POS 31)
require more frequent practitioner visits--often from 1 to 3 times a
week. In contrast, patients in NFs (POS 32) are almost always permanent
residents and generally receive their primary care services in the
facility for the duration of their life. Patients in NFs (POS 32) are
usually seen every 30 to 60 days unless medical necessity dictates
otherwise. Another commenter suggested that we should consider
establishing separate CPT codes to distinguish between E&M services
provided by SNFs vs other nursing facilities.
Response: We appreciate receiving these suggestions on how we could
create a method to exclude services billed for beneficiaries receiving
Part A SNF care from the definition of ``primary care services'' by
using POS 31 to identify such claims. We plan to consider this issue
further and will discuss it in future rulemaking.
Comment: A commenter requested that we establish a separate
definition for ``beneficiary assignment services'' that will reflect
the primary care services used to assign beneficiaries to ACOs under
Sec. 425.20. In this way, CMS could satisfy the need to narrowly
define ACO assignment while continuing to broaden the definition of
``primary care'' in a manner consistent with a wide range of CMS'
health reform efforts.
Response: We do not believe that this revision is necessary. The
definition of primary care services under Sec. 425.20 applies only to
the Shared Savings Program and does not directly affect other CMS
programs.
Comment: A few commenters supported CMS's proposal to make any
future revisions to the definition of primary care service codes
through the annual PFS rulemaking process.
Response: We believe such a process will provide CMS with
flexibility to address any future appropriate revisions to the
definition of primary care service
[[Page 32748]]
codes promptly. ACOs and other interested stakeholders will continue to
have an opportunity as part of the annual PFS rulemaking to provide
input before any revisions to the definition of primary care services
are implemented.
FINAL ACTION: We are finalizing our proposal to update the
definition of primary care services at Sec. 425.20 to include both TCM
codes (CPT codes 99495 and 99496), the CCM code (CPT code 99490), and
to include these codes in our beneficiary assignment methodology under
Sec. 425.402. Further, we are finalizing our proposal to amend Sec.
425.20 to make any future revisions to the definition of primary care
service codes through the annual PFS rulemaking process.
4. Consideration of Physician Specialties and Non-Physician
Practitioners in the Assignment Process
a. Overview
Primary care services can generally be defined based on the type of
service provided, the type of provider specialty that provides the
service, or both. As discussed in detail in the proposed rule (79 FR
72794) our current assignment process simultaneously maintains the
requirement to focus on primary care services in beneficiary
assignment, while recognizing the necessary and appropriate role of
specialists in providing primary care services, such as in areas with
primary care physician shortages.
Under Sec. 425.402, after identifying all patients who had a
primary care service with a physician who is an ACO professional (and
who are thus eligible for assignment to the ACO under the statutory
requirement to base assignment on ``utilization of primary care
services'' furnished by physicians), we employ a step-wise assignment
process that occurs in the following two steps:
Step 1: In this step, first we add up the allowed charges for
primary care services billed by primary care physicians through the
TINs of ACO participants in the ACO. Next, we add up the allowed
charges for primary care services furnished by primary care physicians
that are billed through other Medicare-enrolled TINs (or through a
collection of ACO participant TINs in the case of another ACO). If the
allowed charges for the services furnished by ACO participants are
greater than the allowed charges for services furnished by the
participants in any other ACO or by any non-ACO participating Medicare-
enrolled TIN, then the beneficiary is assigned to the ACO in the first
step of the assignment process.
Step 2: This step applies only for beneficiaries who have not
received any primary care services from a primary care physician. We
assign a beneficiary to an ACO in this step if the beneficiary received
at least one primary care service from a physician participating in the
ACO, and more primary care services (measured by Medicare allowed
charges) from ACO professionals (physician regardless of specialty, NP,
PA or clinical nurse specialist (CNS)) at the ACO than from ACO
professionals in any other ACO or solo practice/group of practitioners
identified by a Medicare-enrolled TIN or other unique identifier, as
appropriate, that is unaffiliated with any ACO.
Since publication of the November 2011 final rule (76 FR 67853
through 67858), we have gained further experience with this assignment
methodology. We have learned from its application for the first 400
ACOs participating in the program that, for the total 7.1 million
assigned beneficiaries, about 92 percent of the beneficiaries assigned
to ACOs are assigned in step 1, with only about 8 percent of the
beneficiaries being assigned in step 2. We have adopted a similar
beneficiary assignment approach for some other programs, such as the
PQRS Group Practice Reporting Option via the GPRO web interface (77 FR
69195 through 69196) and the Value Modifier (VM) (79 FR 67790 and 79 FR
67962).
We continue to believe that the current step-wise assignment
methodology generally provides a balance between maintaining a strong
emphasis on primary care while ultimately allowing for assignment of
beneficiaries on the basis of how they actually receive their primary
care services. However, we proposed several revisions that we believe
would improve the assignment methodology.
b. Proposed Revisions
(1) Including Primary Care Services Furnished by Non-Physician
Practitioners in Step 1
First, we proposed to include primary care services furnished by
non-physician practitioners (NPs, PAs, and CNSs) in step 1 of the
assignment methodology rather than only in step 2 as they are under the
current process. We discussed the reasons for this proposal in detail
in the proposed rule (79 FR 72795). In summary, including services
furnished by NPs, PAs, and CNSs in determining the plurality of primary
care services in step 1 of the assignment process may help ensure that
beneficiaries are assigned to the ACO (or non-ACO entity) that is
actually providing the plurality of primary care for that beneficiary
and thus, should be responsible for managing the patient's overall
care. We also noted that section 5501 of the Affordable Care Act
defines a ``primary care practitioner'' as a physician who has a
primary specialty designation of family medicine, internal medicine,
geriatric medicine, or pediatric medicine or as a ``nurse practitioner,
clinical nurse specialist, or physician assistant.'' Therefore, we
believe that it would be appropriate to include these non-physician
practitioners in step 1 of the assignment process in order to better
align the Shared Savings Program assignment methodology with the
primary care emphasis in other provisions of the Affordable Care Act.
Further, we believe that including these non-physician practitioners in
step 1 would be supported by the statute as long as we continue to
first identify all patients that have received a primary care service
from a physician who is an ACO professional and who are thus eligible
for assignment to the ACO under the statutory requirement to base
assignment on ``utilization of primary care services'' furnished by
physicians. Accordingly, we proposed to amend the assignment
methodology to include primary care services furnished by NPs, PAs, and
CNSs in step 1 of the assignment process. Specifically, we proposed to
revise Sec. 425.402(a) to include NPs, PAs, and CNSs as ACO
professionals that would be considered in step 1 of the assignment
process. We sought comments on our proposal.
However, we also noted that there could be some concerns about
adding NPs, PAs, and CNSs to step 1 of the assignment methodology.
Unlike for physicians, the CMS self-reported specialty codes reported
on claims for NPs, PAs, and CNSs are not further broken down by
specific specialty areas. Therefore, the codes do not allow
practitioners to indicate whether they are typically functioning as
primary care providers or as specialists. We expressed concern that by
considering services furnished by NPs, PAs, and CNSs in step 1, we may
ultimately assign some beneficiaries to an ACO inappropriately based on
specialty care over true primary care. Thus, while we invited comments
on our proposal to include primary care services furnished by NPs, PAs,
and CNSs in step 1 of the assignment methodology, we also requested
comment on the extent to which these non-physician practitioners
provide non-primary care services and whether there are ways to
distinguish between primary care services and non-
[[Page 32749]]
primary care services billed by these non-physician practitioners.
Comment: Most commenters supported this proposal, at least in
concept, agreeing that many NPs, PAs, and CNSs are engaged in the
delivery of primary care and their inclusion within Step 1 can provide
for a more accurate primary care-based assignment. However, many of
these commenters also pointed out that some NPs, PAs, and CNSs furnish
specialty care and not primary care. Therefore, these commenters
suggested that CMS should take additional steps to assure that the NPs,
PAs, and CNSs considered under Step 1 are truly primary care providers
in order to better assure accurate assignment of beneficiaries to ACOs.
These commenters provided a wide range of suggestions. These
suggestions included developing new, more detailed specialty codes for
NPs, PAs, and CNSs: Implementing a primary care attestation process for
non-physician practitioners that would be somewhat similar to the
attestation process that is currently used for physicians that furnish
primary care services in FQHCs/RHCs; implementing such a primary care
attestation process for all ACO professionals including both physicians
and non-physician practitioners; revising the CMS PECOS enrollment
system to require non-physician practitioners to indicate whether they
provide primary care; analyzing claims data to determine whether a
relationship exists between a non-physician practitioner and a primary
care physician; using service code modifiers to clearly identify the
clinician performing a specific service; and giving each ACO the option
to include or not include non-physician practitioners for their
beneficiary assignments, among other suggestions.
Some commenters supporting the proposal acknowledged that NPs are
not classified in specialty codes by CMS, but believe this is unlikely
to be a serious problem. For example, a commenter indicated that recent
surveys found that, of the 205,000 NPs in the U.S., more than 87
percent are prepared in primary care and more than 75 percent practice
in at least one primary care site. Another commenter stated that NPs
are prepared and certified in the primary care specialties with
basically the same frameworks as physicians: Family, adult (internal
medicine) and gerontology, and that women's health NPs are focused on
primary care. Another commenter noted that there exists the same
inability to discern whether physicians are actually providing primary
care services versus non-primary care services. These commenters
requested that CMS not create barriers for one group of ACO
professionals with requirements that are not placed on others.
A few commenters opposed including non-physician practitioners in
step 1 because Medicare claims data is not able to distinguish between
their primary care and specialty care. A commenter opposed assigning a
beneficiary to an ACO based solely on services delivered by a non-
physician ACO professional.
Response: We agree with commenters who believe including NPs, PAs,
and CNSs in step 1 of the assignment methodology will further
strengthen our current assignment process. Including services furnished
by NPs, PAs, and CNSs in determining the plurality of primary care
services in step 1 of the assignment process may help ensure that
beneficiaries are assigned to the ACO (or non-ACO entity) that is
actually providing the plurality of primary care for that beneficiary
and thus, should be responsible for managing the patient's overall
care. In this way, all primary care services furnished by the entire
primary care physician and practitioner team (including NPs, PAs, and
CNSs working in clinical teams in collaboration with or under the
supervision of physicians), will be considered for purposes of
determining where a beneficiary received the plurality of primary care
services under step 1 of the assignment methodology.
At this time, we will not establish special procedures to determine
whether NPs, PAs, and CNSs are actually performing primary care and not
specialty care. We agree with commenters who indicated that most non-
physician practitioners have been prepared in primary care or provide
services in primary care settings or both, and that we should not
unnecessarily create barriers for one group of ACO professionals with
requirements that are not placed on others. Furthermore, we note that
any non-physician practitioner services furnished and billed as
``incident to'' the services of a specialist physician will be billed
under the specialist physician's NPI. Therefore, such ``incident to''
non-physician services will be excluded from Step 1 of the assignment
process. However, we will continue to monitor this issue.
Also we further clarify that beneficiaries will not be assigned to
ACOs solely based on services provided by non-physician practitioners.
We will continue under Sec. 425.402 to first identify all patients who
have received a primary care service from a physician who is an ACO
professional and who are thus eligible for assignment to the ACO under
the statutory requirement to base assignment on ``utilization of
primary care services'' furnished by physicians.
Comment: A commenter believes that CMS should allow primary care
physicians to identify collaborating allied professionals, such as NPs,
to act ``on their behalf,'' so those visits would not count against
them in the attribution process. The commenter stated that this should
be allowed even if the collaborating allied professional is under an
entity with a different Medicare-enrolled TIN.
Response: We disagree. Primary care services furnished by
physicians and non-physicians are all included in the assignment
algorithm if they are billed under the TIN of an ACO participant. We do
not believe it would be appropriate under the beneficiary assignment
process to include such primary care services billed under a TIN that
has not agreed to participate in the ACO.
Comment: A commenter encouraged CMS to assign Medicare
beneficiaries directly to ACOs on the basis of primary care services
provided by NPs and PAs, only when such services are provided in a
manner consistent with state law requirements, including requirements
related to physician supervision.
Response: We do not believe it is necessary to establish such
additional criteria for the Shared Savings Program. Primary care
services provided by NPs and PAs are only payable under the PFS when
such services are provided in a manner consistent with state law
requirements, including requirements related to physician supervision.
FINAL ACTION: We are finalizing our proposal to amend Sec.
425.402(a) to include claims for primary care services furnished by
NPs, PAs, and CNSs under step 1 of the assignment process, after having
identified beneficiaries who received at least one primary care service
by a physician participating in the ACO. The current methodology will
continue to be used for PY 2015, including reconciliation, while the
new methodology will be used for operations related to PY 2016. Thus,
we are retaining the rules for the current methodology under Sec.
425.402(a) and the methodology that will be applicable for performance
years beginning in 2016 has been designated under Sec. 425.402(b).
(2) Excluding Services Provided by Certain Physician Specialties From
Step 2
Second, we proposed to exclude services provided by certain
physician specialties from step 2 of the assignment process. We made
this proposal partly to address stakeholder concerns that by
[[Page 32750]]
including such claims in step 2 of the assignment process, the ACO
participant TINs that submit claims for services furnished by certain
specialists are limited to participating in only one ACO because of the
exclusivity requirement under Sec. 425.306(b) of the regulations. This
requirement is discussed in the November 2011 final rule (76 FR 67810
through 67811). Specifically, some stakeholders have stated that
certain specialties that bill for some of the E&M services designated
as primary care services under Sec. 425.20 do not actually perform
primary care services. We agree that although some specialties such as
surgeons and certain others bill Medicare for some of the Shared
Savings Program ``primary care'' codes, in actual practice the services
such specialists perform when reporting these codes do not typically
represent primary care services because the definitions of HCPCS/CPT
codes for office visits and most other E&M services are not based on
whether primary care is provided as part of the service. Accordingly,
we agree that to identify primary care service claims more accurately,
the CPT codes for primary care services should be paired with the
specialties of the practitioners who render those services and that it
would be appropriate to exclude claims for services provided by certain
physician specialties from the beneficiary assignment process.
Therefore, we proposed to exclude services provided by certain CMS
physician specialties from the beneficiary assignment process. The net
effect of this proposal would be to exclude certain claims from
determining the ACO's assigned population. The proposed lists of
physician specialties that would be included in and excluded from the
assignment process (provided in Tables 1 through 4 of the proposed rule
and also included in Tables 2 through 5 in this final rule) were based
on recommendations by CMS medical officers knowledgeable about the
services typically performed by physicians and non-physician
practitioners. However, we note that given the many requests and
comments from specialists and specialty societies asking to have their
services included in the assignment methodology that we received during
the original rulemaking to establish the Shared Savings Program, in the
proposed rule we attempted to limit the list of physician specialty
types that would be excluded from the assignment process to those
physician specialties that would very rarely, if ever, provide primary
care to beneficiaries. As a general rule, for example, we expected that
physicians with an internal medicine subspecialty such as nephrology,
oncology, rheumatology, endocrinology, pulmonology, and cardiology
would frequently provide primary care to their patients. Especially for
beneficiaries with certain chronic conditions (for example, certain
heart conditions, cancer or diabetes) but who are otherwise healthy, we
expect that these specialist physicians often take the role of primary
care physicians in the overall treatment of the beneficiaries if there
is no family practitioner or other primary care physician serving in
that role. In contrast, we expect that most surgeons, radiologists, and
some other types of specialists would not typically provide a
significant amount of primary care, if any, and therefore we proposed
to exclude their services from the assignment process.
We proposed to amend Sec. 425.402 by adding a new paragraph (b) to
identify the physician specialty designations that would be considered
in step 2 of the assignment process. We also proposed to modify the
exclusivity requirement at Sec. 425.306(b) to clarify how the
exclusivity rules would be affected by this proposal to exclude certain
specialists from step 2 of the assignment methodology. Specifically, we
proposed to revise Sec. 425.306(b) to indicate that each ACO
participant who submits claims for primary care services used to
determine the ACO's assigned population must be exclusive to one Shared
Savings Program ACO.
In addition, we proposed to make several conforming and technical
changes to Sec. 425.402(a). First, we proposed a modification to
provide that for purposes of determining whether a beneficiary has
received a primary care service from a physician who is an ACO
professional, we would consider only services furnished by primary care
physicians or physicians with a specialty listed in new paragraph (b).
Secondly, we proposed to make modifications to conform with changes in
the definitions of ``assignment,'' ``ACO professional,'' and ``ACO
provider/supplier'' in addition to our proposal to adopt a prospective
assignment approach under proposed Track 3, which is discussed in
section II.F. of this final rule. We sought comment on these proposals.
We received a high volume of comments on this proposal.
Comment: Commenters agreed with the proposal to remove from the
assignment process those claims submitted by physician specialties (for
example, surgeons) that, despite using the general purpose CPT and
HCPCS codes defined as ``primary care'' under current regulations, do
not actually perform primary care services. Some commenters suggested
specialty specific revisions to CMS' proposal. However, in a few cases
commenters were not in agreement about whether specific specialties
should be included in step 2 or not. For example, a few commenters
supported including physical medicine and rehabilitation, rheumatology,
and OB/GYN whereas a few other commenters requested they be removed. A
number of commenters suggested we modify our proposals based on input
from each individual specialty organization. Other commenters requested
revisions to CMS' proposals regarding specialties to be included in
step 2 of the beneficiary assignment process are as follows:
A commenter urged CMS to include pediatric medicine (specialty code
37) as an explicit part of the beneficiary assignment step 1 rather
than step 2. The commenter noted that many elements of the framework
that CMS constructs for Medicare ACOs will guide future proposals for
Medicaid ACOs, as well as the design of similar plans by commercial
payers or large self-insured groups.
Commenters requested that psychiatrists (specialty codes 26, 27,
79, and 86) be included in step 2 assignment. These commenters
indicated psychiatry is frequently the point of first contact for
persons with undiagnosed conditions and that there are a number of
important reasons why most persons with serious mental illness would
rather receive their care from their psychiatrist rather than primary
care physicians.
Other commenters requested that CMS include specialty code 12
(osteopathic manipulative medicine) in step 2 because osteopaths
frequently provide primary care services. These commenters also
requested that CMS update this specialty code name in Table 4 of this
final rule.
A commenter urged CMS to exclude hospice and palliative medicine
(specialty code 17) from step 2 of the beneficiary assignment process
in the final rule. The commenter that while many hospice and palliative
care physicians have formal relationships with multiple health systems
in order to meet a current and growing demand for palliative care and
hospice services, the exclusivity requirement makes it difficult for
these physicians to easily participate in multiple ACOs.
A commenter representing specialty code 03 requested exclusion of
specialty code 03 from step 2, indicating that allergy and immunology
physicians are
[[Page 32751]]
not primary care physicians for the vast majority of patients they
serve.
A commenter requested that infectious disease physicians (specialty
code 44) be excluded from step 2 of the beneficiary assignment process
in the final rule. The commenter stated these specialists would not
typically provide primary care and that these specialists should be
free to participate in multiple ACOs as, often times, they visit
multiple hospitals and their clinical practice can span wide
geographies. Other commenters requested that gastroenterology
(specialty code 10), rheumatology (specialty code 66) and
interventional cardiology (C3) be excluded from step 2, indicating that
these specialists typically provide specialty care and would not
routinely provide primary care.
Response: Our intent under the proposal was to exclude primary care
service codes submitted by physician specialties that will very rarely,
if ever, provide true primary care to beneficiaries. We continue to
believe that the exclusion of such claims from determining the ACO's
assigned population will result in more accurately assigning
beneficiaries to ACOs based on where beneficiaries receive a plurality
of true primary care services. However, after reviewing comments, we
have determined that we need to modify our proposed policy.
Specifically, we agree with the commenters who suggested that we
consider the recommendations submitted by individual specialty
organizations to revise the specialties to be included in step 2,
because in general specialty organizations are knowledgeable about the
types of services that the specialists provide, as well as the typical
types of organizational relationships that such specialists have
established. Therefore, if we received support for a specialty specific
proposal listed in Table 2 or 3 of the proposed rule (79 FR 72796 and
72797), or at least received no objection from an affected specialty
organization, then we are finalizing our specialty proposal. If a
specialty society requested a revision to our proposals listed in
Tables 1 through 4 of the proposed rule (79 FR 72796 and 72797), then
we have generally accepted their recommendation when feasible.
Responses to the specialty specific comments requesting revisions to
our proposals are as follows:
We agree with comments that recommended that it would be
appropriate to include pediatric medicine in step 1 assignment. We
agree that pediatricians typically provide primary care for their
patients. While very few children are Medicare beneficiaries, we also
believe it will be appropriate to include these physicians in step 1 of
the assignment process in order to better align the Shared Savings
Program assignment methodology with the primary care emphasis in other
provisions of the Affordable Care Act; section 5501 of the Affordable
Care Act includes pediatric medicine in the definition of ``primary
care practitioner.''
Because we agree that osteopaths frequently provide
primary care services, we agreed with commenters that specialty code 12
(osteopathic manipulative medicine) should be included in Step 2
assignment. As requested, we have also corrected the specialty name in
this final rule for specialty code 12.
We agree with commenters that psychiatry and its
subspecialties (CMS specialty codes 26, 27, 79, and 86) often provide a
substantial proportion of primary care for certain patients and
therefore should be included in Step 2 assignment. We agree that
psychiatry is frequently the point of first contact for persons with
undiagnosed conditions and that those persons with serious mental
illness or substance abuse disorders or both may prefer to receive
their total care from their psychiatrist rather than from primary care
physicians.
We agree with commenters who requested that the following
specialties be added to the list of specialties to be excluded from
step 2 assignment: allergy and immunology (specialty code 03);
gastroenterology (specialty code 10); infectious diseases (specialty
code 44); rheumatology (specialty code 66); and interventional
cardiology (C3). We agree that these specialists typically provide
specialty care and do not routinely provide primary care for the vast
majority of patients they serve. Despite their use of the same office
visit codes that are included in the definition of primary care
services under Sec. 425.20, we agree with the commenters that these
specialties do not routinely furnish primary care and furthermore, are
not seen by patients as serving in a primary care role.
We agree with commenters who requested that hospice and
palliative medicine physicians (specialty code 17) should also be
excluded from step 2 assignment. We note that certain physician
services furnished to beneficiaries receiving services under the
hospice benefit are paid through the Part A Hospice benefit and are not
paid under the PFS. (See, for example, Medicare Claims Processing
Manual, Chapter 11--Processing Hospice Claims). This could make it
difficult to determine for such beneficiaries, based on analysis of PFS
claims, whether an ACO is actually providing the plurality of primary
care service and managing the patient's overall care. At this time, we
agree with commenters that hospice and palliative medicine physicians
(specialty code 17) should be excluded from step 2. We emphasize that
we are not excluding beneficiaries in Hospice from assignment to ACOs.
However, we will not use services furnished by specialty code 17 to
help determine beneficiary assignment. We believe this approach will
still provide an incentive for ACOs to work with physicians furnishing
palliative care and hospice care. We will consider these issues further
and we may request additional comments in a future rulemaking on ways
to assign beneficiaries receiving services under the Hospice benefit to
the ACO or other entity that is actually providing primary care and
managing the patient's overall care.
Therefore, we are finalizing our proposal to exclude services
provided by certain physician specialties with the exception of these
modifications. We believe the resulting step 2 exclusion list is
limited to those physician specialties that will rarely, if ever,
provide primary care to beneficiaries. We do not expect that the
exclusion of these specialties from step 2 will have a significant
impact on the overall number of beneficiaries assigned to each ACO
because we believe the specialties that we are excluding from the
assignment methodology provide a relatively modest number of services
under the codes included in the definition of primary care services or
are not typically the only physician who a beneficiary sees. For
example, patients who are furnished consultations by a thoracic surgeon
will typically also concurrently receive care from a primary care
physician, cardiologist or other medical specialist.
The primary benefit of this final policy is that it will help
correctly assign beneficiaries to the ACO or other entity that is
actually providing primary care and managing the patient's overall
care. Otherwise, for example, a beneficiary could inadvertently be
assigned to an ACO based on services furnished by a surgeon who had not
provided primary care but had provided a number of consultations for a
specific clinical condition. Another important benefit of this policy
is that any ACO participants who submit claims solely for services
performed by the categories of specialists that we are excluding from
the assignment process will have greater flexibility to participate in
more than
[[Page 32752]]
one ACO. This could especially be the case for small physician
practices that only submit claims for specialty services. Allowing such
ACO participants who are composed solely of excluded specialists to
participate in more than one ACO will support our goal of facilitating
competition among ACOs by increasing the number of specialists who can
participate in more than one ACO. ACO participant TINs that submit
claims for primary care services that are used in our assignment
methodology must continue to be exclusive to one Shared Savings Program
ACO for purposes of beneficiary assignment.
Comment: A few commenters believe that CMS has applied assignment
exclusivity more broadly than we had indicated in the 2011 final rule,
and that we have effectively precluded any practice, regardless of
specialty, that bills for E&M services from full-fledged participation
in more than one ACO. Another commenter requested that previously
issued guidance on how Medicare enrolled TINs could join with multiple
ACOs as ``other entities'', instead of as exclusive ACO participants,
be formalized to ease ACOs' reservations about entering into shared
savings contracts with ``other entities.'' Specifically, the commenter
urged CMS to formalize the principle that such other entities that are
not ACO participants or ACO providers/suppliers may share in an ACO's
savings if the arrangement advances the ACO's goals of increased care
coordination, improved quality, and more efficient care delivery. A
commenter requested that CMS provide clarity on how specialists that
are excluded from the ACO beneficiary assignment process can
participate in multiple ACOs and how we will ensure that administrative
errors are avoided. The commenter is concerned that solo practitioners
and single specialty practices will encounter problems if it is
discovered that their TINs are associated with multiple ACOs.
Response: We have been consistent in our application of the
requirement that ACO participants that submit claims for primary care
services that are considered in the assignment methodology must be
exclusive to a single ACO. We are finalizing our proposed changes to
Sec. 425.306(b) to clarify that each ACO participant who submits
claims for primary care services used to determine the ACO's assigned
population must be exclusive to one Shared Savings Program ACO.
Specifically, under Sec. 425.306(b), the requirement that an ACO
participant must be exclusive to a single ACO applies whenever the
ACO's beneficiary assignment is dependent on that TIN, or in other
words, when the primary care service claims submitted by the ACO
participant are used to determine the ACO's assigned population. The
application of the exclusivity requirement to an ACO participant is not
affected by whether or not a FFS beneficiary for whom an ACO
participant has submitted claims for primary care services is
ultimately assigned to the ACO. Retrospective reconciliation occurs at
the end of the performance year, so an ACO participant will not know
with certainty whether it has to be exclusive to a single ACO during a
particular performance year if the requirement were dependent on which
beneficiaries ultimately got assigned to the ACO. Rather, an ACO
participant that submits claims to Medicare for primary care services
must be exclusive to a single ACO because the claims for primary care
services submitted by the ACO participant are used to determine
beneficiary assignment to the ACO. Additionally, the exclusivity
requirement is not affected by whether or not the primary care services
for which the ACO participant submits claims are services furnished by
primary care physicians, specialist physicians, or NPs, PAs, and CNSs.
Furthermore, this exclusivity requirement applies only to the ACO
participant TIN and not to individual practitioners, and only for
purposes of assignment. For example, if a two person group submitted
claims for services furnished by a physician specialist excluded from
assignment and also submitted claims for primary care services
furnished by a PA, then this group will still need to be exclusive to
one ACO since the group's claims are being used for assignment.
Individual practitioners are free to participate in multiple ACOs,
provided they are billing under a different Medicare-enrolled TIN for
each ACO in which they participate. (See 76 FR 67810 through 67811).
