1. Review of MSSP Proposed Rule CAPG ACO Committee December 18, 2014

2. Today’s Agenda Comments and Welcome Context for MSSP Proposed Rule Review of the Provisions of the Proposed Rule Process/Next Steps Questions Adjourn 2

3. Context for MSSP Proposed Rule 3

4. Medicare Accountable Care Organizations: Landscape Over 330 Medicare ACOs –98% in upside only financial arrangement with the government Only 5 Track 2 (two-sided risk) ACOs –Under current regulation, Track 1 only available for 3-year period –Creates a push and pull for CMS, policy community 4 Preventing program exits, keeping organizations on the ramp Achieving the goal of moving ACOs to risk-based models

5. Flurry of Policy Activity Medicare Shared Savings Program proposed rule CMMI working on a new “full risk” ACO model Proposed legislation introduced by Reps. Welch (D-VT) and Black (R-TN) Final Medicare Physician Fee Schedule Rule 5

6. The Goal: “Smoothing” the On-Ramp to Risk FFS MSSP Track 1 MSSP Track 2 MSSP Track 3 Pioneer New CMMI model? ?? Capitated Payment in MA 6 Escalating Levels of Financial Risk CMS “[has] concerns about the slope of the on-ramp to performance based risk created by [existing policy]” -- Proposed Rule, p. 72,803

7. Overview of Proposals 7

8. Financial Models: Context Surveys of MSSP participating ACOs have indicated that many participants are likely to exit the program if forced to assume financial risk CMS is trying to encourage risk-bearing behavior by “smoothing the on-ramp to risk”

9. New Proposed Financial Models Track 1.1Track 1.2Track 2Track 3 Risk ModelUpside Only Upside/ Downside Upside/ Downside Sharing RateUp to 50% based on quality Up to 40% based on quality Up to 60% based on quality Up to 75% based on quality AssignmentPreliminary prospective for reports; retrospective for financial Prospective for reports and financial Minimum Savings Rate (MSR) 2.0% to 3.9% depending on # of assigned beneficiaries Fixed 2% Minimum Loss Rate (MLR) N/A 2.0% to 3.9% depending on # of assigned beneficiaries Fixed 2%

10. New Proposed Financial Models 10 Track 1.1Track 1.2Track 2Track 3 Performance Payment Limit (% of benchmark) 10% 15%20% Shared SavingsFirst dollar once MSR is met Shared LossesN/A One minus final sharing rate First dollar losses once MLR is met or exceeded Up to 60% One minus final sharing rate First dollar losses once MLR is met May not be less than 40% or more than 75% Loss sharing limit (% of benchmark) N/A Limit on losses phases in over 3 years (5%; 7.5%; 10%) 15%

11. Financial Models: Encouraging Two- Sided Risk CMS is exploring tools it can use to encourage organizations to accept two-sided risk –Proposes four specific types of waivers of FFS payment policies –CMS seeks comment on other FFS payment rules that could be waived to effectively implement two-sided risk models –CMS seeks comments as to whether it should allow step-wise assumption of risk by some but not all ACO participants within the same ACO 11

12. Waivers: SNF 3-Day Rule Existing law requires that beneficiaries have a prior inpatient hospital stay of at least three consecutive days to be eligible for Medicare coverage of inpatient SNF care CMS says it could be more medically appropriate for patients to receive services at a SNF without 3-day stay MA plans have the flexibility not to apply the SNF 3-day rule CMS proposes to waive the 3-day requirement and would allow SNF coverage without a prior 3-day stay 12

13. Waivers: Payment and Billing for Telehealth Under existing law, Medicare pays for telehealth services furnished by a physician or practitioner under certain conditions Expanded use of telehealth requirements could facilitate coordinated care CMS proposes to waive some of the limitations on telehealth services for prospectively assigned beneficiaries in Track 3 13

14. Waivers: Homebound Requirement Under existing law, for Medicare to pay for home health services, a beneficiary must be determined to be “homebound” ACOs have suggested that home care may be appropriate for more other beneficiaries and could reduce or avoid hospital admissions CMS proposes to waive the requirement that the beneficiary be homebound for prospectively assigned beneficiaries in Track 3 14

15. Waivers: Referrals to Post-acute Care Settings During discharge planning, hospitals must inform the patient of the right to choose among Medicare- participating post-acute providers ACOs have indicated that there are certain providers that deliver higher-quality and lower-cost care than others ACOs would like to be able to recommend high quality providers Proposes to waive a CMS requirement that the hospital not specify or otherwise limit the post-acute providers for prospectively assigned beneficiaries in Track 3 15

