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Continuing Resolution Creates New Tools for ACOs


PG Bulletin

March 27, 2018

Neil D. Shah (Polsinelli PC, Chicago, IL)

This Bulletin is brought to you by AHLA’s Accountable Care Organization Task Force.

In February 2018, Congress passed the Bipartisan Budget Act of 20181 (commonly known as the “Continuing Resolution”). While much of the focus on the Continuing Resolution centered on its funding implications, which expired on March 23, 2018, the Continuing Resolution also established a number of important changes to Accountable Care Organization (ACO) models operated by the federal government.

Changes to Beneficiary Assignment Rules
The Continuing Resolution requires the Centers for Medicare & Medicaid Services (CMS) to continue creating pathways for ACOs to understand their attributed population at the start of each year. ACOs currently fall into a number of different categories, distinguished by the degree of potential risk and financial reward as well as certain program rules and flexibilities. The Medicare Shared Savings Program (MSSP) contains four distinct Tracks (1, 1+, 2, and 3). The Center for Medicare and Medicaid Innovation (CMMI) also operates the Next Generation ACO program, which provides the highest potential bonuses, requires the most risk, and includes the most programmatic flexibility. For the sake of efficiency, this bulletin refers to the MSSP Tracks and the Next Generation ACO program collectively as “Models.” Currently, MSSP Tracks 1 and 2 use “retrospective attribution,” in which beneficiaries are assigned to an ACO at the end of a year. Congress required CMS to support efforts to allow ACOs to identify beneficiaries at the start of each year, including by allowing beneficiaries to opt-in to a specific ACO.

The Continuing Resolution would require CMS to make a prospective assignment/voluntary alignment option available for all Models. Prospective assignment must be available starting in 2020, but voluntary alignment must be available starting in 2018 if a system is available for electronic designation. Voluntary alignment also would overrule any claims-based attribution rules. This statutory change builds on a regulatory change CMS finalized in the 2017 Medicare Physician Fee Schedule to allow voluntary alignment in all Models.2 Under that process, beneficiaries were able to select a “primary provider” through, which would allow them to be attributed to a practitioner/ACO of their choice.

In addition to bolstering CMS’ statutory authority to implement the voluntary alignment process, the Continuing Resolution also requires future flexibility from the agency to support prospective attribution in all Tracks. Currently, only Track 1+, Track 3, and the Next Generation ACO program use the prospective assignment process. The Continuing Resolution would require all Models to offer this option. This would mean that even Tracks requiring lower levels of risk-taking could take advantage of the certainty associated with beneficiary attribution at the start of the performance period. However, note that prospective attribution may be counterproductive if an attributed beneficiary ultimately chooses to receive a significant portion of his or her care outside the ACO. CMS will most likely need to use a formal rulemaking process to extend this flexibility to Track 1 and Track 2 ACOs.

New Flexibility for Telehealth
Current Medicare telehealth rules only allow reimbursement for telehealth services in certain limited circumstances. Most importantly, reimbursement is only available for services in certain “originating sites,” which typically only cover rural areas.3 The Continuing Resolution amends the definition of “originating site” to also cover beneficiaries’ homes starting in 2020, if the service is provided by certain Medicare ACOs. Thus, Congress has granted ACOs a special right to bill for telehealth services offered to beneficiaries in their homes, even in urban areas.

There are some limitations on this flexibility. The coverage will only be available after January 1, 2020, for Models involving: (1) downside risk; and (2) prospective assignment. In combination with the other changes in prospective assignment, this could potentially cover MSSP Tracks 1+, 2, and 3, and the Next Generation ACO model. Moreover, any telehealth services reimbursed under this section must be appropriate for the home setting (e.g., cannot include services that should be performed in an inpatient hospital setting). While a “home” may include an institutional setting (such as a skilled nursing facility), institutional providers may not charge an additional facility fee for the telehealth service.

Note that any telehealth services will still need to comply with state or local laws concerning the provision of care. In some states, certain services must be provided via an in-person, face-to-face encounter. In many states, the clinician delivering the care also must be licensed in the state of the patient.

Beneficiary Incentive Program
The Continuing Resolution authorized new tools for ACOs to engage beneficiaries with a new program. The Beneficiary Incentive Program is designed “in order to encourage Medicare fee-for-service beneficiaries to obtain medically necessary primary care services.” This program will begin in either 2019 or 2020.

