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Value-Based Care News

New Ruling in Medicare Shared Savings Program Changes Payment

A new participation opportunity is also provided in the new CMS ruling that incentivizes accountable care organizations to move forward into more advanced levels of the Medicare Shared Savings Program.

By Vera Gruessner

As previously reported, the Centers for Medicare & Medicaid Services (CMS) have finalized a ruling that changes how the Medicare Shared Savings Program operates its payment protocols among accountable care organizations. The change impacts the way accountable care organizations will be paid in subsequent contracting years.

Accountable Care Organizations

A new participation opportunity is also provided in the new CMS ruling that incentivizes accountable care organizations to move forward into more advanced levels of the Medicare Shared Savings Program, according to The National Law Review.

The reimbursement model will consist of rewarding ACOs that provide higher quality care at lower cost when compared to other local healthcare providers. The old methods of reimbursing accountable care organizations tended to aim at comparisons between past and current performance. At this point in time, ACOs will be compared to other providers instead.

CMS will be releasing data regarding the performance scores and overall spending among a number of counties as well as information showing these measures among local accountable care organizations.

CMS is looking at ways to improve upon how they measure success among ACOs operating within the Medicare Shared Savings Program. This new ruling is expected to incentivize more physicians to participate in the program and strengthen their performance on a wide variety of practices.

READ MORE: CMS Solicits Payer Participation to Next Phase of CPC+

Under the new finalized rule, the federal agency will be allowing ACOs to spend an additional year under the same contract terms before proceeding to more advanced levels of financial risk.

This new ruling will take effect starting on January 1, 2017, but CMS will likely continue altering the Medicare Shared Savings Program to assist ACO providers in lowering their healthcare spending. CMS will be looking to decrease payment calculations among accountable care organizations that have higher healthcare spending rates than other regional providers.

Among the more costly ACOs, a regional adjustment will be positioned to 25 percent during the first contract year and 50 percent in the second year, according to the finalized rule. It is hoped that these changes will further incentivize more ACO providers to improve the quality of care and reduce healthcare spending when contracting through the Medicare Shared Savings Program. The ruling is also meant to assist providers and alleviate some concerns with regard to the way their performance is measured.

According to a press release from CMS, there are currently 430 accountable care organizations operating through the Medicare Shared Savings Program and serving more than 7 million beneficiaries. With the new changes to the payment methodology, ACO providers will be able to succeed in reining in their healthcare spending based on their specific region instead of past performance since each locale has specific trends that affect medical costs.

“Today’s changes will encourage more physicians to improve patient care by joining accountable care organizations, while also refining how the program measures success, so that current participants are better rewarded for quality,” CMS Acting Administrator Andy Slavitt said in a public statement.

READ MORE: CMS Seeking Feedback on Pediatric Alternative Payment Model

“These new flexibilities are based on significant input from participants and will help physicians prepare for the new Quality Payment Program, part of bipartisan legislation Congress passed last year repealing the failed Sustainable Growth Rate.”

In 2014, the Pioneer ACO Model and the Medicare Shared Savings Program together brought in $411 million in net savings. It is hoped that these revisions will lead to further cost savings for accountable care organizations around the country. Additionally, a greater focus on improving the quality of care and reining in spending is thought to bring value-based care to the industry instead of the prior focus on the quantity of medical assistance found in the traditional fee-for-service payment model.

In keeping with the embrace of value-based care, the Department of Health & Human Services (HHS) reported earlier this year in a press release that 121 new ACOs joined the Medicare Shared Savings Program as well as other innovative accountable care solutions such as the Next Generation ACO Model and the ACO Investment Model.

“Americans will get better care and we will spend our health care dollars more wisely because these hospitals and providers have made a commitment to change how they do business and work with patients,” HHS Secretary Sylvia M. Burwell said in a statement. “We are moving Medicare and the entire healthcare system toward paying providers based on the quality, rather than the quantity of care they give patients. The three new ACO initiatives being launched today mark an important step forward in this effort.”

Patrick Conway, Deputy Administrator for Innovation and Quality and Chief Medical Officer for CMS, also mentioned that, “Accountable Care Organizations are improving quality of care and spending dollars more wisely. These new initiatives place patients at the center of a coordinated care delivery system and give providers the tools to achieve better outcomes.”

READ MORE: Texas Wrongly Claimed $3.8M in Medicaid Reimbursements

The federal agency seeks to improve coordination among ACOs as well as health IT interoperability and medical data analytics to revolutionize patient care around the country. The new CMS ruling should incentivize ACO providers to continue reducing their healthcare spending while strengthening the quality of care among their patient population.


Dig Deeper:

Why Accountable Care Organizations May not Succeed in MSSP

Top 3 Ways Accountable Care Organizations Could Garner Savings


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