Calendar Year (CY) 2024 Medicare Physician Fee Schedule Proposed Rule — Medicare Shared Savings Program Proposals

On July 13, 2023, the Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2024 Medicare Physician Fee Schedule (PFS) proposed rule that includes proposed changes to the Medicare Shared Savings Program (Shared Savings Program) to further advance CMS’ overall value-based care strategy of growth, alignment, and equity and to respond to concerns raised by accountable care organizations (ACOs) and other interested parties. These proposed changes include incremental refinements to the broader changes finalized in the CY 2023 PFS final rule (87 FR 69777 through 69968) as described in the CY 2023 Medicare Physician Fee Schedule Final Rule — Medicare Shared Savings Program Fact Sheet. This Fact Sheet summarizes the major proposed changes to the Shared Savings Program that are included in the CY 2024 PFS proposed rule and select issues on which we seek comment. 

We propose changes to continue to move ACOs toward a digital measurement of quality by establishing a new Medicare Clinical Quality Measure (CQM) collection type for ACOs under the Alternative Payment Model (APM) Performance Pathway (APP). We are also proposing additional refinements to the financial benchmarking methodology for ACOs in agreement periods beginning on January 1, 2024, and in subsequent years to apply a symmetrical cap to risk score growth in an ACO’s regional service area, similar to the cap applied on an ACO’s risk score growth, apply the same CMS-Hierarchical Condition Categories (CMS-HCC) risk adjustment methodology to both the benchmark and performance years, and further mitigate the impact of the negative regional adjustment on the benchmark to encourage participation by ACOs caring for medically complex, high-cost beneficiaries. 

Additional proposals include adding a third step to the step-wise beneficiary assignment methodology to provide greater recognition of the role of nurse practitioners, physician assistants and clinical nurse specialists in delivering primary care services, and updates to the definition of primary care services used for purposes of beneficiary assignment to remain consistent with billing and coding guidelines, as well as refinements to policies for the newly established advance investment payments (AIP). In total these proposals are expected to increase participation in the Shared Savings Program by roughly 10% to 20%, which will provide additional opportunities for beneficiaries to receive coordinated care from ACOs. 

Lastly, we seek comment on potential future developments to Shared Savings Program policies, including with respect to incorporating a new track that would offer a higher level of risk and potential reward than currently available under the ENHANCED track, refining the three-way blended benchmark update factor and the prior savings adjustment, and promoting ACO and community-based organization (CBO) collaboration.

There will be a 60-day public comment period on this proposed rule. CMS encourages all interested members of the public, including ACOs, providers, suppliers, and Medicare beneficiaries to submit comments so that CMS can consider them as we develop the final rule. The 60-day comment period closes on September 11, 2023. Comments can be submitted at: https://www.regulations.gov/ (in commenting please refer to file code CMS-1784-P).

Revising the Shared Savings Program Quality Performance Standard   

Proposal for Shared Savings Program ACOs to Report Medicare CQMs  

For performance year 2024 and subsequent performance years, we are proposing to establish the Medicare CQMs for Accountable Care Organizations participating in the Medicare Shared Savings Program (Medicare CQMs) as a new collection type for Shared Saving Program ACOs under the APP. Medicare CQMs would serve as a transition collection type to help ACOs build the infrastructure, skills, knowledge, and expertise necessary to report the all payer/all patient Merit-Based Incentive Payment System (MIPS) CQMs and eCQMs by focusing on Medicare patients with claims encounters with ACO professionals with specialty designations used in the Shared Savings Program assignment methodology. This policy proposal ensures that ACOs have the option to report digitally on their Medicare patients, and that they are not penalized by serving other patients, while also reducing barriers to digital measurement to allow the Shared Savings Program to align with the Universal Foundation for adults in 2025.^[1]

In addition to this proposal to report quality data utilizing Medicare CQMs in performance year 2024, ACOs would continue to have the option to report quality data utilizing the CMS Web Interface measures, eCQMs, and/or MIPS CQMs collection types. Under this proposal, in performance year 2025 and subsequent performance years, ACOs would have the option to report quality data utilizing the eCQMs, MIPS CQMs, and/or Medicare CQMs collection types.

