On December 21, 2018, CMS issued a mammoth 957 page “Pathways to Success” final rule, which overhauls shared savings/losses tracks for Medicare Shared Savings Program Accountable Care Organizations (MSSP ACOs) to push ACOs into shared risk models more quickly, among other program changes.

Largely consistent with the proposed rule as we summarized here, the final rule essentially reduces the savings/loss tracks from four to two, while layering in additional subtleties.  While the existing tracks included Track 1, 1+, 2, and 3, with Track “1” being the sole upside-only track and Track 3 entailing the most risk for shared losses, CMS notes that the vast majority of ACOs are still Track 1 ACOs, that ACOs tend to stay within Track 1 for the maximum possible amount of time, and that Track 1 ACOs as a whole are not achieving robust results in generating savings for Medicare.  CMS thus retains Track 3 while renaming it the “ENHANCED” Track, and implements a new multi-level “BASIC” Track with a “glide path” to increasing risk during an ACO’s five years on the track.

The BASIC Track starts with an upside-only risk level that has a shared savings opportunity of up to 40%, and a typical new ACO would then take on progressively more risk in years three through five of the track, with a shared loss rate of 30% in each of such years but progressively higher caps on total losses.  However, ACOs with prior Track 1 participation may only stay on the upside-only level of the BASIC Track for 1 year.  Conversely, “low-revenue ACOs”–which CMS notes are often physician-led and have generally achieved better results than their larger peers–may stay on upside-only levels of the BASIC Track for a third year.  Finally, any ACO on the BASIC Track can accelerate its movement to the higher risk levels of that track, which could potentially facilitate obtaining enhanced MACRA physician fee schedule payments through qualifying as an advanced APM.

Building on CMS’s prior history of refining its approach to setting and/or rebasing an ACO’s beneficiary expenditure benchmark level (against which savings or losses are measured), CMS incorporates a regional adjustment into setting an ACO’s initial benchmark (rather than just subsequent benchmarks).  Conversely, CMS reins in the potential extent of regional adjustments to the benchmark through a combination of reduced weighting and an adjustment cap.

CMS additionally finalizes its proposal to permit ACO selection of prospective assignment or preliminary prospective assignment with retrospective reconciliation prior to the start of each performance year.

The final rule also finalizes telehealth policies applicable to certain ACOs, including providing for payment for telehealth services to certain beneficiaries receiving telehealth in non-rural areas, and enabling the receipt of certain telehealth services at home.

The vast majority of the final rule’s key provisions apply commencing with performance years beginning July 1, 2019, with July through December 2019 being a one-time 6 month performance period in connection with implementing the new program changes (with performance periods reverting to calendar years thereafter).

Considering the significant Medicare payments potentially affected by this final rule—together with the impact that an ACO can have on an organization’s physician alignment, and ability to bring bold cost-cutting and care redesign measures under the protection of the MSSP fraud & abuse waiverswe suggest that organizations scrutinize the final rule and model its potential impact.

CMS’s fact sheet summarizing the final rule can be found here.