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December 15, 2016
Mr. Andrew Slavitt
Dear Acting Administrator Slavitt:
The undersigned organizations submit the following comments and recommendations for developing a new Medicare ACO model, Track 1 Plus (1+), as discussed in the final rule with comment period, Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician- Focused Payment Models, published in the Federal Register on November 4, 2016. The signatories to this letter include organizations representing physicians, hospitals, medical group practices, academic medical centers and nearly all existing Medicare Shared Savings Program (MSSP) ACOs.
Our recommendations reflect our unified expectation and desire to see the MSSP achieve the long-term sustainability necessary to enhance care coordination for Medicare beneficiaries, lower the growth rate of healthcare spending and improve quality in the Medicare program. Specifically, our key goals for the MSSP include encouraging increased participation, enabling existing ACOs to continue in the program and creating a successful, long-term ACO model for Medicare. It is in Medicare’s interest for ACOs to continue in the program in order to provide high quality care for Medicare beneficiaries and to reduce the growth rate of Medicare spending.
CMS’s plans to develop Track 1+ represents an important step to ensure the long-term viability of the ACO model by introducing a new ACO track that incorporates less downside risk than what is required in existing two-sided ACO models. Track 1+ must be designed to incentivize ACOs to begin taking on risk in a manner that holds them accountable for cost and quality but does so in an appropriate way, providing a glide path to assuming risk. We applaud CMS’s plans to develop Track 1+ and urge the agency to establish it so that it’s widely available to ACOs of all sizes and structures and that participation in the model is not restricted to a specific number of agreement periods. We also greatly appreciate CMS’s plans to develop Track 1+ as an Advanced APM starting in 2018 under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) Quality Payment Program (QPP). It is imperative that CMS finalize Track 1+ in an expedited manner to ensure its availability for ACOs to begin participating in the new model in 2018, and we strongly recommend CMS release finalized Track 1+ details as soon as possible. Below are our recommendations for the key elements of Track 1+.
The Need to Create Track 1+
As developing organizations, many ACOs face challenges achieving success, as defined by lowering spending relative to their benchmark enough to earn shared savings. While success rates have increased each performance year and ACOs that started the program earlier have higher success rates, according to this CMS Public Use File updated on October 19, 2016, only 119 out of 392 MSSP ACOs earned shared savings in Performance Year 2015. Further, 2016 was the first year when ACOs renewed three-year agreement periods, and only two-thirds of 2012/2013 ACOs remained in the program and renewed their agreements in 2016. To ensure more ACOs are able to be successful and will thus remain in the program, CMS must continue to make program enhancements to ensure the long-term viability of the Medicare ACO model.
Since inception of the MSSP, CMS has emphasized the need for ACOs to assume downside financial risk for their patient population as the best way to incentivize ACOs to reduce unnecessary utilization and lower the growth rate of Medicare expenditures. However, as a portion of total 2016 Medicare ACOs, including those in the MSSP, Next Generation and Pioneer models, those in two-sided risk models only represent slightly more than 10 percent of Medicare ACOs. Track 1 remains by far the most popular option, with 95 percent of MSSP ACOs in Track 1 this year, and from 2012 to 2016 the growth rate for Track 1 has been four times the growth rate of two-sided models. However, ACOs may only remain in Track 1 for two agreement periods before having to move to a two-sided risk model or drop out of the program. Further, the disproportionate emphasis on the goal of reducing costs overshadows the equally important goal of quality improvement that the ACO model offers which, in the long run, will benefit both patients and the Medicare program generally.
With growing calls for ACOs to take on risk, it’s important to recognize that ACOs remain in Track 1 in large part due to the high levels of risk required in the two-sided models. The current two-sided models (MSSP Track 2, 3 and the Next Generation ACO model) include risk levels that are significantly higher than what the vast majority of ACOs can bear and therefore are not viable for most ACOs. The decision to take on risk is at the heart of an ACO’s choice about which model to select and having to potentially pay millions of dollars to Medicare is simply not practical nor feasible for most of these organizations. This type of risk necessitates that ACOs have considerable financial backing. Many ACOs are unable to access investor capital and face many barriers to obtaining sizeable credit. Without large enough assets to secure loans, many physician owners are left having to personally guarantee debts and obligations. Basing risk on total cost of care creates situations where physicians could be responsible for repaying a substantial amount, if not all, of their Medicare income for a particular year.
