The CMS has finalized changes to the way it evaluates whether Medicare accountable care organizations are saving money, responding to persistent complaints that the program was harder for efficient providers because they had to compete against their own success.
Under the revised methodology (PDF), the agency will adjust cost benchmarks based on regional rather than national spending data when an ACO signs up for a second or subsequent three-year contract period. The change is intended to measure participants' success against other providers in the same region rather than an ACO's own past performance.
The CMS will phase in the new methodology for ACOs entering contract periods beginning on or after Jan. 1, 2017, to allow providers to adjust to the change and to buffer the effect on participants whose costs are higher than their regional peers.
Another substantial change in the rule is intended to encourage participants to make the leap to the program's more aggressive tracks. Most of the 434 ACOs in the program are still in a track that allows them to earn bonuses for meeting cost and quality targets without risking penalties if they fall short. The new regulations will give ACOs the option of extending their initial agreement for a year before taking on financial risk.
The rule also establishes time frames and criteria to appeal the CMS' calculation of its bonus or penalty. ACOs now have up to four years to challenge the initial determination of shared savings or shared losses.
"Today's changes will encourage more physicians to improve patient care by joining accountable care organizations, while also refining how the program measures success, so that current participants are better rewarded for quality,” CMS acting Administrator Andy Slavitt said in news release.
The CMS declined a request from several provider organizations to allow ACOs that entered the program in 2012 or 2013 to take advantage of the new benchmarking methodology earlier. Because of the timing of the regulations, the provision won't apply to them until they enter a new agreement in 2019.
Trinity Health, a Livonia, Mich.-based Catholic health system led by Dr. Richard Gilfillan, the former director of the CMS Innovation Center, had pushed for the change.
“More than any other cohort, these early adopters deserve this option, and we see no significant rationale for their exclusion,” Trinity said in a letter to the CMS earlier this year. “These ACOs should not be penalized simply because of unfortunate timing.”
The CMS, however, concluded it would be disruptive to change the performance methodology in the middle of a performance period “and could undermine the ability of these ACOs to adapt to this change.”
Premier, a healthcare purchasing and performance improvement company involved in laying the groundwork for ACOs, said in a statement that the changes in the final rule represent "steps in the right direction" toward the long-term viability of the program.
But the company also said it was disappointed that the new benchmarking methodology would be out of reach for early adopters for more than two years. "This decision puts the inaugural class of ACOs at a distinct disadvantage to those that applied later," Premier Vice President Blair Childs said in the statement.
Premier also said the CMS should have used the regulations to create a pathway for ACOs to enter risk-based tracks sooner and meet the criteria for participating in an "alternative payment model" under the Medicare Access and CHIP Reauthorization Act of 2015.