Data Completeness Standard for Medicare CQMs: We are proposing to use the MIPS data completeness criteria thresholds for Medicare CQMs establishing data completeness at 75% for the CY 2024, CY 2025, and CY 2026 performance periods, and at 80% for the CY 2027 performance period. Data completeness is based on the ACO’s matched and aggregated beneficiaries eligible for Medicare CQMs, who meet the Medicare CQM Specification as proposed at § 425.20.

In order to facilitate population-based activities related to improving health through quality measurement of Medicare CQMs and to aid ACOs in the process of patient matching and data aggregation necessary to report Medicare CQMs, we would provide ACOs with a list of beneficiaries who are eligible for Medicare CQMs within the ACO, upon the ACO’s request for the data for purposes of population-based activities relating to improving health or reducing growth in health care cost. We anticipate the list of beneficiaries eligible for Medicare CQMs to be shared once annually, at the beginning of the quality data submission period. Since we would not have full run-out on performance year claims data prior to the start of the quality data submission period, the list of beneficiaries eligible for Medicare CQMs would not be a complete list of beneficiaries who should be included in an ACO’s Medicare CQMs’ reporting. ACOs would have to ensure that all beneficiaries who meet the applicable Medicare CQM specification, and also meet the definition of a beneficiary eligible for Medicare CQMs proposed under § 425.20, are included in the ACO’s eligible population/denominator for reporting each Medicare CQM.

Benchmarking Policy for Medicare CQMs: Benchmarks for scoring ACOs on the Medicare CQMs under MIPS would be developed in alignment with MIPS benchmarking policies. As historical Medicare CQM data would not be available, we are proposing for performance years 2024 and 2025 to score Medicare CQMs using performance period benchmarks. Similarly, as quality performance data are submitted via Medicare CQM and baseline period data become available to establish historical benchmarks, we are proposing for performance year 2026, and  subsequent performance years, to transition to using historical benchmarks for Medicare CQMs when baseline period data are available to establish historical benchmarks in a manner that is consistent with the MIPS benchmarking policies.

Expanding the Health Equity Adjustment to Medicare CQMs: Consistent with the goal of supporting ACOs in their transition to eCQMs/MIPS CQMs, we are proposing that ACOs that report Medicare CQMs would be eligible for the health equity adjustment to their quality performance category score when calculating shared savings payments. Specifically, we are proposing that, for performance years 2024 and subsequent performance years, we would calculate a health equity adjusted quality performance score for an ACO reporting the three Medicare CQMs, or a combination of eCQMs/MIPS CQMs/Medicare CQMs, in the APP measure set, meeting the data completeness requirement for each measure, and administering the Consumer Assessment of Healthcare Providers and Systems (CAHPS) for MIPS survey. This proposal would advance equity within the Shared Savings Program by supporting ACOs that deliver high quality care and serve a high proportion of underserved individuals. Applying the health equity adjustment to an ACO’s quality performance category score when reporting Medicare CQMs would recognize ACOs treating underserved populations and delivering high quality care. 

Proposals to Align CEHRT Requirements for Shared Savings Program ACOs with MIPS

Currently, the Shared Savings Program and MIPS differ in their certified electronic health record technology (CEHRT) requirements. The MIPS Promoting Interoperability (PI) reporting requirements are more comprehensive and address key functions that can facilitate better care coordination and quality measurement and improvement than the Shared Savings Program requirements. In order to align the Shared Savings Program with MIPS, we are proposing to remove the Shared Savings Program CEHRT threshold requirements beginning performance year 2024, and add a new requirement, for performance years beginning on or after January 1, 2024, that all MIPS eligible clinicians, Qualifying APM Participants (QPs), and Partial QPs participating in the ACO, regardless of track, are to report the MIPS Promoting Interoperability (PI) performance category measures and requirements to MIPS, according to 42 CFR part 414 subpart O, at the individual, group, virtual group, or APM level, and earn a MIPS performance category score. Our proposal would further align the Shared Savings Program with the MIPS program and promote greater CEHRT use among ACO clinicians.