The challenges of taking on risk are often exacerbated for those in rural areas and safety-net providers, which care for some of the most vulnerable patient populations. These providers tend to have even fewer resources and may struggle to come up with start-up and investment costs, let alone be in a position to assume down-side risk. Even the promise of higher shared savings rates or the ability to utilize waivers afforded to two-sided ACOs is not enough to overcome the barriers to assuming considerable financial risk. Further, ACOs are in the business of delivering care and are not necessarily well equipped to take on what is essentially actuarial risk more typical of a health insurance company. Finally, while a slight majority of ACOs are physician owned, many others share ownership and financial responsibility with hospitals, which often have the same concerns about such high risk.
Based on these realities, it is critical that CMS develop Track 1+, which would provide a much-needed option that enhances accountability for costs but does so in a manner more appropriate for ACOs. Below are our specific recommendations for establishing Track 1+, and we look forward to working with CMS on these and other key areas of the model’s design.
Comments on Information Included in the MACRA Final Rule with Comment Period
Qualification of Track 1+ as an Advanced APM
We strongly support CMS finalizing details of Track 1+ so that this model meets the Advanced APM criteria and look forward to working with CMS on its development so that Track 1+ is available beginning with the 2018 performance year.
Track 1+ Risk Levels
1. For performance periods in 2017 and 2018, 8 percent of the average estimated total Medicare Parts A and B revenues of the ACO (the “revenue-based standard”); or
We urge CMS to finalize a Track 1+ risk structure and level that equals the minimum amounts of risk required under the final Advanced APM criteria, thus allowing Track 1+ to qualify as an Advanced APM. CMS’s Advanced APM risk levels referenced above are more than sufficient to promote accountability and, in contrast to the amount of risk currently required under existing two-sided ACO models which have loss sharing limits ranging from 5 percent to 15 percent of total cost of care, are more reasonable for ACOs that face considerable obstacles assuming risk.
Benchmarks for Existing ACOs that Move to Track 1+
Track 1+ Availability
We strongly support Track 1+ being a voluntary model available to new ACOs and those in Track 1, but we also urge CMS to also make this opportunity available to ACOs currently in MSSP Tracks 2 and 3, as well as to those in the Pioneer and Next Generation models. ACOs in these tracks/models have demonstrated a clear commitment to value-based payment models and to assuming financial accountability. However, some of these ACOs may not be successful and could face repayment of losses greater than they anticipated. Should they conclude they are unable to continue in their current ACO track/model, allowing them to participate in Track 1+ would be more beneficial for the ACOs and Medicare rather than requiring them to remain in an unsustainable situation. Faced with this dilemma, many ACOs would likely drop out of the program. Therefore, allowing them to move into Track 1+ would be a better option and would not penalize them for their early commitment to a two-sided risk model. We strongly recommend that CMS allow all current and new ACOs to participate in Track 1+. We also request that ACOs be able to move into Track 1+ at the start of any performance year and not be required to wait until the start of their next three-year agreement period.
Comments on Track 1+ Elements Not Addressed in the MACRA Final Rule with Comment Period
In addition to our comments in the previous section on Track 1+ elements discussed in the final MACRA rule with comment period, this section of the letter includes our recommendations for other Track 1+ program elements and requirements which we urge CMS to incorporate into the design of Track 1+.
ACO Eligibility for Track 1+ Participation
We also strongly recommend that CMS allow current ACOs to move into Track 1+ at the start of any performance year and not be required to wait until the beginning of their next three-year agreement period. Currently, ACOs may only switch MSSP tracks at the start of a new three-year agreement, and once that period begins they are locked into their decision until their next agreement. As ACOs consider their options for the future, it will be essential for CMS to adopt a more flexible policy to allow ACOs to move into two-sided risk models such as Track 1+ earlier than the start of their next agreement period. Given that the 5 percent Advanced APM bonus is only in effect for a few years with the last performance year of 2022, it would be incredibly unfair to lock ACOs into decisions for years to come, especially when new options such as Track 1+ become available.
