By Curtis Campbell, Class of 2019; Andrew F. Solinger, Attorney at Waller

The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would overhaul the Medicare Shared Savings Program, which was established by the Affordable Care Act (ACA). Currently, the vast majority of Medicare’s Accountable Care Organizations (ACOs) operate under the Medicare Shared Savings Program. The redesigned program is called “Pathways to Success” and was developed based on a comprehensive analysis of the performance of ACOs to date.

What is an “ACO”?

ACOs are groups of health care providers that agree to take responsibility for the total cost and quality of care for their patients. Under the Medicare Shared Savings Program, the ACOs get to keep a portion of the savings they achieve. CMS provides ACOs with Shared Savings Waivers to allow the savings to be applied in virtually any manner to further innovation.  Presently, there are 561 Shared Savings Program ACOs that serve over 10.5 million Medicare fee-for-service beneficiaries.

Results of the Medicare Shared Savings Program

Since the Medicare Shared Savings Program was established by the ACA, and launched in 2012, it has been faced with a mix bag of success:

• Shared Savings Programs have shown increases in net spending for CMS and taxpayers because 82 percent of all ACOs in the program are not taking on risk for increases in cost.
• ACOs that are not at risk for cost increases end up increasing Medicare spending in the aggregate.
• ACOs participating in the two-sided, risk-sharing model in which eligible ACOs share in a larger portion of any savings, but are also required to take on losses if spending exceeds certain benchmarks, have proven successful in accounting for significant savings to the Medicare Program.

Pathways to Success

The proposed rule, Pathways to Success, would redesign the participation options available under the program to transition more to two-sided models. The projected proposal is estimated to lead to savings to Medicare of $2.2 billion over ten years.

Pathways to Success is designed to advance five goals:

• (1) Accountability and (2) Competition: Currently, ACOs have up to six years without taking on risk for increases in cost. These ACOs receive a shared savings payment from CMS when they keep their costs down, but do not have to pay back taxpayers when costs are high. Under the proposed rule, ACOs can only remain in the program without taking risk for two years, instead of six.
• (3) Beneficiary Engagement: CMS proposes to require that beneficiaries receive a notification at their first primary care visit of a performance year informing them that they are in an ACO and what it means for their care. To bolster beneficiary engagement, CMS proposes to allow certain ACOs to provide incentive payments to patients for taking steps to achieve good health.
•  (4) Quality: CMS proposes allowing physicians in risk-sharing ACOs to receive payment for telehealth services provided to patients regardless of the patient’s location. This would expand the use of telehealth even in situations in which the beneficiary’s home is the originating site. In addition, the proposed rule promotes interoperability and patient control of their medical data by proposing a new requirement around ACOs adopting the 2015 edition of the Certified Electronic Health Records (EHR) technology.
• (5) Integrity: CMS’s proposed rule would change the benchmark calculations to better account for regional adjustments by accurately reflecting the spending levels and growth rates in each ACO’s local market. The proposed ruled will also strengthen the monitoring of financial performance and permitting termination of ACOs with multiple years of poor financial performance.

In sum, Pathways to Success is aimed at mitigating losses, increasing program integrity, and promoting regulatory flexibility for ACOs. As CMS Administrator Seema Verma stated, “ACOs can be an important component of a system that increases the quality of care while decreasing costs.” With the proposed rule change, the program will hopefully achieve its original intent of decreasing net spending for CMS and taxpayers.