CMS finalizes major reforms to Medicare Shared Savings Program, 4.5% doc pay cut in 2023

The Centers for Medicare & Medicaid Services (CMS) is moving forward with a major overhaul of the Medicare accountable care organization program to boost enrollment and address health equity gaps.

As outlined in the final rule issued Tuesday, CMS will offer advance shared savings payments to low-revenue ACOs and allow longer periods of time for ACOs to become accustomed to accountable care before being liable for downside risk, all of which is expected to increase participation in rural and underserved areas, the agency said in a press release.

Under the new rule, an organization new to the Medicare Shared Savings Program (MSSP) that is not renewing or reentering as an ACO and qualifies as low revenue can get a one-time payment of $250,000 and quarterly payments for the first two years of a five-year period. 

The advance payments would be recouped once an ACO starts to generate shared savings in their current and next agreement periods. However, if an ACO does not generate savings, CMS will not move to recoup the money, but the ACO must stay in the program for the full five years.

CMS is hoping to entice more physicians into value-based care, a key request from ACO stakeholders that say that initial costs of investment in becoming an ACO are too high and burdensome.

CMS is also finalizing a health equity adjustment to an ACO’s quality score to recognize high-quality performance by ACOs with high underserved populations, the agency said.

"These policies represent some of the most significant reforms since the program was established in 2011, and the first Accountable Care Organizations (ACOs), which are groups of health care providers who come together to give coordinated, high-quality care to people with Medicare, began participating in 2012," CMS officials said in a fact sheet. "Through these policies, which are central to the Medicare Value-Based Care Strategy, CMS will take important steps toward our 2030 goal of having 100% of Traditional Medicare beneficiaries in an accountable care relationship with their healthcare provider by 2030." 

The MSSP is the nation’s largest ACO program, covering more than 11 million people with Medicare and including more than 500,000 healthcare providers, according to CMS.

In the final rule, CMS also finalized adjustments to ACO benchmarks to promote long-term participation. The CMS said the changes would save Medicare more than $15 billion and result in $650 million in higher shared savings payments to ACOs.

The National Association of ACOs (NAACOS) praised the program reforms.

"Today’s finalized changes to Medicare’s largest ACO program bring a win to patients and will absolutely help providers deliver accountable care to more beneficiaries," said NAACOS President and CEO Clif Gaus. "On balance, we believe this final rule will grow participation in accountable care organizations, which have already generated billions of dollars of savings for our health system." 

NAACOS remains concerned with CMS’ use of a prospectively projected administrative growth factor for ACO benchmarks or their financial spending targets. "More than a third of ACOs would be harmed by this change. Instead, we ask for more collaboration between CMS and the ACO community to build a better bridge to a more sustainable benchmarking strategy," Gaus said. "Specifically, CMS should consider correcting the ‘rural glitch,’ where ACOs no longer benefit from the regional adjustment when lowering the spending of their assigned patients. This change would greatly help ACOs, but remains in effect even after today’s changes."

Docs will see slight pay cut in 2023

The updates are part of the 2023 Physician Fee Schedule rule that sets Medicare payments for doctors and also will make changes to coverage for certain behavioral health services.

Physicians will face a small decline in their Medicare payments next year, despite strong protests from provider groups to the payment cut when the proposed rule was released back in July.

CMS will move forward with a 2023 fee schedule conversion factor of $33.08 for each relative unit, which determines how Medicare payments to doctors are calculated. That factor is a slight decline of the 2022 factor of $34.61, or a 4.5% pay cut.

The factor considers a statutory requirement that the conversion factor for 2023 remains flat and the expiration of a 3% bump in fee schedule payments that went away in 2022. The slight bump was installed to help physicians weather the revenue impact from the COVID-19 pandemic. 

In a statement, Jack Resneck Jr., M.D., president of the American Medical Association (AMA), said the rate cuts would create "immediate financial instability in the Medicare physician payment system and threaten patient access to Medicare-participating physicians." 

“Earlier this year, the AMA offered detailed comments on the proposed payment schedule. It was immediately apparent that the 2023 Medicare physician payment rates not only failed to account for inflation in practice costs and COVID-related challenges to practice sustainability but also included the damaging across-the-board reduction," Resneck said. "Unless Congress acts by the end of the year, physician Medicare payments are planned to be cut by nearly 8.5% in 2023—partly from the 4% PAYGO sequester—which would severely impede patient access to care due to the forced closure of physician practices and put further strain on those that remained open during the pandemic."

The rule also outlines several provisions aimed at expanding behavioral health services, including covering opioid treatments and services from mobile units like vans and paying clinical psychologists and licensed social workers as part of a primary care team.

The rule issued Tuesday codifies current policies in which Medicare Parts A and B pay for dental services when that service is integral to treating a beneficiary's medical condition. Medicare will also pay for a dental exam and treatment preceding an organ transplant as well as several other services. 

The rule also expands cancer screening coverage in support of President Joe Biden’s Cancer Moonshot initiative. Colon and rectal cancers continue to be a leading cause of death in the U.S. with even higher new cases and death rates for Black Americans, American Indians and Alaskan Natives, according to CMS.

Medicare will now reduce the minimum age for colorectal cancer screening from 50 to 45 years, in alignment with recently revised policy recommendations by the U.S. Preventive Services Task Force. Additionally, Medicare will now cover as a preventive service a follow-on screening colonoscopy after a noninvasive stool-based test returns a positive result, which means that beneficiaries will not have out-of-pocket costs for both tests. 

"Together, we are building a stronger Medicare program,” said Deputy Administrator and Director for the Center for Medicare Meena Seshamani, M.D., Ph.D., in a statement. “No matter who you are, or what diagnoses you have, these changes will help ensure that Medicare treats the whole person—caring for physical health, behavioral health, and social needs that are integral to health—and ensuring access to the high-quality care all people deserve.”