Changes Ahead for MSSP in the Final 2023 Physician Fee Schedule – What Physicians Need to Know

November 9, 2022

The Centers for Medicare & Medicaid Services (CMS) recently finalized substantial changes for the Medicare Shared Savings Program (MSSP) in the Final 2023 Physician Fee Schedule (PFS), including the move toward prospectively projected administrative benchmarking. Other key provisions include:

  • The move toward prospectively projected administrative benchmarking 
  • Incorporating advance shared savings payments to encourage new ACOs to join the MSSP
  • Increasing access to value-based care arrangements through investments and a more flexible glidepath to risk 
  • Rewarding excellent care delivered to underserved populations by adding health equity adjustments to an ACO’s quality performance category score

Also top-of-mind in the final rule is the substantial reduction in the average amount of fee-for-service payments – which CMS finalized but Congress will need to address before the end of the year. Aledade has been working alongside primary care and value-based care stakeholders to advocate for Congress to address these looming cuts, and we expect action after the midterm elections.

Finalized as proposed: The Final Rule looks very similar to the Proposed Rule

If you are familiar with the provisions in the Proposed PFS CMS released back in July, you are well equipped to understand the  Final Rule. The value-based care and ACO community coalesced around comments urging CMS to consider alternative approaches to meet the goal of shifting away from updating benchmarks based on observed trends and toward administrative benchmarking.

Administrative benchmarking certainly makes sense to consider. Aledade applauds CMS for recognizing that MSSP will grow, and we will need to prepare for a time when there are so many Medicare beneficiaries in MSSP that having a comparator group outside the program is not feasible. 

CMS’s chosen solution is to, beginning in 2024, set one-third of the benchmark trends using a new factor that is based on a forecast of national costs trends in Medicare. The problem is, as we pointed out in our comments, national cost trends differ significantly and persistently from local cost trends, which will cause significant distortions in where ACOs locate.

CMS responded with their own data that looked at a different, longer time period (2007-2016 vs. Aledade’s 2015-2020), grouped it differently (Hospital Referral Regions vs Core Based Statistical Areas) and measured costs differently (All Medicare vs Aledade’s MSSP eligible population). We look forward to working with CMS on agreeing on the most relevant question to answer regarding national versus regional trends as we continue to explore administrative benchmarking. 

As MSSP enters its 11th performance year, many ACOs have successfully transitioned to value. It is important for policymakers to recognize that having made the transition, the viability of the ACO is now dependent on savings and not just fee-for-service. Savings payments have long been treated like a nice-to-have bonus, but once you make the transition to value, they become every bit as essential to viability as fee-for-service payments.

In recognition of that, many value-based care and ACO stakeholders outlined specific guardrails for CMS to consider as we move towards administrative benchmarking. First among them was to recognize that a major drop in savings is every bit as determinant to a mature ACO as paying losses. In the final rule, CMS stated that it retains discretion to determine whether an unforeseen circumstance warrants a reduction in the weight of the Accountable Care Prospective Trend in the new three-way blend. Unfortunately, the only official guardrail is against losses. As ACOs continue to mature, we need to move past this thinking that the only negative effect in MSSP is paying losses.

What does this mean for existing ACOs? We have a choice to make for performance year 2024: stay in the current rules for the remainder of the contract or transition to a new contract with new rules. As always, Aledade will look at the regulations and the data and recommend the best course of action for the practices that partner with us to mitigate insurance risks and ensure the work they do in primary care and population health shines through in their savings calculations.

Welcome developments in ACO investment, risk scoring, and quality 

Building on learnings from the Center for Medicare and Medicaid Innovation’s (CMMI) ACO Investment Model (AIM), CMS is encouraging the formation of new ACOs in both rural and urban areas with underserved beneficiaries by making advanced investment payments available to certain new, qualifying ACOs beginning in 2024. The payments are an initial lump sum plus quarterly per-beneficiary payments, based on the beneficiary’s Area Deprivation Index score and whether they have Medicaid or receive a Low Income Subsidy.

This is a positive development that will help ACOs in underserved areas be able to better serve vulnerable populations through investments in staffing, supporting initiatives that address the social determinants of health, and strengthening care coordination capabilities. 

Another positive move is the changes to risk scoring CMS finalized. Unlike in Medicare Advantage, risk scores in MSSP are capped at 3 percent relative to the most recent benchmark year. CMS is now going to account for changes in ACO’s demographic risk scores before applying the cap on hierarchical condition categories (HCC) risk scores and to apply the cap in aggregate across all four enrollment types (Aged, Disabled, Dual Eligible, and End Stage Renal Disease).

The finalized change moves us in the right direction to advance health equity and avoid harming those ACOs who serve the most vulnerable patients by better accounting for medically complex, high-cost patient populations while guarding against coding intensity. Aledade will continue to advocate for a better risk adjustment model – potentially through CMMI launching a multi-grantee competition to see what better ideas are out there to improve the current HCC model.  

In the quality category, CMS is returning to an alternative quality performance standard for ACOs that gets rid of the harsh cutoff point and allows for those who do not meet the 30th or 40th percentile on quality scores (depending on the performance year) to still get shared savings on a sliding scale based on the ACO’s final quality score.

Again, a positive development for equity so that ACOs serving the most vulnerable patients do not risk falling off the quality cliff. CMS continues to want everyone to move to electronic clinical quality measures (eCQMs) but recognizes the challenges and is allowing for one extra year (2024) for the incentive to report eCQMs/MIPS CQMs.

Finally, CMS finalized the administrative simplification changes, such as getting rid of the requirements to have ACO marketing materials reviewed, simplifying the Skilled Nursing Facility 3 day waiver application process, and allowing beneficiary notification requirements to happen once per agreement period with a 180-day follow-up instead of once annually. These changes take effect on January 1, 2023.

More to come from Aledade and CMS

The MSSP is now 10 years old, and we have seen stand-alone rules that signal large impacts to the program in 2011, 2015, 2016, and 2018. This was the first time major changes to benchmarking were done in the Physician Fee Schedule. As CMS pursues its 100% participation by 2030 goal, we anticipate that we will see more frequent rule making. We stand ready to continue providing detailed analysis to CMS and the ACO community on the impact of any proposal. 

Want a deeper dive on the Final 2023 Physician Fee Schedule? Click here to watch the full, on-demand recording of our recent webinar with Aledade’s SVP, Policy & Economics, Travis Broome, MPH, MBA.