New Federal ACO Regulations Waive 3-Day Stay Requirement; Add a Risk-Sharing Arrangement

The Centers for Medicare & Medicaid Services (CMS) published a final rule modifying the regulations governing Medicare Accountable Care Organizations (ACOs). The new regulations include provisions that:

Increase the emphasis on primary care practitioner services in the beneficiary assignment methodology.
Provide improved access to data necessary for ACOs to engage in quality improvement and care coordination.
Add a new risk-sharing option (known as “Track 3”) that includes prospective beneficiary assignment and a higher rate of shared savings and losses.
Allow eligible ACOs to continue participation under Track 1 (one-sided risk/shared savings-only track) for a second 3-year agreement period.
Permit waivers of the 3-day stay requirement for skilled nursing facility coverage for Medicare beneficiaries who are prospectively assigned to ACOs under Track 3.
Refine the methodology for re-setting the Medicare spending benchmarks that are used to calculate savings and excess spending, in order to ensure continued ACO participation in the program as Medicare spending declines.

CMS indicated that in addition to codifying existing guidance and streamlining operations, its primary goal in modifying the regulations is to encourage ACO engagement in two-sided risk sharing, without stifling participation in the program. Prior to the adoption of the final rule, ACOs could choose to participate in either Track 1 (upside only risk) or Track 2 (two-sided risk with a higher shared savings rate). The overwhelming majority of the 400 current ACOs are participating in Track 1.

The new Track 3 seeks to promote two-sided risk sharing by offering an enhanced savings rate and other advantages. Specifically, the final rule provides Track 3 ACOs with the potential to capture 75% of shared savings, while accepting risk for up to 75% of excess spending, depending on quality performance measurements. As an added incentive to participate in Track 3, the rule provides Track 3 ACOs with the opportunity to manage inpatient hospital stays by seeking a waiver the three-day stay requirement for skilled nursing facility coverage. This waiver would apply only to beneficiaries prospectively assigned to a Track 3 ACO, who do not reside in a SNF or other long-term care setting and who require SNF care. To participate in the waiver, SNFs must have at least a 3-Star rating and enter into a written agreement to partner with the ACO for purposes of the waiver. The waivers will be available no earlier than January 1, 2017.

CMS’s notice of the proposed ACO regulations, published in December 2014, had included potential waivers of the homebound rule for home health services, the telehealth billing and payment requirements, and the prohibition on hospital recommendations of post-acute care providers. LeadingAge New York submitted comments on those proposals, supporting the waivers of the SNF 3-day rule, the homebound rule, and the telehealth requirements. CMS decided to make available only the waiver of the SNF 3-day rule. It will be conducting development and testing of other waivers through the Innovation Center, beginning with the telehealth billing and payment requirements. It anticipates a telehealth waiver being available to ACOs no earlier than Jan. 1, 2017 after public comment and formal rulemaking.

Contact: Karen Lipson, klipson@leadingageny.org, 518-867-8383 ext. 124.