By proposing changes to performance benchmarking, Medicare officials are trying to improve the odds that cost-effective healthcare providers will earn spending-benchmark-beating payments in the Medicare Shared Savings Program.
Some big changes proposed for the Medicare Shared Savings Program are drawing a measure of praise from healthcare providers and analysts.
The biggest change, which would go into effect in January 2017, would craft financial performance benchmarking to fit local markets, says Ivy Baer, JD, MPH, senior director and regulatory counsel at the Association of American Medical Colleges, a Washington, DC-based nonprofit that represents nearly 400 teaching hospitals and health systems.
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Bill Bithoney MD |
Going from a national benchmark to a regional benchmark would be a "huge leap forward" for health systems, hospitals and physician practices participating in MSSP, says William "Bill" Bithoney, MD, FAAP, chief physician executive and managing director at BDO's Center for Healthcare Excellence & Innovation. "It's incredibly great."
Basing MSSP's financial performance benchmarks on national trends has been a sore point for hospitals and physicians in accountable care organizations since federal officials launched the shared savings program in 2012.
"The national benchmark can be difficult for even the most efficient healthcare providers to earn shared-savings payments in some areas of the country and "is not useful to most ACOs," Bithoney says. "It's dispiriting in high-cost markets."
Officials at the Centers for Medicare & Medicaid Services are proposing changes to MSSP's performance benchmarking that are likely to be a net positive for many ACOs, says Sarah Baumann, JD, legal analyst at Riverwoods, IL-based consultancy Wolters Kluwer.
"The rule would use county-level data when resetting benchmarks after an initial three-year agreement period, since CMS believes that counties are more stable than other geographic units and better capture regional variation in Medicare expenditures," she says.
"Rather than rebasing the benchmark by adjusting it to account for savings generated under the prior agreement period, the agency would adjust it based on regional fee-for-service expenditures. CMS thinks that adjusting benchmarks based on regional spending rather than prior performance would allow ACOs that previously enjoyed shared savings to enjoy a similar or slightly greater share of savings, and would lower benchmarks for ACOs that previously suffered losses."
More Participation, Fewer Dropouts
The increased likelihood of earning shared-savings should increase the number of hospitals and physicians participating in MSSP, Bithoney says. "You will have increased ACO participation [and] fewer dropouts. Hospitals and clinically integrated health systems are going to be more likely to join."
As of January, the MSSP roster stood at 434 ACOs, compared to 404 MSSP ACOs enrolled in the program in January 2015.
The proposed benchmarking changes are designed to reward cost-effective ACOs and to financially prod high-cost ACOs, a CMS official told me last week.
"We anticipate use of regional FFS trends could encourage the development of and continued participation by ACOs with rates of [spending] growth below that of their region. Using regional trend factors would result in relatively higher [spending] benchmarks for ACOs that are low-growth in relation to their region compared to benchmarks for ACOs that are high-growth relative to their region. Therefore, these ACOs would benefit from having a relatively higher benchmark, which would increase their chances for shared savings."
"On the other hand," the CMS representative continued, "ACOs with historically higher rates of growth above the regional average would have a relatively lower benchmark and may be discouraged from participating if they are not confident of their ability to bring their costs in line with costs in their region."
More Risk
CMS is seeking to make several other significant changes, Wolters Kluwer's Baumann says. "CMS is also continuing to encourage ACOs to assume more risk by switching from Track 1 to Tracks 2 or 3. Track 1 is a one-sided model that allows ACOs to share in savings rather than losses. Track 2 is a two-sided model that allows for more savings, but also subjects ACOs to losses. Track 3 allows for greater savings, but higher risks."
The proposed rule would allow Track 1 ACOs wishing to enter Tracks 2 or 3 to extend Track 1 participation for a fourth year, deferring benchmark rebasing, before entering the new track," she says.
"The proposed rule would limit the authority of CMS to re-open determinations of shared savings or losses to no more than four years after the date of the notification to the ACO of the initial determination, while reserving the right to reopen a payment determination at any time in the case of fraud."
Fine-tuning MSSP is going to be a daunting task for federal officials, Baer says. "It's too early to know who will or won't be helped by this; though with regional benchmarking, ACOs may be better positioned to make that determination themselves."
Thousands of hospitals and physician practices are either just contemplating or just beginning investments of money and clinical-redesign effort into building ACOs. Under the current performance benchmarking rules, many of those providers are longshots to earn shared-savings payments in the early years of an MSSP contract, Bithoney says.
"It's a real challenge to develop a care continuum," he says, noting that it takes significant investment to achieve ACO success. Care coordination, including "warm handoffs" and providing home-care support for patients who lack family members or friends as caregivers are just two elements of a successful ACO.
By the end of 2018, CMS officials are vowing to make 50% of Medicare payments for healthcare services tied to value-based care and alternative payment models such as ACOs. Volume-based FFS payments currently account for about three quarters of Medicare payments, and MSSP participation grew at less than 8% from January 2015 to this January.
The proof of whether proposed MSSP rule changes will boost participation in the ACO program will come next January, when anything less than double-digit growth will be deeply disappointing.
The 60-day period for public comments on the proposed rule changes closes March 28.
Christopher Cheney is the CMO editor at HealthLeaders.