Additionally, we are proposing to add a new requirement for public reporting, requiring that the ACO must publicly report the number of MIPS eligible clinicians, QPs, and partial QPs participating in the ACO that earn a MIPS performance category score for the MIPS Promoting Interoperability performance category at the individual, group, virtual group, or APM entity level (except as established under § 414.1380(c)(2) for the MIPS Promoting Interoperability performance category).

MIPS Value Pathway (MVP) Reporting for Specialists in Shared Savings Program ACOs — Request for Information (RFI)

Beginning in CY 2023, specialists who report under MIPS, including specialists who participate in Shared Savings Program ACOs, have the option to register to report MVPs for the applicable performance period as a group, subgroup, or individual and to report on relevant MVP quality measures. We need to allow for specialists to report relevant data and applicable quality measures, and to allow patients and referring clinicians to make more informed decisions regarding the specialists involved in a given patient’s care. In this proposed rule, we are soliciting comments on potential future scoring incentives that could be applied to an ACO’s health equity adjusted quality performance score, beginning in performance year 2025 when specialists who participate in the ACO report quality MVPs.

Proposals to Modify the Health Equity Adjustment Underserved Multiplier 

We are proposing to modify the calculation of the proportion of assigned beneficiaries dually eligible for Medicare and Medicaid, and the calculation of the proportion of assigned beneficiaries enrolled in the Medicare Part D low-income subsidy (LIS), to use the number of beneficiaries, rather than person years, for calculating the proportion of the ACO’s assigned beneficiaries who are enrolled in LIS or who are dually eligible for Medicare and Medicaid, starting in performance year 2024. The proposed policy recognizes that beneficiaries with partial year as compared to full year LIS enrollment or dual eligibility are also underserved and strengthens incentives for ACOs to serve this population. Further, inclusion of beneficiaries with partial year LIS enrollment in the underserved multiplier provides increased incentive for ACOs to help facilitate LIS enrollment for beneficiaries who meet eligibility criteria. 

Proposal to Use Historical Data to Establish the 40th Percentile MIPS Quality Performance Category Score

For performance year 2024 and subsequent performance years, we are proposing to use historical submission-level MIPS Quality performance category scores to calculate the 40th percentile MIPS Quality performance category score. Specifically, we are proposing to use a rolling three-performance year average with a lag of one performance year (for example, the 40th percentile MIPS Quality performance category score, used for the quality performance standard for performance year 2024, would be based on averaging the 40th percentile MIPS Quality performance category scores from performance years 2020 through 2022). 

This approach would allow CMS to provide ACOs with the Shared Savings Program quality performance standard they must meet in order to share in savings at the maximum sharing rate prior to the start of the performance year (for example, the 40th percentile MIPS Quality performance category score, based on historical data and applicable for performance year 2024, would be released on the Shared Savings Program website in December 2023). Our proposal would address concerns expressed by interested parties that benchmarks are currently not publicly available prior to the start of a performance year, and that they do not believe that ACOs have a way of determining what quality score they would need to achieve to meet the quality performance standard. 

Proposal to Apply a Shared Savings Program Scoring Policy for Excluded APP Measures

Given that ACOs do not have a choice of measures they can report under the APP, we do not want to adversely impact shared savings determinations for events outside the ACOs’ control, such as that a measure is excluded. Therefore, we are proposing that, for performance year 2024 and subsequent performance years, if (1) an ACO reports all required measures under the APP, and meets the data completeness requirement for all required measures, and receives a MIPS Quality performance category score, and (2) the ACO’s total available measure achievement points used to calculate the ACO’s MIPS Quality performance category score for the performance year is reduced due to measure exclusion, then we would use the higher of the ACO's health equity adjusted quality performance score or the equivalent of the 40th percentile MIPS Quality performance category score across all MIPS Quality performance category scores, excluding entities/providers eligible for facility-based scoring, to determine whether the ACO meets the quality performance standard required to share in savings at the maximum rate under its track (or payment model within a track) for the relevant performance year.