For example, there may be practitioners who work in multiple settings
and bill Medicare for primary care services through several different
TINs, depending on the setting. If each of these TINs represents an ACO
participant in a different ACO, then the practitioner will be an ACO
professional in more than one ACO.
Previously, we also issued guidance on how Medicare-enrolled TINs
could join with multiple ACOs as ``other entities'' (see FAQ numbers 8
through 13 at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/FAQ.html#ACO_Participant_TIN_Exclusivity_and_Other_Entities). ``Other
entities'' do not appear on the certified list of ACO participants and
they are not used for program operations such as assignment. Therefore,
they are not required to be exclusive to a single Shared Savings
Program ACO. Entities that are not ACO participants or ACO providers/
suppliers may share in an ACO's savings if the arrangement advances the
ACO's goals of increased care coordination, improved quality, and more
efficient care delivery. ACOs and ACO participants negotiate these
arrangements individually. Although we are not providing additional
guidance in this final rule regarding such other entities, we will
continue to review this issue and intend to develop additional
educational material to address specific questions raised as needed.
Comment: A commenter stated that assignment of beneficiaries to an
ACO violates the beneficiary's freedom of choice of provider. A few
other commenters recommended that CMS clearly explain to beneficiaries
that alignment (that is, assignment) to an ACO does not alter a
beneficiary's Medicare rights or consumer protections, including the
freedom to choose a Medicare-enrolled provider that is outside the ACO.
Response: As noted previously, the statute requires the Secretary
to determine an appropriate method to assign beneficiaries to ACOs on
the basis of primary care services furnished to them by physicians. The
term ``assignment'' for purposes of the Shared Savings Program in no
way implies any limits, restrictions, or diminishment of the rights of
Medicare FFS beneficiaries to exercise freedom of choice in the
physicians and other health care providers and suppliers from whom they
receive their services. Likewise, the requirement that ACO participants
that furnish primary care services used for assignment must be
exclusive to a single ACO does not in any way imply that beneficiaries
are locked into receiving services or referrals from specific ACO
providers/suppliers. This point is also emphasized in educational
materials for ACOs and beneficiaries.
Comment: A number of commenters suggested a very wide variety of
alternative beneficiary assignment approaches for CMS to consider that
would allow for ACO and provider choice. Some commenters suggested that
CMS create a process by which each individual ACO could specifically
identify the specialty/subspecialty physicians to include in its
beneficiary assignment. A commenter suggested a different approach to
determining the
[[Page 32753]]
inclusion and exclusion of certain providers in which we would
delineate new criteria that more accurately pinpoint high cost, high
risk, high need patients for whom continuity with certain providers is
important. In the spirit of beneficiary empowerment and to support the
concept of continuity of care, a commenter suggested that CMS should
consider implementing a way for beneficiaries to affirm up front, that
is to attest, the individual they believe to be ``their doctor.'' This
would not limit patients from exercising provider choice going forward,
but would allow patients to influence at least some part of patient
attribution to the extent they have a relationship that is important to
them.
A few other commenters suggested that assignment should be based on
an alternative precedence or a weighting of the specific services
included within the definition of primary care services. For example, a
commenter suggested the first tier assignment should be with the use of
the welcome to Medicare visit (G0402), the initial wellness exam
(G0438), subsequent wellness exam (G0439), the CCM codes (99490) and
TCM codes (99495 and 99496). Another the commenter suggested that
assignment should be based on the number of ``touches'' the ACO has
with the beneficiary which would outweigh the cumulative cost of
services (that is, allowed charges) as the methodology for determining
the plurality of primary care services for assignment purposes. The
commenter indicated commercial payers have developed an ACO attribution
methodology with which CMS should consider aligning, where the
preponderance of care services (not necessarily cumulative cost) is
used to assign patients.
Response: We appreciate these suggestions. However, in some cases,
we do not believe that these suggestions are operationally feasible as
it is not possible to implement the new processes that would be
necessary to allow for individual ACO or provider choice or both at
this time. We believe it would be burdensome on both ACOs and CMS to
collect and maintain this information. Also, we have gained experience
with our current method in the Physician Group Practice Demonstration,
where it was well accepted (see http://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/Medicare-Demonstrations-Items/CMS1198992.html). Furthermore, we have adopted a similar
beneficiary assignment approach for some other major programs,
including the PQRS Group Practice Reporting Option via the GPRO web
interface (77 FR 69195 through 69196) and the Value Modifier (VM) (79
FR 67790 and 79 FR 67962). In addition, the effect of these alternative
approaches on ACOs, ACO participants, and ACO providers/suppliers is
uncertain. However, we note that we plan for future rulemaking to allow
for a method to incorporate beneficiary attestation into the assignment
methodology as described in section II.F.7.b.(1). of this final rule.
We believe the revisions to the assignment methodology that we are
finalizing in this rule will result in more accurate assignment of
beneficiaries to ACOs based on where beneficiaries receive the
plurality of true primary care services, while continuing to recognize
that in some cases specialist physicians often take the role of primary
care physicians in the overall treatment of the beneficiaries if there
is no primary care physician or non-physician practitioner serving in
that role.
FINAL ACTION: We are modifying our proposal to exclude services
provided by certain physician specialties based on public comment, as
follows:
To include pediatric medicine (specialty code 37) in step
1 assignment.
To include osteopathic manipulative medicine (specialty
code 12) and psychiatry specialties (specialty codes 26, 27, 79, 86) in
step 2 assignment.
To exclude allergy and immunology (specialty code 03),
gastroenterology (specialty code 10), hospice and palliative medicine
(specialty code 17), infectious diseases (specialty code 44),
rheumatology (specialty code 66), and interventional cardiology (C3)
from step 2 assignment.
More specifically, the following four tables display the specific
CMS physician specialty codes that are now included and excluded for
beneficiary assignment purposes under the Shared Savings Program.
Table 2 of this final rule shows the CMS physician
specialty codes that are included in step 1 under the final policy.
Table 3 of this final rule shows the CMS specialty codes
for NPs, PAs, and CNSs that are included in beneficiary assignment step
1 under the final policy.
Table 4 of this final rule lists the physician specialties
that are included in step 2 under the final policy.
Table 5 of this final rule lists the physician specialties
that are excluded from the beneficiary assignment methodology under
step 2 under the final policy. Services furnished by these physician
specialties are also excluded for purposes of determining if a
beneficiary has received a primary care service from a physician who is
an ACO professional, which under Sec. 425.402(a) is a precondition for
assignment to an ACO.
Table 2--Specialty Codes Included in Assignment Step 1
------------------------------------------------------------------------
Code Specialty name
------------------------------------------------------------------------
01........................................ General Practice.
08........................................ Family Practice.
11........................................ Internal Medicine.
37........................................ Pediatric Medicine.
38........................................ Geriatric Medicine.
------------------------------------------------------------------------
Table 3--CMS Non-Physician Specialty Codes Included in Assignment Step 1
------------------------------------------------------------------------
Code Specialty name
------------------------------------------------------------------------
50........................................ Nurse practitioner.
89........................................ Clinical nurse specialist.
97........................................ Physician assistant.
------------------------------------------------------------------------
Table 4--Physician Specialty Codes-Included in Assignment Step 2
------------------------------------------------------------------------
Code Specialty name
------------------------------------------------------------------------
06........................................ Cardiology.
12........................................ Osteopathic manipulative
medicine.
13........................................ Neurology.
16........................................ Obstetrics/gynecology.
23........................................ Sports medicine.
25........................................ Physical medicine and
rehabilitation.
26........................................ Psychiatry.
27........................................ Geriatric psychiatry.
29........................................ Pulmonary disease.
39........................................ Nephrology.
46........................................ Endocrinology.
70........................................ Multispecialty clinic or
group practice.
79........................................ Addiction medicine.
82........................................ Hematology.
83........................................ Hematology/oncology.
84........................................ Preventive medicine.
86........................................ Neuro-psychiatry.
90........................................ Medical oncology.
98........................................ Gynecology/oncology.
------------------------------------------------------------------------
Table 5--Physician Specialty Codes Excluded From Assignment Step 2
------------------------------------------------------------------------
Code Specialty name
------------------------------------------------------------------------
02........................................ General surgery.
03........................................ Allergy/immunology.
04........................................ Otolaryngology.
05........................................ Anesthesiology.
07........................................ Dermatology.
09........................................ Interventional pain
management.
10........................................ Gastroenterology.
14........................................ Neurosurgery.
[[Page 32754]]
17........................................ Hospice and Palliative Care.
18........................................ Ophthalmology.
20........................................ Orthopedic surgery.
21........................................ Cardiac electrophysiology.
22........................................ Pathology.
24........................................ Plastic and reconstructive
surgery.
28........................................ Colorectal surgery.
30........................................ Diagnostic radiology.
33........................................ Thoracic surgery.
34........................................ Urology.
36........................................ Nuclear medicine.
40........................................ Hand surgery.
44........................................ Infectious disease.
66........................................ Rheumatology.
72........................................ Pain management.
76........................................ Peripheral vascular disease.
77........................................ Vascular surgery.
78........................................ Cardiac surgery.
81........................................ Critical care
(intensivists).
85........................................ Maxillofacial surgery.
91........................................ Surgical oncology.
92........................................ Radiation oncology.
93........................................ Emergency medicine.
94........................................ Interventional radiology.
99........................................ Unknown physician specialty.
C0........................................ Sleep medicine.
C3........................................ Interventional Cardiology.
------------------------------------------------------------------------
We are finalizing our proposal to amend Sec. 425.402 by adding a
new paragraph (c) to identify the physician specialty designations that
will be considered in step 2 of the assignment process, with the
modifications noted previously. We are also finalizing the proposed
modification to the exclusivity requirement at Sec. 425.306(b) to
clarify how the exclusivity rules will be affected by our final policy
of excluding certain specialists from step 2 of the assignment
methodology. Specifically, we are revising Sec. 425.306(b) to clarify
that each ACO participant who submits claims for primary care services
used to determine the ACO's assigned population must be exclusive to
one Shared Savings Program ACO.
The current assignment methodology will continue to be used for PY
2015, including the final retrospective reconciliation which will occur
in mid-2016, while the new methodology will be used for operations
related to PY 2016, including during application review for ACOs that
are applying or renewing for a 2016 start date. Thus, we have retained
the rules for the current methodology under Sec. 425.402(a) and the
methodology that will be applicable for performance years beginning in
2016 has been designated under Sec. 425.402(b) and (c). We did not
receive any comments that directly addressed our proposal to make
several conforming and technical changes to Sec. 425.402(a), and we
are finalizing them with modifications to accommodate the revisions
necessary to retain the current assignment methodology for PY 2015.
Therefore, we clarify that the conforming and technical changes are
reflected in Sec. Sec. 425.402(a) and (b).
(3) Other Assignment Methodology Considerations
Finally, we note that in the proposed rule we considered another
alternative approach to assignment. We considered whether it might be
preferable, after excluding the specialties listed in Table 3 of the
proposed rule from step 2 of the assignment process, to further
simplify beneficiary assignment by establishing an assignment process
that involves only a single step in which the plurality of primary care
services provided by the physicians listed in Tables 1 and 2 of the
proposed rule, and the non-physician practitioners in Table 4 of the
proposed rule, would all be considered in a single step. (See 79 FR
72798). However, while it had some attractive features, we also
expressed some important concerns about this approach. For example,
beneficiaries receiving concurrent care from both primary care
physicians and specialists could inappropriately be assigned to an ACO
or other entity that is not responsible for managing their overall
care. Therefore, we expressed a concern that by establishing an
assignment methodology based on a single step, we might reduce our
focus on primary care and ultimately assign some beneficiaries to an
ACO inappropriately based on specialty care over true primary care. A
one-step assignment methodology could also introduce additional
instability into the assignment process. Therefore, we did not propose
to combine the two steps used under the current assignment methodology.
Although we did not propose this change, we sought comments as to
whether it would be preferable, after excluding the physician
specialties listed in Table 3 (79 FR 72797) from the assignment
process, to further simplify the assignment methodology by establishing
an assignment process that involves only a single step.
We also welcomed any comments about the possible impact these
potential changes to the assignment methodology might have on other CMS
programs that use an assignment methodology that is generally aligned
with the Shared Savings Program, such as PQRS GPRO reporting via the
GPRO web interface and VM. We noted that, as previously discussed, we
revised the assignment methodology for PQRS GPRO reporting via the GPRO
web interface and VM in the CY 2015 PFS final rule with comment period
that appeared in the November 13, 2014 Federal Register (79 FR 67790
and 79 FR 67962).
Comment: A few commenters addressed the desirability of
establishing a one-step assignment methodology. Most of these supported
maintaining the current two-step assignment process. These commenters
were concerned that adopting a one-step assignment process could
inappropriately reduce the focus on primary care. A few commenters
supported further examination of the issue for future consideration. A
commenter suggested that assignment should be solely based on the
preponderance of ``evaluation and management services'' provided
regardless of specialty because most doctors are able to bill these
codes. Otherwise, the commenter noted that the assignment determination
is arbitrary, because it assumes all services provided by the
``approved'' specialties and even true primary care physicians are all
related to primary care services, which they are not. This commenter
stated that commercial payers are already recognizing this and
developing attribution methods accordingly.
Response: We agree with commenters that it is appropriate to
continue to maintain the current two-step assignment process at this
time. We do not agree with commenters that believe a two-step
methodology is arbitrary. We believe that the revisions to the
beneficiary assignment methodology included in this final rule will
further strengthen our balanced assignment process, which
simultaneously maintains the requirement to focus on primary care
services in beneficiary assignment, while recognizing the necessary and
appropriate role of specialists in providing primary care services,
such as in areas with primary care physician shortages.
Comment: A commenter was in support of the changes to the
assignment methodology, including removing certain specialists from
step 2 but recommended that CMS allow an ACO to continue to include
physician and non-physician providers who are not used in the
assignment methodology on the ACO's annual, certified list of ACO
providers/suppliers and consider all TINs and individual providers
included on the list to meet PQRS GPRO reporting requirements through
ACO reporting.
Response: Although not all providers and suppliers may provide
services that are used to determine the assignment of
[[Page 32755]]
beneficiaries to an ACO, we believe that each of these entities has a
role to play in the coordination of the care of FFS beneficiaries
assigned to the ACO. For this reason, as discussed in section II.B.3.
of this final rule, each NPI that has reassigned his or her billings to
the TIN of the ACO participant must agree to participate and comply
with program rules. Additionally, it is required that the ACO maintain
and submit its list of ACO participants and ACO providers/suppliers in
accordance with Sec. 425.118. If not all providers and suppliers
billing through the TIN have agreed to participate in the ACO and to
comply with the program requirements, the ACO cannot add the ACO
participant to its list. Therefore, ACOs must include all physicians
and non-physician providers who bill under the TIN of an ACO
participant on their annual, certified list of ACO providers/suppliers
even if their services are not used in the assignment methodology.
FINAL ACTION: We appreciate the comments and will continue to
consider them when developing future rules.
5. Assignment of Beneficiaries to ACOs That Include FQHCs, RHCs, CAHs
or ETA Hospitals
In this section, we summarize the regulatory policies in Sec.
425.404 for assignment of beneficiaries to ACOs that include FQHCs and
RHCs as ACO participants and subsequent operational procedures and
instructions that we have established in order to allow FQHCs and RHCs
as well as CAHs billing under section 1834(g)(2) of the Act (referred
to as Method II), and ETA hospitals to fully participate in the Shared
Savings Program. These types of providers may submit claims for
physician and other professional services when certain requirements are
met, but they do not submit their claims through the standard Part B
claims payment system. Accordingly, we have established operational
processes so that we can consider claims for professional services
submitted by these providers in the process for assigning beneficiaries
to ACOs. However, each of these four provider types (that is, FQHCs,
RHCs, CAHs, and ETA hospitals) generally have differing circumstances
with respect to their provider and medical service code reporting
requirements, claims forms used, and the payment methodology that
applies to professional services. Although there are important
differences between the payment policy and claims processing for FQHCs
and RHCs, they do share some key characteristics. Therefore, we will
discuss FQHCs and RHCs jointly, and then address CAHs and ETA hospitals
separately.
a. Assignment of Beneficiaries to ACOs That Include FQHCs and RHCs
(1) Overview
FQHCs and RHCs are facilities that furnish services that are
typically furnished in an outpatient clinic setting. (See the proposed
rule at 79 FR 72798 and 72799.) They are currently paid an all-
inclusive rate (AIR) per visit for qualified primary and preventive
health services furnished to Medicare beneficiaries. On October 1,
2014, FQHCs began to transition to a new FQHC prospective payment
system (PPS). FQHCs have been required to use HCPCS coding on all their
claims since January 1, 2011, to inform the development of the PPS and
for limited other purposes, and will be required to use HCPCS coding
for payment purposes under the FQHC PPS.
Based on detailed comments from some FQHC and RHC representatives,
in the November 2011 final rule, we established a beneficiary
assignment process that allows primary care services furnished in FQHCs
and RHCs to be considered in the assignment process for any ACO that
includes an FQHC or RHC as an ACO participant. This process is codified
in the regulations at Sec. 425.404. Operationally we assign
beneficiaries to ACOs that include FQHCs or RHCs in a manner generally
consistent with how we assign beneficiaries to other ACOs based on
primary care services performed by physicians as described previously.
However, to address the requirement under section 1899(c) of the Act
that beneficiaries be assigned to an ACO based on their use of primary
care services furnished by physicians, we require ACOs that include
FQHCs or RHCs to identify, through an attestation (see Sec.
425.404(a)), the physicians that provide direct patient primary care
services in their ACO participant FQHCs or RHCs. We use the combination
of the FQHC or RHC ACO participant TIN (and other unique identifier
such as CCN, where appropriate) and the NPIs of the FQHC or RHC
physicians provided to us through an attestation process to identify
those beneficiaries who received a primary care service from a
physician in the FQHC or RHC and who are therefore eligible to be
assigned to the ACO as provided under Sec. 425.402(a)(1). Then, we
assign those beneficiaries to the ACO, using the step-wise assignment
methodology under Sec. 425.402(a)(1) and (2), if they received the
plurality of their primary care services, as determined based on
allowed charges for the HCPCS codes and revenue center codes included
in the definition of primary care services at Sec. 425.20, from ACO
professionals.
The special procedures that we have established in the November
2011 final rule and through operational program instructions are
discussed in detail in the proposed rule (79 FR 72799). FQHC and RHC
services are billed on an institutional claim form and require special
handling to incorporate them into the beneficiary assignment process.
For FQHCs/RHCs that are ACO participants, we treat a FQHC or RHC
service reported on an institutional claim as a primary care service
performed by a primary care physician if the claim includes a HCPCS or
revenue center code that is included in the definition of a primary
care service at Sec. 425.20 and the service was furnished by a
physician who was identified as providing direct primary care services
on the attestation submitted as part of the ACO's application. All such
physicians are considered primary care physicians for purposes of the
assignment methodology and no specialty code is required for these
claims. If the claim is for a primary care service furnished by someone
other than a physician listed on the attestation, we treat the service
as a primary care service furnished by a non-physician ACO
professional.
For FQHCs/RHCs that are not ACO participants, we assume a primary
care physician performed all primary care services. We chose to assume
such primary care services were furnished by primary care physicians so
that these services would be considered in step 1 of the assignment
methodology. We established this operational procedure to help make
sure we do not disrupt established relationships between beneficiaries
and their care providers in non-ACO participant FQHCs and RHCs by
inappropriately assigning beneficiaries to ACOs that are not primarily
responsible for coordinating their overall care.
(2) Proposed Revisions
As currently drafted, Sec. 425.404(b) conflates the question of
whether a service billed by an FQHC or RHC is provided by a physician
with the question of whether the service is a primary care service. As
a consequence, the provision arguably does not address situations where
the FQHC/RHC claim is for a primary care service as defined under Sec.
425.20, but the NPI reported on the claim is not the NPI of a physician
included in the attestation submitted under Sec. 425.404(a).
Therefore, we
[[Page 32756]]
proposed to revise Sec. 425.404(b) to better reflect the program rules
and operational practices as previously outlined. In addition, we
proposed to revise Sec. 425.404(b) to reflect the proposal discussed
earlier to revise Sec. 425.402 to include services furnished by NPs,
PAs, and CNSs as services that will be considered in step 1 of the
assignment process. Under these proposals, we would assign
beneficiaries to ACOs that include FQHCs and RHCs in the following
manner.
To address the requirement under section 1899(c) of the Act that
beneficiaries be assigned to an ACO based on their use of primary care
services furnished by physicians, we would continue to require ACOs
that include FQHCs and RHCs to identify, through an attestation process
(see Sec. 425.404(a)), the physicians who provide direct patient
primary care services in their ACO participant FQHCs or RHCs. Under the
proposal we would use this attestation information only for purposes of
determining whether a beneficiary is assignable to an ACO because he or
she meets the criteria of having received a primary care service from a
physician the FQHC/RHC has designated on their attestation list. We
refer to this determination under Sec. 425.402(a) and (b)(1) as being
the assignment ``pre-step''. If a beneficiary is identified as an
``assignable'' beneficiary in the assignment pre-step, then we would
use claims for primary care services furnished by all ACO professionals
submitted by the FQHC or RHC in determining whether the beneficiary
received a plurality of his or her primary care services from the ACO
under Step 1. We proposed to make revisions to Sec. 425.404(b) to
reflect these policies.
We have also encountered instances where an assignable beneficiary
has received primary care services from FQHCs or RHCs that are not
participants in an ACO. For non-ACO participant FQHCs and RHCs, we have
previously assumed that all of their primary care services are
performed by primary care physicians. However, as discussed in the
proposed rule (see 79 FR 72800) this special assumption for non-ACO
FQHCs/RHCs would no longer be necessary under the proposed revision to
the assignment methodology at Sec. 425.402 to consider primary care
services furnished by NPs, PAs, and CNSs in step 1 of the assignment
methodology rather than step 2. Under this proposed revision, all
primary care services furnished by non-ACO FQHCs/RHCs would be
considered in step 1 of the assignment methodology, and there would no
longer be a need to assume such primary care services were provided by
primary care physicians in order to achieve this result.
We welcomed comments on our proposed revisions to Sec. 425.404(b)
and our current procedures for using claims submitted by FQHCs and RHCs
in the assignment methodology and suggestions on how we might further
support participation of FQHCs and RHCs in the Shared Savings Program
in a manner that is consistent with the statutory requirements.
Comment: Commenters agreed that CMS should recognize all FQHC/RHC
care provided by PAs, NPs and CNSs as primary care. Commenters also
agreed that if a beneficiary is identified as an ``assignable''
beneficiary in the assignment pre-step, then it is appropriate to
recognize FQHC/RHC care provided by all ACO professionals under Step 1
assignment.
Response: We agree with these commenters. We believe it is
important to clarify the rules to better reflect current operating
procedures, and also to revise them to reflect the final policy
discussed earlier to include services furnished by non-physician
practitioners in step 1 of the assignment process.
Comment: A commenter supported including all ACO participant non-
physician practitioners in the assignment process in step 1 but
excluding any non-ACO participant non-physician practitioners during
step 1 in order to facilitate assignment of beneficiaries receiving
services at FQHCs/RHCs.
We disagree with the suggestion to include ACO participant non-
physician practitioners during step 1 but to exclude claims billed
under a non-ACO participant TIN by non-physician practitioners during
step 1. We are concerned that this approach could lead to beneficiaries
being assigned to an ACO, even if some other entity is primarily
responsible for managing their care. This result would be contrary to
our policy goal of assigning beneficiaries to the entity that is
primarily responsible for their overall care.
Comment: A few commenters objected to the statutory requirement
that beneficiaries be assigned on the basis of primary care services
furnished by physicians, a requirement that is satisfied by the pre-
step in CMS' assignment methodology.
Response: As discussed earlier in this section, the pre-step is
designed to satisfy the statutory requirement under section 1899(c) of
the Act that beneficiaries be assigned to an ACO based on their use of
primary care services furnished by physicians. We refer to this
determination under Sec. 425.402(a)(1) and (b)(1) as being the
assignment ``pre step''. We must retain the pre-step as part of the
assignment methodology in order to comply with the requirements of
section 1899(c) of the Act.
FINAL ACTION: We are finalizing our proposal to amend Sec. 425.404
to use FQHC/RHC physician attestation information only for purposes of
determining whether a beneficiary is eligible to be assigned to an ACO.
If a beneficiary is identified as ``assignable'' then we will use
claims for primary care services furnished by all ACO professionals
submitted by the FQHC or RHC to determine whether the beneficiary
received a plurality of his or her primary care services from the ACO
under Step 1. We recognize the unique needs and challenges of rural
communities and the importance of rural providers in assuring access to
health care. FQHCs, RHCs and other rural providers play an important
role in the nation's health care delivery system by serving as safety
net providers of primary care and other health care services in rural
and other underserved areas and for low-income beneficiaries. We have
attempted to develop and implement regulatory and operational policies
to facilitate full participation of rural providers in the Shared
Savings Program, within the statutory requirements for the program.
b. Assignment of Beneficiaries to ACOs That Include CAHs
In the proposed rule (see 79 FR 72801) we briefly addressed certain
issues regarding ACOs that include CAHs billing under section
1834(g)(2) of the Act (referred to as method II). Professional services
billed by method II CAHs are reported using HCPCS/CPT codes and are
paid using a methodology based on the PFS. However, method II CAH
claims that include professional services require special processing
because they are submitted as part of institutional claims. Therefore,
we have developed operational procedures that allow these claims to be
considered in the assignment process under Sec. 425.402. Although we
did not make any new proposals regarding the use of services billed by
method II CAHs in the assignment process, we noted that our procedures
for incorporating claims billed by method II CAHs into the assignment
methodology are available on our Web site at http://www.cms.gov/
Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/
[[Page 32757]]
Downloads/Shared-Savings-Losses-Assignment-Spec-v2.pdf (see section
3.3.)
Comment: A few commenters supported the process for using claims
billed by method II CAHs in the assignment methodology.
Response: We appreciate the supportive comments. We did not make
any new proposals regarding the assignment of beneficiaries receiving
primary care services furnished by method II CAHs but included this
discussion in the proposed rule to promote understanding of our
processes.
FINAL ACTION: We will continue including claims for primary care
services billed by method II CAHs in the beneficiary assignment process
under Sec. 425.402 using established procedures.
c. Assignment of Beneficiaries to ACOs That Include ETA Hospitals
In the proposed rule (79 FR 72801 and 72802), we discussed in
detail the operational procedures that we have established in order to
include primary care services performed by physicians at ETA hospitals
in the assignment of beneficiaries to ACOs. ETA hospitals are hospitals
that, under section 1861(b)(7) of the Act and Sec. 415.160 of our
regulations, have voluntarily elected to receive payment on a
reasonable cost basis for the direct medical and surgical services of
their physicians in lieu of Medicare PFS payments that might otherwise
be made for these services. We have developed special operational
instructions and processes (see 79 FR 72801 and 72802) that enable us
to include primary care services performed by physicians at ETA
hospitals in the assignment of beneficiaries to ACOs under Sec.
425.402.
In summary, we use institutional claims submitted by ETA hospitals
in the assignment process because ETA hospitals are paid for physician
professional services on a reasonable cost basis through their cost
reports and no other claim is submitted for such services. However, ETA
hospitals bill us for their separate facility services when physicians
and other practitioners provide services in the ETA hospital and the
institutional claims submitted by ETA hospitals include the HCPCS code
for the services provided. We use the HCPCS code included on this
institutional claim to identify whether a primary care service was
rendered to a beneficiary in the same way as for any other claim. These
institutional claims do not include allowed charges, which are
necessary to determine where a beneficiary received the plurality of
primary care services as part of the assignment process. Accordingly,
we use the amount that would otherwise be payable under the PFS for the
applicable HCPCS code, in the applicable geographic area as a proxy for
the allowed charges for the service.
