Pathways to success: Five key areas participants should evaluate based off the final rule

The Centers for Medicare and Medicaid Services (CMS) delivered sweeping changes on December 21, 2018. They should come as no surprise given the clear indications of the new direction throughout 2018.

CMS has now set the foundation for “Pathways to Success” with the Final Rule for the program. The most notable change is to reduce participants’ time in upside-only models, which is critical to driving financial outcomes rather than simple participation numbers. What’s more, the shift means CMS is doubling down based on the indications that Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs) in two-side risk arrangements save more than their one-side counterparts.

The newly formed Basic and Enhanced Tracks will be the highlight of the Final Rule. Yet current and prospective ACOs should consider other nuances when evaluating the new normal of Pathways to Success. Optum Advisory Services (OAS) believes organizations should assess the following areas.

1. Current MSSP contract timing
ACOs with agreement periods ending in 2019 and 2020 should begin evaluating if their current contract would likely result in better performance against their established benchmark than versus a new benchmark within Pathways to Success. Is your organization currently faced with a low benchmark and will it fail to meet its minimum savings rate? If so, it may be best to rebase your benchmark under a new agreement beginning on July 1, 2019.

2. Expected level of entry considerations
Pathways to Success will have Basic and Enhanced tracks. The Basic track will have five different “levels” (A through E) of risk. There are multiple new definitions regarding past participation, level of experience and control over spending that mask a lot of complexity. ACOs will need to understand these complexities to ensure they know what level of risk to expect moving forward. ACOs should also evaluate their participant Tax ID Number’s (TIN) experience in MSSP or Advanced Payment Models. This will help the ACO determine which track or level the ACO will enter. Determining if your ACO will be a “high-revenue” or “low-revenue” ACO may also give you further options to explore.

3. New benchmarking methodology effects
CMS’ new and improved benchmarking methodology will:

• Incorporate regional expenditures
• Blend national and regional trends
• Increase the impact of risk adjustment

In years past, many ACOs have had to compete against their own historical benchmark. This decreased the likelihood of earning Shared Savings despite high performance. By projecting financial performance through actuarial analyses that incorporate these new changes, organizations can improve their data-driven, strategic decisions.

4. Risk adjustment impacts
CMS will eliminate the distinction between continuously and newly assigned beneficiaries. This may allow modest adjustments to occur (up to positive 3 percent) based on changes in beneficiary risk profiles over the length of the agreement.

It has always been important to capture CMS Hierarchical Condition Categories (HCC) information completely and accurately. The new ruling will make it even more fundamental. That’s because the new benchmarking methodology will more completely and accurately reflect changes in a population risk profile. An ACO will need to begin to capture complete beneficiary information as soon as possible. This is especially true for those with identified documentation and coding improvement opportunities.

5. Administrative workflows
It may seem like a minor change compared to others mentioned above, but CMS finalized the requirement for ACOs to deliver a standardized written notice to all assigned beneficiaries prior to or at their first primary care visit. OAS advises instituting an automated workflow throughout the ACO’s organizational process to limit any administrative burden for front-office staff. ACOs can also use this new regulation as a way to underline the importance of preventive services like annual wellness visits when contacting their beneficiaries.

With greater exposure to risk on the horizon, understanding the impact of these five key areas will be paramount as ACOs try to build their success within Pathways to Success. We recommend providers guide their decisions with actuarial financial modeling and utilization projections, as well as clinical variation analyses. This will help determine how current performance will trend forward in 2019 and beyond. Even though July 1, 2019, is six months away, it is never too early to begin evaluating how to increase quality and drive down costs for your patients.

Mark Lamm is a Consultant at Optum Advisory Services

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