How the New CMS Interim Final Rule Impacts ACOs

As discussed in our previous blog post , CMS has declared the COVID-19 pandemic a public health emergency (PHE) and published an interim final rule with comment period that includes a number of items that affect Medicare Shared Savings Program (MSSP) participants. This blog post summarizes those changes and how they might impact your MSSP ACO.

No 2021 MSSP Application Cycle

Due to uncertainties caused by the COVID-19 pandemic, CMS has canceled the application cycle to participate as an MSSP ACO beginning in 2021. The reasons for this decision relate to poor benchmarking data from regional ACO claims data and how ACOs might fare in relation to those benchmarks. Some CMS beneficiaries, such as patients diagnosed with COVID-19 and requiring extensive inpatient services, will have higher-than-expected claims costs. Other beneficiaries will defer services and procedures due to fears about contracting COVID-19, causing expenditures for their healthcare to be artificially low. Both scenarios will impact the overall total cost of care for 2020 beneficiaries, which would be used to set benchmarks for the 2021, 2022, and 2023 performance years.

Because of the uncertainty about the impact of COVID-19 on ACO performance, CMS has determined that by canceling the 2021 application cycle, they can “develop approaches to further mitigate the role of 2020 as a benchmark year given the unusual expenditure and utilization trends likely to result from the pandemic.”¹

Extension of Current MSSP Contracts into 2021

All MSSP ACOs, regardless of track or level, that will be at the end of their three-year MSSP contract period on December 31, 2020, have the option to extend their participation by one year until the end of 2021. This will allow organizations to focus on the pandemic without the distraction of planning next steps for future MSSP participation. Current historical benchmarks and expenditures used for 2020 will also be used for the 2021 performance year. The decision to extend an MSSP contract must be weighed against the past performance of the ACO, alignment with the ACO participants’ strategic vision, COVID-19 environmental factors, and the track the ACO will participate in for 2021.

If the ACO decides to extend its contract with CMS, updated agreements with all participants/suppliers and SNF affiliates (for those participating in the SNF 3-Day Rule Waiver) will need to be obtained.

“Freezing” the Pathway to Success Track Progression

If ACOs elect to extend their participation, they will be allowed to maintain their 2020 tracks into 2021. However, in 2022, ACOs will be required to progress to the track to which they would have advanced in 2021. Those ACOS that were originally expected to progress to BASIC tracks B, C, and D in 2021 will be affected by this update. BASIC tracks A and E and the ENHANCED track are not affected by this rule.

• BASIC track A progresses to track B with no shared losses, as was previously detailed.
• BASIC track E will stay at track E unless it chooses to move to the ENHANCED track.

Table 1 shows the MSSP BASIC tracks and options for 2021 and requirements for 2022.

If ACOs are in BASIC track B, they can remain in their track in 2021 and not be at risk for shared losses until 2022. CMS provides this option to ACOs that will be new to the increased risk of shared losses. ACOs may find that acquiring a repayment mechanism, such as a letter of credit, is more challenging in 2020 after the unique cash flow challenges of the COVID-19 pandemic. Additionally, ACOs typically increase their population health infrastructure to prepare for the increased shared savings and possibility of shared losses required for BASIC track C. With the operational challenges of COVID-19, CMS hopes this longer runway will allow ACOs to focus on the pandemic and defer investments on their infrastructure until the PHE has ended.

Much of the track B ACOs’ focus in 2020 has been on caring for their patients during the pandemic, making preparation difficult for the increased risk of BASIC track C. Although CMS is allowing ACOs to maintain their track for 2021, it is expected that ACOs will use 2021 to prepare for resuming track progression and gliding to the track in which they would have been placed without the “maintain” option.

For those ACOs on BASIC track B, an additional year without the risk of incurring shared losses may be helpful. 2021 can be used to develop the infrastructure needed for the higher-risk BASIC track D. This includes investing time to consider and implement a repayment mechanism, identify and develop needed technology, and plan the staffing needs to support the increased population health management responsibilities.

For those ACOs in BASIC tracks C and D, the decision to progress on the track level should be informed by the previous year’s performance. If the ACO has been successful and has confidence in its ability to achieve greater shared savings, we recommend the ACO progress to the next track level. If an ACO has not had success, we recommend maintaining the current track level to perform root-cause analyses before moving forward.