In the proposed rule, we explained that we believe it is
appropriate that ETA hospitals and their patients benefit from the
opportunity for ETA hospitals to fully participate in the Shared
Savings Program to the extent feasible. Therefore, we proposed to
revise Sec. 425.402 by adding a new paragraph (c) to provide that when
considering services furnished by physicians in ETA hospitals in the
assignment methodology, we would use the amount payable under the PFS
for the specified HCPCS code as a proxy for the amount of the allowed
charges for the service. In addition, because we are able to consider
claims submitted by ETA hospitals as part of the assignment process, we
also proposed to amend Sec. 425.102(a) to add ETA hospitals to the
list of ACO participants that are eligible to form an ACO that may
apply to participate in the Shared Savings Program.
We sought comments on the use of institutional claims submitted by
ETA hospitals for purposes of identifying primary care services
furnished by physicians in order to allow these services to be
considered in the assignment of beneficiaries to ACOs. We also sought
comments on whether there are any other types of potential ACO
participants that submit claims representing primary care services that
CMS should also consider including in (or excluding from) its
methodology for assigning beneficiaries to ACOs participating in the
Shared Savings Program.
Comment: A few commenters supported the proposal, pointing out that
beneficiaries in medically underserved populations could benefit from
the improved care coordination ACOs with ETA hospitals may provide. A
commenter opposed the proposal but offered little explanation. A
commenter requested clarification of how CMS would be modifying its
operational processes for including primary care services performed by
physicians in ETA hospitals to reflect a change in coding policy under
the OPPS effective for services furnished on or after January 1, 2014.
Effective January 1, 2014, CMS will recognize HCPCS code G0463
(Hospital outpatient clinic visit for assessment and management of a
patient) for payment under the OPPS for outpatient hospital clinic
visits. Also, effective January 1, 2014, CPT codes 99201 through 99205
and 99211 through 99215 are no longer recognized for payment under the
OPPS. Under the OPPS, outpatient hospitals were instructed to use HCPCS
code G0493 in place of 99201 through 99205 and 99211 through 99215.
Response: Since the December 2014 proposed rule was issued, new
information has come to light about how clinic visits are billed under
OPPS, effective January 1, 2014. This change affects our operational
processes for considering ETA hospital claims in the assignment
methodology for the Shared Savings Program because under OPPS,
outpatient hospitals including ETA hospitals, no longer report CPT
codes in the range 99201 through 99205 and 99211 through 99215.
Instead, as noted by the commenter, outpatient hospitals report all
such services using a single HCPCS code, G0463. That is, for ETA
hospitals, G0463 is a replacement code for CPT codes in the range 99201
through 99205 and 99211 through 99215. Therefore, we need to further
consider our ETA proposal and will address this coding issue in future
rulemaking. We continue to believe that it is appropriate to use ETA
institutional claims for purposes of identifying primary care services
furnished by physicians in ETA hospitals in order to allow these
services to be included in the stepwise methodology for assigning
beneficiaries to ACOs. We believe that including these claims increases
the accuracy of the assignment process by helping to ensure that
beneficiaries are assigned to the ACO or other entity that is actually
managing the beneficiary's care. ETA hospitals are often located in
underserved areas and serve as providers of primary care for the
beneficiaries they serve.
FINAL ACTION: We will further consider the operational processes
necessary in order to allow ETA hospital outpatient claims to continue
to be considered in the assignment methodology and will address these
issues in future rulemaking
6. Applicability Date for Changes to the Assignment Algorithm
As indicated in the DATES section of this final rule, the effective
date for the final rule will be 60 days after the final rule is
published. However, we proposed that any final policies that affect
beneficiary assignment would be applicable starting at the beginning of
the next performance year. We stated that implementing any revisions to
the assignment methodology at the beginning of a performance year is
reasonable and appropriate because it would permit time for us to make
the necessary programming changes and
[[Page 32758]]
would not disrupt the assessment of ACOs for the current performance
year. Moreover, we proposed to adjust all benchmarks at the start of
the first performance year in which the new assignment rules are
applied so that the benchmark for an ACO reflects the use of the same
assignment rules as would apply in the performance year. For example,
any new beneficiary assignment policies that might be included in a
final rule issued in 2015 would apply to beneficiary assignment
starting at the beginning of the following performance year, which in
this example would be January 1, 2016. In this hypothetical example, we
would also adjust performance benchmarks that apply for the 2016 and
subsequent performance years, as applicable, to reflect changes in our
assignment methodology.
In addition, under the proposal we would not retroactively apply
any new beneficiary assignment policies to a previous performance year.
For example, if the assignment methodology is applied beginning in
2016, we would not use it in mid-2016 to reconcile the 2015 performance
year. Accordingly, the assignment methodology used at the start of a
performance year would also be used to conduct the final reconciliation
for that performance year.
Comment: Commenters agreed with the proposal to adjust benchmarks
at the start of the first performance year in which the new assignment
rules are applied so that the benchmark for the ACO reflects the use of
the same assignment rules as would apply in the performance year.
Response: We agree and believe uniformly applying any change to the
assignment methodology at the beginning of a performance year will
mitigate disruptions in implementing changes in the beneficiary
assignment policies.
FINAL ACTION: We are finalizing our proposal to adjust all
benchmarks at the start of the first performance year in which the new
assignment rules are applied so that the benchmark for the ACO reflects
the use of the same assignment rules as will apply in the performance
year. Additionally, we will not retroactively apply the new beneficiary
assignment methodology to the previous performance year. In other
words, when conducting the final retrospective reconciliation of
beneficiary assignment for PY 2015 during mid-2016, we will use the
assignment methodology that was applicable at the start of 2015.
F. Shared Savings and Losses
1. Background
Section 1899(d) of the Act establishes the general requirements for
payments to participating ACOs. Specifically, section 1899(d)(1)(A) of
the Act provides that ACO participants will continue to receive payment
``under the original Medicare fee-for-service program under parts A and
B in the same manner as they would otherwise be made,'' and that an ACO
is eligible to receive payment for shared Medicare savings provided
that the ACO meets both the quality performance standards established
by the Secretary, and demonstrates that it has achieved savings against
a benchmark of expected average per capita Medicare FFS expenditures.
Additionally, section 1899(i)(3) of the Act authorizes the Secretary to
use other payment models in place of the one-sided model outlined in
section 1899(d) of the Act as long as the Secretary determines these
other payment models will improve the quality and efficiency of items
and services furnished to Medicare beneficiaries without additional
program expenditures.
In our November 2011 final rule (76 FR 67904 through 67909)
establishing the Shared Savings Program, we considered a number of
options for using this authority. For example, commenters suggested we
consider such options as blended FFS payments, prospective payments,
episode/case rate payments, bundled payments, patient centered medical
homes or surgical homes payment models, payments based on global
budgets, full or partial capitation, and enhanced FFS payments for care
management. However, in the November 2011 final rule (76 FR 67905), we
opted not to use our authority under section 1899(i) of the Act to
integrate these kinds of alternative payment models at that time,
noting that many of the suggested payment models were untested. We
expressed concern that immediately adopting untested and/or unproven
models with which we had little experience on a national scale could
lead to unintended consequences for the FFS beneficiaries we serve or
for the health care system more broadly. We also noted that the
Affordable Care Act had established a new Center for Medicare and
Medicaid Innovation (Innovation Center) at CMS. The Innovation Center
is charged with developing, testing, and evaluating innovative payment
and service delivery models in accordance with the requirements of
section 1115A of the Act. Many of the approaches suggested by
stakeholders and commenters on the Shared Savings Program rule are the
subject of ongoing testing and evaluation by the Innovation Center. In
the November 2011 final rule (76 FR 67905), we noted that while we did
not yet have enough experience with novel payment models to be
comfortable integrating them into the Shared Savings Program at the
time, we anticipated that what we learned from these models might be
incorporated into the program in the future. Since publication of the
December 2014 proposed rule, the Innovation Center has announced
several important developments related to its testing of ACO models. In
May 2015, the Secretary announced that an independent evaluation report
for CMS found that the Pioneer ACO Model generated over $384 million in
savings to Medicare over its first 2 years--an average of approximately
$300 per assigned beneficiary per year--while continuing to deliver
high-quality patient care. The CMS Office of the Actuary certified the
Pioneer ACO model, as tested during the first 2 performance years of
the Model, to have met the criteria for expansion to a larger
population of Medicare beneficiaries. See News release ``Affordable
Care Act payment model saves more than $384 million in 2 years, meets
criteria for first-ever expansion'' (May 4, 2015) available online at
http://www.hhs.gov/news/press/2015pres/05/20150504a.html. In March
2015, the Innovation Center announced the launch of the Next Generation
ACO Model, whose first performance year begins January 1, 2016,
building upon experiences from the Pioneer ACO Model and the Medicare
Shared Savings Program. The Next Generation ACO Model uses refined
benchmarking methods that reward both attainment and improvement in
cost containment, and that ultimately transition away from comparisons
to an ACO's historical expenditures. The Model also offers a selection
of payment mechanisms to enable ACOs to progress from FFS
reimbursements to capitation. Central to the Next Generation ACO Model
are several ``benefit enhancement'' tools to help ACOs improve
engagement with beneficiaries, including:
Greater access to home visits, telehealth services, and
skilled nursing facility services;
Opportunities to receive a reward payment for receiving
care from the ACO and certain affiliated providers;
A process that allows beneficiaries to confirm their care
relationship with ACO providers; and
Greater collaboration between CMS and ACOs to improve
communication
[[Page 32759]]
with beneficiaries about the characteristics and potential benefits of
ACOs in relation to their care.
In the November 2011 final rule establishing the Shared Savings
Program (76 FR 67909), we created two tracks from which ACOs could
choose to participate: A one-sided risk model (Track 1) that
incorporates the statutory payment methodology under section 1899(d) of
the Act and a two-sided model (Track 2) that is also based on the
payment methodology under section 1899(d) of the Act, but incorporates
performance-based risk using the authority under section 1899(i)(3) of
the Act to use other payment models. Under the one-sided model, ACOs
qualify to share in savings but are not responsible for losses. Under
the two-sided model, ACOs qualify to share in savings with an increased
sharing rate, but also must take on risk for sharing in losses.
In the November 2011 final rule (76 FR 67904), we explained that
offering these two tracks would create an on ramp for the program to
attract both providers and suppliers that are new to value-based
purchasing as well as more experienced entities that are ready to share
in losses. We stated our belief that a one-sided model would have the
potential to attract a large number of participants to the program and
introduce value-based purchasing broadly to providers and suppliers,
many of whom may never have participated in a value-based purchasing
initiative before. Another reason we included the option for a one-
sided track with no downside risk was that this model would be
accessible to and attract small, rural, safety net, and physician-only
ACOs.
However, we also noted that while a one-sided model could provide
incentives for participants to improve quality, it might not be
sufficient incentive for participants to improve the efficiency and
cost of health care delivery (76 FR 67904). Therefore, we used our
authority under section 1899(i)(3) of the Act to create a performance-
based risk option, Track 2, where ACOs would not only be eligible to
share in savings, but also must share in losses. We believe a
performance-based risk option would have the advantage of providing
more experienced ACOs an opportunity to enter a sharing arrangement
that provides greater reward for greater responsibility. During our
initial rulemaking, we explained that both CMS and stakeholders believe
that models where ACOs bear a degree of financial risk hold the
potential to induce more meaningful systematic change. Therefore, the
program's policies were initially designed to offer a pathway for ACOs
to transition from the one-sided model to risk-based arrangements.
Therefore, we required that ACOs who participate in Track 1 during
their first agreement period must transition to Track 2 for all
subsequent agreement periods. We believe that offering the two tracks,
but requiring a transition to Track 2 in subsequent agreement periods,
would increase interest in the Shared Savings Program by providing a
gentler ``on ramp'' while maintaining the flexibility for more advanced
ACOs to take on greater performance-based risk in return for a greater
share of savings immediately upon entering the program (76 FR 67907).
Although most of the program requirements that apply to ACOs in
Track 1 and Track 2 are the same, the financial reconciliation
methodology was designed so that ACOs that accept performance-based
risk under Track 2 would have the opportunity to earn a greater share
of savings. Thus, the same eligibility criteria, beneficiary assignment
methodology, benchmark and update methodology, quality performance
standards, data reporting requirements, data sharing provisions,
monitoring for avoidance of at-risk beneficiaries, provider screening,
and transparency requirements apply to ACOs under both models. However,
the financial reconciliation methodology was modified for Track 2 in
order to allow an opportunity for ACOs to earn a greater share of
savings, in exchange for their willingness to accept performance-based
risk. Specific differences between the two tracks include the minimum
savings rate (MSR), the sharing rate based on quality performance, and
the performance payment limit.
In the December 2014 proposed rule, we reiterated our intent to
continue to encourage ACOs' forward movement up the ramp from the one-
sided model to performance-based risk. The proposed rule discussed
policy changes that would both allow ACOs not yet ready to transition
to performance-based risk a second agreement period under the one-sided
model, while also encouraging ACOs to enter performance-based risk
models by lowering the risk under the existing Track 2, and offering an
additional two-sided model (Track 3). As proposed, Track 3 would be
based on the current payment methodology under Track 2, but would also
incorporate some different elements that may make it more attractive
for entities to accept increased performance-based risk, including:
Prospective beneficiary assignment, and greater risk for greater reward
(as compared to the current Track 2). We proposed modifications to the
requirements for ACOs to establish an adequate repayment mechanism as a
condition to participate under the two-sided model, including changes
to address concerns that the existing requirements tie up capital that
otherwise could be used to implement the care processes necessary to
succeed in the program. We also sought comment on other ways to
encourage ACO participation in performance-based risk arrangements,
including the following:
Waiving certain payment and program requirements.
Incorporating beneficiary attestation, under which an
eligible beneficiary would have the opportunity to voluntarily align
with the ACO in which their primary healthcare provider participates.
ACO participant arrangements which would allow ACOs to
make a step-wise transition to performance-based risk arrangements.
Further, we sought comment on alternative methodologies for
establishing, updating, and resetting ACO benchmarks based on concerns
about the sustainability of the program under the current policies.
In this section, we discuss our final actions on the proposals for
modifying the program's financial models, as well as the options on
which we sought comment, including alternative benchmarking
methodologies and potential policies to further encourage ACO
participation in performance-based risk arrangements (for example, by
waiving certain payment and program requirements and adopting
beneficiary attestation). Table 8 summarizes the differences between
the one-sided and two-sided models and specifies the characteristics of
the Tracks as finalized under the November 2011 final rule and with
this final rule.
2. Modifications to the Existing Payment Tracks
a. Overview
In the November 2011 final rule, we established policies to
encourage ACOs not only to enter the program, but also to progress to
increased risk based on the believe that payment models where ACOs bear
a degree of financial risk have the potential to induce more meaningful
systematic change in the behavior of providers and suppliers.
Therefore, we established a requirement that an ACO entering the
program under Track 1 may only operate under the one-sided model for
its first agreement period. For subsequent agreement periods, an ACO
would not be
[[Page 32760]]
permitted to operate under the one-sided model (Sec. 425.600(b)). If
the ACO wishes to participate in the program for a second agreement
period, it must do so under Track 2 (shared savings/losses).
Additionally, an ACO experiencing a net loss during its initial
agreement period may reapply to participate in the program, but the ACO
must identify in its application the cause(s) for the net loss and
specify what safeguards are in place to enable the ACO to potentially
achieve savings in its next agreement period (Sec. 425.600(c)). In our
view, this allowance for a full first agreement period under the one-
sided model and required transition to performance-based risk in the
subsequent agreement period struck a balance between our intent to
encourage program participation by small, rural, or physician-only ACOs
with the need to ensure that ACOs quickly transition to taking downside
risk.
We are encouraged by the popularity of the Shared Savings Program,
particularly the popularity of the one-sided model. Most ACOs
participating in the Shared Savings Program have chosen Track 1, with
only 5 ACOs participating under Track 2 as a starting option. About
half of the ACOs participating in the program are small, each having
less than 10,000 assigned beneficiaries. In the December 2014 proposed
rule we explained that we believe that one 3-year agreement period
under Track 1 is sufficient for many organizations to progress along
the on-ramp to performance-based risk. We reiterated that we continue
to encourage forward movement up the ramp because we believe, as
discussed in the November 2011 final rule (76 FR 67907), that payment
models where ACOs bear a degree of financial risk have the potential to
induce more meaningful systematic change in providers' and suppliers'
behavior. However, based on our experience with the program, we
recognized that many of the organizations that are currently
participating in the program are risk averse and lack the
infrastructure and readiness to manage increased performance-based
risk. We explained that given the short time period between
finalization of the November 2011 final rule and the first application
cycles, it is our impression that many ACOs, particularly smaller ACOs,
focused initially on developing their operational capacities rather
than on the implementation of care redesign processes. We expressed
some concerns about the slope of the on-ramp to performance-based risk
created by the two existing tracks and the policy that requires ACOs in
Track 1 (shared savings only) to transition to Track 2 (shared savings/
losses) for their second agreement period. In particular we explained
our concern that the current transition from one- to two-sided risk may
be too steep for some organizations, putting them into a situation
where they must choose between taking on more risk than they can manage
or dropping out of program participation altogether. For instance, some
smaller and less experienced ACOs will likely drop out of the program
when faced with this choice, because the smaller an ACO's assigned
beneficiary population, the greater the chances that shared losses
could result from normal variation. Also, we explained the concern, as
expressed by some stakeholders, that one agreement period under the
one-sided model may be not be a sufficient amount of time for some ACOs
to gain the level of experience with population management or program
participation needed for them to be comfortable taking on performance-
based risk. For some organizations, having additional experience in the
Shared Savings Program under Track 1 could help them to be in a better
position to take on performance-based risk over time. We also expressed
concern that the existing features of Track 2 may not be sufficiently
attractive to ACOs contemplating entering a risk-based arrangement.
In the December 2014 proposed rule we revisited our policies
related to Tracks 1 and 2 in order to smooth the on ramp for
organizations participating in the Shared Savings Program. First, we
proposed to remove the requirement at Sec. 425.600(b) for Track 1 ACOs
to transition to Track 2 after their first agreement period. Second, we
proposed to modify the financial thresholds under Track 2 to reduce the
level of risk that ACOs must be willing to accept. We explained that we
believe there are a number of advantages to smoothing the on ramp by
implementing these proposed policies as follows:
Removing the requirement that ACOs transition to a two-
sided model in their second agreement period would provide
organizations, especially newly formed, less experienced, and smaller
organizations, more time to gain experience in the program before
accepting performance-based risk, thereby encouraging continued
participation in the program by potentially successful ACOs that would
otherwise drop out because of the requirement to transition to the two-
sided model in their second agreement period.
Allowing organizations to gain more experience under a
one-sided model before moving forward to a two-sided model would
encourage earlier adoption of the shared savings model by organizations
concerned about being required to transition to performance-based risk
before realizing savings under a one-sided model.
Incorporating the opportunity for ACOs to remain in Track
1 after their first agreement period could have a beneficial effect
with respect to the care that beneficiaries receive. Specifically, to
the extent that more ACOs are able to remain in the program, a
potentially broader group of beneficiaries will have access to better
coordinated care through an ACO.
Allowing ACOs additional time to make the transition to
performance-based risk would reduce the chances that a high-performing
ACO, which believe that it is not yet ready to assume greater financial
risk, will either cease to participate in the program to avoid risk or
find it necessary to engage in behaviors primarily intended to minimize
that risk rather than improve patient care.
Further, we explained our expectation that ACOs participating in
the Shared Savings Program move in the direction of accepting
performance-based risk. Thus, while we proposed to offer additional
time for ACOs under a one-sided model, we also indicated there should
be incentives for participants to voluntarily take on additional
financial risk and disincentives to discourage organizations from
persisting in a shared savings only risk track indefinitely. To signal
to ACOs the importance of moving toward performance-based risk and
encourage ACOs to voluntarily enter the two-sided model as soon as they
are able, we proposed to distinguish the financial attractiveness of
the one-sided model from the two-sided model by dropping the sharing
rate in Track 1 for ACOs participating in Track 1 for a subsequent
agreement period and modifying the risk inherent in Track 2. Finally,
we explained that adopting restrictions to prevent organizations that
have not achieved certain minimum performance requirements with respect
to cost and quality of care, based on their experience to date, from
obtaining additional agreement periods under Track 1 would serve as an
appropriate program safeguard against entities remaining in the program
that are not fully committed to improving the quality and efficiency of
health care service delivery. We received many comments regarding the
overall framework we outlined in the proposed
[[Page 32761]]
rule for modifying the existing payment tracks under the Shared Savings
Program.
Comment: Some commenters urged CMS to strengthen the program's
existing financial tracks, suggesting alternatives that went beyond the
modifications discussed in the December 2014 proposed rule. Some
commenters pointed out that as designed, the program's existing
financial models inadequately reward ACOs for the savings they
generate, discourage ACOs who are working to achieve program goals, and
pose hardships for ACOs who rely on shared savings payments to support
their operational costs needed to sustain their participation in the
program.
Some commenters explained that increasing the opportunity for
savings under Track 1 is a means of encouraging continued program
growth and sustainability of ACOs, and is a means for ensuring ACOs
become ready to enter the two-sided model. Some commenters specifically
addressed how to make performance-based risk arrangements under the
program more attractive and to encourage ACOs to transition to risk,
citing the importance of certain factors such as:
Enhanced financial rewards, for example through a lower/
fixed MSR, or eliminating the MSR, or revising the MSR methodology;
higher sharing rates; and policies to reward ACOs who are trending
positive (whose expenditures are lower than their benchmarks but who
have not met or exceeded their MSR).
Reduced liability for risk under the two-sided model, for
example through a higher MLR, or lower loss sharing rates (that is, a
phase-in to higher loss sharing rates over time), and lower loss limits
(that is, a gentler phase-in of the loss limit by starting at zero and
progressing to 10 percent).
Tools to enable ACOs to more effectively control and
manage their patient population, for example through prospective
beneficiary assignment, beneficiary attestation, improved data sharing,
and regulatory and programmatic flexibilities.
Additional safeguards against risk, for instance in the
form of CMS-subsidized stop loss insurance and funding for ACOs seeking
to move to risk to make sure they have adequate cash reserves.
Commenters typically recommended a combination of these factors.
Some commenters' recommendations were specific to certain types of
entities. In particular, commenters recommended improving the financial
incentives for smaller ACOs, rural ACOs, and existing low-cost ACOs.
Several commenters underscored the need for ACOs to be successful
in Track 1 before moving to two-sided risk. A commenter explained that
ACOs should not be expected to participate in the Shared Savings
Program with upside risk under Track 1 with one set of rules, but then
undertake downside risk under a different set of rules. Along these
lines, some commenters urged CMS to apply the same assignment
methodology and allow the same regulatory and programmatic
flexibilities under the one-sided model that apply to the two-sided
model, explaining that doing so could: (1) allow Track 1 ACOs to gain
experience with these program features before accepting risk under the
same terms; (2) stimulate success within the program by Track 1 ACOs
and allow them to more quickly move to a two-sided risk track; and (3)
reduce administrative burden on CMS for implementing the program.
Some commenters supported policies that would allow ACOs to move
from the one-sided to two-sided risk within a given agreement period.
Several commenters suggested allowing ACOs to move from Track 1 to a
two-sided risk track annually, so that ACOs ready to assume more risk
do not have to wait until a new agreement period to change tracks.
Several commenters recommending CMS move to 5 or 6 year agreements for
ACOs suggested that ACOs have the opportunity to move to a performance-
based risk model during their first agreement period, for example,
after their first 3 years under the one-sided model. A commenter
suggested encouraging ACOs to transition to two-sided risk by offering
lower loss sharing rates for ACOs that move from Track 1 to the two-
sided model during the course of an agreement period, and phasing-in
loss sharing rates for these ACOs (for example, 15 percent in year 1,
30 percent in year 2, 60 percent in year 3). Another commenter
suggested that CMS allow all ACOs (regardless of Track) the option to
increase their level of risk annually during the agreement period.
Response: In the December 2014 proposed rule we did not propose or
seek comment on modifications to the design of Track 1 to increase the
opportunity for reward under this model, such as revisions to the Track
1 MSR methodology. Although we appreciate commenters' thoughtful
recommendations for improving the rewards under Track 1, we consider
these suggestions beyond the scope of this final rule and we decline at
this time to adopt commenters' recommendations. Further, we continue to
believe it is important to maintain the MSR under the one-sided model
to protect against paying shared savings based on changes in cost that
result from normal variation in expenditures. We also remain committed
to the belief that ACOs who accept financial responsibility for the
care of beneficiaries have the greatest beneficial effects for the
Medicare program and its beneficiaries. Keeping with the initial design
of the program, the differences between the tracks encourage ACOs to
transition from one-sided risk to two-sided risk by providing greater
reward to those who accept greater risk. We believe that adjusting the
sharing rate and the other aspects of the Track 1 financial model to
match more closely, or exactly, the up-side available under the two-
sided risk tracks would undermine our effort to encourage ACOs to
transition to performance-based risk.
We appreciate commenters' thoughtful considerations on how to
encourage ACOs to transition to performance-based risk. As indicated in
other sections of this final rule, we are finalizing certain
modifications to program policies to encourage ACOs to enter
performance-based risk arrangements. These modifications respond to
commenters' recommendations for improving the financial incentives
under the program and allowing ACOs a range of options with respect to
features of the tracks they may select from (for example, prospective
versus retrospective assignment methodology and level of risk in
relation to opportunity for reward). Although we are not adopting the
additional suggestions recommended by some commenters in this rule, we
will further consider these suggestions and may propose additional
revisions to encourage ACOs to enter performance-based risk
arrangements through future notice and comment rulemaking.
b. Transition From the One-Sided to Two-Sided Model
(1) Second Agreement Period Under Track 1
We considered several options to better balance both our intent to
encourage continued participation by ACOs that entered the program
under the one-sided model but that are not ready to accept performance-
based risk after 3 years of program participation with our concern that
allowing a shared savings only option will discourage ACOs capable of
taking risk from moving to a two-sided model. We considered the
following options:
[[Page 32762]]
Revising the regulations to allow ACOs that enter the
program under the one-sided model to continue participation in Track 1
for more than one agreement period.
Extending the initial 3-year agreement period for an
additional 2 years for ACOs that enter the program under Track 1, but
that do not believe that they are ready to advance to a risk-based
track.
Allowing ACOs to continue participation in Track 1 for
more than one agreement period, but revising the one-sided model to
decrease the financial attractiveness of the model, so as to encourage
ACOs ready to accept performance-based risk to transition to a two-
sided model. Among these options, we expressed our belief that the
third option offered a good balance of encouraging continued
participation in addition to encouraging progression along the on-ramp
to performance-based risk. Therefore, we proposed to remove the
requirement at Sec. 425.600(b) that ACOs that enter the program under
Track 1 (one-sided model) must transition to Track 2 (two-sided model)
after one agreement period, if they wish to continue participating in
the Shared Savings Program. Instead, we proposed to revise the
regulation to permit ACOs that have completed a 3-year agreement under
Track 1 to enter into one additional 3-year agreement under Track 1.
Comment: Most commenters generally supported policies that would
allow Track 1 ACOs to continue in the program under the one-sided
model, with many commenters addressing the specifics of the proposed
policies and offering alternative suggestions.
Most commenters generally and strongly supported policies that
would permit ACOs to participate in the Shared Savings Program under a
one-sided model for a longer period of time, indicating that the
transition to performance-based risk under the current rule is too soon
and steep for most ACOs. A commenter indicated that the progression to
risk outlined in the current rule was too aggressive in light of the
challenges ACOs and CMS faced during the initial program startup
period.