Under a Beneficiary Incentive Program, ACOs could pay beneficiaries up to $20 (as adjusted for inflation) per year as an incentive to receive certain primary care services through the ACO. These payments may only be made to beneficiaries attributed to a Track 2 or 3 ACO, or attributed to any future two-sided risk ACO through prospective attribution or preliminary prospective alignment. Payments made under this program will not be used in any calculation of a benchmark, expenses, or savings, and the Department of Health and Human Services (HHS) will not pay ACOs for the cost of administering such a program.

Any such program will be subject to requirements established by HHS, including termination and program integrity requirements. As a result, CMS will likely engage in future rulemaking on this point. Notably, the Continuing Resolution amended the definition of “remuneration” used in the beneficiary inducement civil monetary penalty to permit payments under this program.4

Changes to MACRA and CMMI Models
The Medicare Advantage and CHIP Reauthorization Act of 2015 (MACRA) incorporated major value-based payment elements into the Medicare fee-for-service system. The Continuing Resolution changed one element of MACRA (the Merit-based Incentive Payment System or MIPS) in a way that may make it easier for providers to avoid penalties, which in turn could reduce incentives to move to ACOs.

Under MIPS, clinicians who bill under the Medicare Physician Fee Schedule will receive a score based on four components: Quality, Cost, Advanced Care Information (ACI), and Improvement Activities. Future Medicare reimbursements for each clinician will be increased or decreased based on this score (for example, 2020 reimbursement may be adjusted up to 5% based on 2018 performance). The Cost category will be implemented for the first time in 2018, based in part on the “total cost of care” attributable to the clinician. CMS previously stated it would measure the costs of Medicare-covered “items,” such as prescription drugs to calculate this measure. The Continuing Resolution restricts CMS to measuring costs of “covered professional services” to set a Cost score. This should mean that costs of “items,” such as drugs will not be included in the calculation. In addition, CMS cannot look to the costs or volume of Medicare Part B drug services to assess whether clinicians fall under the MIPS “low-volume threshold” (which would exempt them from participation in the program). CMS will likely issue additional rulemaking to provide more detail concerning its implementation of this change.

Note that drug and other item costs most likely will continue to be included in ACOs’ benchmark and expenditure calculations. As a result, clinicians and practices with higher Medicare Part A and B drug spending may find it less advantageous to explore ACO participation.

Congress also acted to slow down MACRA’s initial schedule of placing increasing weight on the Cost category. The law originally required that Cost would make up 30% of the total MIPS score by 2019. Congress instead gave CMS the authority to weight Cost at between 10–30% through performance year 2021. When CMS increases the weight to 30%, it must affirmatively determine that “sufficient resource use measures are ready for adoption.” Similarly, the Continuing Resolution stripped out language from the Medicare meaningful use provisions that required more stringent meaningful use standards over time (which is relevant to the MIPS ACI category).

While these may be welcome changes to practices subject to MIPS, they may lessen some of the incentive to shift to risk-based reimbursement. However, the Continuing Resolution also encourages continued value-based care efforts through CMMI. In particular, Congress required CMMI to expand its existing Medicare Advantage value-based insurance design model. Under this model, Medicare Advantage Organizations can provide additional benefits and/or reduced cost-sharing for patients with certain chronic conditions who use the services of high-quality providers. As of 2018, the program is available in ten states, but CMMI plans to expand it to 15 others in 2019. Congress has instructed CMMI to make it available in all states by January 1, 2020. CMMI also may not consider terminating this model until 2022. ACOs may be well-positioned to participate as preferred providers in these value-based models.

The Continuing Resolution’s immediate funding effects have expired. However, its ACO-related provisions indicate that Congress remains interested in the potential and future direction of this program. In particular, Congress appears to be interested in expanding ACOs’ flexibility to achieve reduced costs and improved quality. ACOs should look out for additional guidance and potentially further rulemaking from CMS to implement these important changes.

1 Pub. L. No. 115-123.
2 See 81 Fed. Reg. 80170, 80501–80510; 42 C.F.R. § 425.402(e).
3 42 U.S.C. § 1395m(m)(4)(C).
4 42 U.S.C. § 1320a-7a(i)(6).
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