CMS has published a final rule that revises the methodology CMS uses to measure the performance of accountable care organizations (ACOs) in the Medicare Shared Savings Program. According to CMS, the changes are intended to encourage participation in the MSSP, under which more than 430 ACOs in 49 states and the District of Columbia currently serve more than 7.7 million Medicare beneficiaries.

Notably, the rule will phase in the use of regional fee-for-service (FFS) expenditures in the methodology CMS uses to rebase and update performance benchmarks for ACOs that continue participation in the Shared Savings Program after an initial three-year agreement period. According to CMS, “this approach will improve the program’s incentives for ACOs by recognizing an ACO’s efficiency relative to its region and limiting the link between an ACO’s performance and its future benchmarks.” In addition, the rule adds an alternative participation option to encourage ACOs to enter performance-based risk arrangements earlier in their Shared Savings Program participation. The rule makes other changes to benchmarking rules, including accounting for the health status of the ACO’s assigned population in determining the regional adjustment to the ACO’s rebased historical benchmarks and using “assignable” Medicare FFS beneficiaries (instead of all FFS beneficiaries) in national FFS calculation. On the other hand, CMS did not adopt its proposal to replace its methodology for adjusting an ACO’s benchmark for ACO participant list changes.

CMS also finalized an option to encourage ACOs that renew participation in the Shared Savings Program to accelerate their acceptance of performance-based risk beginning with the 2017 application cycle, along with new rules for reopening determinations of ACO shared savings and shared losses to provide administrative finality of financial reconciliation calculations. While the rule is effective on August 9, 2016, certain provisions apply to agreement periods beginning in 2017 and subsequent years.