This policy aims to alleviate the potential adverse impacts to shared savings determinations that may arise in the event that one or more of the quality measures required under the APP is excluded.

Proposal to Revise the Requirement to Meet the Case Minimum Requirement for Quality Performance Standard Determinations

In order to alleviate confusion regarding the reference to case minimum in determining the ACO quality performance standard, for performance year 2024 and subsequent performance years, we are proposing to replace the references to meeting the case minimum requirement with the requirement that the ACO must receive a MIPS Quality performance category score in order to meet the quality performance standard. 

This proposal would correct the purpose of our reference to case minimums by incorporating all of the applications of case minimums in our MIPS Quality performance category scoring policies to determine an ACO’s quality performance standard under the Shared Savings Program. 

For a fact sheet on the CY 2024 Quality Payment Program proposed changes, please visit the QPP Resource Library (cms.gov).

Proposals to Improve ACO Risk Adjustment and Alignment

Proposal to Cap Regional Service Area Risk Score Growth for Symmetry with ACO Risk Score Cap

We are proposing to modify the calculation of the regional component of the three-way blended benchmark update factor (weighted one-third accountable care prospective trend (ACPT), and two-thirds national-regional blend), for agreement periods beginning on January 1, 2024, and in subsequent years. The proposed approach would cap prospective HCC risk score growth in an ACO’s regional service area between benchmark year three and the performance year using a similar methodology as the one adopted in the CY 2023 PFS final rule (87 FR 69932 through 69946) for capping ACO risk score growth, while additionally accounting for an ACO’s aggregate market share. This cap on regional risk score growth would be applied independently of the cap on an ACO’s own prospective HCC risk score growth, meaning that this proposed cap on prospective HCC risk score growth in an ACO’s regional service area would be applied whether or not the ACO’s prospective risk score growth was capped.

The effect of the proposed regional risk score growth cap would be to increase the regional component of the update factor for ACOs in regions with aggregate regional prospective HCC risk score growth above the cap. ACOs in regions with aggregate regional prospective HCC risk score growth below the cap would not be affected by the proposed policy. The proposal would maintain a disincentive against coding intensity for ACOs with high market share by adjusting the regional risk score growth cap based on ACO market share.

By symmetrically limiting risk score growth within both an ACO’s assigned beneficiary population and its region, this proposed approach is expected to improve the accuracy of the regional update factors for ACOs operating in regional service areas with high risk score growth, particularly in later years of the five-year agreement period where the differences are expected to be the greatest. We believe capping regional risk score growth would strengthen incentives for ACOs to form or continue to operate in regions with high risk score growth and thereby incentivize ACOs to care for higher risk beneficiaries. This approach would also offer an incentive for potential applicant ACOs that may be examining recent risk score growth in their region and making the decision whether to participate in the Shared Savings Program.

Proposal to Update How Benchmarks Are Risk Adjusted

On March 31, 2023, CMS released the Announcement of Calendar Year (CY) 2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies,^[2] which finalized the transition to a revised CMS-HCC risk adjustment model, the 2024 CMS-HCC risk adjustment model, Version 28 (V28). Currently, to perform Shared Savings Program risk adjustment calculations, we use the CMS-HCC risk adjustment model(s) that is applicable for a particular calendar year to identify a Medicare FFS beneficiary’s prospective HCC risk score for the corresponding benchmark year or performance year. When the CMS-HCC risk adjustment model changes, this leads to situations wherein Shared Savings Program performance year and benchmark year comparisons are calculated using different CMS-HCC risk adjustment models. Based on initial results of Shared Savings Program analysis, we have found that using different CMS-HCC risk adjustment models between the benchmark and performance years negatively impacts ACOs with the highest average risk scores, ACOs participating in two-sided models, and ACOs that have been in the Shared Savings Program longer.

