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CMS issues calendar year (CY) 2023 Medicare Physician Fee Schedule proposed rule: Medicare Shared Savings Program proposals

United States Publication July 2022


On July 7, 2022, the Centers for Medicare and Medicaid Services (CMS) issued its 2023 Physician Fee Schedule proposed rule (the Proposed Rule), which includes numerous proposed changes to the Medicare Shared Savings Program (MSSP). According to CMS, the proposed changes to the MSSP are designed to advance CMS' overall value-based care strategy of program growth, alignment and equity. The proposed changes also represent CMS' attempt to reverse certain trends in the MSSP that CMS has observed over the last several years, including the leveling of the number of Medicare beneficiaries assigned to accountable care organizations (ACOs), an increase in underrepresented higher spending populations and inequitable access to ACOs by certain patient populations. As such, CMS' proposed changes to the MSSP are intended to, among other things, advance equity within the MSSP by increasing the participation of health care providers in ACOs within rural, minority and other underserved communities. CMS intends to finalize the Proposed Rules with many of the provisions effective January 1, 2023.

Given the significance of CMS proposed changes to the MSSP, we will publish a detailed description of the changes proposed by CMS in the Proposed Rule at a later date. In the meantime, we highlight in this article certain key provisions in Proposed Rule that are likely to be of interest to ACOs and health care providers currently participating in the MSSP as well as parties that are considering forming, or are in the process of forming, an ACO that intends to participate in the MSSP at a later date.

Key provisions in Proposed Rule

1. Increasing participation in accountable care models in underserved communities by providing an option for advance investment payments to certain ACOs

a. Advance investment payments to qualifying ACOs

To encourage ACO participation in rural and other underserved areas, CMS proposes providing advance shared savings payments (referred to as advance investment payments or AIPs) to low-revenue ACOs that: (1) are new to the MSSP (that is, not a renewing ACO or a re-entering ACO), (2) are inexperienced with performance-based risk Medicare ACO initiatives and (3) serve underserved populations. Subject to certain limitations, these AIP funds would be available to address the social needs of people with Medicare, health care provider staffing and infrastructure. The payments would consist of an initial one-time fixed payment of US$250,000, with quarterly payments over the next two years of the eligible ACO's five-year agreement period.

b. Smoothing the transition to performance-based risk

CMS also proposes modifications to certain existing policies under the MSSP to support organizations new to accountable care by providing greater flexibility in the progression to performance-based risk and allowing such organizations more time to redesign their care processes. As proposed, beginning January 1, 2024, qualifying ACOs that are inexperienced with performance-based risk would be able to participate in an initial five-year agreement under an upside only (i.e. no risk) shared savings model, and in some cases, an additional two years of their second five-year agreement period. Furthermore, CMS is proposing to allow ACOs greater flexibility to continue to participate in Level E of the BASIC track so that transition to the ENHANCED track would be optional.

2. Strengthening program participation by reducing the effect of ACO performance on historical benchmarks, addressing market penetration and strengthening incentives for ACOs serving medically complex and high cost of care populations

CMS has also proposed changes to its benchmarking methodology, which are designed to reduce the effect of ACO performance on ACO historical benchmarks as well as to increase options for ACOs caring for high-risk populations. Specific changes include, among others, modifying the methodology for updating the historical benchmark (to incorporate a prospective, external factor), incorporating a prior savings adjustment in historical benchmarks for renewing and re-entering ACOs and reducing the impact of the negative regional adjustment on ACOs.

3. Transitioning ACOs to all payer quality measure reporting, adjusting for health equity and addressing social determinants of health

In response to feedback provided by interested parties, CMS is proposing a number for changes to quality reporting requirements which are designed to support the transition of ACOs to all payer quality measure reporting. For example, CMS proposes changing the "all-or-nothing" approach to determining an ACO's eligibility for shared savings based on quality performance. Rather, CMS would use a sliding scale approach for determining shared savings and scaled shared losses beginning in performance year 2023 and extend the incentive for reporting electronic clinical quality measures (eCQMs)/MIPS Clinical Quality Measures (CQMs) for performance year 2024.

4. Reducing administrative burden for ACOs

CMS proposes a number of changes designed to reduce the administrative burden on ACOs. Specifically, under the Proposed Rule, CMS would no longer require ACOs to submit marketing materials for CMS review prior to use and would remove the requirement for ACO applicants to submit narratives in connection with their application to utilize the SNF three-day Rule Waiver.

CMS also proposes changes to data sharing requirements which would allow ACOs acting as organized health care arrangements (OHCAs) to request aggregate reports and beneficiary-identifiable claims data from CMS and allow ACOs to structure themselves as an OHCA to reduce the administrative burden in connection with reporting eCQMs/MIPS CQMs.

Next steps

ACOs and other industry stakeholders should examine the provisions of the Proposed Rule and consider the potential ramifications on their business operations. Stakeholders and interested parties should consider submitting comments to CMS.

Norton Rose Fulbright can assist clients with the drafting and submission of comments and advise on the Proposed Rule's possible implications. Comments on the Proposed Rule must be submitted to CMS by September 6, 2022.

For additional information regarding the Proposed Rule, please contact the Norton Rose Fulbright professional(s) listed below.

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