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MSSP Proposal Better Measures Risk With Changes to the Benchmark Methodology

Travis Broome is vice president of policy at Aledade, a new company helping doctors stay independent and thrive in the transition to value-based care. Joining Aledade early on, Travis helped Aledade grow from 2 accountable care organizations (ACOs) to 20 ACOs. From business development with both practices and payers, to early population health analytics, to serving as executive director for the Aledade Louisiana ACO, he has touched every part of Aledade as it has grown. Today, he is a thought leader on accountable care and is responsible for strategy development, policy analysis and economic modeling. Prior to Aledade, Travis was a regional director at CMS. He earned his MPH and MBA from the University of Alabama at Birmingham.
Cowritten by Sean Cavanaugh, chief administrative officer of Aledade; Hayden Rooke-Ley of Aledade; and Farzad Mostashari, MD, cofounder and CEO of Aledade.

On August 9, CMS issued the first update to the Medicare Shared Savings Program (MSSP) of the current administration. This is the second of a series of blogs that explores the proposed regulation. In this blog, we explore the proposed changes to how MSSP benchmarks are set.

We have been known to say “it is all about the benchmark,” and this is doubly true when performance-based risk is involved. Our first post identified 3 types of risk an accountable care organization (ACO) must consider: medical risk, insurance risk, and regulatory risk. Medical risk is changes in costs driven by the delivery of healthcare services, such as how well diabetic patients are managed. Insurance risk is changes in costs that are not driven by the delivery of healthcare services, such as changes in the rates of accidents. Regulatory risk is the risk of changing the rules and/or rules that affect risk in nontransparent ways. The benchmark methodology is crucial to determining how much medical and insurance risk an ACO assumes, and whether ACOs are appropriately rewarded for reducing costs. CMS is proposing several substantial changes to this benchmark methodology.

Risk Score
In today’s value-based landscape, physicians are becoming more amenable to accepting responsibility for medical risk. But insurance risk remains daunting—and beyond the purview of most providers. Therefore, a benchmark methodology should minimize the transfer of insurance risk to healthcare providers. The primary mechanism for transferring medical risk, but not insurance risk, is risk adjustment. CMS uses the Hierarchical Condition Categories, or the “HCC mode,” in both Medicare Advantage (MA) and in MSSP. In MA, payments are adjusted up or down for changes in risk score, without caps, and based on a normalized risk score. In MSSP, the ACO population is divided into continuously assigned beneficiaries (those who saw an ACO provider both last year and this year) and newly assigned beneficiaries (those who did not see an ACO provider last year). For the continuously assigned beneficiaries (75% to 90% of the ACO population), the population-level risk score is asymmetric: it cannot increase, but it can decrease. This means that essentially all insurance risk that this population gets sicker is transferred to the ACO. For the newly assigned population, the risk score floats freely like in MA.

CMS is proposing to remove the distinction between the 2 ACO populations; instead, it would calculate a single risk score for the entire assigned population to adjust the benchmark. However, unlike MA, CMS is proposing a 3% cap, up or down, on changes in risk score compared with the most recent benchmark year. This limit could hold for as long as 5 years, although an ACO can shorten this timeframe by ending its agreement early and going to the Enhanced track. CMS proposes to use the cap instead of a MA-style coding intensity adjustment. CMS is asking for comment on whether the caps should be higher, whether the caps should be replaced with a coding intensity adjustment, or whether the risk score should just freely float with no adjustment until CMS has more data in such an environment.

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