With CMS’s latest proposed changes to the MSSP ACO program (“Pathways to Success”), successful organizations should focus on a few key elements: risk, levels, and shared savings.  


Some important elements of the existing program are carried through in the newly proposed Medicare Shared Savings Program ACO rule. The proposed highest level of risk in the BASIC track is almost identical to the current Track 1+. This shows that CMS, while pushing for risk, is not requiring all ACOs go into two-sided risk right away. Instead, there will be a more gradual path to risk in the early years of the program.  This is consistent with our experience that ACOs need some time to learn a new way of providing and managing care in order to achieve the best financial and quality results. 


Sample ACO Path if CMS Finalizes the Rule as Proposed: 

An ACO enters the program in 2020, joining Basic Level A, which is an upside-only track. Then, in 2021, they are required to advance to Level B. Instead, they decide the shared savings rate on the table at that time is favorable and elect to advance to Level E. Because this ACO still has four years remaining in the Basic track, it can stay in Level E for those four years and cannot move backwards to previous Levels


Under the Basic option, a new ACO will follow a path to risk that typically starts with two or two and a half years of no-risk. Even then, when moving to the risk-bearing option it will be 75 percent lower in risk than the previous lowest-risk option in the program (which was Track 1+). ACOs will also have the opportunity to elect whether they want to progress to risk faster than prescribed. However, as ACOs progress one Level every year, the goal will be to have all ACOs in risk eventually. So, the option now is not about taking on increasing risk, but whether ACOs want to do it faster than what CMS has scheduled.  



CMS is proposing to restructure the participation options available to ACOs in several fundamental ways:  

  • Moving from a three-year agreement period to a five-year agreement period.  

  • Requiring a faster progression to risk.  

  • Replacing Tracks 1, 1+, 2, and 3 with the Basic and Enhanced options.  

The Basic option has graduated levels of risk through which ACOs will advance each year, from A to B to C, etc., until reaching Level E. Level E has the same structure for risk-sharing parameters and cap on losses as what is currently Track 1+. ACOs will remain in the Basic track until the end of their agreement period and then progress to the Enhanced option. 

In the Enhanced option, which has the same risk profile as the existing Track 3, an ACO will have much higher sharing rates and potential losses of about 15 percent of benchmark. At the end of the Basic agreement period, a hospital-affiliated or high-revenue ACO would be required to go to Enhanced. A low-revenue ACO, on the other hand, has the option of staying in the highest risk level of Basic (Level E) for another five-year agreement period. 


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Shared Savings 

ACOs in Levels A, B, C, or D that want to earn a greater percentage of shared savings could opt to skip ahead in the Levels. Under any Level that includes downside risk, which starts at Level C, ACOs can choose to have risk corridors, similar to the current policy for those under two-sided risk. These risk corridors are minimum savings and loss rates that determine the level above or below the benchmark that organizations must be at before shared savings or losses “kick in.”  

At this point, there are a couple of options:  

  • Set fixed symmetrical Minimum Savings Rate (MSR)/Minimum Loss Rate (MLR).  

  • Select a variable rate with CMS that can be changed every year. (This can be a better option for smaller ACOs that want rates tied to number of beneficiaries.)  


One important change from the existing Track 1 is that shared savings rates would be reduced from 50 percent to 25 percent. Unfortunately, that could mean smaller shared savings checks to providers, as well as weaker incentives to deliver savings for the program – factors that may cause CMS to revisit this proposal in the final rule. 


Proposed vs. Final Rules 

The biggest changes under this proposed rule are the accelerated pathway to two-sided risk, track and level structures, and difference in shared savings rates in the early years of the program. Health care leaders need to carefully reconsider the new opportunities the program provides and what the changes mean for their organizations. However, it’s also important to note that the rule is not yet final and a final rule isn’t expected until late 2018.  

We strongly recommend making your voice heard in the rulemaking process by submitting your comments at https://www.regulations.gov/document?D=CMS-2018-0101-0001. The final rule could (and we hope will) have bigger, better changes.  


Questions or comments? 

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