The majority of commenters strongly supported our specific proposal
to permit one additional agreement period under Track 1. Generally
commenters agreed with CMS' concern about the transition to risk posed
by the existing rule, which could require organizations to choose
between taking on more risk and exiting the program after one agreement
period. Commenters pointed to a variety of benefits from allowing ACOs
additional time under the one-sided model:
Allows ACOs more than 3 years to mature and develop the
necessary infrastructure and capabilities, in which they have invested
significant time and capital, to meet the program's goals, including:
testing patient-centered approaches, providing care management
services, implementation of electronic medical records (EMRs), and
performing data analytics and risk assessment.
Affords ACOs additional time needed to develop the
infrastructure and experience needed to assume greater risk. Comments
explained that ACOs need more than 3 years to develop the necessary
infrastructure and competencies to effectively manage down-side risk. A
commenter explained that past experience from the PGP demonstration and
the Pioneer ACO Model indicates that providers need more than 3 years
to produce meaningful savings and to develop sufficient skills to
manage downside risk. Indeed, several commenters explained that some
Track 1 ACOs may not be risk averse, but rather are reluctant to enter
a performance-based risk arrangement given concerns, such as the
financial viability of shared savings for ACOs in low-cost regions, and
the risk of program participation posed by the significant and
incremental operational costs for ACOs.
Encourages continued participation by existing ACOs and
makes the program more attractive to prospective ACOs. Commenters
emphasized the importance of giving ACOs the opportunity to generate
savings to further fund their operations without risk of accountability
for losses, for the success of ACOs and the program. Commenters
indicated this issue may be especially relevant for smaller
organizations and those less experienced with care redesign processes
and with performance-based risk, existing low-cost ACOs (which may need
additional time to further their care management efforts to achieve
additional savings), and ACOs led by academic medical centers (which
tend to treat sicker and more complex patient populations than other
providers). A commenter indicated the importance of continued
participation by Advance Payment Model ACOs under Track 1, in order for
CMS to recoup pre-paid shared savings from these organizations.
Some commenters opposed the proposal to allow ACOs to continue
under the program for only one additional agreement period, favoring a
slower transition to risk than was proposed. These commenters suggested
that CMS offer multiple agreement periods under Track 1 (for instance
two full agreement periods and part of a third agreement period).
Others recommended alternatives such as permitting select types of
ACOs, such as rural- or physician-only ACOs, or existing low-cost ACOs,
to continue under Track 1 for more than two agreement periods. A
commenter suggested allowing ACOs to remain in Track 1 as long as they
meet program requirements or until additional risk-bearing payment
models, such as full capitation, risk-adjusted capitations, and
prepayment, are available under the program or both. A commenter
suggested that any exemptions for ACOs from the requirement to
transition to two-sided risk arrangements should be limited to those
states where state law does not allow for contracts between payer and
provider that incorporate downside risk.
On the other hand, a few commenters were opposed to this proposal,
stating that ACOs should be capable of moving to risk in a more
aggressive timeframe, and that eliminating the requirement to move to
risk after the first agreement period sends the wrong signal. Several
commenters pointed to private sector ACO initiatives to illustrate that
organizations can be ready for two-sided risk within a few years. These
commenters urged CMS to hasten the transition to performance-based risk
by Track 1 ACOs, for instance by allowing them less than a full second
agreement period under Track 1, or no additional time under Track 1.
More generally, some commenters stated their agreement with CMS'
emphasis on the importance of two-sided risk as a driver of more
meaningful change. A commenter explained: two-sided risk creates a
greater onus of accountability, and ultimately encourages providers to
respond to what patients need. It also injects greater momentum into
the pace of change in the development of the care processes that are
needed to achieve success in a risk environment. If there is no risk,
the system may reward providers that are ACOs in name only.
However, in the drive to move ACOs to the two-sided model, other
commenters urged CMS not to lose sight of the benefits of having robust
participation under the one-sided model. Several commenters urged CMS
not to overlook or withdraw its support from Track 1 ACOs, for instance
pointing out that the Track 1 serves as the primary model for the vast
majority of existing ACOs, and urging CMS to recognize the value that
Track 1 brings to Medicare in capturing savings and serving as a
vehicle for advancing new
[[Page 32763]]
models of care that create value for Medicare beneficiaries. A
commenter was critical of the overall policy direction of the proposed
rule, to encourage ACOs to move to performance-based risk, explaining
that this was unjustified given that CMS is receiving substantial
savings from ACOs participating under the one-sided model. A commenter
cautioned CMS that the goal to incentivize ACOs to move into two-sided
risk models should not overshadow the underlying statutory intent of
the Shared Savings Program, which is to drive improvements in patient
care and reductions in overall health care costs. A commenter noted the
need for CMS to support Track 1 ACOs until they evolve into
organizations that can better coordinate care of beneficiaries and take
on additional risk. Another commenter noted that the perceived rush to
move all ACOs to two-sided risk models undermines other CMS pilot
programs, such as the Bundled Payments for Care Improvement (BPCI) and
the Pioneer ACO Model.
Response: We are finalizing our proposal to permit ACOs to
participate in an additional 3-year agreement period under Track 1, for
a total of two agreement periods under the one-sided model. We believe
giving ACOs one additional agreement under Track 1 is responsive to the
many comments we received that some ACOs require additional time before
moving to a two-sided risk arrangement. In particular, we are persuaded
by commenters' urging of the need for ACOs to gain additional
experience under accountable care models before transitioning to
performance-based risk, as well as the benefits to CMS and Medicare
beneficiaries of encouraging continued participation by ACOs--including
those who received Advanced Payments from the Innovation Center--in
light of the alternative that these ACOs would terminate their
participation altogether. We continue to believe that ACOs who accept
responsibility for the quality and cost of the care furnished to
beneficiaries have the greatest positive effect on the Medicare program
and its beneficiaries. We believe that allowing ACOs a second 3-year
agreement period under the one-sided model strikes a reasonable balance
between permitting ACOs additional time under Track 1 and maintaining a
clear timeframe for when ACOs must transition to performance-based
risk. We disagree with commenters' suggestions to allow select ACOs
(based on their geographic location, historical cost or provider
composition) to remain under the one-sided model indefinitely. We
believe such a policy design would encourage ACOs to languish under the
one-sided model. We also disagree with commenters who suggest that ACOs
should be pushed to transition to performance-based risk in a shorter
time, given the volume of concerns we heard as we developed the
proposal to allow ACOs additional time under the one-sided model and
from comments received in response to the proposed rule. We believe
that a requirement for ACOs to immediately transition to risk after the
conclusion of their first agreement period, or before the end of their
second agreement period could result in significant attrition from the
program, particularly by ACOs that are newly formed or underfunded.
Comment: Some commenters identified the most immediate challenges
faced by ACOs with 2012 and 2013 agreement start dates who are
considering renewing their agreement period for the 2016 performance
year. For example, a commenter indicated that ACOs may lack the
performance data needed at the time of agreement renewal (based on 2
performance years) to make an informed decision between a second
agreement period under Track 1 or entering a performance-based risk
arrangement. In addition, some commenters further pointed out they
could have a relatively short period in which to make this decision
given the short timeline CMS faces in issuing a final rule that would
be effective for the 2016 performance year and implementing the
finalized policies. In light of these factors, some commenters
recommended that CMS allow current ACOs the option to extend their
current contracts by 1, 2 or 3 years, or if they choose, to enter into
a new agreement period under the two-sided model. These commenters
explained that extension of the ACOs' existing agreements would allow
certain ACOs more time to determine their readiness to change tracks
and assume risk, while those that are prepared to accept new contract
terms and shift to greater risk at this time could do so.
Some other commenters recommended instead that CMS extend the
current ACO participation agreement from its current 3 years to a 5-
year agreement, for all tracks, including not only the initial
agreement, but all subsequent agreements. These commenters explained
that this would make the program more attractive by increasing program
stability and providing ACOs with the necessary time to achieve the
desired quality and financial outcomes. However, a commenter expressed
concern that rebasing every 5 years (as opposed to rebasing with each
3-year agreement) may not be authorized under section 1899(d) of the
Act.
Response: Section 1899(d)(1)(B)(ii) of the Act specifies the
benchmark shall be reset at the start of each agreement period, while
section 1899(b)(2)(B) specifies the ACO shall enter into an agreement
to participate in the program for not less than a 3-year period. While
we have the authority under section 1899(b) of the Act to establish
agreements for periods longer than a term of three years, we decline to
take commenters' suggestions regarding extending the first agreement
period for ACOs. We believe it is appropriate to maintain a 3-year
agreement period to provide continuity with the design of the program
finalized with the November 2011 final rule. Furthermore, we do not
believe an extension of ACO's first agreement period is necessary,
particularly to address the situation of ACOs whose agreements conclude
December 31, 2015, given the modifications to the program's current
rules that we are making in this final rule. For one, we are finalizing
our proposal to permit ACOs to participate in an additional agreement
period under Track 1. This change should alleviate concerns of
commenters who favored extending the agreement period to make the
program more attractive to Track 1 ACOs, particularly those who need
additional time in Track 1 to become experienced with the accountable
care model before transitioning to performance-based risk. Second, as
explained in greater detail elsewhere in this final rule, we are
modifying the rebasing methodology to make continued participation in
the program more attractive to ACOs, particularly by equally weighting
the benchmark years and accounting for savings generated under the
ACO's prior agreement period. These modifications address commenters'
concerns regarding the need for extended agreement periods to provide
greater stability to ACO benchmarks. Further, we recognize that the
longer the agreement period, the greater an ACO's chance to build on
the success or continue the failure of its current agreement. Therefore
we believe rebasing every 3 years, at the start of each agreement
period, is important to protect both the Trust Funds and ACOs.
FINAL ACTION: We are finalizing our proposal to remove the
requirement at Sec. 425.600(b) that ACOs that enter the program under
Track 1 (one-sided model) must transition to Track 2 (two-sided model)
after one agreement period if they wish to continue participating in
the Shared Savings Program. We are
[[Page 32764]]
revising the regulation to permit ACOs that have completed a 3-year
agreement under Track 1 to enter into one additional 3-year agreement
under Track 1. We have also made some minor revisions to the proposed
language at Sec. 425.600(b) to further clarify that ACOs may operate
under the one-sided model for a maximum of two agreement periods.
(2) Eligibility Criteria for Continued Participation in Track 1
In section II.C.3. of this final rule, we discuss criteria for
determining whether to allow ACOs that are currently participating in
the program to renew their participation agreements for subsequent
agreement periods. We proposed to make the option of participating in
Track 1 for a second agreement period available to only those Track 1
ACOs that: (1) Meet the criteria established for ACOs seeking to renew
their agreements (as discussed in section II.C.3. of this final rule,
including demonstrating to CMS that they met the quality performance
standard during at least 1 of the first 2 years of the previous
agreement period); and (2) did not generate losses in excess of the
negative MSR in at least 1 of the first 2 performance years of the
previous agreement period. We explained that if the ACO's financial
performance results in expenditures in excess of the negative MSR in
only 1 of the first 2 performance years, then we would accept the ACO's
request to renew its participation agreement under the one-sided model,
provided all other requirements for renewal were satisfied. Through
this proposed policy we aimed to encourage the continued participation
of ACOs that are successful and have the potential to move toward
accepting greater responsibility for the care of their beneficiaries.
Further, we explained that the proposed policy would prevent
consistently poor performers from being able to seamlessly continue in
program participation under the one-sided model while permitting some
leeway for ACOs that are new to the program and may have had some
difficulty in cost or quality performance in 1 of the first 2
performance years. We further explained that these additional
eligibility criteria would serve as an important safeguard to reduce
the potential for ACOs to participate in the program for reasons other
than a commitment to improving the value of health care services. We
also recognized that because our assessment would be based on only 2
years of data, we would not have a complete picture of the ACO's
performance during the agreement period. That is, an ACO may
financially perform very poorly, exceeding the negative MSR in its
first and second performance years, but demonstrate a trend in a
direction that could ultimately lead to better performance in the third
year. Under our proposal this ACO would not be permitted to renew its
agreement under Track 1 for a second agreement period. However, we
acknowledged that an argument could be made that this ACO simply needed
the additional time under a one-sided model to gain experience and
start improving. Therefore, we sought comment on whether we should also
consider the direction the ACO's performance is trending when
determining whether to permit renewal of an ACO's participation
agreement under Track 1. We also sought comment on whether other
options for such ACOs, short of refusing their participation in a
second agreement period under Track 1, would better serve program
goals. We noted that such ACOs would not be precluded from renewing
their participation agreement in order to participate under a two-sided
risk track, consistent with Sec. 425.600(c). We also emphasized that
in addition to meeting the specific criteria to be eligible to continue
in Track 1, the ACO must also demonstrate that it meets the
requirements to renew its agreement under proposed Sec. 425.224, which
would include the requirement that the ACO establish that it is in
compliance with the eligibility and other requirements of the Shared
Savings Program. While the eligibility criteria for renewing ACOs are
discussed in detail in section II.C.3. of this final rule, the
following discussion is limited only to the additional financial
performance criterion proposed for determining the eligibility of Track
1 ACOs to continue under the one-sided model for a second agreement
period.
Comment: Several commenters agreed with the proposed criteria for
evaluating whether an ACO could continue under Track 1, for example
indicating that the proposed criteria would reasonably hold ACOs
accountable for noticeable improvement in their first agreement period.
A commenter explained that it is important that failing organizations
not continue ``free-riding'' the benefits of the program without
showing clear signs of improving quality and controlling health care
costs. Several other commenters also expressed direct support for the
financial performance criterion as proposed.
However, several others recommended more stringent requirements
than those we proposed, for instance suggesting CMS terminate the
following categories of ACOs from the program:
ACOs who do not demonstrate year-to-year improvements in
controlling costs and improving quality.
ACOs who failed to meet their benchmark under their first
agreement period (or allow these ACOs to participate for a second
agreement period only under a reduced sharing rate).
On the other hand, many commenters were opposed to using an ACO's
prior financial performance, as proposed, to determine whether it
should be permitted to continue under Track 1. Commenters offered a
number of reasons for opposing a requirement that ACOs must not have
generated losses in excess of their negative MSR in at least 1 of the
first 2 performance years to be eligible to continue in Track 1:
The policy may disadvantage certain ACOs that need more
time to fully implement strategies in care management that consistently
yield savings, such as newly formed, smaller and rural ACOs, and those
with certain provider compositions (such as those that include teaching
hospital participants).
The policy may discourage providers from participating in
ACOs because it sends a signal that CMS will ``pull the plug'' on
underperforming ACOs, and seems not to recognize the significant start-
up costs and learning curve to establish a successful ACO.
It may be premature to judge an ACO's ability to perform
on data from only 2 years of program participation, particularly as
some ACOs have faced a steep learning curve.
Several commenters pointed to publicly available performance
results in explaining that variation in generating savings and losses
relates more to an ACO's benchmark per capita spending than to the
ACO's number of assigned beneficiaries (and therefore its MSR under the
one-sided model). In light of this information, commenters suggested
that CMS reconsider the proposed financial performance requirement for
continued participation in Track 1.
Some commenters requested greater leniency in determining whether
ACOs can continue participating in Track 1 based on their past
financial performance and suggested various alternatives to the
proposed criteria which include the following:
Removing the financial performance criterion altogether
from the determination of whether an ACO is eligible to renew under
Track 1, with some commenters suggesting CMS focus
[[Page 32765]]
more on ACO quality performance in determining their eligibility to
renew their agreements.
A case-by-case assessment of each ACO not meeting the
criterion or a reconsideration process, or both, so that CMS can review
any compelling reasons why the organization generated losses outside
its negative MSR in its first 2 years and consider any mitigating
factors (for example, patterns of performance improvement or changes in
ACO composition).
Consideration of the ACO's performance trend over the
first 2 years, and if the ACO's financial or quality data showed
improvement from the first to the second year, then it would be
permitted to renew under Track 1, or permitting ACOs to continue in
Track 1 under probationary status for 1 or 2 years to allow them time
to demonstrate a change in trends.
Permitting ACOs that exhibit bona fide efforts to pursue
the program's goals to continue under Track 1.
A commenter indicated that entities should only be permitted the
opportunity to renew under the one-sided model for one additional 3-
year agreement, and entities that are unable to demonstrate adequate
performance within 6 years should not be permitted to remain in the
Shared Savings Program.
Several comments seemed to reflect commenters' misunderstanding of
the proposed policy, interpreting it to mean that an ACO who either
failed to satisfy the quality performance requirements in one of its
first 2 performance years, or generated losses in excess of its
negative MSR in one of its first 2 performance years would be
ineligible to continue in Track 1 for a second agreement period.
Another commenter seems not to have understood the proposed policy,
believing CMS indicated that only ACOs with losses outside their
negative MSR would be eligible to continue in Track 1 for a second
agreement period.
Response: As discussed in section II.C.3. of this final rule, we
are finalizing general criteria that will apply to all renewing ACOs,
including the requirement that an ACO meet the quality performance
standard during at least 1 of the first 2 years of its previous
agreement period. We are persuaded by commenters' concerns that
application of the additional proposed financial performance criterion
for continued participation in Track 1 may come too early for ACOs who
initially struggle to demonstrate cost savings in their first years in
the program. Therefore, we are modifying our proposed criteria for an
ACO to qualify for an additional agreement period under Track 1. We are
not finalizing an additional renewal criterion for ACOs seeking to
renew for a second agreement period under Track 1 that would consider
the ACO's financial performance during its first 2 performance years in
its prior agreement period. We believe that the general criteria that
would apply to all renewing ACOs (see section II.C.3. of this final
rule) are sufficient to address program integrity and program
compliance concerns that failing organizations or those lacking a bona
fide interest in the program would be allowed to continue their
participation. Further, we believe our authority to monitor ACOs
(Sec. Sec. 425.316) allows us to take action to address ACOs who are
outliers on financial performance by placing poorly performing ACOs on
a special monitoring plan. Furthermore, if our monitoring reveals that
the ACO is out of compliance with any of the requirements of the Shared
Savings Program, we may request a corrective action plan and, if the
required corrective action is not taken or satisfactorily implemented,
we may terminate the ACO's participation in the program.
Comment: Several commenters made suggestions that CMS focus on
establishing criteria for determining an ACO's readiness to transition
to performance-based risk. Generally, some comments suggested that ACOs
should be encouraged to adopt two-sided risk payment models as soon as
they have the capacity to do so. Commenters offered a variety of
suggestions on how CMS could determine an ACO's readiness to accept
performance-based risk. A commenter suggested Track 1 ACOs whose
performance year expenditures are lower than their benchmarks should
move into the two-sided model. A commenter suggested requiring ACOs to
achieve shared savings under Track 1 before being permitted to move to
a two-sided model; another commenter suggested that ACOs transition to
the two-sided model once they demonstrate success in the program by
earning a shared savings payment in 2 consecutive performance years. A
commenter suggested looking at the ACO's performance trends and whether
it is accredited by NCQA or URAC in determining its readiness to
transition to performance-based risk, and, if not, allowing an annual
renewal process for up to 3 additional years under Track 1 beyond the
first agreement period. A few commenters suggested that ACOs with a
certain composition of ACO participants be required to transition to
two-sided risk sooner, for instance suggesting that hospital/health
system-led or sponsored ACOs should be pushed towards two-sided risk
based on the belief that these ACOs are more entrenched in volume-based
(as opposed to value-based) incentives. A commenter suggested that an
ACO's risk sharing should vary based on its data sharing capabilities
in relation to the availability of data sharing infrastructure in the
state where it is located. According to this commenter, this approach
would recognize the disparities in states' capabilities to share data
through health information exchanges, and the higher costs for ACOs to
develop data sharing infrastructure in states without robust,
preexisting data sharing infrastructure.
More generally, a few commenters recommended allowing ACOs to
remain in Track 1 until they can demonstrate readiness to accept
performance-based risk. A commenter recommended that CMS continue to
explore additional ways to provide Track 1 ACOs with a glide path to
two-sided risk and articulate a defined point at which Track 1 ACOs
must move into Track 2 or 3.
Response: Under the general framework of the Shared Savings
Program, as modified by this final rule, ACOs participating under the
one-sided model will be required to transition to the two-sided model
or terminate their participation after the conclusion of their second
agreement period under Track 1. As previously discussed, this policy
balances the need for ACOs to gain more experience in the program under
the one-sided model with the importance of ACOs transitioning to
performance-based risk. We appreciate the suggestions around
establishing criteria for determining ACO readiness to accept risk.
However, we consider these comments beyond the scope of the proposals
and other issues on which we sought comment in the December 2014
proposed rule, and decline at this time to implement additional
requirements for determining an ACO's readiness to enter performance-
based risk arrangements. As comments discussed elsewhere in this final
rule indicate, the decision to enter performance-based risk is highly
specific to each organization, and its perceived readiness to bear
performance-based risk in relation to various other factors including
(among others) its provider composition and historical cost performance
and financial trends, assigned beneficiary population, and the
benchmarking and shared savings/losses methodology under the Shared
Savings Program.
FINAL ACTION: The general criteria described in section II.C.3. of
this final rule apply to all renewing ACOs,
[[Page 32766]]
including Track 1 ACOs applying for a second agreement period under the
one-sided model. Under Sec. 425.224(b), CMS will evaluate an ACO's
participation agreement renewal based on all of the following factors:
Whether the ACO satisfies the criteria for operating under
the selected risk model.
The ACO's history of compliance with the requirements of
the Shared Savings Program.
Whether the ACO has established that it is in compliance
with the eligibility and other requirements of the Shared Savings
Program, including the ability to repay losses, if applicable.
Whether the ACO met the quality performance standards
during at least 1 of the first 2 years of the previous agreement
period.
For an ACO under a two-sided model, whether the ACO has
repaid losses owed to the program that it generated during the first 2
years of the previous agreement period.
The results of a program integrity screening of the ACO,
its ACO participants, and its ACO providers/suppliers (conducted in
accordance with Sec. 425.304(b)).
We are not finalizing any additional financial performance criteria
for determining the eligibility for Track 1 ACOs to continue under the
one-sided model for a second agreement period. We have modified the
proposed revisions to Sec. 425.600(b) to reflect this final policy.
Additionally we are making conforming changes to Sec. 425.600(c). This
provision currently specifies that an ACO with net losses in its
initial agreement period that reapplies to participate under the
program must identify in its application the cause(s) for the net loss
and what safeguards are in place to enable the ACO to potentially
achieve savings in the next agreement period. Specifically, we are
revising the provision to apply to ACOs seeking to renew their
participation agreements for a second or subsequent agreement period.
(3) Maximum Sharing Rate for ACOs in a Second Agreement Period Under
Track 1
As part of our proposal to allow ACOs to participate in a second
agreement period under the one-sided model, we proposed to reduce the
sharing rate by 10 percentage points for ACOs in a second agreement
period under Track 1 to make staying in the one-sided model less
attractive than moving forward along the risk continuum. As a result,
the maximum sharing rate for an ACO in a second agreement period under
Track 1 would be 40 percent. Accordingly, in addition to our proposed
change to Sec. 425.600(b) to allow ACOs to participate under Track 1
for a second agreement period, we proposed to modify Sec. 425.604(d)
to provide that the maximum sharing rate during a second agreement
period under Track 1 would be 40 percent.
We sought comment on this proposal. In particular, we requested
input on whether a 40 percent sharing rate in a second agreement period
under the one-sided model is sufficient to incentivize an ACO that may
need more time to prepare to take on two-sided performance-based risk
while also encouraging ACOs that are ready to take on performance-based
risk to choose to continue participation in the Shared Savings Program
under a two-sided model.
We also considered other variations and options for allowing ACOs
additional time in the one-sided model. For example, we considered
allowing ACOs to continue under Track 1 for a second agreement period
without any changes to the sharing rate (that is, retaining the 50
percent sharing rate in the second agreement period). However, we
expressed our concern that if ACOs are able to continue to receive up
to 50 percent of savings in a second agreement period there may be
insufficient incentive for many ACOs that may be ready to take on two-
sided risk to move to a track with two-sided risk after their first
agreement period. We specifically sought comments on the other options
we considered, including extending an ACO's Track 1 agreement period
for an additional 2-years rather than permitting two 3-year agreement
periods under Track 1, permitting ACOs to participate in a second
agreement period under Track 1 with no change to the sharing rate, and
offering multiple agreement periods under Track 1 while reducing the
sharing rate by 10 percentage points for each subsequent agreement.
Comment: Some commenters, including MedPAC, were in favor of
reducing the sharing rate for ACOs in a second agreement period under
Track 1. Several commenters noted the importance of moving ACOs to
performance-based risk for driving meaningful changes by providers in
health care quality and spending, and a commenter recognized that not
all ACOs will be able to make this transition. In this commenter's
view, CMS should not be focused on maximizing the number of ACOs in the
program, rather it should be encouraging ACOs with robust ability to
improve quality and control spending growth to be in the program and to
reward them appropriately. Several commenters indicated that the
proposed reduction of the sharing rate by 10 percentage points in the
second agreement period strikes a reasonable balance between allowing
promising ACOs to continue for a limited time without bearing risk and
encouraging ACOs to transition to two-sided risk. Another commenter
explained that the lower sharing rate would provide an incentive to
entities that may be on the cusp of considering moving to a two-sided
risk model. Several suggested dropping the rate to 45 percent for ACOs
continuing under the one-sided model after their first agreement period
in combination with increasing the sharing rate (for example, by at
least 5 percentage points) under the two-sided model to serve as an
incentive for ACOs to transition to performance-based risk. At the same
time, several other commenters recommended dropping the sharing rate
under the one-sided model even further, for example to 20 percent, 25
percent or 30 percent under the second agreement period, or making a 5
percentage point reduction for each year under the second agreement
period. These commenters expressed concern that the proposed 10
percentage point reduction in the sharing rate for ACOs that continue
in Track 1 may not be sufficient to encourage ACOs to more quickly
accept performance-based risk.
However, a majority of the commenters were strongly opposed to
reducing the sharing rate under a subsequent Track 1 agreement. These
commenters cautioned that such a policy could have adverse effects on
program participation, suggesting the reduction in sharing rate would
be a significant disincentive for ACOs to continue in the program and
may discourage ACOs from forming. In particular, ACOs may choose to
leave the program, or not enter the program at all, if they determine
they are not prepared to transition to performance-based risk tracks,
which offer higher sharing rates, and the proposed 40 percent sharing
rate under Track 1 is insufficient to justify the cost and effort
required to reach and maintain the high level of performance needed to
achieve success. Others stated their belief that reducing the sharing
rate under the one-sided model is merely punitive. Commenters provided
a variety of reasons why a reduction in sharing rate disadvantages ACOs
and the program. Many pointed to the financial risk of ACO formation
and participation in the program under the one-sided model due to the
significant upfront investments necessary for ACO formation and ongoing
operational costs to support
[[Page 32767]]
infrastructure (such as IT solutions) and process development,
staffing, population management, care coordination, quality reporting,
and patient education. Some explained that the existing sharing rate of
50 percent is too low, and a further reduction in the sharing rate
would ratchet down the potential for ACOs to realize return on
investment, which is the key for some organizations to continue funding
their operations. Some commenters pointed to the phase-in of pay for
performance for quality measures as a factor that will further reduce
the sharing rate for Track 1 ACOs. Others pointed to the MSR as already
providing an additional hurdle for Track 1 ACOs to cross before they
may share in savings they generate. Others pointed to the program's
first year financial performance results and the limited number of ACOs
that shared in savings, indicating it is too soon to reduce the sharing
rate since so few ACOs have begun to see any return on investment.
