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January 28, 2016

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CMS Announces Proposed Improvements to Medicare Shared Savings Program

Plan Strengthens Incentives for ACOs to Improve Performance

The Centers for Medicare & Medicaid Services (CMS) today released a proposed rule to update the methodology used to measure the performance of Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program (Shared Savings Program). Today’s proposal builds on the momentum of growth in the Shared Savings Program and charts a path for long-term sustainability by improving the long-term incentives for ACOs as they continue to provide efficient, high quality health care to Medicare beneficiaries.

"Medicare payments are an important catalyst to improving care delivery, spending our resources smarter and keeping people healthy," said Andy Slavitt, Acting Administrator for CMS. "This proposal allows ACOs in all parts of the country to be successful by recognizing both their achievements and improvements in how they provide care. This should have the effect of growing the number of ACOs, and making ACOs and the coordinated care they provide to patients, more of a standard in all parts of the country."

Under the proposed rule, CMS would modify the process for resetting the benchmarks, which are used to determine ACO performance for ACOs renewing their participation agreements for a second or subsequent agreement period. The proposed methodology would incorporate factors based on regional fee-for-service expenditures, into establishing and updating the ACO’s rebased historical benchmark, including an adjustment to the benchmark based on regional spending that is phased-in over several agreement periods.

Key proposals include:

Recognizing that health cost trends vary in communities across the country by using regional, rather than national, spending growth trends when establishing and updating an ACO’s rebased benchmark.
Adjusting an ACO’s rebased benchmark when it enters a second or subsequent agreement period by a percentage (increased over time) of the difference between fee-for-service
spending in the ACO’s regional service area and the ACO’s historical spending, which will provide a greater incentive for continued ACO participation and improvement.
Giving ACOs time to prepare for benchmarks that incorporate regional expenditures by using a phased-in approach to implementation.

Other changes would include:

Adding a participation option to facilitate an ACO’s transition to performance-based risk arrangements by allowing eligible ACOs to elect a fourth year under their existing first agreement and defer by one year entering a second agreement period under a performance-based risk track.
Streamlining the methodology for adjusting an ACO’s benchmark when its composition changes.
Clarifying the timeline and other criteria for reopening determinations of ACO shared savings and shared losses for good cause or fraud or similar fault.

Today’s proposals are the product of extensive stakeholder input. CMS sought comment on the methodology used to reset ACO benchmarks in a proposed rule released in December 2014. In June 2015, CMS indicated that it would pursue future rulemaking on this issue.

A fact sheet with more information about the proposed rule is available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-01-28-2.html

The proposed rule will be open to a 60-day comment period. The proposed rule is available for viewing at:https://www.federalregister.gov/public-inspection

Comments may be submitted by March 28, 2016 at: http://www.regulations.gov/

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