To strengthen risk adjustment in the Shared Savings Program and consistently apply V28 in the Shared Savings Program context, we are proposing a policy under which CMS would apply the same CMS-HCC risk adjustment model used in the performance year for all benchmark years, when calculating prospective HCC risk scores to risk adjust expenditures used to establish, adjust and update an ACO’s benchmark, for agreement periods beginning on January 1, 2024, and in subsequent years. This would be the same three-year phase-in as Medicare Advantage to the revised 2024 CMS-HCC model, which will mean the underlying model will be 67% of the current 2020 CMS-HCC risk adjustment model and 33% of the CMS-HCC risk adjustment model for performance year (PY) 2024. ACOs in an existing agreement period would continue to have the current methodology for calculating benchmark year and performance year prospective HCC risk scores, using different CMS-HCC risk adjustment model(s) applied, and are expected to experience smaller adverse impacts as a result of the phase-in of V28 and our existing approach to renormalize prospective HCC risk scores by Medicare enrollment type, among other factors.

Proposed Modifications to the Shared Savings Program’s Benchmarking Methodology — Negative Regional Adjustment 

Proposal to Mitigate the Impact of the Negative Regional Adjustment on the Benchmark to Encourage Participation by ACOs Caring for Medically Complex, High-Cost Beneficiaries

With the policies finalized in the CY 2023 PFS final rule (87 FR 69915 through 69923), we sought to reduce the impact of negative regional adjustments in several ways for agreement periods beginning on January 1, 2024, and subsequent years to incentivize ACOs that serve high-cost beneficiaries to join or continue to participate in the Shared Savings Program. We believe further mitigating the impact of the negative regional adjustment, thereby resulting in higher benchmarks for ACOs compared to the recently finalized methodology, could further bolster the business case for Shared Savings Program participation.

Under the proposed approach, ACOs that would face a negative overall adjustment to their benchmark based on the methodology adopted in the CY 2023 PFS final rule would benefit, as they would now receive no downward adjustment. Additionally, ACOs that have a negative regional adjustment amount and are eligible for the prior savings adjustment, under the policy adopted in the CY 2023 PFS final rule, would also be expected to benefit from the proposed policy, because we would no longer offset the prior savings amount by the negative regional adjustment amount when determining the final adjustment that would apply to the ACO’s

benchmark. ACOs that have an overall positive regional adjustment amount would continue to receive the same adjustment to their benchmark as they would under the methodology finalized in the CY 2023 PFS final rule.

Determining Beneficiary Assignment Under the Shared Savings Program

Proposal to Add a Step Three to the Step-Wise Assignment Methodology Used to Assign Beneficiaries to ACOs

We are proposing modifications to the assignment methodology, and the definition of an assignable beneficiary, to better account for beneficiaries who receive primary care from nurse practitioners, physician assistants and clinical nurse specialists during the 12-month assignment window and who received at least one primary care service from a physician in the preceding 12 months. This would increase access by assigning additional Medicare fee-for-service beneficiaries to ACOs, especially among more underserved populations. For the performance year beginning on January 1, 2025, and subsequent performance years, we propose to revise the step-wise beneficiary assignment methodology, as described in § 425.402, to include a new step three, which would utilize a proposed expanded window for assignment (a 24-month period that would include the applicable 12-month assignment window and the preceding 12 months) to identify additional beneficiaries for assignment. Consistent with the proposal to use an expanded window for assignment in an enhanced step-wise assignment methodology, we are proposing to revise the definition of an “assignable beneficiary” in § 425.20 to include additional beneficiaries who would be identified using the expanded window for assignment.