Another commenter pointed out that a reduced sharing rate would impair
ACOs' ability to appropriately reward participating providers. Taken
together, commenters explained their belief that this level of return
on investment is not sustainable for ACOs and could result in ACOs
leaving the program. A few commenters noted the particular importance
of maintaining the sharing rate for small, provider-based and rural
ACOs. A commenter suggested sustaining the sharing rate at 50 percent
under the one-sided model could encourage small, rural ACOs to enter
and remain in the program, explaining that these types of entities may
face a steeper learning curve in developing the capacity to meet the
program's goals (for instance needing more time to fully implement
strategies in care management that consistently yield savings and
developing collaborations across providers to enable effective care
management), and require additional capital and human resources to
succeed. Several commenters explained that a reduced sharing rate under
the one-sided model does not improve the attractiveness of the two-
sided model. Others explained that maintaining the current sharing rate
could provide ACOs with the funds needed to support the ACO and to
prepare for managing increased performance-based risk.
In the alternative, some commenters recommended the following
different approaches that would maintain the Track 1 sharing rate at 50
percent, slow the reduction of the sharing rate, or increase the
sharing rate for ACOs that continue under Track 1 after their first
agreement period:
Increase the sharing rate, for example, to over 80
percent.
Allow ACOs to continue in Track 1 indefinitely with no
reduction in sharing rate.
Allow ACOs to continue in Track 1 for more than 2
agreement periods with a continued reduction in sharing rate (for
example, a 10 percentage point decrease) for each subsequent agreement.
Several commenters suggested a slower phase-in of the reduction of the
sharing rate, for example by reducing the sharing rate below 50 percent
starting in the third agreement period.
Allow Track 1 ACOs the opportunity to extend their initial
3 year agreement by 2 or 3 additional years, and to maintain the 50
percent sharing rate during these additional years.
Decreasing the sharing rate only for select ACOs as a
means of encouraging these ACOs to move to the two-sided model while
providing sufficient incentive for ACOs with less success to continue
to innovate in a subsequent agreement period under Track 1. For
instance, decreasing the sharing rate for ACOs that demonstrated shared
savings in their first agreement period, or decreasing the sharing rate
for higher-cost ACOs (or requiring these ACOs to accept performance-
based risk) while increasing the sharing rate for lower-cost ACOs.
A few commenters suggested that certain types of ACOs should be
exempt from the reduction in sharing rate, such as rural ACOs, and ACOs
comprised largely of practicing physicians or primary care physicians
(as opposed to ACOs that include a hospital or health system as an ACO
participant).
Response: We were influenced by the comments indicating that a
reduced sharing rate under the one-sided model does not necessarily
increase the attractiveness of the two-sided model, but rather could
impede the progression to risk by ACOs needing additional experience
with the accountable care model. Specifically, we are persuaded by
comments suggesting that maintaining the sharing rate at a maximum of
50 percent for Track 1 may result in payments to ACOs that in turn can
be used by ACOs to prepare their infrastructure and financial reserves
for transitioning to performance-based risk. We further believe this
policy helps address concerns of commenters about the need for ACOs to
achieve a return on investment through shared savings, and in
particular, could encourage continued participation by ACOs who have
not yet been eligible for a performance payment by the time they must
determine whether to continue in the program for a second agreement
period. Further, since we are only permitting one additional agreement
period under the one-sided model, as opposed to multiple additional
agreement periods, we believe it is reasonable to sustain the maximum
sharing rate at 50 percent. In light of this determination, we decline
to accept the suggestions by commenters to further reduce the sharing
rate for ACOs who continue under Track 1 (to lower than 40 percent).
Given our interest in ACOs progressing to performance-based risk, we
decline to accept the recommendations to more slowly transition ACOs to
performance-based risk arrangements, such as the suggestions to allow
multiple agreement periods under Track 1 with the same or a
progressively decreasing sharing rate. We also decline to select
certain ACOs for eligibility for a reduced sharing rate, based on past
performance, composition or geography, because we believe the
previously noted considerations that support maintaining the sharing
rate at 50 percent are applicable to ACOs of varying forms and
locations. At the same time, we believe that decreasing the sharing
rate for ACOs who remain under the one-sided model would provide little
if no incentive for ACOs to eventually transition to performance-based
risk, and could result in ACOs languishing under the one-sided model.
Therefore, we are finalizing a policy that would offer continuation of
the 50 percent sharing rate to ACOs participating in a second agreement
under Track 1.
FINAL ACTION: We are not finalizing our proposed amendment to
section 425.604(d) to reduce the maximum sharing rate during an ACO's
second agreement period under Track 1. Therefore, an ACO participating
under Track 1 for a second agreement period that meets all the
requirements for receiving shared savings payments under the one-sided
model will receive a shared savings payment of up to 50 percent of all
savings, as determined on the basis of its quality performance, as
currently specified under Sec. 425.604(d).
(4) Eligibility for Continued Participation in Track 1 by Previously
Terminated ACOs
In light of our proposed revisions to Sec. 425.600 to permit an
ACO to participate under Track 1 for a second agreement period, we
proposed conforming changes to Sec. 425.222(c) to permit previously
terminated Track 1 ACOs to reapply under the one-sided model. We
proposed that, consistent
[[Page 32768]]
with our existing policy under Sec. 425.222(c), an ACO whose agreement
was terminated less than half way through the term of its participation
agreement under Track 1 would be permitted to reapply to the one-sided
model as if it were applying for its first agreement period. If the ACO
were accepted to reenter the program, the maximum sharing rate would be
50 percent. However, in the case of an ACO that was terminated more
than half way through its initial agreement under the one-sided model,
we proposed to revise Sec. 425.222(c) to permit this ACO to reapply
for participation under the one-sided model, but to provide that the
ACO would be treated as if it were applying for a second agreement
period under Track 1. Thus, if the ACO were approved to participate in
the program again, the reduced sharing rate of 40 percent would apply.
An ACO whose prior agreement under Track 2 was terminated would still
be precluded from applying to participate under Track 1. We sought
comment on these proposals.
We further noted in December 2014 proposed rule that the option to
participate under the one-sided model agreement in a subsequent
agreement period is only available to ACOs that have completed or are
in the process of completing an agreement under the one-sided model.
That is, we would not permit an ACO that had participated under a two-
sided model to subsequently participate under a one-sided model.
Comment: We received very few comments on these proposals. A
commenter supported the proposal to allow previously terminated ACOs to
reapply to Track 1 if they can still meet the necessary eligibility
requirements and demonstrate the capability to meet program financial
and quality targets.
Several commenters disagreed with the policy that an ACO that was
previously terminated from Track 2 would not be allowed to reapply to
Track 1. These commenters explained that it may be more prudent for
these organizations to reapply for Track 1 and then move to Track 2
when they are ready. A commenter specifically suggested that CMS should
allow any ACO, regardless of what track it entered the program under
and when it was terminated, to reapply for Track 1 at a 50 percent
sharing rate. A commenter suggested that an ACO that was terminated
from Track 2 should be allowed to enter into Track 1; however, under
these circumstances the ACO should be required, as part of its
application, to provide detailed plans for correcting the deficiencies
noted under the prior agreement.
A commenter expressed support for an existing program policy
specified at Sec. 425.222(a) of the regulations, under which an ACO
that has been terminated from the Shared Savings Program under
Sec. Sec. 425.218 or 425.220 may participate in the Shared Savings
Program again only after the date on which the term of the original
participation agreement would have expired if the ACO had not been
terminated. The commenter explained that it is important to recognize
that not all ACOs are immediately able to assume the full
responsibility of shared savings. The onboarding process of becoming an
ACO and developing the capabilities to achieve shared savings takes
some organizations longer than anticipated, especially given some of
the uncertainties of a new program. The commenter recommended that
those ACOs that re-enroll in the program should be required to
demonstrate improvement in the capabilities necessary to succeed under
a shared savings model. The commenter recommended that CMS revisit at a
later time the issue of whether and under what conditions previously
terminated ACOs should be allowed to reapply.
Response: Under our final policy to allow Track 1 ACOs who continue
under the one-sided model for a second agreement period to be eligible
for a maximum sharing rate of 50 percent based on quality performance,
the issue of when to apply a reduced sharing rate for previously
terminated ACOs who reapply to Track 1 is superseded. However, we are
finalizing our proposed approach for determining whether an ACO
previously terminated from Track 1 is re-entering the program under its
first or second agreement period under Track 1, specifically an ACO
whose agreement was terminated--
Less than half way through its first agreement under the
one-sided model will be permitted to reapply to the one-sided model as
if it were applying for its first agreement period; or
More than half way through its first agreement under the
one-sided model will be permitted to reapply to the one-sided model and
would be treated as if it were applying for a second agreement period
under Track 1.
Since we are finalizing a policy under which ACOs may continue to
participate in the one-sided model for a second agreement period, we
believe it is important to clarify the choice of financial models for
ACOs whose participation is terminated under their second agreement
period and reapply to participate in the program. In addressing this
issue, we believe it is important to align with the approach
established by the original policy: To give an ACO whose participation
was terminated before completing half of its agreement period the
opportunity to reapply to enter the financial model it was
participating under at the time of termination. Specifically:
An ACO whose agreement was terminated less than half way
through its second agreement period under the one-sided model will be
permitted to reapply to the one-sided model and would be treated as if
it were applying for a second agreement period under Track 1.
An ACO whose agreement was terminated more than half way
through its second agreement under the one-sided model will only be
permitted to reapply for participation under the two-sided model.
We are revising the regulation at Sec. 425.222(c) to reflect this
clarification.
We will not at this time to modify our current policy that
prohibits an ACO whose prior agreement under Track 2 was terminated
from applying to participate under Track 1. Commenters presented
reasons for why ACOs who terminate from the two-sided model should be
allowed to reenter the program under the one-sided model. However, in
light of our decision to extend participation under Track 1 for a
second agreement period, we believe it is especially important to
establish policies to support an earnest transition to performance-
based risk by Track 1 ACOs. Should we finalize a policy that allows
terminated two-sided model ACOs to reapply to Track 1, we are concerned
this would create an opportunity for Track 1 ACOs to enter the two-
sided model and quickly terminate in an effort to reset the clock on
the participation in the one-sided model.
Further, we appreciate commenter's suggestions about the need for
terminated ACOs reapplying to the program to demonstrate their capacity
to achieve program goals. As we established in the 2011 final rule, a
terminated ACO reapplying to the program must describe the reason for
termination of its initial agreement and explain what safeguards are
now in place to enable the prospective ACO to participate in the
program for the full term of its participation agreement. We continue
to believe it is an important beneficiary and program protection to
limit participation in the program to providers and suppliers who are
dedicated to the goals of the program.
We appreciate the commenters' support for the existing policy under
[[Page 32769]]
which a previously terminated ACO may participate in the Shared Savings
Program again only after the date on which the term of the original
participation agreement would have expired if the ACO had not been
terminated. As we explained in the 2011 final rule (76 FR 67961), we
continue to believe that in order to ensure protection for
beneficiaries and the program, ACOs should not be allowed to re-enter
the Shared Savings Program before the conclusion of their initial
agreement period.
FINAL ACTION: We are finalizing our proposal to permit previously
terminated Track 1 ACOs to reapply under the one-sided or two-sided
model and to differentiate between whether the ACO will be applying for
its first or second agreement period under Track 1 based on when the
ACO terminated its previous agreement. Accordingly, we are finalizing
the proposed changes to Sec. 425.222(c), but are making additional
revisions to clarify the treatment of previously terminated Track 1
ACOs that were in their second agreement period at the time of
termination.
c. Modifications to the Track 2 Financial Model
To complement the proposals to extend ACOs' participation under
Track 1 for a second agreement period to smooth the on ramp to risk, we
proposed to modify the financial model under Track 2 for ACOs choosing
this two-sided option to further encourage ACOs to accept increased
performance-based risk. Specifically, we proposed to retain the
existing features of Track 2 with the exception of modifying the
threshold that Track 2 ACOs must meet or exceed in order to share in
savings (minimum savings rate (MSR)) or losses (minimum loss rate
(MLR)) from the current flat 2 percent to vary based upon the size of
the ACO's assigned beneficiary population, as determined based on the
methodology for setting the MSR under the one-sided model in Sec.
425.604(b) as shown in Table 8. We explained in the December 2014
proposed rule that, as compared to the MSR used for Track 1, the flat 2
percent MSR/MLR generally offers a lower savings threshold for Track 2
ACOs to meet in order to share in savings, and was established in
recognition of the Track 2 ACOs' willingness to assume the risk of
incurring shared losses (79 FR 72807). The proposal to vary the Track 2
MSR/MLR based on the number of beneficiaries assigned to the ACO would
reduce risk for smaller ACOs by increasing the threshold before they
would have to share in additional costs that they incur for the
program. In turn, smaller ACOs would also have to achieve a greater
level of savings under a higher MSR in order to share in savings (79 FR
72807). We explained our belief that by building in greater downside
protection, this proposal might help smooth the on-ramp to performance-
based risk for ACOs, particularly ACOs with smaller assigned
populations and those with less experience with population management,
making the transition to a two-sided model more attractive. With the
proposed addition of Track 3 to the program, discussed later in this
section, we explained that Track 2 could be viewed as a first step for
some organizations to accepting performance-based risk.
Table 6--Proposed Minimum Savings Rate and Minimum Loss Rate for Track 2
------------------------------------------------------------------------
MSR/MLR (low end MSR/MLR (high end
of assigned of assigned
Number of beneficiaries beneficiaries) beneficiaries)
(%) (%)
------------------------------------------------------------------------
5,000-5,999....................... 3.9 3.6
6,000-6,999....................... 3.6 3.4
7,000-7,999....................... 3.4 3.2
8,000-8,999....................... 3.2 3.1
9,000-9,999....................... 3.1 3.0
10,000-14,999..................... 3.0 2.7
15,000-19,999..................... 2.7 2.5
20,000-49,999..................... 2.5 2.2
50,000-59,999..................... 2.2 2.0
60,000 +.......................... 2.0%
------------------------------------------------------------------------
We explored other ways to reduce financial risk for ACOs
participating under Track 2, such as increasing the MSR/MLR using a
fixed percent. For example, we considered using an MSR and MLR
threshold of 3 or 4 percent that would apply to all ACOs participating
in Track 2. We sought comments on this proposal as well as other
options that could potentially make Track 2 more financially attractive
to ACOs. We requested that commenters indicate why they believe an
alternative option would be more attractive to ACOs than the one
proposed and the specific reason why the option would be beneficial. We
also requested that commenters consider whether additional safeguards
should be implemented to appropriately protect the Medicare Trust
Funds, if an alternative approach were to be adopted.
Comment: Commenters generally agreed with our concern that the
existing Track 2 features may not be sufficiently attractive for ACOs
to take on performance-based risk. In particular, some commenters
favored protecting Track 2 ACOs with smaller patient populations from
losses, and for this reason supported higher MLRs for these ACOs.
Several commenters, who favored limiting ACOs' exposure to risk, seemed
to misunderstand the function of a higher MLR as being more protective
of ACOs against financial risk.
Commenters for and against the proposed modification were fairly
evenly divided. Some commenters supported our proposal to modify both
the MSR and MLR to vary based on the size of the ACO's assigned
population, stating that the variable rate would add protection from
losses for smaller ACOs and encourage participation in Track 2. Several
commenters suggested that if a variable rate were to be used in Track
2, the range be narrowed, for example to a range of 1.5 through 2.5
percent (or no more than 2 percent) based upon the size of the ACO's
assigned population. A commenter, who supported the proposal, explained
that the proposed methodology based on standard inferential statistics
reduces the probability of rewarding or punishing changes in
expenditures which could be attributed to normal variation.
[[Page 32770]]
Others opposed changes to current policy which would increase the
MSR/MLR and recommended that we retain the flat 2 percent MSR/MLR for
Track 2 ACOs. A commenter explained that ACO participants willing to
take on risk should be rewarded with a lower MSR, not one that is the
same as the MSR used in a non-risk track. Several commenters explained
the need to keep the MSR/MLR low to motivate Track 1 ACOs to make the
transition to Track 2, suggesting that a variable MSR could make the
track very unattractive relative to Track 1 and act as a disincentive
for ACOs to move into performance-based risk. Several commenters
explained that many small and rural ACOs believe they are disadvantaged
by being held to a MSR of 3.9 percent when larger ACOs have a MSR of
2.0 percent. These commenters indicated that CMS' proposal provided
strong disincentives for small and rural entities to move into Track 2,
as they would need to achieve almost twice the amount of savings as
larger ACOs in order to receive a shared savings bonus.
Still others recommended alternative modifications to the MSR/MLR
under Track 2, with some commenters' suggestions about modifying the
MSR/MLR emerging from their descriptions of alternatives to make
performance-based risk more attractive under Tracks 2 and 3 as opposed
to comments specifically on the proposed revisions to the Track 2 MSR/
MLR. Suggestions included--
Permitting the ACO to choose its own MSR/MLR. Many
commenters favored an approach that would allow ACOs a choice of
options including: A fixed MSR/MLR of 2.0 percent, no MSR/MLR, or a
variable MSR/MLR (for example, between 2-3.9 percent based upon number
of assigned beneficiaries). Commenters explained that each organization
is in the best place to determine the level of risk for which it is
prepared, and thus should be given options to choose from, rather than
being required to have a specific fixed or variable MSR and MLR.
Several commenters indicated that allowing ACOs the choice of MSR/MLR
would encourage ACOs to transition to the two-sided model and encourage
participation in the program generally. Several commenters explained
that a MSR/MLR are not necessary as normal variation will result in
inaccuracies both above and below the benchmark that will balance each
other out. However, a commenter--
Favored not lowering the MSR/MLR below 1 percent,
concerned it could result in savings or losses based on normal
variation in utilization instead of changes in care for beneficiaries;
Using a lower flat percent MSR/MLR, such as 1 percent; and
Making the MLR variable (ranging from 2.0-3.9 percent)
while using the flat 2 percent for the MSR. In this way, the ACO would
be better protected from sharing in losses while enjoying a greater
opportunity to share in savings.
Another commenter suggested that the MLR range be broadened to be
higher, such as 4 percent; and setting the MLR higher, for example, at
5 percent, and allowing for a gradual reduction in the MLR over the
course of time (for example, 1 percentage point per year) to ease the
transition into risk.
A few commenters responded to CMS' request for feedback on whether
additional safeguards should be implemented to appropriately protect
the Medicare Trust Funds, if an alternative approach were to be
adopted. A commenter specified that additional provisions are not
needed to safeguard the Medicare Trust Funds because Medicare stands to
benefit more from the participation of ACOs compared to the lack of
participation by these organizations in the program altogether. Another
commenter explained that the preservation of symmetry in the MSR/MLR
creates protection for CMS.
Another commenter generally urged caution in making significant
changes to the MSR/MLR rates going forward as such changes could
negatively impact organizational planning. A commenter emphasized the
importance of making the MSR/MLR the same under Track 2 and 3, to
ensure equity across all ACOs assuming two-sided risk.
Response: We are persuaded by commenters' statements that ACOs are
best positioned to determine the level of risk which they are prepared
to accept. We also agree with commenters that ACOs under the two-sided
model should be allowed to select from a range of MSR/MLR options.
Given the relatively even divide among commenters favoring and
disfavoring the proposal to vary the Track 2 MSR/MLR by the number of
assigned beneficiaries, we are also convinced this methodology is one
of several options that ACOs should be allowed to choose from. However,
we disagree with the options suggested by commenters to modify the
range (for example, to lower the minimum or increase the maximum) based
upon the ACO's number of assigned beneficiaries. We developed this
range based on the range established for Track 1 ACOs in the initial
rulemaking establishing the Shared Savings Program, and as a commenter
pointed out, it was established based on standard inferential
statistics. This approach reduces the probability of rewarding or
punishing changes in expenditures which could be attributed to normal
variation. We believe some ACOs want to have their MSR/MLR set based on
this methodology. We also believe that increasing the MLR much higher
above 3.9 percent may provide too great of a shield for ACOs entering
the two-sided model. Therefore, it could foster the transition to risk
by ACOs who have no intention of driving meaningful change in the
quality and cost of the care furnished to their Medicare FFS
beneficiaries.
In defining the other MSR/MLR options for ACOs to choose from, as
ae commenter pointed out, we believe it is important to preserve a
symmetrical up- and down-side. We also agree with the comment that ACOs
accepting performance-based risk should have the option to choose an
MSR/MLR as low as 0 percent, since an ACO in this position would have a
significant incentive to make meaningful changes in the quality and
cost of care for its beneficiaries since it would be liable for risk
beginning at the first dollar. To maximize flexibility on the MSR/MLR
in response to comments expressing concerns that the MSR is too
onerous, we believe it is also appropriate to offer ACOs a choice of a
symmetrical MSR/MLR in increments of 0.5 percent between 0.5 percent
and 2.0 percent.
Therefore, we are modifying our proposal in order to give an ACO in
Track 2 the ability to choose from a menu of options for setting its
MSR and MLR for the duration of its agreement period. The menu of
choices, reflecting our desire to retain symmetry between upside and
downside risk, includes--
Remove the MSR/MLR (the ACO shares in savings/losses from
the first dollar);
Select a symmetrical MSR/MLR in a 0.5 percent increment
between 0.5-2.0 percent; and
Implement a MSR/MLR that varies based on the size of the
ACO's assigned population according to the methodology established
under the one-sided model.
Track 2 ACOs would have the opportunity to select their MSR/MLR
prior to the start of their agreement period, as part their initial
program application or agreement renewal application. No modifications
to this selection would be permitted during the course of the agreement
period.
We believe that allowing Track 2 ACOs to customize their
symmetrical MSR/MLR threshold for risk vs reward,
[[Page 32771]]
and implementing an identical approach under Track 3, is responsive to
commenters' requests for greater flexibility in setting the threshold
the ACO must meet before the ACO is eligible to share in savings or be
accountable for losses. Further, we believe offering ACOs a choice of
MSR/MLR will encourage ACOs to move to two-sided risk. For instance,
ACOs who are more hesitant to enter a performance-based risk
arrangement may choose a higher MSR/MLR, to have the protection of a
higher threshold on downside risk, although they would in turn have a
higher threshold to meet before being eligible to share in savings.
ACOs who are comfortable with a lower threshold to protect them against
risk of losses, may select a lower MSR/MLR to benefit from a
corresponding lower threshold for sharing in savings. We also believe
that applying the same MSR/MLR methodology in both of the two risk-
based tracks reduces complexity for CMS' operations and establishes
more equal footing between the risk models.
FINAL ACTION: We will retain the existing features of Track 2 with
the exception of revising Sec. 425.606(b) to allow ACOs entering Track
2 for agreement periods beginning January 2016 or later a choice among
several options for establishing their MSR/MLR: (1) 0 percent MSR/MLR;
(2) symmetrical MSR/MLR in a 0.5 percent increment between 0.5-2.0
percent; and (3) symmetrical MSR/MLR that varies based on the ACO's
number of assigned beneficiaries according to the methodology
established under the one-sided model. Regarding this third option, the
MSR for an ACO under Track 2 will be the same as the MSR that would
apply in the one-sided model under Sec. 425.604(b) and is based on the
number of beneficiaries assigned to the ACO, and the MLR must be equal
to the negative MSR. We are also adopting a requirement that ACOs must
select their MSR/MLR prior to the start of each agreement period in
which they participate under Track 2 and this selection may not be
changed during the course of the agreement period.
3. Creating Options for ACOs That Participate in Risk-Based
Arrangements
a. Overview
We proposed to develop a new risk-based Track 3 under Sec. 425.610
which would be based on the current payment methodology under Track 2,
but would also incorporate some different elements that may make it
more attractive for entities to accept increased performance-based
risk. We structured the features of Track 3 in light of our experience
with the Shared Savings Program, comments from stakeholders, and early
responses to the Pioneer ACO Model. In developing this new track, we
aimed to encourage organizations to take on increasing financial risk
in order to motivate even greater improvements in care and also to
minimize the barriers faced by some ACOs that limit their willingness
to accept performance-based risk. In evaluating what features might
encourage ACOs to take on increasing financial risk, we considered
several options, including modifying Track 1, modifying or eliminating
Track 2, adding a new Track 3 to supplement the existing tracks, or a
combination of these options.
In general, unless otherwise stated, we proposed to model Track 3
off the current provisions governing Track 2, which in turn are modeled
on Track 1, and specifically to have the same general eligibility
requirements, quality performance standards, data sharing requirements,
monitoring rules, and transparency requirements. However, as we discuss
later in this section, we proposed certain discrete features for Track
3 that differentiate it from Track 2. Specifically, we proposed to make
modifications to the beneficiary assignment methodology, sharing rate,
and performance payment and loss sharing limits.
Establishing Track 3 would require us to exercise our authority
under section 1899(i)(3) of the Act, which requires that we determine
that this policy: (1) ``. . . does not result in spending more for such
ACO for such beneficiaries than would otherwise be expended . . . if
the model were not implemented;'' and (2) ``. . . will improve the
quality and efficiency of items and services furnished under this
title.'' We applied this authority when proposing a two-sided risk-
based model in our April 2011 proposed rule (76 FR 19603), which was
modified and made final in in our November 2011 final rule (76 FR
67909). As discussed in our final rule (76 FR 67904), we stated our
belief that Track 2 would provide an opportunity for organizations more
experienced with care coordination and risk models that are ready to
accept performance-based risk to enter a sharing arrangement that
provides greater reward for greater responsibility. In the December
2014 proposed rule (see 79 FR 72809), we expressed our belief that
proposed Track 3 would offer an additional opportunity for ACOs to
accept greater responsibility for beneficiary care in exchange for the
possibility of greater reward. Moreover, we explained our belief that
adding a second two-sided risk model would not result in an increase in
spending beyond what would otherwise occur. As discussed later in our
Regulatory Impact Analysis of this final rule, our initial estimates
suggested that the inclusion of Track 3 along with the other
modifications to the program regulations would improve savings for the
Trust Funds resulting from this program. Further, in the December 2014
proposed rule we explained our belief that adding Track 3 would improve
the quality of care furnished to Medicare FFS beneficiaries because
ACOs participating under Track 3 would have an even greater incentive
to perform well on the quality measures in order to maximize the
percentage of savings they may receive, while limiting their liability
for any losses that might be incurred.
In this section we discuss our final actions on our proposed
policies related to the creation of Track 3.
Comment: The majority of commenters providing feedback on the
proposed Track 3 generally supported the addition of the new
performance-based risk model based on prospective beneficiary
assignment and offering ACOs multiple paths toward more accountable
care. Many commenters supported the additional risk for greater reward
that was offered under proposed Track 3 in relation to Track 2, with
some commenters indicating that the addition of Track 3 will help
beneficiaries realize the benefits of better care faster. A commenter
specified the importance of allowing multiple risk-bearing tracks to
enable ACOs to match their infrastructure and maturity to the
appropriate regulatory framework. However, some commenters suggested
modifications to Track 2 to make it closely match Track 3 (such as the
balance of risk and reward, assignment, and availability of waivers,
beneficiary attestation), calling into question the role of Track 2 in
the program. A commenter suggested CMS eliminate Track 2 and offer only
Tracks 1 and 3 to encourage transition to performance-based risk.
A few commenters were critical of the need for CMS to establish
Track 3. A commenter supported CMS' interest in developing additional
risk-based options, but suggested that actual implementation of Track 3
was premature, pointing out that few ACOs have entered Track 2.
Therefore, few ACOs may be ready to take on the additional risk under
Track 3. This commenter encouraged CMS to continue to gather and
incorporate stakeholder feedback into the design of a Track 3. A
commenter supported creation of a Track 3 generally, but suggested that
it may not be needed if
[[Page 32772]]
much broader modifications were made to the design of the program's
financial methodology.