16. Incentives for Two-Sided Risk: Beneficiary Attestation Balancing concerns about beneficiary churn with the guarantee of free choice of provider in Medicare’s fee- for-service system Pioneers will begin testing an attestation model –ACOs mail letters to beneficiaries aligned in prior years –Beneficiary indicates his or her “main doctor” –Beneficiaries who elect a main doctor in the ACO are assigned to the ACO CMS makes no specific proposal in this rule, but is seeking comment on whether attestation is appropriate for two-sided risk model MSSP ACOs 16

17. Financial Models: Summary CMS is making modifications to the existing Tracks, including providing more time in upside risk and introducing a new Track 3, to try to smooth the ramp to risk for MSSP ACOs CMS is looking at other ways to encourage ACOs to accept financial risk, including waiving certain FFS program requirements CMS is looking for input on other ways to encourage organizations to accept financial risk 17

18. Data Sharing: Context ACOs have been vocal about CMS not providing enough data to achieve the care coordination and management goals of the program CMS believes that ACOs should be developing and using their own data CMS acknowledges that there is care provided outside the ACO’s control 18 CMS “continue[s] to believe that the ability to independently identify and produce data for evaluating, improving and monitoring the health of the patient population is a critical skill for each ACO to develop” --- Proposed Rule, at 72,783 CMS “continue[s] to believe that the ability to independently identify and produce data for evaluating, improving and monitoring the health of the patient population is a critical skill for each ACO to develop” --- Proposed Rule, at 72,783

19. Data Sharing: Proposed Expansion of Data Elements in Aggregate Reports Current Data Elements Name Date of Birth Health insurance claim number (HICN) Sex Proposed Expanded Data Elements Current data elements Demographic data (e.g., enrollment status) Health status information (e.g., risk profile; chronic conditions subgroup) Utilization rates of Medicare services (e.g., use of evaluation and management, hospital, emergency and post-acute services, including dates and place of service) Expenditure information related to utilization of services 19

20. Data Sharing: CMS Proposal For Track 1 and 2: CMS would include data for each FFS beneficiary that is identified in preliminary prospective assignment and for beneficiaries that received a primary care service during the previous 12 months from an ACO participant For Track 3: CMS would limit reports to prospectively assigned beneficiaries 20

21. Proposed Simplification of Beneficiary Data Opt-Out Process Beneficiaries continue to have the opportunity to decline to share data with the ACO CMS has learned from ACOs that the existing data opt-out process is causing confusion A very small percentage of patients have opted out CMS proposes to have patients opt out using 1-800- MEDICARE rather than through the ACO –CMS will add information about the ACO program to the Medicare & You Handbook –ACO must still notify beneficiaries of option to opt out of data sharing by Posting signs Making written notices available upon request in primary care offices 21

22. Existing Two-Step Beneficiary Assignment Process Step 1 Beneficiary is assigned to the ACO if the allowed charges for primary care services furnished to the beneficiary by PCP who is ACO professional is greater than those allowed charges for primary care services by PCPs in any other ACO or non-ACO TIN Step 2 If beneficiary received at least one primary care service from ACO professionals and more primary care services from ACO professionals at the ACO than from ACO professionals in another ACO or non- ACO TIN 22

23. Proposed Revisions: Step 1 PCPs General practice Family medicine, Internal medicine, Geriatric medicine Would Add New Professionals Nurse practitioners Physician assistants Clinical nurse specialists 23

24. Proposed Revisions: Step 2 In step 2, identify beneficiaries who have not had a primary care service by a PCP, PA, NP, or CNS, but have had the plurality of primary care services furnished by ACO physicians with these specialty designations: Allergy/Immunology Cardiology Gastoenterology Neurology OB/GYN Hospice and Palliative Care Sports medicine Physical medicine and rehab Pulmonary disease Pediatric medicine Nephrology Infectious disease Endocrinology Rheumatology Multispecialty clinic or group practice Hematology Hematology/oncology Preventive medicine Medical oncology Gynecology/oncology 24

25. Beneficiary Assignment: Proposals Adding new codes to the definition of primary care services –CMS proposes to include Transitional Care Management and Chronic Care Management codes in beneficiary assignment methodology Proposes to make future revisions to the definition of primary care service codes through the annual Physician Fee Schedule rulemaking process 25

26. Beneficiary Eligibility Proposal Beneficiaries must meet all of these criteria during the relevant assignment period to be assigned to an ACO –Have at least 1 month of Part A and Part B enrollment and does not have any months with only Part A or only Part B enrollment –Has no months of Medicare Advantage enrollment –Is not assigned to another Medicare shared savings initiative –Lives in the US or US territories based on most recent available data 26