CMS has asked MSSP participants to indicate their track election by July 20, 2020; this can be revised until September 22, 2020. For further information on the track levels and participation options, please see this CMS document.

Reduction in Shared Losses for ACOs

CMS has determined that the Extreme and Uncontrollable Circumstance Policy will apply to the COVID-19 pandemic. For ACOs that are in BASIC tracks C, D, and E or the ENHANCED track, shared losses will be a proration based on the number of months the pandemic occurs. More specifically, shared losses will be reduced “by the percentage of the total months in the performance year affected by extreme and uncontrollable circumstance and the percentage of the ACO’s assigned beneficiaries.”²

CMS has defined the time period of the PHE as beginning in January and lasting at least through the end of July. This means that shared losses will be reduced by seven-tenths (January through July) and possibly more based on the progression of the COVID-19 pandemic.

Adjustments to MSSP Calculations

CMS is working to minimize the impact of care delivery irregularities, such as increased inpatient stays and decreased elective procedures and preventive care caused by COVID-19. This includes COVID-19 claims expenditures, which will be removed from the following calculations:

• FFS expenditures that will be applicable to shared savings
• Historical benchmark calculations
• Performance year expenditures
• Regional and national growth rate factors
• Loss-sharing limits for BASIC tracks C, D, and E
• High- or low-revenue ACO identification

Additionally, HCC risk scores from 2019 will be used for 2021, and the DRG weighting factor of COVID-19 episodes will be adjusted. We are concerned that patients who have opted to delay care may have health deteriorations that would normally be reflected in an increased HCC score. We recommend that health systems factor in this disparity between 2019 HCC coding and 2020 patient health as part of financial forecasting to understand how this will affect services and sustainability.

CMS has indicated that additional detail on these calculations and how pent-up demand from elective procedures might impact MSSP calculations will be coming this summer.

Inclusion of Telehealth Services in Beneficiary Assignment Logic

With the COVID-19 pandemic, CMS expanded the services used to assign beneficiaries to ACOs to include primary care and other services provided via telehealth. Telehealth services will be applied to the plurality of services methodology used to determine the provider to whom the patient is assigned.

Next Steps

Based on the current track, success, and infrastructure of the ACO, ECG recommends the following actions for ACOs:

For ACOs with MSSP Contracts Ending December 31, 2020
Should your ACO extend its MSSP contract by one year? If the ACO has a track record of success, anticipates the COVID-19 factors described above not impacting ACO success, and is prepared for track-level participation in 2021, the ACO may decide to extend its contract to the end of 2021.

• Recommendation: If the ACO chooses to extend its contract, updated agreements with participants, suppliers, and SNF affiliates will need to be signed for submission to CMS.
• By When: CMS asks that ACOs provide an initial decision by July 20, 2020. This decision can be revised until September 22, 2020.
• What Should ACOs Do?For ACOs that choose to extend their contracts through December 31, 2021, the following documents will need to be updated, signed, and provided to CMS by September 22, 2020:
  • Updated signed agreements with participants/suppliers
  • If participating in the SNF 3-Day Rule Waiver, updated signed agreements with SNF affiliates

For ACOs on BASIC tracks B, C, and D
Should your ACO maintain its current track level or progress to the next track level? If your ACO has been financially successful, we recommend advancing to the next track level.

• Recommendation: If your ACO has not seen any shared savings yet, we recommend maintaining the current track level.
• By When: CMS asks that ACOs provide an initial decision by July 20, 2020. This decision can be revised until September 22, 2020.
• What Should ACOs Do?We recommend ACOs develop financial modeling to understand the different scenarios for each track level.

For All ACOs
How should ACOs forecast for 2021 given no calculations will update?

• Recommendation: We recommend ACOs consider that their population of patients may be sicker and have increased HCC scores due to the adverse impacts of COVID-19. This may lead to higher claims costs compared to the benchmark that includes historical HCC scores.
• By When: As this may impact track progression, we recommend conducting forecasting as part of the track progression discussion prior to July 20, 2020.
• What Should ACOs Do?We recommend ACOs develop financial modeling that takes into account the lack of updated calculations to ensure a realistic budget is developed.

ECG continues to monitor our country’s response to the COVID-19 pandemic. Visit our COVID-19 thought leadership page regularly for trusted advice on how healthcare leaders and providers can weather this crisis. If you have questions on how your ACO can best respond to the new ACO rules, please reach out to us to continue the conversation.

Published July 6, 2020