The is the first post in Health Care Law Today’s series on the proposed rule.

The Centers for Medicare and Medicaid Services released, on December 1, 2014, a proposed rule to revise the Medicare Shared Savings Program (“MSSP”) Accountable Care Organization (“ACO”) Regulations. The proposed rule is expected to be published in the Federal Register on December 8, 2014, and parties have 60 days from such publication to offer comments on the proposed rule.

The MSSP was created as part of the Affordable Care Act (“ACA”) and represented an important ACA initiative to transform the health care delivery system to improve the efficiency and the quality of health care. Final regulations establishing the structure of the MSSP were published on November 4, 2011. There has now been more than over two full years of operational experience under the MSSP. CMS generally has found the MSSP to be a success. It has reported that over 330 ACOs are participating in the MSSP, representing more than 5.5 million Medicare beneficiaries. There have been significant savings to the Medicare Trust Fund and the growth of government Medicare expenditures has slowed. At the same time, participating ACOs have shown improvement on most quality measures.

Others have not had as positive a view of the success of the MSSP. In a letter to CMS dated April 17, 2014, which we summarized in a prior blog post, the American Hospital Association (“AHA”) identified several design and structure issues with the MSSP which it recommended be revised. The Wall Street Journal was less positive in an editorial on October 20, 2014, entitled “Obama Care’s Failing Cost Control,” calling the “accountable care experiment… a bust so far.”

In the proposed rule, CMS offers revisions to the MSSP regulations in response to the concerns that have been raised. CMS believes the proposed rule will reduce the administrative burden, improve program function and transparency, and encourage continued and expanded participation in the MSSP, particularly with respect to the assumption of downside risk. Among the more significant proposed revisions are:

• Clarifying a number of definitions used
• Making modifications to the financial model to encourage greater participation in the MSSP by, among other things:
  • Modifying the requirement that an ACO must take downside risk if it renews the initial three-year agreement
  • Reducing the downside risk in the Track 2 model
  • Offering a Track 3 model with a higher sharing rate, a higher cap on potential sharing, and prospective assignment of beneficiaries
  • Modifying the repayment mechanism in the Track 2 model
  • Requesting comment on a number of potential Medicare program requirements to better carry out the purposes of the MSSP
• Specifying new requirements for both the agreement the ACO has with CMS and the agreement the ACO has with the ACO participants
• Changing the methodology for adding and subtracting ACO participants
• Changing the beneficiary assignment methodology, by expanding the definition of primary care services and including services of certain mid-level providers
• Expanding the beneficiary identifiable data that would be available to ACOs

In a number of places CMS requests comments on various options that CMS considered in coming up with the new proposals.

CMS also has sought comments on the possibility of waiving, for MSSP participants, some other Medicare program requirements. These include a waiver of the required three-day stay in a hospital before a stay in a skilled nursing facility may be reimbursable and the requirement that one receiving home care must be home bound. These suggestions reflect a CMS interest in encouraging MSSP participation.

In the commentary accompanying the rules CMS reflects a commitment to making the MSSP work. There has been a concern that many ACOs are not ready to take downside risk, as the current regulations require if an ACO wants to renew its initial three-year term. There appears to be a fear that many ACOs will not elect to renew their agreements to take the downside risk as currently structured. It is noted in the commentary to the proposed rule that only five ACOs currently participate in Track 2. A number of proposals included in the rule and for which CMS seeks comment are addressed to create refinements that will make continued participation more inviting for current ACO participants as well as new potential ACO participants and to move them along the path to taking downside risk.

Both those participating in ACOs and others considering participation, may desire to comment on some of the proposals. This is the time to act, as CMS seems sincerely interested in improving the MSSP to encourage broader participation and make the MSSP operate more efficiently.

View This Blog