Developing Track 1+ creates an important glide path for assuming risk, representing an option in between Track 1 which has no downside risk and the higher risk levels included in the other two-sided ACO tracks/models. However, it’s important to note that we oppose limiting Track 1+ participation to a certain number of agreement periods and forcing ACOs to take on greater risk in other models. If, as we are advocating, CMS develops Track 1+ to meet the Advanced APM risk thresholds, we see no reason that ACOs could not remain in Track 1+ indefinitely. Limiting Track 1+ participation to a certain number of agreement periods would likely result in ACOs eventually dropping out of the program rather than assuming risk they are not prepared for. Retaining ACOs in Track 1+ would benefit ACOs and Medicare by continuing to incentivize them to enhance quality of care and generate savings for themselves and the Medicare Trust Funds. Therefore, we urge CMS not to restrict Track 1+ participation to a particular number of agreement periods.
Shared Savings Rate
Shared loss rate
Performance payment limit
Financial benchmark in initial and subsequent agreement periods
Financial mechanisms to demonstrate ability to repay losses
Under the financial risk standard finalized by CMS, if actual expenditures for which an APM Entity is responsible under the APM exceed expected expenditures during a specified performance period, the agency will allow a reduction of payment rates to the APM Entity and/or the APM Entity’s eligible clinicians, among other options for repaying losses. We urge CMS to develop an option for ACOs to repay losses through reduced payment rates of the ACO’s eligible clinicians in future years. Through this mechanism, CMS would identify the Tax Identification Number (TIN)/National Provider Identifier (NPI) combinations that participate in the ACO for a specific performance period and, similar to downward payment adjustments under MIPS, CMS would reduce the payment rates for those TIN/NPIs by a certain percent in a future payment adjustment year to recoup the ACO’s losses. ACOs would include language in the agreement between the ACO and its participant TINs and their individual practitioners detailing specifics of this repayment mechanism. Allowing ACOs to choose this as one of the mechanisms to repay losses would provide a new option that some ACOs may prefer over repaying losses in a lump sum. We urge CMS to work collaboratively with us to further develop this concept and the key details that would be needed to implement it.
Beneficiaries and Risk Adjustment
Voluntary beneficiary alignment
Adjustments for beneficiary health status and demographic changes
Quality and waivers
However, we strongly urge CMS to allow quality performance and quality improvement to increase the percent of shared savings a Track 1+ ACO may earn, from 60 to 70 percent. Under current MSSP rules, an ACO that achieves CMS’s established quality performance levels is not rewarded and is merely prevented from forfeiting the shared savings payments it has earned. In contrast, Medicare Advantage (MA) plans are rewarded with higher benchmarks for higher quality, which leads to an asymmetry between MA plans and ACOs. As noted by the Medicare Payment Advisory Commission (MedPAC) in their Feb. 2, 2015 letter to CMS, "Otherwise, the ACO with top quality performance would end up with a lower benchmark than an MA plan in the same market with top quality performance. That situation could be seen as inequitable for the ACO."
Many efforts to improve quality of care consume ACO resources and increase spending relative to the ACO’s financial benchmark in the short term, even if they decrease Medicare spending over the long term. The more an ACO strives to improve quality performance, the more it often needs to spend. ACOs that make large investments to improve quality performance may be less able to keep spending below their benchmarks as a direct result of their increased investment in quality. We urge CMS to properly reward Track 1+ ACOs, as well as all MSSP ACOs, for high quality. It is important to recognize high quality performance compared to established measure thresholds as well as to recognize – and reward – quality improvement relative to an ACO’s previous performance. Therefore, to emphasize and reward above average quality performance or improvement, we urge CMS to provide on a sliding scale up to 10 percentage points of additional shared savings to Track 1+ ACOs, from 60 to 70 percent.
Compliance and Payment Waivers
These waivers are critical to removing legal and regulatory barriers that inhibit providers from working together to provide better-coordinated, high quality care. We also strongly encourage CMS to make available to all Medicare ACOs, including Track 1+, waivers related to the following:
Waiving these payment regulations is essential so that ACOs can effectively coordinate care and ensure that it is provided in the right place at the right time. These waivers would provide ACOs with valuable tools to increase quality and reduce unnecessary costs and should be available to advance the success of all ACOs, including those in Track 1+. Further, CMS should implement the waivers in a manner that is not prohibitively burdensome to ACOs that utilize them. CMS should ensure that the waivers are easily accessible to ACOs and should rely on the ACOs’ existing cost and quality metrics to ensure that ACOs continue to provide high-quality, appropriate care to their ACO populations.
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