27. Changes to Program Requirements within 3-Year Agreement Current Regulation: ACOs subject to all regulatory changes mid-contract except –Changes to the eligibility requirements concerning ACO structure and governance, –Calculation of sharing rate, and –Beneficiary assignment Proposal: remove beneficiary assignment exception –Changes to assignment would apply to all ACOs, including those in the middle of an agreement period 27

28. Public Reporting and Transparency CMS would modify its ACO public reporting requirements Each ACO would be required to maintain a dedicated webpage where it publicly reports certain information using a CMS template Information to include: –Name and location –Primary contact –ACO participants –Governing body –Clinical leadership –Committees and committee leadership –Shared savings and losses information –Quality performance information 28

29. Establishing, Updating, and Resetting the Benchmark CMS is not proposing any changes to the benchmarking methodology at this time However, CMS will consider all of the comments and may adopt an option in the final rule CMS also seeks comments on whether it should allow multiple options for participants in the program 29

30. Benchmarking: Current Regulation CMS uses the national growth rate in Medicare Parts A and B expenditures for FFS beneficiaries to trend forward the most recent 3 years of per beneficiary expenditures to establish each ACO’s benchmark –Note this is different from Pioneer methodology An ACO’s benchmark would be reset at the start of its second or subsequent agreement period using the same methodology for establishing the historical benchmark 30

31. Benchmarks: Stakeholder Concerns Resetting the benchmarks at the start of each agreement period may disadvantage ACOs, especially ACOs that have generated savings Are ACOs “holding back” on achieving savings because it would reduce their benchmarks for future periods? Existing methodology does not sufficiently account for regional or local cost trends on the ACO’s financial performance How does the benchmark affect the value proposition of moving into two-sided risk tracks? 31

32. Benchmarking Options 1.Equally weighting the 3 benchmark years 2.Accounting for shared savings earned by ACO in the benchmark 3.Use of regional factors in establishing and updating benchmarks (as opposed to national FFS expenditures) 4.Holding the ACOs historical costs constant relative to its region 5.Transition to benchmarks based on regional FFS costs over the course of multiple agreement periods 32

33. 1. Equally Weighting the Benchmark Years (BY) Existing Regulation Benchmark years are weighted BY 1 = 10% BY 2 = 30% BY 3 = 60% For re-set purposes, greatest weight is placed on the year with the most care management activity CMS Discussion Option Equally weight the three benchmark years 30% weight to each of the three years Concern: May be less accurate, especially of the ACO has significant changes to ACO participants and beneficiary population 33

34. 2. Accounting for ACO Savings in the Benchmark Another way to encourage participation and improve incentives to achieve savings CMS discusses the option of including the ACO’s share of savings in the benchmark Would increase the benchmark for subsequent agreement Not all ACOs would benefit – would not apply to those that did not meet or exceed the MSR; would not apply to those that fail to satisfy quality reporting standard 34

35. 3. Use Regional Factors in Establishing and Updating Benchmarks Instead of using national Medicare FFS expenditure data to trend expenditures in establishing the historical benchmark and to update the benchmark, CMS would use regional FFS expenditure data to make these adjustments –CMS would use a reference population, similar to methodology used in Physician Group Practice (PGP) Demonstration (see p. 72,839 for more detail on the methodology) –CMS would define the ACO’s service area and identify beneficiaries that meet determined comparison group assignment criteria –Re-determined each year to account for changes in assigned beneficiaries –Expenditure growth rate for the comparison population is calculated and used to update the benchmark 35

36. 4. Hold ACOs Historical Costs Constant Relative to the ACO Region CMS would set the benchmark using existing methodology Under this approach, when reset, the benchmark would be updated according to regional trends in FFS costs in the ACOs service area (using a methodology from the PGP demo; or a scaling factor) Improvements in efficiency would not lower benchmark for subsequent agreement period 36

37. 5. Transition ACOs to Benchmarks Based Only on Regional FFS Costs CMS considered transitioning ACOs from benchmarks based on historical costs toward benchmarks based only on regional FFS costs Would gradually transition ACOs from benchmarks based on historical performance to benchmarks based on cost efficiency relative to local market This is the approach MedPAC recommends 37

38. Process/Next Steps 38

39. What’s Missing? No capitated payment model No proposals around modifying beneficiary cost sharing to encourage beneficiaries to seek care within the ACO Lots of discussion about benchmarking methodology but no formal proposal No discussion of including Part D spending in the ACO financial performance model No risk adjustment proposals 39

40. Process Comments due February 6, 2015 CAPG will draft and circulate comments to this committee for your review Next CAPG ACO Committee Meeting January 13, 2015 at 10 am Pacific by WebEx 40