Response: We appreciate commenters' support for Track 3 as a new
option for a two-sided model under which ACOs have the opportunity to
share in greater reward for accepting higher levels of risk. We agree
with commenters who suggested the need to maintain Track 2 in addition
to implementing Track 3 and to distinguish the features of these two-
sided risk tracks to offer ACOs options, particularly with regard to
assignment methodology and their level of risk and reward. As discussed
in detail in the following sections, we are finalizing Track 3 with
features that distinguish it from Tracks 1 and 2.
b. Assignment of Beneficiaries Under Track 3
Having considered the relative advantages and disadvantages of
prospective and retrospective assignment methodologies for achieving
improvements in the cost and quality of the care furnished to FFS
beneficiaries, we proposed to implement a prospective assignment
methodology, but only for Track 3 ACOs. The proposed design features
were as follows:
Using the same stepwise assignment methodology under Sec.
425.402 to assign beneficiaries to ACOs participating under Track 3 as
is currently used to assign beneficiaries to ACOs participating under
Track 1 and Track 2. The result would be a prospective list of
beneficiaries.
Retrospectively excluding only those beneficiaries that
appeared on the prospective assignment list that no longer meet
eligibility criteria for assignment. The net effect would be to hold
Track 3 ACOs accountable for beneficiaries who were prospectively
assigned to the ACO based on having received primary care services from
ACO professionals in the past, which would include beneficiaries that
have received care from ACO professionals in the past, but who do not
receive care from ACO participants during the performance year. This
proposal reduces our concern that ACOs in Track 3 may avoid at-risk
beneficiaries that appear on their prospective assignment list because
they would be held accountable for the care of those beneficiaries,
regardless of whether or not they choose to receive a plurality of
their primary care services from ACO professionals.
Basing prospective assignment on a 12-month assignment
window (offset from the calendar year) prior to the start of the
performance year. We further proposed to define an ``assignment
window'' as the 12-month period used to assign beneficiaries to an ACO
and to make conforming changes to the regulations to refer to the
assignment window where appropriate.
Prohibiting beneficiaries that are prospectively assigned
to a Track 3 ACO from being assigned to any other Shared Savings
Program ACO as part of the retrospective reconciliation for Track 1 and
Track 2 ACOs.
(1) Prospective Versus Retrospective Assignment
In the November 2011 final rule that established the Shared Savings
Program, we adopted a preliminary prospective assignment model with
retrospective reconciliation because it would provide ACOs with
adequate information to redesign their care processes while also
encouraging ACOs to standardize these care processes for all Medicare
FFS beneficiaries instead of focusing care management activities on a
small subset of their FFS population. Further, we expressed our view
that this approach would provide sufficient incentives for each ACO to
provide quality care to its entire beneficiary population (76 FR
67864).
As an alternative, beneficiaries could be prospectively assigned to
an ACO prior to the start of the performance year. In the December 2014
proposed rule, we discussed the use of prospective alignment in the
Pioneer ACO Model, where beneficiaries are aligned to Pioneer ACOs
prior to the start of each performance year. Under the Pioneer ACO
Model, the list of prospectively aligned beneficiaries is reconciled at
the end of the year to exclude certain beneficiaries from the list, for
example, beneficiaries who were not eligible for alignment during the
performance year; however, no new beneficiaries are added to the list.
We explained that this alternative assignment methodology arguably
provides Pioneer ACOs with a more targeted set of FFS beneficiaries on
whom to focus their care redesign efforts during the performance year.
Further, we noted that this improved certainty may be an important
factor in an ACO's willingness to take on greater performance-based
risk because the ACO may be better positioned to make decisions
regarding where to make investments in infrastructure to deliver
enhanced services.
We proposed to implement a prospective assignment methodology for
Track 3 ACOs using the assignment algorithm that is specified in
Subpart E of the Shared Savings Program regulations, and described in
more detail in section II.E. of this final rule. This prospective
assignment methodology would use the same stepwise assignment
methodology under Sec. 425.402 to assign beneficiaries to ACOs in
Track 3 as is used to assign beneficiaries to ACOs participating under
Track 1 and Track 2. The major difference would be that beneficiaries
would be assigned to Track 3 ACOs prospectively, at the start of the
performance year, and there would be no retrospective reconciliation
resulting in the addition of new beneficiaries at the end of the
performance year. The only adjustments that would be made at the end of
the performance year would be to exclude beneficiaries that appeared on
the prospective assignment list provided to the ACO at the start of the
performance year that no longer meet eligibility criteria. For the
reasons discussed in the November 2011 final rule (76 FR 67851), we
explained that this proposed prospective assignment methodology meets
the requirement under section 1899(c) of the Act that assignment be
based on the ``utilization of primary care services'' provided by
physicians that are ACO professionals. We also proposed to amend the
regulations at Sec. 425.400(a) by adding a new paragraph (3) to
reflect this new prospective assignment methodology for Track 3.
We also sought comment on whether we should consider implementing
the prospective assignment approach proposed for Track 3 under Track 2
and whether doing so would enhance or erode the incentives for
organizations to take on risk.
Comment: Only a few commenters expressed reservations about moving
to a prospective assignment model. A commenter strongly opposed
implementing a prospective approach to assignment under any
circumstances, expressing concerns that such an approach would result
in inequalities of care by inappropriately shifting the ACO's focus to
specific patients. Instead, the commenter stated that the current
assignment methodology reduces potential inequalities in care by
encouraging ACOs to redesign care processes to provide high quality and
lower cost care to all FFS patients equally.
Nearly all commenters were generally supportive of implementing a
prospective approach to assignment under Track 3. Commenters suggested
that a prospective approach will permit ACOs to focus on specific
beneficiaries and more generally on a stable assigned population, and
consequently provide some certainty regarding where the ACO should
focus its quality and cost efforts.
[[Page 32773]]
Commenters specifically detailed the following perceived benefits of
prospective assignment:
Allows ACOs to better apply population management
techniques, including developing more effective systems to actively
manage care for patients and engage patients.
Gives providers stronger incentives to engage
beneficiaries and their caregivers in care management activities;
enables providers to focus on building long term relationships with
patients.
Allows ACOs to establish stabilized financial targets.
Encourages transparency with assigned beneficiaries
compared to retrospective assignment. Specifically, prospective
assignment enables patients to be fully aware of any incentives
providers may have in delivering their care and allows them to
incorporate this understanding into the interactions they have with
their care providers. Absent this information, patients may develop
distrust in the system and unnecessarily switch physicians in order to
opt-out of a program in which they may not even be included.
Other commenters pointed to challenges with the program's current
preliminary prospective assignment methodology with retrospective
reconciliation noting that it could stand in the way of ACOs achieving
program goals and discourage participation in the program. In
particular, commenters pointed to the quarterly churn of beneficiaries
under the present assignment methodology as creating uncertainty for
planning and implementing population health strategies and services and
posing challenges for ACOs to accurately gauge the impact of new care
programs and protocols. Given these challenges, a few other commenters
expressed strongly that retrospective assignment should be eliminated
from the program.
A comment reflected the commenter's misunderstanding that
prospective assignment would limit beneficiaries to seeking care within
the ACO. The commenter, supporting prospective assignment, explained
that the current retrospective assignment methodology makes managing
the cost and care of patients difficult because patients can seek
primary care services from multiple providers, which can result in the
patient no longer being assigned to an ACO.
Many commenters generally encouraged CMS to extend the option for
prospective assignment beyond Track 3 to Tracks 1 and 2. Commenters
emphasized the need for ACOs to know in advance the populations for
which they are responsible to most effectively coordinate care for such
individuals and benefit from the other perceived advantages of
prospective assignment (previously noted). Some commenters expressed
the need for ACOs in Track 1 to become familiar with prospective
assignment, and other features considered for Track 3, to prepare them
to enter performance-based risk arrangements that include these
features. Others explained that for Track 2 ACOs to be successful, they
should have the benefit of the Track 3 features, including prospective
assignment, to give them greater certainty over their assigned
populations.
Other commenters saw the value in both assignment methodologies--
knowing upfront who the ACO's assigned population is under prospective
assignment versus accountability for a population that is retroactively
determined to have actually received the plurality of its care from ACO
providers/suppliers--and encouraged CMS to allow all ACOs (Tracks 1, 2,
and 3) a choice of prospective and retrospective assignment. Several
commenters suggested CMS allow ACOs a choice of retrospective or
prospective assignment annually, within the ACO's 3-year agreement
period. A commenter suggested allowing rural ACOs the option to elect
prospective assignment.
Several commenters emphasized the importance of beneficiary
attestation in relation to assignment. A commenter, responding to the
request for comment about extending prospective assignment to Track 2,
explained that prospective assignment would not necessarily be
preferable to the current retrospective assignment under Track 2,
unless a methodology was implemented whereby a beneficiary would attest
to affirm his or her prospective assignment to the ACO prior to being
assigned to the ACO, and the ACO was able to offer incentives, such as
reduced cost sharing, to the beneficiary for receiving services within
the ACO's network. Another commenter suggested that CMS allow ACOs the
option to have patients assigned exclusively based on patient
designation (attestation) instead of based on retrospective or
prospective assignment.
Several comments reflect the need to better analyze the impact of
assignment on beneficiaries' care. A commenter encouraged CMS to
compare beneficiary awareness and satisfaction scores between the
different assignment models (retrospective and prospective) to test the
theory that prospective assignment increases beneficiary awareness,
which in turn improves patient satisfaction. If either or both of these
increase, the commenter encouraged CMS to expand the prospective
assignment methodology to the other Tracks. A commenter disagreed with
CMS' belief that retrospective assignment offers strong incentives for
health system redesign to impact the care for all FFS beneficiaries
that receive care from ACO providers/suppliers, and that retrospective
assignment limits the potential for gaming and reduces the motivation
to target beneficiaries for avoidance. The commenter suggested ACOs
should be encouraged to pilot innovative approaches on a subset of
beneficiaries to determine their efficacy prior to full-scale
implementation.
Response: We appreciate commenters' support generally for
incorporating prospective assignment into the Shared Savings Program
under a new performance-based risk option, Track 3. We continue to
believe that the preliminary prospective assignment methodology with
retrospective reconciliation currently used under Tracks 1 and 2 of the
Shared Savings Program offers strong incentives for health system
redesign to impact the care for all FFS beneficiaries receiving care
from ACO providers/suppliers, as indicated in a commenter's remarks. We
also continue to believe that the preliminary prospective assignment
methodology with retrospective reconciliation limits the potential for
gaming and reduces the motivation to target beneficiaries for
avoidance. While comments indicate strong support for prospective
assignment, and incorporating prospective assignment across all tracks
of the program, we are also convinced by comments encouraging us to
allow ACOs a choice of assignment methodology. We also acknowledge
there is operational complexity and administrative burden to
implementing an approach under which ACOs in any track may choose
either prospective or retrospective assignment, with an opportunity to
switch their selection on an annual basis. Therefore, we decline at
this time to implement prospective assignment in Track 1 and Track 2,
and we also decline to give ACOs in Track 3 a choice of either
prospective or retrospective assignment. Further, we believe
implementing prospective assignment in a two-sided model track may
encourage Track 1 ACOs who prefer this assignment methodology, and the
other features of Track 3, to more quickly transition to performance-
based risk. We note that while prospective assignment will provide an
ACO with the
[[Page 32774]]
knowledge at the beginning of each performance year of the population
for which it will be accountable, this methodology does not eliminate
the issues underlying beneficiary churn in an ACO's population.
Specifically, Medicare fee-for-service beneficiaries retain their
freedom to seek care from the Medicare-enrolled providers and suppliers
of their choosing, including providers and suppliers within and outside
an ACO. As the performance year progresses, the ACO or the provider/
supplier that has provided the plurality of a beneficiary's primary
care services may change. In the case of ACOs participating under Track
3, these changes will not affect their prospectively assigned
population for the particular performance year, but will likely
influence assignment of beneficiaries in the next performance year.
FINAL ACTION: We are finalizing our proposal to codify at Sec.
425.400(a)(3) a prospective assignment methodology that would use the
stepwise assignment methodology under Sec. 425.402 to assign
beneficiaries to ACOs in Track 3. Although beneficiaries will be
assigned prospectively to Track 3 ACOs, the assignment methodology
itself (specified under Sec. 425.402) will be the same as is used to
assign beneficiaries to ACOs participating under Track 1 and Track 2,
with the limited exceptions that are discussed in this section such as
the assignment window.
(2) Exclusion Criteria for Prospectively Assigned Beneficiaries
In the December 2014 proposed rule, we noted that changes in
circumstance may cause prospectively assigned beneficiaries to no
longer be eligible for assignment to an ACO at the end of a performance
year. We explained that it is appropriate to exclude from an ACO's
prospectively assigned population beneficiaries that are no longer
eligible to be assigned to an ACO. We proposed to perform a limited
reconciliation where beneficiaries would only be removed from the
prospective assignment list at the end of the year if they were not
eligible for assignment at that time under the criteria in proposed
Sec. 425.401(b). For example, if a prospectively assigned beneficiary
chose to enroll in Medicare Advantage (MA) at the beginning of the
performance year, that beneficiary would be removed from the
beneficiary assignment list at the end of the year and the
beneficiary's expenditures would not be used in determining the ACO's
financial performance for that year. We noted that under this proposal,
beneficiaries would be removed from the prospective assignment list,
but would not be added as they are in the retrospective reconciliation
used under Tracks 1 and 2. We also explained that unlike the
preliminary prospective assignment methodology with retrospective
reconciliation used in Tracks 1 and 2, under this proposal,
beneficiaries would not be removed from the prospective beneficiary
assignment list because the beneficiary chose to receive the plurality
of his or her primary care services during the performance year from
practitioners other than those participating in the ACO. In other
words, the ACO would be held accountable for all beneficiaries that
appear on the prospective assignment list, with the narrow exception of
those beneficiaries who are not eligible for assignment at the time of
reconciliation based on the limited set of proposed exclusion criteria
under proposed Sec. 425.401(b). We explained that this methodology
would help to mitigate concerns that ACOs may attempt to avoid caring
for high risk beneficiaries that appear on their prospective
beneficiary assignment list because the ACO will continue to be held
accountable for the quality and cost of the care furnished to these
beneficiaries even if the ACO providers/suppliers are not directly
involved in their care. We also noted that this may mean that ACOs will
be held accountable for beneficiaries with whom their ACO providers/
suppliers have had little contact during the year. Therefore they may
have limited opportunity to affect their care. We sought comment on our
proposal to apply limited exclusion criteria to reconcile the
prospective beneficiary assignment lists for ACOs under Track 3 at the
end of the performance year.
Comment: Some commenters specifically expressed support for the
proposed exclusion criteria. Many commenters offered suggestions on how
to expand the proposed assignment exclusion criteria and their
suggestions often included the exclusion of beneficiaries--
Who opt out of data sharing.
Who are cared for in long-term care (post-acute)
facilities such as skilled nursing facilities or assisted living
facilities.
Who reside in the ACO's service region but receive care
outside the ACO; for instance excluding beneficiaries who seek care
from non-ACO providers/suppliers and in particular from distant
tertiary/quaternary care facilities.
Who move out of the ACO's service region.
Based on the ACO's recommendation.
Some commenters specifically supported the exclusion of
beneficiaries who enroll in Medicare Advantage at the beginning of the
year, as indicated in the proposed exclusion criteria.
Several commenters suggested revisions to the assignment algorithm
in relation to prospective assignment. A commenter suggested CMS should
also adjust the assignment methodology to increase stability in the
prospectively assigned population. For instance, if a beneficiary is
initially assigned to an ACO in 1 year, the methodology should make it
more likely for the beneficiary to be assigned to the ACO in subsequent
years. Another commenter suggested that a beneficiary should remain
assigned to a Track 3 ACO unless the beneficiary receives no primary
care services during the performance year from an ACO professional
within the Track 3 ACO whose services are considered at step 1 of the
assignment methodology, and receives at least one primary care service
from a primary care provider who is not an ACO professional in the
Track 3 ACO whose services are considered at step1 of the assignment
methodology. A commenter suggested modifying the program's assignment
methodology to limit assignment to beneficiaries living in the ACO's
pre-defined service area.
Commenters provided the following operational considerations
related to the limited reconciliation of the Track 3 ACOs' prospective
assignment lists:
Provide ACOs with notification, during the performance
period, when beneficiaries are excluded.
Remove beneficiaries who are excluded from the ACO's
quality sample for the year.
Response: We are finalizing with modification our proposal to
reconcile Track 3 ACOs' preliminary assignment lists based on the
limited set of proposed exclusion criteria under Sec. 425.401(b).
While we appreciate the varied suggestions for additional assignment
exclusion criteria suggested by commenters, we decline to adopt
commenters' suggestions because we believe adding such exclusions would
dilute the request for a prospective understanding of the population
assigned to the ACO, lessen the distinction between a prospective
approach and our current methodology, and raise concerns regarding
avoidance of at-risk beneficiaries. We did, however, explore some of
the commenters' suggestions. In particular, we performed an initial
analysis on the suggestion for removal of beneficiaries who move out of
the ACO's service area, based on the experience of the Pioneer ACO
Model, and determined there is a
[[Page 32775]]
very small number (on average less than 2 percent) of beneficiaries who
would meet the criteria for exclusion on this basis, and would not
represent a significant portion of the ACO's assignment list. We
believe that continuing to include these beneficiaries on the ACO's
prospective assignment list during the performance year in which the
move occurs provides an opportunity for ACOs to make sure beneficiaries
who move from the ACO's service area have a seamless transition in care
to the new primary care provider of their choice. We intend to monitor
and assess the potential impact of these additional exclusion criteria
suggestions made by commenters and, if appropriate, will propose
adjustments in future rulemaking.
We also decline to adopt at this time revisions to the program's
assignment algorithm, as suggested by commenters, to improve ACO's
retention of assigned beneficiaries from year to year or to remove
certain beneficiaries based on the type of providers who furnished
their care.
We appreciate commenters' support for the proposal to annually
remove beneficiaries from the Track 3 ACO's prospective assignment
list, based on the proposed exclusion criteria, at the end of each
benchmark and performance year. We also appreciate the comments on
operational issues associated with performing only an annual
reconciliation of the Track 3 ACO's assignment list. We agree that
there may be circumstances where we need to perform this assignment
list reconciliation more frequently than annually, for instance to
facilitate feedback to ACOs on their quarterly program reports (which
currently include a list of excluded beneficiaries) as well as in
developing ACOs' quality reporting samples. Accordingly, we are
modifying our proposal to perform an annual reconciliation of the Track
3 ACO's assignment list, to exclude beneficiaries ineligible for
assignment under the proposed exclusion criteria, to provide for
reconciliation of the Track 3 ACO's assignment list on a quarterly
basis, to coincide with the provision of quarterly reports to ACOs. In
addition, consistent with the approach currently used under Tracks 1
and 2, we expect to use recently available assignment data in
determining the ACO's quality reporting sample, in order for the ACO to
know in advance of the quality reporting period the beneficiaries for
whom it must report quality measures.
Comment: A commenter suggested that CMS allow ACOs an opportunity
for a reconsideration review of their assignment list with respect to
any beneficiaries the ACO believes were assigned in error.
Response: As discussed in the November 2011 final rule, certain
actions specified in section 1899(g) of the Act are precluded from
judicial and administrative review, including the assignment of
Medicare fee-for-service beneficiaries to an ACO under subsection
1899(c) of the Act. Because beneficiary assignment under all tracks is
under this authority, we are unable to offer a reconsideration review
of beneficiary assignment lists.
FINAL ACTION: We are finalizing our proposed policy of excluding
beneficiaries from the prospective assignment list for an ACO
participating under Track 3, who meet the exclusion criteria, as
specified at Sec. 425.401(b), at the end of a performance or benchmark
year. However, we are adopting a modification to this policy under
which we will also perform this exclusion on a quarterly basis during
each performance year, and incorporate these exclusions into quarterly
reports provided to Track 3 ACOs. We have revised Sec. 425.401(b) to
reflect this change. In addition, we will use recently available
assignment data when determining the ACO's quality reporting sample.
(3) Timing of Prospective Assignment
We proposed to base prospective assignment on a 12-month assignment
window (off-set from the calendar year) prior to the start of the
performance year. We further proposed to define an ``assignment
window'' at Sec. 425.20 as the 12-month period used to assign
beneficiaries to an ACO. The assignment window for Tracks 1 and 2 would
be based on a calendar year while the assignment window for Track 3
would be based on the most recent 12 months for which data are
available, and which would be off-set from the calendar year. We
proposed to make conforming changes to the regulations to refer to the
assignment window where appropriate. We explained that this approach
best balances the availability of claims data with the following
operational considerations that affect the timing of when we would
perform prospective assignment and make the assignment lists available
to the ACOs:
The importance of providing ACOs their assignment lists
close to the start of each performance year.
Operationally, the time needed to generate these lists.
Aligning the timing of prospective assignment with the
timing of annual acceptance of new ACOs into the program.
We also considered the option of using complete claims data for the
calendar year prior to the performance year. Under this option,
assignment would synchronize with the timing of the financial
calculations for setting the ACO's benchmark, and would occur more than
3 months after the start of the performance year. However, under these
parameters, Track 3 ACOs would not receive their prospective assignment
lists until after the first quarter of each performance year. We
believe that Track 3 ACOs would find such a delay in the receipt of
their prospective assignment list burdensome for carrying out their
health care operations, including care coordination processes and data
analysis.
Comment: Commenters addressing these issues supported CMS' proposal
to base prospective assignment on a 12-month assignment window (off-set
from the calendar year), to balance the timely delivery of the ACO's
assignment list against the availability of complete data for the
calendar year prior to the start of the performance year. Some
commenters expressed concern that CMS did not specify in the proposed
rule the exact timeline it would use to determine prospective
assignment, and urged CMS to provide this specificity in the final
rule.
Several commenters explicitly stated support for the proposal to
define an ``assignment window'' under Sec. 425.20 as the 12-month
period used to assign beneficiaries to an ACO.
Response: We appreciate the commenters' support of the proposal to
base prospective assignment under Track 3 on a 12-month assignment
window (off-set from the calendar year). In the proposed rule we
provided an example of the timing of the 12 month period, which would
span October through September of the prior calendar year.
Specifically, to establish the assignment list for the performance year
beginning January 1, 2016, we could use an assignment window from
October 1, 2014 through September 30, 2015. We intentionally did not
specify the precise months that would be used as part of the assignment
window in the regulatory text to provide us operational flexibility in
implementing assignment.
FINAL ACTION: We are finalizing our proposal regarding the timing
of beneficiary assignment under Track 3, and will base prospective
assignment on a 12-month assignment window (off-set from the calendar
year) prior to the start of the performance year. Accordingly, we are
finalizing the provision at Sec. 425.400(a)(3) as proposed. In
addition, we are finalizing our proposal, to define an ``assignment
window'' at Sec. 425.20 as
[[Page 32776]]
the 12-month period used to assign beneficiaries to an ACO.
(4) Interactions Between Prospective and Retrospective Assignment
Models
Under the Shared Savings Program, a beneficiary may only be
assigned to a single ACO for purposes of determining the ACO's
financial and quality performance during a performance year. In the
December 2014 proposed rule we explained that because there are markets
in which there are multiple ACOs, there would likely be interactions
between prospective assignment for Track 3 ACOs and preliminary
prospective assignment with retrospective reconciliation for Track 1
and Track 2 ACOs. Accordingly, we proposed the following:
A beneficiary that is prospectively assigned to a Track 3
ACO would remain assigned to the Track 3 ACO for the performance year
even if the beneficiary chose to receive a plurality of his or her care
outside the ACO.
A beneficiary would remain assigned to the Track 3 ACO
even if we determine as part of the retrospective reconciliation for
Track 1 and Track 2 ACOs that the beneficiary actually received the
plurality of his or her primary care from ACO professionals in another
ACO.
A beneficiary prospectively assigned to a Track 3 ACO
would remain assigned to that ACO even if we subsequently determine the
beneficiary actually received the plurality of his or her primary care
from ACO professionals participating in another Track 3 ACO.
In other words, we proposed that once a beneficiary is
prospectively assigned to a Track 3 ACO, the beneficiary will not be
eligible for assignment to a different ACO, even if the beneficiary
chose to receive a plurality of his or her primary care services from
ACO professionals in that ACO during the relevant performance year.
Comment: Commenters were generally supportive of the proposal that
a beneficiary prospectively assigned to a Track 3 ACO at the start of a
performance year would not be eligible for assignment to a different
ACO for that performance year. Several commenters suggesting additional
assignment exclusion criteria (previously discussed) further suggested
that some beneficiaries excluded from a prospective assignment list
should become eligible for assignment to other ACOs (for example, in
the case of a beneficiary who moved out of the ACO's area).
Several commenters suggested that CMS use the following hierarchy
to determine the order of precedence for beneficiary assignment:
Beneficiary choice through attestation at any time during
the year.
Prospective assignment.
Retrospective assignment.
Commenters explained that this hierarchy creates the most stable
population for the ACOs, while first honoring beneficiary choice.
Response: We appreciate commenters' suggestions on the proposal
concerning interactions between prospective assignment for Track 3 ACOs
and preliminary prospective assignment with retrospective
reconciliation for Track 1 and Track 2 ACOs. We are finalizing, as
proposed, the policy establishing that a beneficiary prospectively
assigned to a Track 3 ACO will not be eligible for assignment to a
different ACO, even if the beneficiary chooses to receive a plurality
of his or her primary care services from ACO professionals in that ACO
during the relevant performance year. Specifically a beneficiary--
That is prospectively assigned to a Track 3 ACO would
remain assigned to the Track 3 ACO for the performance year even if the
beneficiary chose to receive a plurality of his or her care outside the
ACO;
Would remain assigned to the Track 3 ACO even if we
determine as part of the retrospective reconciliation for Track 1 and
Track 2 ACOs that the beneficiary actually received the plurality of
his or her care from ACO professionals in another ACO; or
That is prospectively assigned to a Track 3 ACO would
remain assigned to that ACO even if we subsequently determine the
beneficiary actually received the plurality of his or her primary care
from ACO professionals participating in another Track 3 ACO.
Since we are finalizing prospective assignment exclusion criteria
for Track 3 consistent with the exclusion criteria used in Tracks 1 and
2, there is no opportunity for beneficiaries removed from Track 3 ACOs'
assignment lists to be eligible for assignment to Track 1 or 2 ACOs.
We also wish to clarify that this policy on interactions between
the prospective and retrospective assignment models would apply to
assignment for benchmark years as well as assignment for performance
years. Applying the same policies to benchmark year calculations as are
applied to performance year calculations will reduce the chances of
introducing unwanted bias.
As discussed elsewhere in this final rule, we will be proposing the
procedures for beneficiary attestation in rulemaking for the 2017
Physician Fee Schedule. However, our future considerations on how to
incorporate beneficiary attestation into the Shared Savings Program
will include commenters' suggestions about the need for an assignment
hierarchy (accounting for attestation in relation to prospective and
retrospective assignment).
FINAL ACTION: We are finalizing the policy that once a beneficiary
is prospectively assigned to a Track 3 ACO for a benchmark or
performance year the beneficiary will not be eligible for assignment to
a different ACO, even if the beneficiary chose to receive a plurality
of his or her primary care services from ACO professionals in that ACO
during the relevant benchmark or performance year.
c. Determining Benchmark and Performance Year Expenditures Under Track
3
We proposed to use the same general methodology for determining
benchmark and performance year expenditures under Track 3 as is
currently used for Tracks 1 and 2, with the exception of certain
modifications to account for the timing of beneficiary assignment under
the prospective assignment methodology. Specifically, under Sec.
425.602 we would establish the historical benchmark for all ACOs by
determining the per capita Parts A and B fee-for-service expenditures
for beneficiaries that would have been assigned to the ACO in any of
the 3 most recent years prior to the start of the agreement period
using the ACO participant TINs identified at the start of the agreement
period (Sec. 425.602(a)). For each benchmark year that corresponds to
a calendar year, this includes calculating the payment amounts included
in Parts A and B fee-for-service claims using claims received within 3
months following the end of the calendar year (referred to as a ``3
month claims run out'') with a completion factor, excluding IME and DSH
payments and considering individually beneficiary-identifiable payments
made under a demonstration, pilot or time limited program (Sec.
