ACO Proposed Rule Change: A Choice Between Two Tracks

By Holly Moore, Jason Altier and Sarah Moore

6 November 2018

Practical Analytic Approaches to Healthcare Challenges

The Centers for Medicare and Medicaid Services (CMS) proposed a new rule in August of 2018 to change the structure of the Medicare Shared Savings Program (MSSP). This will affect current and future ACOs whether they participate in a track with one-sided or two-sided risk. Currently, three MSSP tracks incorporate performance-based, or two-sided, risk: Track 1+, Track 2, and Track 3. Performance-based risk means these ACOs share in a larger portion of any savings below the benchmark, but they also share in losses if their expenditures surpass the benchmark. In the proposed new rule, ACOs will choose between two tracks: BASIC and ENHANCED. ACOs that have participated in performance-based risk tracks in the past are limited to participation in the ENHANCED track or, if they are determined to be low-revenue, ACOs may enter the highest level of risk/reward in the BASIC track.

In order for an ACO that has previously participated in performance-based risk to enter the BASIC track, it must be considered low revenue. An ACO is determined to be high or low revenue based on the percentage of the ACO’s assigned beneficiaries’ total fee-for-service expenditures that are paid to physicians participating in the ACO. If the ACO participants’ total FFS revenue (including revenues for beneficiaries not assigned to the ACO) is more than 25% of the ACO’s assigned beneficiaries’ total FFS expenditures, the ACO is classified as high revenue, otherwise it is low revenue. In general, high-revenue ACOs will be those that include facilities, resulting in a higher degree of control over total expenditures for its assigned beneficiaries. If an ACO is determined to be low revenue, it can choose to participate in the highest risk/reward level of the BASIC track: Level E. Level E of the BASIC track contains the same level of risk and reward as the current Track 1+. The other option available to ACOs that previously participated in performance-based risk is the ENHANCED track. High-revenue ACOs must enter this track, and low-revenue ACOs will be given the option to enter this track. ACOs that choose to participate in the ENHANCED track will receive the same level of risk and rewards as current Track 3 ACOs.

According to CMS, ACOs in performance-based risk models are improving quality of care and perform better over time than ACOs in one-sided risk models. CMS believes the new tracks will encourage ACOs to participate in performance-based risk models, while continuing to reward ACOs that take on the two-sided risk with new tools and a greater reward for beating the benchmark. For more detailed information on this proposed rule and its potential impact please click here.

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