The proposed use of an expanded window for assignment would result in a greater number of beneficiaries included in the assignable population and, in particular, beneficiaries who tend to come from underserved populations, which we have seen over time are less likely to be assigned to ACOs than the overall Medicare fee-for-service beneficiary population. Specifically, beneficiaries likely to be added to the assignable population due to this proposal are more likely to be disabled, enrolled in the Medicare Part D LIS, or reside in areas with higher ADI scores. The proposed changes to the assignment methodology and the definition of assignable beneficiary would impact downstream aspects of the Shared Savings Program that rely on the assigned population, national assignable population, and assignable beneficiaries identified for an ACO’s regional service area. This proposal is also aligned with HHS’ Initiative to Strengthen Primary Care, given its improved recognition of the variety of clinician types who participate in delivering high quality primary care.

Proposed Modifications to Advance Investment Payments Policies

In the CY 2023 PFS final rule, we finalized a new payment option for eligible Shared Savings Program ACOs entering agreement periods beginning on or after January 1, 2024, to receive advance shared savings payments (87 FR 69782 through 69805). This payment option is referred to as “advance investment payments” or with the acronym “AIP,” and the payments themselves are referred to as “advance investment payments.”

We are proposing a series of technical modifications to refine AIP policies to better prepare for initial implementation of AIP, beginning with ACOs entering agreement periods on January 1, 2024. We are proposing to better support ACOs that are prepared to progress to performance-based risk, by allowing them to advance to two-sided model levels within the BASIC track’s glide path, beginning in performance year three of the agreement period in which they receive advance investment payments. We are also proposing to only recoup advance investment payments from the shared savings of an ACO that wishes to renew early to continue its participation in the Shared Savings Program, instead of directly recouping the payments from the ACO. We propose to require ACOs to report spend plan updates and actual spend information to CMS in addition to publicly reporting such information. We propose to modify the termination policies to specify that CMS would immediately terminate advance investment payments to an ACO for future quarters if the ACO voluntarily terminates from the Shared Savings Program. We propose to codify that ACOs receiving advance investment payments may seek reconsideration review of all payment calculations. If finalized, these policies would be effective beginning January 1, 2024.

Proposed Modifications to Shared Savings Program Eligibility Requirements

Shared Governance Requirement

In the November 2011 final rule (76 FR 67819 through 67822), CMS initially established Shared Savings Program requirements on the composition and control of the ACO’s governing body, including that at least 75% control of an ACO’s governing body must be held by ACO participants (§ 425.106(c)(3)). Further, CMS established an option for ACOs to seek an exception to this shared governance requirement (refer to §§ 425.106(c)(5) and 425.204(c)(3)). 

To date, CMS has not granted an ACO an exception to this requirement, despite the flexibility provided in current regulation. The 75% participant control threshold is critical to ensuring that governing bodies are participant-led and best positioned to meet program goals, while allowing for partnership with non-Medicare enrolled entities to provide needed capital and infrastructure for ACO formation and administration. Accordingly, we are proposing to remove the option for ACOs to request an exception to the requirement specified in § 425.106(c)(3) that 75% control of the ACO's governing body must be held by ACO participants.

Comment Solicitation on Potential Future Developments to Shared Savings Program Policies

CMS has described its vision for the Shared Savings Program and new Innovation Center models to expand participation in ACOs, strengthen incentives for savings for participants and for Medicare, and make access to ACOs more equitable, to help CMS achieve its goal of having all beneficiaries in the traditional Medicare program cared for by health care providers who are accountable for costs and quality of care by 2030.^[3] To inform potential future policy developments, to further advance our progress towards meeting these goals, we seek comment on topics, including the following: (1) incorporating a higher risk track than the ENHANCED track; (2) modifying the amount of the prior savings adjustment through changes to the 50% scaling factor used in determining the adjustment, as well as considerations for potential modifications to the positive regional adjustment to reduce the possibility of inflating the benchmark; (3) potential refinements to the ACPT and the three-way blended benchmark update factor, such as (i) replacing the national component of the two-way blend with the ACPT, and (ii) scaling the weight given to the ACPT in a two-way blend for each ACO based on the collective market share of multiple ACOs within the ACO’s regional service area; and (4) approaches to promote ACO and CBO collaboration.

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