425.602(a)(1)).
We proposed that in establishing the historical benchmark for Track
3 ACOs, we would determine the beneficiaries that would have been
prospectively assigned to the ACO during each of the 3 most recent
years prior to the start of the agreement period; basing benchmark year
assignment on a 12-month assignment window offset from the calendar
year prior to the start of each benchmark year. We also proposed to add
a new regulation at Sec. 425.610 to
[[Page 32777]]
address the calculation of shared savings and losses under Track 3.
We further proposed that we would still determine the Parts A and B
fee-for-service expenditures for each calendar year, whether it is a
benchmark year or a performance year, using a 3-month claims run out
with a completion factor for the prospectively assigned beneficiaries.
We would exclude IME and DSH payments and account for individually
beneficiary-identifiable payments made under a demonstration, pilot or
time limited program during the calendar year that corresponds to the
benchmark or performance year. For example, for an ACO entering Track 3
beginning January 1, 2016, we would determine the benchmark based on
CYs 2013, 2014, and 2015. We would determine a prospective list of
beneficiaries using the assignment window for each year (based on an
off-set 12 month period such as October 1, 2011 through September 30,
2012 for BY1). However, the claims used to determine the per capita
expenditures for BY1 would be based on claims submitted during the
calendar year from January 1, 2013 through December 31, 2013. The same
pattern would be used to determine assignment and per capita
expenditures for BY2 and BY3. We would apply the same pattern going
forward to calculate per capita expenditures for the performance years.
We noted that the timing of the generation of historical benchmark
reports for Track 3 ACOs would also be consistent with the current
schedule for generating these reports for ACOs in Tracks 1 and 2. That
is, for an ACO that begins under Track 3 in 2016, the prospective
beneficiary assignment list would be available immediately at the
beginning of the performance year and the historical benchmark report
would be available following the 3-month claims run out, sometime after
the first quarter of 2016.
Comment: Commenters supported CMS' proposal to use the calendar
year to calculate benchmark and performance year expenditures for
beneficiaries assigned to ACOs under Track 3, and explained advantages
of this approach: (1) Aligns with the actuarial analyses that calculate
the risk scores and the data inputs based on national FFS expenditures
(for example, the national trend factors) and (2) allows CMS to
maintain consistent timing for the generation of the historical
benchmark reports across all 3 tracks.
Response: We appreciate commenters' support of the proposed
policies. We are finalizing as proposed the policy of using the same
general benchmarking methodology used under Tracks 1 and 2 for
determining benchmark and performance year expenditures under Track 3,
with certain modifications to account for the timing of beneficiary
assignment under the prospective assignment methodology, as follows:
In establishing the historical benchmark for Track 3 ACOs,
determining the beneficiaries that would have been prospectively
assigned to the ACO during each of the 3 most recent years prior to the
start of the agreement period by basing assignment on a 12-month
assignment window offset from the calendar year prior to the start of
each benchmark year.
Determining the Parts A and B fee-for-service expenditures
for prospectively assigned beneficiaries each calendar year, whether it
is a benchmark year or a performance year; using a 3-month claims run
out with a completion factor; excluding IME and DSH payments, and
considering individually beneficiary-identifiable payments made under a
demonstration, pilot or time limited program.
FINAL ACTION: We are finalizing our proposal for calculating the
historical benchmarks for Track 3 ACOs in accordance with Sec.
425.602, by determining benchmark year expenditures for Track 3 ACOs
using the calendar year expenditures for prospectively assigned
beneficiaries, allowing for a 3-month claims run out, excluding IME and
DSH payments and considering individually beneficiary-identifiable
payments made under a demonstration, pilot or time limited program. We
are also finalizing our proposal to add a new regulation at Sec.
425.610 to address the calculation of shared savings and losses under
Track 3, including use of a 3-month claims run out with a completion
factor to calculate an ACO's per capita expenditures for each
performance year, excluding IME and DSH payments and considering
individually beneficiary-identifiable payments made under a
demonstration, pilot or time limited program.
d. Risk Adjusting the Updated Benchmark for Track 3 ACOs
Currently, under Track 1 and Track 2, the risk adjustment
methodology differentiates between newly and continuously assigned
beneficiaries, as defined under Sec. 425.20. A newly assigned
beneficiary is a beneficiary assigned in the current performance year
that was neither assigned to nor received a primary care service from
any of the ACO participants during the most recent prior calendar year.
A continuously assigned beneficiary is a beneficiary assigned to the
ACO in the current performance year that was either assigned to or
received a primary care service from any of the ACO participants during
the most recent prior calendar year. As specified under Sec. Sec.
425.604(a), and 425.606(a), we use updated CMS-HCC prospective risk
scores to account for changes in severity and case mix for newly-
assigned beneficiaries. We use demographic factors to adjust for these
changes in severity and case mix for continuously assigned
beneficiaries. However, if the CMS-HCC prospective risk scores for the
continuously assigned population show a decline, we use the lower risk
score to adjust for changes in severity and case mix for this
population.
In the December 2014 proposed rule we explained that, as expressed
in the November 2011 final rule (76 FR 67918), this approach to risk
adjustment strikes a fair balance between accounting for changes in the
health status of an ACO's population while not encouraging changes in
coding practices for care provided to beneficiaries who remain
continuously assigned to the ACO or avoidance of high risk
beneficiaries. We stated that we believe that the existing risk
adjustment methodology has been effective in achieving this balance
under Tracks 1 and 2, which use a retrospective assignment methodology
for purposes of financial reconciliation, and that it would be
appropriate to apply a similar approach to risk adjusting the updated
benchmark for Track 3 ACOs, even though we proposed a prospective
beneficiary assignment methodology. As in the existing tracks, it is
important to ensure that ACOs participating under Track 3 are not
encouraged to modify their coding practices in order to increase the
likelihood of earning shared savings; rather, shared savings should
result from actual reductions in Medicare expenditures for assigned
beneficiaries.
Therefore, we proposed to apply the same general risk adjustment
methodology in Track 3, but to make certain refinements to our
definitions of newly and continuously assigned beneficiaries at Sec.
425.20 to be consistent with our proposed prospective assignment
approach for Track 3. Specifically, we proposed to replace the
reference to ``most recent prior calendar year'' with a reference to
``the assignment window for the most recent prior benchmark or
performance year.'' Thus, for Track 3 the reference period for
determining whether a beneficiary is newly or continuously assigned
will be most recent prior prospective assignment window (the 12 months
off set from the calendar year) before the assignment window for the
current performance year. The reference period
[[Page 32778]]
for determining whether under Track 1 or 2 a beneficiary is newly or
continuously assigned will continue to be the most recent prior
assignment window (the most recent calendar year). Our proposed risk
adjustment methodology for Track 3 was reflected in the proposed new
regulation at Sec. 425.610(a).
Comment: Commenters expressed their support for this proposal.
However, commenters expressed concerns generally about the program's
risk adjustment methodology.
Response: We appreciate commenters' support for the proposal to use
the risk adjustment methodology established under Tracks 1 and 2 for
updating the historical benchmark for Track 3 ACOs with refinements to
the definitions of newly and continuously assigned beneficiaries to be
consistent with the prospective assignment approach proposed for Track
3. In section II.F.5 of this final rule, we discuss in greater detail
our response to concerns expressed by commenters about the program's
existing risk adjustment methodology.
FINAL ACTION: We are finalizing our proposed risk adjustment
methodology for updating the historical benchmark for Track 3 ACOs
under Sec. 425.610(a). We are also finalizing our proposal to modify
the definitions of newly and continuously assigned beneficiaries at
Sec. 425.20 to ensure they are consistent with prospective assignment
under Track 3 and remain relevant to preliminary prospective assignment
with retrospective reconciliation under Tracks 1 and 2.
e. Final Sharing/Loss Rate and Performance Payment/Loss Recoupment
Limit Under Track 3
Currently, an ACO that meets all the requirements for receiving
shared savings payments under the one-sided (Track 1) model can qualify
to receive a shared savings payment of up to 50 percent of all savings
under its updated benchmark, not to exceed 10 percent of its updated
benchmark, as determined on the basis of its quality performance.
Likewise, a Track 2 ACO can potentially receive a shared savings
payment of up to 60 percent of all savings under its updated benchmark,
not to exceed 15 percent of its updated benchmark. The higher sharing
rate and performance payment limit under Track 2 were established as
incentives for ACOs to accept greater financial risk for their assigned
beneficiaries in exchange for potentially higher financial rewards.
Additionally, a Track 2 ACO is accountable for between 40 to 60 percent
of all losses above its updated benchmark, depending on the ACO's
quality performance. The amount of shared losses for which an ACO is
liable, however, may not exceed 5 percent of its updated benchmark in
the first performance year, 7.5 percent in the second performance year,
and 10 percent in the third performance year and any subsequent
performance year (Sec. 425.606(g)). In the November 2011 final rule
(76 FR 67937), we stated that we believe these progressively higher
caps on losses ``achieve an appropriate balance between providing ACOs
with security about the limit of their accountability for losses while
encouraging ACOs to take increasing responsibility for their costs and
protecting the Medicare Trust Funds.'' In the December 2014 proposed
rule, we noted that under one of the payment arrangements available
under the Pioneer ACO Model, a Pioneer ACO can qualify to receive up to
75 percent of shared savings, not to exceed 15 percent of its
benchmark. Under this payment arrangement, Pioneer ACOs may also be
responsible for shared losses of up to 15 percent of their benchmark.
In the December 2014 proposed rule, we considered options for
increasing ACO participation in a performance-based risk track by
improving the attractiveness of the final sharing rate and performance
payment limit in a risk model. We explained that it is important to
reward ACOs with a greater level of savings for taking on greater
levels of risk. Further, we noted that it is important to draw a
distinction between the sharing rates available under Track 2 and the
proposed Track 3.
We discussed several options for increasing potential shared
savings while also increasing risk for Track 3 ACOs as follows:
Retaining the symmetry between the shared savings and
shared losses methodologies under Track 3, such that an ACO with very
high quality performance would not be allowed to lower its share of
losses below 25 percent of losses, the equivalent of 1 minus the
maximum sharing rate of 75 percent, while being eligible for a sharing
rate of up to 75 percent.
Holding Track 3 ACOs responsible for the maximum
percentage of losses, that is, 75 percent, while allowing quality
performance to protect them only to the same extent it protects Track 2
ACOs, such that ACOs with very high quality scores would limit their
percentage of losses to 40 percent.
Applying the same minimum and maximum shared loss rates
used under Track 2: That is, the range of 40 percent to 60 percent,
depending on quality performance, but the maximum shared savings rate
would be increased to 75 percent in order to encourage participation in
a model with increased risk.
After considering these options, we proposed, and sought comment
on, the following policies under Track 3 (specified under Sec.
425.610):
Shared savings rate of up to 75 percent in conjunction
with accepting risk for up to 75 percent of all losses, depending on
quality performance similar to Track 2 ACOs. Track 3 ACOs with high
quality performance would not be permitted to reduce the percentage of
shared losses below 40 percent.
Performance payment limit not to exceed 20 percent of the
Track 3 ACO's updated benchmark, and a loss recoupment limit of 15
percent of the Track 3 ACO's updated benchmark. We also sought comment
on whether a shared loss rate of 40 percent was high enough to protect
the Trust Funds or whether it should be increased, for example, to 50
percent or 60 percent. We also sought comment on whether our proposal
to establish a range of 40 percent to 75 percent for shared losses
should, in turn, impact the amount of shared savings available to Track
3 ACOs. For example, should we permit Track 3 ACOs to earn a parallel
range of 40 percent to 75 percent of shared savings. In other words,
once the ACO has met criteria for sharing in savings, the minimum
guaranteed amount of shared savings would be 40 percent with a maximum
of 75 percent.
We requested comment on the appropriate minimum percentage of
shared losses under Track 3. We also sought comment on the appropriate
percentage for the performance payment limit and loss recoupment limit
and whether there are reasons to set these at 15 percent and 10 percent
of the updated benchmark respectively, rather than our proposal of 20
percent and 15 percent respectively.
Finally, we proposed to make certain technical, conforming changes
to Sec. 425.606, which governs the calculation of shared savings and
losses under Track 2, to reflect our proposal to incorporate a second
two-sided risk model into the Shared Savings Program. We sought
comments on these proposed changes and on any other technical changes
to our regulations that may be necessary in order to reflect the
proposal to add a new Track 3.
Comment: Several commenters expressed support generally for the
proposal to ``widen the performance payment and loss sharing limits''
under Track 3 as compared to Track 2, specifically the proposal to
offer Track
[[Page 32779]]
3 ACOs the potential to realize more savings, but also more losses
compared to Track 2. Some commenters agreed with the mix of risk and
reward offered to Track 3 ACOs under the proposed policies, while other
commenters expressed support for some aspects of the proposed policies
(typically favoring higher reward and lower risk), while others
suggested a number of alternatives.
Nearly all commenters were supportive of increasing the sharing
rate and performance payment limit under Track 3 and establishing a
maximum loss rate of 75 percent and a minimum loss rate of 40 percent,
stating this would differentiate Track 3 from Track 2 for ACOs willing
to take on more risk for greater reward. Some commenters recommended
increasing the sharing rate, for example, to 85 percent, and some
commenters suggested lowering the maximum and minimum loss rates (for
example, to max 40 percent and min 10 percent, respectively). A
commenter requested clarification and the opportunity to review and
comment on the quality performance required to reduce the shared loss
requirement from 75 percent to 40 percent.
Several commenters favored alternatives to the proposed policies
that would reduce the total losses Track 3 ACOs would be liable for as
follows:
Track 3 loss sharing should match Track 2. A commenter
generally supported holding Track 3 ACOs to the same level of downside
risk as Track 2 (rather than less) even with high quality performance.
Lower the loss sharing rate maximum, for example to 40
percent. Commenters explained that paying 40 percent of losses is a
sufficient deterrent to incentivize providers to avoid losses if at all
possible. Setting the percentage higher could deter participation in
two-sided risk models.
Lowering the loss sharing rate minimum, for example to 10
percent. Commenters suggested that the loss sharing rate under Track 3
be reduced to a minimum of 10 percent based on quality performance to
encourage continued investment in quality improvements, which should
yield longer term cost savings.
Some commenters specifically supported the proposed performance
payment limit (20 percent) and loss cap (15 percent). A few commenters
suggested alternatives to the sharing and loss caps, suggesting a lower
loss cap (for example, 10 percent), or phasing-in loss caps for Track 1
ACOs moving to Track 3 with progressively higher caps year to year, or
using symmetrical caps on savings and losses consistent with those used
in commercial ACO financial models.
While it was not uncommon for commenters to acknowledge the current
low participation in the two-sided model, a commenter cautioned CMS
about the unattractiveness of the downside of Track 3 given the lack of
participation in Track 2 with its shared loss rate of up to 60 percent
and loss limit of 5 percent in year 1, 7.5 percent in year 2 and 10
percent in year 3. When compared with the level of risk required under
Track 2, the commenter expressed concerns that the proposal to hold
Track 3 ACOs accountable for a shared loss rate of up to 75 percent
with a loss-recoupment limit of 15 percent would be counterproductive.
Response: We appreciate commenters' support for the proposed
policies related to the final sharing and loss rates and performance
payment and loss sharing limitations for Track 3, and are finalizing
these features of Track 3 as proposed. We continue to believe that the
proposed policies strike the appropriate balance between risk and
reward under this new two-sided model Track. We believe that the
opportunity for greater shared savings as compared to Track 2 will
encourage ACOs to enter performance-based risk, as well as give an
opportunity for greater reward for ACOs more experienced with
population management who are achieving the program's goals. Further,
offering greater risk and reward under Track 3 as compared to Track 2
creates another step towards progressively higher risk, which we
believe is responsive to commenters' requests for additional program
options. We continue to believe it is important to hold ACOs
accountable for greater risk in exchange for the opportunity to earn a
greater reward, particularly considering that we believe ACOs who bear
financial risk hold the potential to induce more meaningful systematic
change. For these reasons, we disagree with the suggestions to lower
the maximum loss sharing rates and the loss limits for Track 3 to
match, or to be lower than, those currently offered under Track 2.
As commenters pointed out, participation in the two-sided model has
been low. We believe the features of the financial model under Track 3,
as well as opportunities for prospective assignment and additional
programmatic and regulatory flexibility for Track 3 ACOs will attract
ACOs to enter this model.
FINAL ACTION: We are finalizing the following modifications in
order to implement a new two-sided risk option, Track 3 under Sec.
425.610:
Applying a shared savings rate of up to 75 percent in
conjunction with accepting risk for up to 75 percent of all losses,
depending on quality performance similar to Track 2 ACOs. Track 3 ACOs
with high quality performance would not be permitted to reduce the
percentage of shared losses below 40 percent.
Applying a performance payment limit such that shared
savings do not exceed 20 percent of the Track 3 ACO's updated
benchmark, and a loss recoupment limit of 15 percent of the Track 3
ACO's updated benchmark.
We did not receive any comments on the technical, conforming
changes to Sec. 425.606 to reflect our proposal to incorporate a
second two-sided risk model into the Shared Savings Program, and we are
finalizing these changes as proposed.
f. Minimum Savings Rate and Minimum Loss Rate in Track 3
We proposed to apply the same fixed MSR and MLR of 2 percent under
Track 3, as was originally established for Track 2 under the November
2011 final rule. This proposal was reflected in paragraph (b) of the
proposed new regulation at Sec. 425.610. As described in the December
2014 proposed rule, we also considered other options for establishing
the MSR and MLR for Track 3 ACOs, including an option that would remove
the MSR and MLR entirely. Under this option, ACOs would be subject to
normal variation around their benchmark so that they would be held
responsible for all losses when performance year expenditures are above
the benchmark in addition to sharing in any savings if performance year
expenditures fall below the benchmark. Another option could be to set
both the MSR and MLR at 1 percent instead of 2 percent. This would
serve to increase both risk of sharing losses and savings, but not as
much as doing away with the MSR and MLR entirely. We specifically
sought comment on whether it would be desirable to remove the MSR and
MLR entirely under Track 3 as well as alternative levels at which to
set the MSR and MLR for ACOs participating under Track 3. We noted that
we would consider comments received regarding these alternatives in
determining the final MSR and MLR that would apply under Track 3.
Comment: Several commenters expressed support for our proposals to
apply a fixed 2 percent MSR/MLR to Track 3 ACOs, favoring an
alternative that would differentiate Track 3 from Track 2 (where we
proposed to revise the MSR/MLR to vary based upon the size of the ACO's
population) and
[[Page 32780]]
provide a greater opportunity to share savings for Track 3 ACOs. Some
commenters offered alternatives such as permitting ACOs to choose a
MSR/MLR that varies by number of assigned beneficiaries, choose their
own MSR/MLR, use a flat 1 percent MSR/MLR, or eliminate it altogether.
We consider the comments received in response to the proposed
modification of the MSR/MLR for Track 2 to be relevant to our proposal
and the options we sought comment on for setting the MSR/MLR for Track
3. (See related discussion in section F.2.c of this final rule.)
Response: As we previously explained in our response to the
comments on our proposed revisions to the MSR/MLR for Track 2, we are
persuaded by commenters' statements that ACOs are best positioned to
determine the level of risk they are prepared to accept. We are
finalizing the same MSR/MLR methodology for ACOs in both Track 2 and 3.
Under this methodology, ACOs may select a symmetrical MSR/MLR to apply
throughout the course of their agreement period from a set of options.
We believe that applying this same flexibility in symmetrical MSR/MLR
selection across Tracks 2 and 3 is appropriate, and would allow ACOs to
have the opportunity to select the risk track to best suit their
preferences and their readiness to accept performance-based risk. We
believe commenters supportive of the proposed policy would find this
policy acceptable, as Track 3 ACOs would have the opportunity to choose
a flat 2 percent MSR/MLR (as was proposed). Furthermore, we believe
this approach is responsive to commenters' requests for greater
flexibility on the thresholds ACOs must meet to be eligible to share in
savings or be accountable for sharing in losses under Track 3.
Under this policy, Track 3 ACOs would have the opportunity to
select a symmetrical MSR/MLR prior to the start of their agreement
period, as part their initial program application or agreement renewal
application. No modifications to this selection would be permitted
during the course of this agreement period.
FINAL ACTION: We are finalizing a MSR/MLR methodology for Track 3
under Sec. 425.610(b) that will allow ACOs to choose among several
options for establishing their symmetrical MSR/MLR: (1) 0 percent MSR/
MLR; (2) symmetrical MSR/MLR in a 0.5 percent increment between 0.5-2.0
percent; and (3) symmetrical MSR/MLR that varies based on the ACO's
number of assigned beneficiaries according to the methodology
established under the one-sided model. Under the third option, the MSR
for an ACO under Track 3 would be the same as the MSR that would apply
in the one-sided model under Sec. 425.604(b) and is based on the
number of beneficiaries assigned to the ACO. The MLR under Track 3 must
be equal to the negative MSR. We are also finalizing a requirement that
ACOs must select their MSR/MLR prior to the start of each agreement
period in which they participate under Track 3 and this selection may
not be changed during the course of the agreement period.
Additionally, we are making conforming changes to Sec. 425.100 to
account for the addition of Track 3. Section 425.100(c) currently
refers to the application of the minimum loss rate to ACOs that operate
under the two-sided model. In the December 2014 proposed rule, we
proposed to make a conforming change to Sec. 425.100(c) to add
references to the two-sided models under Tracks 2 and 3. In this
conforming change, we inadvertently included a reference to the one-
sided model (Sec. 425.604). Accordingly, in this final rule, we are
modifying the conforming change to eliminate the reference to the one-
sided model because ACOs under this model are not accountable for
shared losses.
g. Monitoring for Gaming and Avoidance of At-Risk Beneficiaries
In the December 2014 proposed rule we explained that while we have
concerns that prospective assignment may inadvertently increase
incentives for gaming and avoidance of at-risk beneficiaries, we have
taken steps to minimize these incentives by retaining other Shared
Savings Program policies and procedures such as risk-adjusting
expenditures and monitoring ACOs to ensure they are not engaging in
gaming or avoidance of at-risk beneficiaries. We explained further that
our proposal to exclude only those beneficiaries that no longer meet
the eligibility criteria for assignment to an ACO should reduce the
probability that attempts by the ACO to ``cherry pick'' or avoid at-
risk beneficiaries during the performance year would succeed.
Therefore, the concerns associated with a prospective assignment
methodology would be balanced by the potential that establishing a new
Track 3 has to encourage ACOs to accept greater responsibility and
financial risk for the care provided to their patients in return for
the possibility of achieving greater rewards. We sought comment on ways
to mitigate concerns regarding gaming and avoidance of at-risk
beneficiaries under a prospective assignment methodology, whether
implementing a prospective approach to assignment would dilute the
program goals of delivery system redesign, and whether there are
additional programmatic considerations that should be taken into
account as a result of our proposal to apply a prospective assignment
methodology in Track 3.
Comment: Several commenters expressed general concerns about the
effect of ACOs undertaking increased financial risk and prospective
assignment on beneficiaries' freedom of choice of providers and, more
generally, on access to care. In particular, commenters expressed
concerns that ACOs that transition to risk-based models have incentives
to curtail access to care provided in certain settings or by certain
providers, specifically post-acute and rehabilitation care and care by
specialty and sub-specialty providers. Some commenters explained that
performance-based risk could increase the likelihood for care stinting
and beneficiary steering. A commenter explained that prospective
assignment may tempt ACOs to treat their assigned beneficiary
populations as if they are enrolled managed care populations and apply
more aggressive care management strategies that limit patient choice. A
commenter generally suggested that ACOs have already implemented more
aggressive and somewhat questionable practices that require patient
referrals to remain within ACOs.
Several commenters explained their concerns were heightened in
certain circumstances, such as situations in which ACOs do not include
a broad range of specialists, and, as a result, patients may not have
access to appropriate specialty care for their clinical needs. Concerns
were also raised regarding the program's existing quality measurement
and risk adjustment methodology. Several commenters indicated that the
program's existing quality measures are not sufficient to assure
appropriate levels of care even under existing levels of risk. Another
commenter specified that the Clinician and Group CAHPS for ACOs survey
used to assess ACO quality performance is not sufficient to demonstrate
whether beneficiaries are being referred for specialty care at the most
clinically appropriate point in their disease progression. A commenter
suggested that avoidance behavior around high-risk beneficiaries could
be eliminated by including robust risk adjustment that incorporates all
of beneficiaries' health related characteristics (clinical
complexities), as well as relevant socioeconomic and socio-demographic
factors.
[[Page 32781]]
Some commenters provided the following suggestions on how to
protect against care stinting, beneficiary steering and avoidance of
at-risk beneficiaries by ACOs under prospective assignment:
Examine the referral patterns of ACOs.
Establish benchmarks that will foster an appropriate level
of access to and care coordination with specialty medicine providers,
particularly for beneficiaries with chronic health conditions.
Require ACOs to include in their applications a summary of
specialists included in their networks and the methodology used to
determine that the number of specialists is sufficient to provide
access to the assigned beneficiary population.
Require ACOs to include specialists on committees
responsible for developing and implementing care pathways for the ACO's
assigned Medicare population.
Develop formalized guidance for ACOs outlining the types
of behaviors that are and are not allowed with regard to a
prospectively assigned patient population.
Closely monitor whether ACOs are limiting beneficiary
freedom of choice in light of prospective assignment or discouraging
high-cost or at-risk beneficiaries from seeking care at the ACO in
order to avoid assignment of these beneficiaries to the ACO.
Monitor for a combination of factors, such as quality
performance, ACO Participant List changes, and utilization trends.
Ensure beneficiaries understand their right to seek care
from providers of their choice.
Response: As we discussed in the December 2014 proposed rule, we
believe that ACOs will have strong incentives to provide their
prospectively assigned beneficiaries high-quality, low-cost care in
order to discourage them from seeking care outside the ACO and that
beneficiaries that are prospectively assigned to an ACO will continue
to be protected from concerns related to inappropriate limitations on
care under traditional FFS Medicare because of their ability to choose
their providers. Unlike managed care programs, there is no lock-in for
beneficiaries under the Shared Savings Program. Beneficiaries assigned
to Shared Savings Program ACOs retain their freedom to choose their
healthcare providers and suppliers. Therefore, we believe a prospective
assignment methodology under the Shared Savings Program presents
limited risks to FFS beneficiaries.
We appreciate the commenters' sharing their concerns and
recommendations on this issue. We agree that monitoring is necessary to
ensure providers do not stint on care or avoid at-risk beneficiaries,
and we currently monitor ACOs for these circumstances as specified
under Sec. 425.316(b). Our policies on monitoring and termination will
help to ensure that ACOs who underperform on the quality standards do
not continue in the program. Further, we continue to believe the
program's quality performance standard is rigorous and the quality
measures are diverse and appropriate, spanning ACO-reported measures,
claims-based and administrative measures and patient/caregiver
experience of care measures. We will monitor closely the implementation
of prospective assignment and the effect of performance-based risk on
ACOs, and if we identify concerns, we may revise our policies in these
areas in future rulemaking.
4. Modifications to Repayment Mechanism Requirements
a. Overview
In the November 2011 final rule (76 FR 67937), we discussed the
importance of a program requirement that ensures ACOs entering the two-
sided model will be capable of repaying Medicare for shared losses. The
final rule established a requirement that ACOs applying to participate
in the two-sided model must establish a repayment mechanism to assure
CMS that they can repay losses for which they may be liable (Sec.
425.204(f)). For an ACO's first performance year, the repayment
mechanism must be equal to at least 1 percent of its total per capita
Medicare Parts A and B FFS expenditures for its assigned beneficiaries,
as determined based on expenditures used to establish the ACO's
benchmark (Sec. 425.204(f)).
