The Centers for Medicare & Medicaid Services (CMS) recently announced changes to the Medicare Shared Savings Program (MSSP) designed to improve equity within the MSSP and increase the percentage of Medicare beneficiaries in accountable care arrangements.  The changes are included in the Calendar Year 2023 Physician Fee Schedule final rule (Final Rule), which is scheduled for publication on November 18, 2022.

Background on the MSSP

The MSSP is CMS’s most popular value-based payment model and was first implemented in 2012. Under the MSSP, providers and suppliers form Accountable Care Organizations (ACOs) to manage the quality, cost, and experience of care of an assigned Medicare fee-for-service beneficiary population. The MSSP offers different participation options that allow ACOs to assume various levels of risk and earn shared savings. Over the past decade, the MSSP has grown to be the largest value-based payment program in the country. According to a CMS press release, the MSSP included over 525,000 participating clinicians in 483 ACOs providing care to more than 11 million Medicare beneficiaries, as of January 2022.

The MSSP had steady growth in its early years, increasing from 3.2 million beneficiaries participating in the MSSP in 2012 to 10.4 million beneficiaries in 2018.  In recent years, however, the number of beneficiaries participating in the MSSP has plateaued to around 11 million. In addition, CMS notes that higher spending populations are increasingly underrepresented in the MSSP and access to ACOs appears to be inequitable based on data showing that people of color are less likely to be assigned to a MSSP ACO than their white counterparts.

Summary of the Changes

CMS’s changes to the MSSP are designed to reverse these trends by making the MSSP more appealing to providers, particularly providers that are new to the MSSP and/or that serve underserved populations. Below is a summary of the most significant changes to the MSSP.

• Advance Investment Payments for Certain ACOs.  Based on feedback from health care providers and its experience with other alternative payment models, CMS recognizes that smaller providers and suppliers, particularly those that treat underserved populations, typically require upfront capital to make investments in order to succeed in accountable care. To reduce financial barriers encountered by small providers and suppliers, CMS will provide advance shared savings payments, called Advance Investment Payments (AIPs), to low revenue ACOs that are inexperienced with performance-based risk (i.e. two-sided risk), are new to the MSSP, and serve underserved populations. To receive AIPs, ACOs must submit a supplemental application and a proposed spend plan for CMS review. If approved to receive AIPs, the ACO will receive a one-time fixed payment of $250,000 and per-beneficiary quarterly payments for the first 2 years of an ACO’s 5-year agreement period. The quarterly payment amount is based on the number of beneficiaries assigned to the ACO who are enrolled in the Medicare Part D low-income subsidy, are dully eligible for Medicare and Medicaid, or reside in areas with high deprivation (measured by the area deprivation index). CMS will recoup AIPs made to an ACO from any shared savings the ACO earns.

• Transition to Performance-Based Risk.  CMS will allow ACOs applying to the program that are inexperienced with performance-based risk to participate in a one-sided shared savings model for five years in order to provide these ACOs more time to invest in infrastructure and redesigned care processes before transitioning to performance-based risk. CMS believes this change will allow more small health care providers in rural and underserved settings to participate in the MSSP.

• Sliding Scale Approach for Determining Shared Savings. Presently, the current structure of the quality performance standard creates an “all-or-nothing” scoring where an ACO may be ineligible to share in savings if it does not achieve a certain quality performance standard, even if the difference is marginal. CMS will now offer an alternative quality performance standard based on a sliding scale reflecting an ACO’s quality performance for use in determining shared savings for an ACO.

• Health Equity Adjustment to ACO’s Quality Performance Score. In furtherance of its goal to increase equity within the MSSP, CMS established a health equity adjustment that will upwardly adjust quality performance scores of ACOs that serve a minimum number of underserved or dually eligible beneficiaries.

• Benchmarking Methodology Revised to Reduce the Effect of ACO Performance on Benchmarks. One longstanding challenge for ACOs is that an ACO’s success in one year lowers the cost benchmarks in subsequent years, making it harder for the ACO to earn shared savings in the future because it had to exceed its past performance. In the Final Rule, CMS finalized modifications to the benchmarking methodology to reduce the impact of ACOs’ performance on their benchmarks. CMS is also revising its risk adjustment methodology to better account for medically complex, high cost populations.

• Reducing Administrative Burden for ACOs. CMS will no longer require ACOs to submit marketing materials for CMS review and approval prior to use.  Starting in 2023, ACOs will only be required to provide a beneficiary notice prior to or at the first primary care service visit. Annual notices will no longer be required. However, ACOs will now be required to provide a follow-up communication within 180 days after providing the beneficiary notice. The follow-up beneficiary communication is intended to provide an opportunity for beneficiaries to ask any outstanding questions.

Overall, we expect these changes to be well-received by the health care industry, particularly smaller health care entities and health care entities looking to start participating in value-based payment models.  In particular, the option to participate in the MSSP without downside risk over the full agreement period and the availability of AIPs will likely encourage participation in the MSSP.