Further, to continue participation in the program, each Track 2 ACO
must annually demonstrate the adequacy of its repayment mechanism
before the start of each performance year in which it takes risk (Sec.
425.204(f)(3)). The repayment mechanism for each performance year must
be equal to at least 1 percent of the ACO's total per capita Medicare
Parts A and B FFS expenditures for its assigned beneficiaries, as
determined based on expenditures for the ACO's most recent performance
year.
An ACO may demonstrate its ability to repay losses, or other monies
determined to be owed upon first year reconciliation, by obtaining
reinsurance, placing funds in escrow, obtaining surety bonds,
establishing a line of credit (as evidenced by a letter of credit that
the Medicare program can draw upon), or establishing another
appropriate repayment mechanism that will ensure its ability to repay
the Medicare program (Sec. 425.204(f)(2)). Given our experience in
implementing the program, we proposed to revisit our requirements to
simplify them and to address stakeholder concerns regarding the
transition to risk, as discussed in the previous sections.
b. Amount and Duration of the Repayment Mechanism
In the proposed rule, we discussed that the practical impact of the
current rule is to require ACOs to create and maintain two separate
repayment mechanisms for 2 consecutive performance years, which
effectively doubles the amount of the repayment mechanism during the
overlapping time period between the start of a new performance year and
settlement of the previous performance year. We heard from stakeholders
that establishing multiple repayment mechanisms during the agreement
period can be very burdensome and ties up capital that could otherwise
be used to support ACO operations. Therefore, we considered whether it
would be possible to streamline the repayment mechanism requirements.
Specifically, we considered whether it would be feasible for an
organization to establish a single repayment mechanism to cover the
entire 3-year agreement period. Initially, we were concerned that
requiring an organization to establish a single repayment mechanism to
cover 3 performance years would involve excessive and overly burdensome
repayment amounts. However, our actuaries determined that this may not
be the case. Instead, we found that the repayment mechanism that is
established for the first performance year of an agreement period under
a two-sided risk model could be rolled over for subsequent performance
years. In other words, we could create a mechanism for ACOs to
demonstrate their ability to repay losses by establishing one repayment
mechanism for the entire 3-year agreement period.
Thus, we proposed to require an ACO to establish a repayment
mechanism once at the beginning of a 3-year agreement period. We
additionally proposed to require an ACO to demonstrate that it would be
able to repay shared losses incurred at any time within the agreement
period, that is, upon each performance- year reconciliation and for a
reasonable
[[Page 32782]]
period of time after the end of each agreement period (the ``tail
period''). Under our proposal, the tail period provides time for CMS to
calculate the amount of any shared losses the ACO may owe and to
collect this amount from the ACO. We proposed to establish the length
of the tail period in guidance.
We proposed that an ACO must demonstrate the adequacy of its
repayment mechanism and maintain the ability to repay 1 percent of the
ACO's total per capita Medicare Parts A and B FFS expenditures for its
assigned beneficiaries based on the expenditures used to establish the
benchmark for the applicable agreement period, as estimated by CMS at
the time of application or participation agreement renewal. If the ACO
uses any portion of the repayment mechanism to repay any shared losses
owed to CMS, the ACO must promptly replenish the amount of funds
available through the repayment mechanism within 60 days. This would
ensure continued availability of funds to cover any shared losses
generated in subsequent performance years. Given that we also proposed,
as discussed in section II.B. of this final rule, to adjust an ACO's
benchmark annually to account for changes in the ACO participant list,
it is possible that an ACO's benchmark could change such that the
repayment mechanism amount established at the beginning of the 3-year
agreement period no longer represents 1 percent of the ACO's benchmark
expenditures. Therefore, we noted in our proposal that we were
considering whether to require the ACO to adjust the repayment
mechanism to account for this change, or whether we should establish a
threshold that triggers a requirement for the ACO to add to its
repayment mechanism. We sought comment on this issue, including the
appropriate threshold that should trigger a requirement that the ACO
increase the amount guaranteed by the repayment mechanism.
We proposed to modify Sec. 425.204(f) to reflect these changes. We
noted that the reference to ``other monies determined to be owed'' in
the current provision relates to the interim payments that were
available in the first performance year only for ACOs that started
participating in the program in 2012. Because we no longer offer
interim payments to ACOs, we also proposed to remove from Sec.
425.204(f) the reference to ``other monies determined to be owed.''
Comment: We received several comments on our proposal to require an
ACO to establish a repayment mechanism once at the beginning of the
agreement period instead of annually. Most commenters expressed support
for this change because they believe it would reduce burden on the ACO.
Few commenters opposed the change, but the ones that did stated that it
may be more difficult or more expensive for an ACO to obtain a
repayment mechanism that covers 3-performance years as opposed to one;
for example, a commenter explained that the duration and size of a
surety bond may affect whether an ACO can obtain a surety bond. As the
duration of the bonded obligation becomes longer, the surety must
predict the strength of the principal's operation for periods of time
further into the future, and this in turn increases the surety's risk,
resulting in tightened underwriting standards.
A commenter pointed out that there is nothing currently in the
program rules to prohibit an ACO from replacing one repayment mechanism
with another and suggested that CMS establish a policy to give ACOs
flexibility to switch from one type of approved repayment mechanism to
another. This same commenter believes such flexibility would enable the
ACO to pursue its best option at any given time without jeopardizing
CMS' possession of a sound repayment mechanism.
Response: We appreciate these comments and agree with commenters
that requiring an ACO to establish a repayment mechanism once at the
beginning of an agreement period instead of annually could relieve
burden from ACOs that choose to participate under a two-sided model.
Thus, we anticipate that the proposed policy would be less burdensome
than the current policy. Specifically, under the existing rule, a two-
sided model ACO must concurrently maintain multiple repayment mechanism
arrangements. For instance, an ACO must retain the repayment mechanism
established for the preceding performance year while CMS determines the
ACO's shared savings or losses for that prior performance year while
also maintaining a separate repayment mechanism for the current
performance year. Based on our experience with repayment mechanisms, we
believe ACOs will be able to work with financial institutions to
establish the required arrangement to cover the full agreement period
and tail period. However, we will monitor the use of repayment
mechanisms and may revisit the issue in future rulemaking if we
determine that the ability of an ACO to establish an adequate repayment
mechanism for the entire agreement period and an appropriate tail
period is constrained by the availability or cost of repayment
mechanism options. Furthermore, we agree that nothing in our program
rules currently prohibits an ACO from changing from one acceptable
repayment mechanism to another during the agreement period. Indeed, we
worked with an ACO who transitioned from a letter of credit to an
escrow account, and we anticipate changes where an ACO replaces a
repayment mechanism with another acceptable repayment mechanism are
likely to occur in the future. However, we note that these changes can
be costly and require significant coordination between CMS, the ACO,
and financial institutions to ensure the ACO remains in compliance with
the program's repayment mechanism requirements at all times during the
transition. Therefore, we encourage ACOs to establish and maintain one
repayment mechanism for the entire 3-year agreement period and tail
period.
Comment: A few commenters provided feedback regarding the proposal
to require ACOs to maintain a repayment mechanism sufficient to repay 1
percent of the ACO's total per capita Medicare Parts A and B FFS
expenditures for its assigned beneficiaries based on the expenditures
used to establish the benchmark for the applicable agreement period, as
estimated by CMS at the time of application or participation agreement
renewal. These few commenters found the proposed amount acceptable. A
few commenters responded to CMS' request for comment on whether a
threshold should be established that triggers a requirement for the ACO
to add to its repayment mechanism. Several commenters stated that such
a trigger should apply, but only when the amount of the required
payment mechanism would decline. In other words, the repayment
mechanism should be revised only if the ACO's benchmark declines. A
commenter suggested that CMS conduct analyses on the magnitude of year-
to-year changes in benchmarks prior to setting a threshold amount or
trigger. This commenter explained it did not expect it to be common for
an ACO to make changes to its ACO participant list significant enough
so that the 1 percent initially estimated is no longer sufficient.
Several commenters recommended specific triggers for revisions to the
amount of the repayment mechanism such as changes in the ACO's
benchmark of 10 or 15 percent or more, or changes to the ACO
participant list.
Response: We appreciate these comments and decline at this time to
establish a trigger or threshold that would require an ACO to add to
(or remove from) its repayment mechanism
[[Page 32783]]
in the event the ACO's benchmark changes significantly during the
course of the agreement period. We agree with commenters that CMS
should conduct the suggested additional analyses prior to implementing
such a policy. We may revisit this issue in future rulemaking after we
gain more experience with ACOs under a two-sided model.
Comment: Several commenters provided comment on the proposal that
the ACO must promptly replenish the amount of funds available through
the repayment mechanism within 60 days. Most commenters opposed the
proposal stating that 60 days may not be enough to raise the necessary
replenishment funds, particularly in ACOs that had accrued substantial
losses. Instead, these commenters suggested permitting the ACO 90 days
to replenish the repayment mechanism. A commenter found 60 days a
reasonable period of time for replenishment. Other commenters expressed
concern that ACOs that have used their repayment mechanisms may not be
in a financial position to replenish the amount at all. These
commenters suggested that requiring replenishment was unusual,
particularly in the case of surety bonds, and recommended that CMS
carefully consider whether such a policy would be necessary.
Response: We appreciate the comments regarding replenishment of
repayment mechanism funds when they are used during the agreement
period. We believe it is important for an ACO that uses a repayment
mechanism for shared losses to replenish the arrangement so that the
ACO continues to demonstrate its ability to repay any future losses
during the agreement period. We disagree that requiring replenishment
is particularly unusual, but we agree that some ACOs may require
additional time to replenish funds. Specifically, we believe that ACOs
who have used their existing repayment mechanism arrangement to repay
shared losses might need additional time to gather the resources needed
to replenish their repayment mechanism arrangement. Therefore, we are
revising our proposal. Instead of requiring ACOs to replenish funds
within 60 days, we will allow up to 90 days for replenishment. However,
we will monitor the replenishment process and may revisit the issue in
future rulemaking if we believe this policy inhibits ACO participation
in the Shared Savings Program or undermines ACOs' ability to repay
shared losses.
FINAL ACTION: We are finalizing our proposal to require an ACO that
enters a two-sided model to establish a repayment mechanism once at the
beginning of a 3-year agreement period. We recognize there are a few
ACOs under existing participation agreements in Track 2 that have
established repayment mechanisms for the 2014 and 2015 performance
years (the final 2 years of the ACO's' first' agreement period). We
note that the repayment mechanisms established by these ACOs are types
of repayment mechanisms that we are retaining under this final rule.
Accordingly, we expect these ACOs to maintain their existing repayment
mechanisms in accordance with the terms set forth in the repayment
mechanisms. Should these ACOs choose to renew their participation
agreements for a second agreement period beginning January 1, 2016,
they will only need to establish a repayment mechanism once at the
beginning of their new 3-year agreement period. For purposes of this
final rule, we will treat the existing repayment mechanisms established
by these ACOs for the 2014 and 2015 performance years as satisfying the
requirement that the ACO establish a repayment mechanism that is
sufficient to repay any shared losses it may incur in the current
agreement period and will apply the revisions to the requirements under
section Sec. 425.204(f) accordingly.
Under the new requirements we are finalizing in this rule, ACOs
must demonstrate that they would be able to repay shared losses
incurred at any time within the agreement period, and for a reasonable
period of time after the end of each agreement period (the ``tail
period''). The tail period shall be sufficient to permit CMS to
calculate the amount of any shared losses that may be owed by the ACO
and to collect this amount from the ACO. We will establish the length
of the tail period in guidance. Additionally, we are finalizing our
proposal that an ACO must demonstrate the adequacy of its repayment
mechanism and maintain the ability to repay 1 percent of the ACO's
total per capita Medicare Parts A and B FFS expenditures for its
assigned beneficiaries based on the expenditures used to establish the
benchmark for the applicable agreement period, as estimated by CMS at
the time of application or participation agreement renewal. We decline
at this time to adopt a policy to establish a trigger or threshold that
would require an ACO to increase the value of its repayment mechanism
in the event of changes to the ACO's benchmark during the agreement
period.
We are modifying our proposal regarding the timing of the
replenishment of the amount of funds available through the repayment
mechanism. Based on comments, we are finalizing the requirement that if
an ACO uses its repayment mechanism to repay any portion of shared
losses owed to CMS, the ACO must promptly replenish the amount of funds
required to be available through the repayment mechanism within 90
days.
Finally, we are finalizing our proposal to modify Sec. 425.204(f)
to reflect these changes, and to remove the reference to ``other monies
determined to be owed'' from Sec. 425.204(f).
c. Permissible Repayment Mechanisms
Under our current rules, ACOs may demonstrate their ability to
repay shared losses by obtaining reinsurance, placing funds in escrow,
obtaining surety bonds, establishing a line of credit (as evidenced by
a letter of credit that the Medicare program can draw upon), or
establishing another appropriate repayment mechanism that will ensure
their ability to repay the Medicare program. Based on our experience
with the program, we proposed to remove the option that permits ACOs to
demonstrate their ability to pay using reinsurance or an alternative
mechanism. First, in the proposed rule we explained that no Shared
Savings Program ACOs had obtained reinsurance to establish their
repayment mechanism. We noted that ACOs that explored this option had
told us that it is difficult to obtain reinsurance, in part, because of
insurers' lack of experience with the Shared Savings Program and the
ACO model, and because Shared Savings Program ACOs take on performance-
based risk rather than insurance risk. Additionally, the terms of
reinsurance policies could vary greatly and prove difficult for CMS to
effectively evaluate. Second, we explained that based on our experience
to date, a request to use an alternative repayment mechanism increases
administrative complexity for both ACOs and CMS during the application
process and is more likely to be rejected by CMS than one of the
specified repayment mechanisms.
Therefore, we proposed to revise Sec. 425.204(f)(2) to limit the
types of repayment mechanisms ACOs may use to demonstrate their ability
to repay shared losses to the following: Placing funds in escrow;
establishing a line of credit; or obtaining a surety bond. Under this
proposed revision, ACOs would retain the flexibility to choose a
repayment mechanism that best suits their organization. We stated that
we would be more readily able to evaluate the adequacy of these three
types of arrangements, as compared to reinsurance policies and other
alternative repayment mechanisms. For
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instance, escrow account agreements, letters of credit, and surety
bonds typically have standard terms that CMS can more readily assess as
compared to the documentation for alternative repayment mechanisms,
which tends to be highly variable.
In addition, we proposed to clarify that ACOs may use a combination
of the designated repayment mechanisms, if needed, such as placing
certain funds in escrow, obtaining a surety bond for a portion of
remaining funds, and establishing a line of credit for the remainder.
Thus, we proposed to revise our rule at Sec. 425.204(f)(2) to indicate
that an ACO may demonstrate its ability to repay shared losses owed by
placing funds in escrow, obtaining surety bonds, establishing a line of
credit, or by using a combination of these mechanisms. We sought
comment on our proposed modifications to the repayment mechanism
requirements and also welcomed comments on the availability and
adequacy of reinsurance as a repayment mechanism.
Comment: Commenters specific suggestions regarding repayment
mechanisms that were not addressed directly by our proposals as
follows:
ACOs should be required to meet the same rigorous
financial reserve and solvency requirements as state-regulated risk-
bearing entities such as organizations participating in Medicare
Advantage.
CMS should subsidize the ACO's cost for establishing a
repayment mechanism.
CMS should establish standards for selecting institutions
that issue letters of credit or hold funds in escrow, similar to the
requirements for sureties to be authorized by the Department of
Treasury.
CMS should establish standardized forms for ACOs to use,
for example, a standardized surety bond form.
Response: We appreciate these comments and will keep them in mind
when developing future proposed rule changes. We decline at this time
to adopt more stringent repayment mechanism standards because there are
very distinct differences between Shared Savings Program ACOs and
Medicare Advantage plans. Specifically, as noted in our 2011 final
rule, we believe that organizations participating in the Shared Savings
Program are taking on performance-based risk and not insurance risk,
the latter of which is retained by Medicare because ACO participants
continue to bill and receive FFS payments as they normally would.
Additionally, we decline at this time to further reduce the burden of
the repayment mechanism requirement on ACOs, as suggested by
commenters. We note that ACOs choosing to enter a two-sided model are
required to accept additional up-front risk in exchange for the greater
potential for reward. The cost of establishing a repayment mechanism is
one additional up-front risk for ACOs. As we explained in November 2011
final rule, we believe that ACOs entering the two-sided model would
likely be larger and more experienced ACOs or both, and thus have the
experience, expertise and resources to meet the repayment requirements
(76 FR 67940). Further, we believe the repayment mechanism requirement
is an important safeguard against ACOs entering the two-sided model
when they lack the capacity to bear performance risk. Adopting policies
whereby CMS would subsidize the ACO's repayment mechanism would
undermine the objectives of the repayment mechanism policy. We also
decline at this time to require all ACOs, and their respective
financial institutions, to use a specified format across all repayment
mechanism instruments. We issued ``Repayment Mechanism Arrangements
Guidance,'' available online http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/Repayment-Mechanism-Guidance.pdf, to explain the terms we would expect to see in various
repayment mechanism arrangements, but did not go so far as to require
use of a specified form. Given the newness of the program and our lack
of experience with these arrangements for ACOs, it was our desire not
to impede ACOs from working with financial institutions to establish
the most appropriate repayment mechanism for their circumstance.
Comment: Several commenters opposed our proposal to limit
alternative repayment mechanism options for ACOs and encouraged CMS to
retain flexibility for ACOs to choose the repayment mechanism that best
suits it. In particular, these commenters stated that they believe it
is too early to remove alternative repayment mechanisms and reinsurance
as permitted mechanisms for demonstrating the ability to repay shared
losses owed to CMS because having as many options for a repayment
mechanism as possible would align with CMS' desire to encourage
organizations to take on two-sided risk. Commenters explained that
reinsurance is a well-established and proven means of managing risk
that is frequently used by organizations that manage capitated risk in
commercial insurance contexts and that these policies are likely to
become more available and standardized as ACOs and insurers gain more
experience with shared savings models. A commenter went further and
encouraged CMS to actively promote reinsurance as the best funding
vehicle for successful ACOs, explaining that ACOs should create
`captive' insurance companies to holistically manage the emerging
clinical, financial, and quality risks of the whole ACO enterprise. A
commenter recommended that CMS retain an alternative repayment
mechanism that would allow ACOs' shared losses to be carried over to
subsequent years (for example, through deductions in FFS payments),
rather than demanding full payment all at once.
On the other hand, a few commenters expressed specific support for
the proposal to eliminate alternative repayment mechanisms and
reinsurance as options for repayment stating that their removal would
simplify program rules and options.
Response: As we indicated in our December 2014 proposed rule, based
on our experience with the program to date, no Shared Savings Program
ACOs have obtained reinsurance for the purpose of establishing their
repayment mechanism. ACOs that explored this option told us that it is
difficult to get reinsurance, in part, because of insurers' lack of
experience with the Shared Savings Program and Medicare ACOs and
because Shared Savings Program ACOs take on performance-based risk not
insurance risk. In the proposed rule, we also explained that the terms
of reinsurance policies for ACOs could vary greatly and prove difficult
for CMS to effectively evaluate. In addition, based on our experience
to date, an alternative repayment mechanism increases administrative
complexity for both ACOs and CMS during the application process and we
are more likely to reject it than one of the specified repayment
mechanisms. However, we agree with stakeholders that reinsurance may
become a viable option in the future. If it does, we intend to revisit
this issue and may propose to add reinsurance as an option for ACOs to
demonstrate their ability to repay shared losses owed to CMS. At this
time, we continue to believe that CMS would be more readily able to
evaluate the adequacy of the three remaining types of repayment
arrangements, as compared to reinsurance policies and other alternative
repayment mechanisms. In addition, ACOs may use a combination of the
designated repayment mechanisms, if needed, such as placing
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certain funds in escrow, obtaining a surety bond for a portion of
remaining funds, and establishing a line of credit for the remainder.
FINAL ACTION: We are finalizing the revisions to our policy on
repayment mechanisms. Specifically, we are finalizing the proposed
revisions to our rule at Sec. 425.204(f)(2) to indicate that an ACO
may demonstrate its ability to repay shared losses owed by placing
funds in escrow, obtaining surety bonds, establishing a line of credit,
or by using a combination of these mechanisms.
5. Methodology for Establishing, Updating, and Resetting the Benchmark
a. Overview
Section 1899(d)(1)(B)(ii) of the Act addresses how ACO benchmarks
are to be established and updated. This provision specifies that the
Secretary shall estimate a benchmark for each agreement period for each
ACO using the most recent available three years of per beneficiary
expenditures for parts A and B services for Medicare FFS beneficiaries
assigned to the ACO. Such benchmark shall be adjusted for beneficiary
characteristics and such other factors as the Secretary determines
appropriate and updated by the projected absolute amount of growth in
national per capita expenditures for parts A and B services under the
original Medicare fee-for-service program, as estimated by the
Secretary. Such benchmark shall be reset at the start of each agreement
period. Accordingly, through the initial rulemaking establishing the
Shared Savings Program, we adopted policies for establishing, updating
and resetting ACO benchmarks at Sec. 425.602. Under this methodology,
we establish ACO-specific benchmarks that account for national FFS
trends.
As the statute requires the use of historical expenditures to
establish an ACO's benchmark, the per capita costs for each benchmark
year must be trended forward to current year dollars and then a
weighted average is used to obtain the ACO's historical benchmark for
the first agreement period. The statute further requires that we update
the benchmark for each year of the agreement period based on the
projected absolute amount of growth in national per capita expenditures
for parts A and B services under the FFS program, as estimated by the
Secretary. In the April 2011 proposed rule (76 FR 19609 through 19611),
we considered a variety of options for establishing the trend factors
used in establishing the historical benchmark and for accounting for
FFS trends in updating the benchmark during the agreement period.
The statute outlines the scope of Medicare expenditures to be used
in calculating ACO benchmarks. Section 1899(d)(1)(B)(ii) of the Act
specifies that the benchmark is established `` . . . using the most
recent available 3 years of per-beneficiary expenditures for parts A
and B services for Medicare fee-for-service beneficiaries assigned to
the ACO.'' This provision of the Act further specifies: ``Such
benchmark shall be adjusted for beneficiary characteristics and such
other factors as the Secretary determines appropriate.''
In addition to the statutory benchmarking methodology established
in section 1899(d), section 1899(i)(3) of the Act grants the Secretary
the authority to use other payment models, including payment models
that would use alternative benchmarking methodologies, if the Secretary
determines that doing so would improve the quality and efficiency of
items and services furnished under this title and the alternative
methodology would result in program expenditures equal to or lower than
those that would result under the statutory payment model.
Under the methodology established by the November 2011 final rule
(Sec. 425.602) we calculate a benchmark for each ACO using a risk-
adjusted average of per capita Parts A and B expenditures for original
Medicare fee-for-service (FFS) beneficiaries who would have been
assigned to the ACO in each of the three calendar years prior to the
start of the agreement period. We trend forward each of the first 2
benchmark year's per capita risk adjusted expenditures to third
benchmark year (BY3) dollars based on the national average growth rate
in Parts A and B per capita FFS expenditures verified by the CMS Office
of the Actuary (OACT). The first benchmark year is weighted 10 percent,
the second benchmark year is weighted 30 percent, and the third
benchmark year is weighted 60 percent. This weighting creates a
benchmark that more accurately reflects the latest expenditures and
health status of the ACO's assigned beneficiary population. In creating
an updated benchmark we account for changes in beneficiary
characteristics and update the benchmark by the OACT-verified projected
absolute amount of growth in national per capita expenditures for Parts
A and B services under the original fee-for-service program. In
trending forward, accounting for changes in beneficiary
characteristics, and updating the benchmark, we make calculations for
populations of beneficiaries in each of the following Medicare
enrollment types: ESRD, disabled, aged/dual eligible and aged/non-dual
eligible. Further, to minimize variation from catastrophically large
claims, we truncate an assigned beneficiary's total annual Parts A and
B FFS per capita expenditures at a threshold of the 99th percentile of
national Medicare FFS expenditures. Under section 1899(d)(1)(B)(ii) of
the Act and Sec. 425.602(c) of the Shared Savings Program regulations
an ACO's benchmark must be reset at the start of each agreement period.
In the December 2014 proposed rule, we considered whether modifying
the methodology used for establishing, updating, and resetting ACO
benchmarks to account for factors relevant to ACOs that have
participated in the program for 3 or more years would help ensure that
the Shared Savings Program remains attractive to ACOs and continues to
encourage ACOs to improve their performance, particularly those that
have achieved shared savings. As discussed later in this section, we
considered a range of modifications to the benchmarking methodology in
order to expand the methodology for resetting benchmarks to account for
factors relevant to continued participation by ACOs in subsequent
agreement periods and to increase incentives to achieve savings in a
current agreement period, specifically: (1) Equally weighting the three
benchmark years; (2) accounting for shared savings payments in
benchmarks; (3) using regional FFS expenditures (as opposed to national
FFS expenditures) to trend and update the benchmarks; (4) implementing
an alternative methodology for resetting ACO benchmarks that would hold
an ACO's historical costs, as determined for purposes of establishing
the ACO's initial historical benchmark for its first agreement period,
constant relative to costs in its region for all of the ACO's
subsequent agreement periods; and (5) implementing an alternative
methodology for resetting ACO benchmarks that would transition ACOs to
benchmarks based only on regional FFS costs, as opposed to the ACO's
own historical costs, over the course of multiple agreement periods.
Further, we considered whether to apply these changes broadly to all
ACOs or to apply these changes only when resetting benchmarks for ACOs
entering their second or subsequent agreement periods. We also
considered whether to apply these changes to a subset of ACOs, such as
ACOs participating
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under a two-sided model (Tracks 2 and 3) or Track 3 ACOs only.
We considered and sought comment on using combinations of these
approaches, as opposed to any one approach. Specifically, we considered
revising the methodology for resetting ACO benchmarks by equally
weighting the three benchmark years or accounting for shared savings
payments received by an ACO in its prior agreement period or both, and
using regional FFS expenditures instead of national FFS expenditures in
establishing and updating the benchmark.
In considering these potential options for modifying the
benchmarking methodology, we noted it is necessary to balance the
desire to structure the program to provide appropriate financial
incentives to ACOs with the need to protect the Medicare Trust Funds.
We also noted the necessity of meeting the requirements for invoking
our authority under section 1899(i) of the Act, where relevant.
Comment: Generally, commenters appreciated CMS' interest in
modifying the program's current benchmarking methodology, particularly
to improve the sustainability of the program. Commenters generally
supported changes to the benchmarking methodology that would encourage
continued participation and improvement by ACOs, thereby improving the
program's sustainability. Some commenters suggested the need to improve
the predictability, accuracy and stability of benchmarks over time. A
commenter indicated that the revisions to the benchmarking methodology
discussed in the proposed rule do not go far enough to address the
program's inherent challenges to ACO success under the program, for
instance pointing to the MSR.
Commenters pointed out the following perceived disadvantages of the
program's current benchmarking methodology:
Calculating the trend for the three years of the
historical benchmark and the annual benchmark update using a national
growth rate, or more generally not accounting for regional cost trends
in benchmarks. Some commenters perceived disadvantages to ACOs in many
regions because significant variation in year to year cost trends by
market are not accounted for by using a single national dollar amount
to update the benchmark.
Existing rebasing methodology, based on ACO-specific
historical spending, penalizes certain ACOs for past good performance
and forces ACOs to chase diminishing returns in subsequent contract
periods when the benchmark is reset. Some described this dynamic as
requiring the ACO to continually beat its own best performance, or as a
``downward spiral,'' and by others as ``chasing one's tail.'' Some
identified this issue as being of particular concern to existing low-
cost ACOs.
Existing risk adjustment methodology doesn't completely
account for the health status of assigned beneficiaries.