Legislative Developments in the Medicare Shared Savings Program

Pearl Health



Efforts to move American healthcare systems toward a value-based healthcare model continue to evolve. The Center for Medicare and Medicaid Services (CMS) is invested in transitioning from a fee-for-service model to a value-based one. This has been an ongoing pursuit, starting with Accountable Care Organizations (ACOs) and the Medicare Shared Savings Program, and it continues today with next generation ACOs and the Global and Professional Direct Contracting (GPDC) model. CMS evidently believes that shifting toward a value-based payment program rather than fee-for-service will reduce costs and improve outcomes. But getting the correct formula for success will take a bit of tweaking. 

There are a few new legislative developments that hope to better facilitate CMS’s value-based healthcare goals. Recent changes in the Medicare Shared Savings Program appear to have triggered a decline in enrollment. Policies that increased provider risk and reduced opportunities for shared savings seem to be the cause. This naturally undermines value-based care goals. Therefore, legislators are introducing new bills designed to reverse these trends. By making ACOs and Direct Contracting models more appealing, provider participation should increase. Providers can make the best decisions by understanding the nuances of these new legislative bills.


The National Association of ACO's Letter to CMS

Understanding the Medicare Shared Savings Program

The Medicare Shared Savings Program originated from studies conducted under the Bush administration. It was then permanently authorized as part of the Affordable Care Act. In essence, this program allows for providers to participate in Medicare ACOs, facilitating an opportunity to share in cost savings. CMS defines spending and quality metrics for a provider’s patient population. If those metrics are met, then they can share in the cost-savings and receive a periodic value-based payment. But if they fail to meet these targets, reimbursement withholdings result. This is the basic structure for this value-based healthcare model. 

Unfortunately, provider participation in the Medicare Shared Savings Program has been declining lately. In 2018, there were 561 participating ACOs in the program. But in 2021, this figure fell to 477. The reason for the decline is believed to be recent changes that occurred under the Trump administration. These changes required providers to take on risk earlier in the program than previously. Likewise, the amount of the value-based payment received for cost savings was reduced. As a result, the National Association of ACOs believe providers became less inclined to participate in Medicare ACO programs.

House Representative Suzan DelBene D-Washington

The Value in Health Care Act

Recently, a bipartisan legislative bill was introduced in the House to address the recent decline in ACO participation. The Value in Health Care Act adopts several changes to the Medicare Shared savings Program to encourage providers to join. Notably, it increases the amount of shared savings that providers can receive. It also attempts to better define fair benchmarks upon which payments will be based. Finally, the bill mandates further study of the health outcomes of beneficiaries participating in both the Medicare Shared Savings Program and ‘vanilla’ Medicare fee-for-service. The comparison will potentially provide evidence that can be used to guide and support future legislative changes. 

The most challenging aspect of new legislation relates to changes that might affect benchmarks. Refining these targets for specific ACOs and patient populations can be difficult because of inherent variability. For example, providers with highly complex patient populations experience higher levels of risk.  According to a summary of the bill, “The legislation would increase the size of shared savings that an ACO can get. It also will modify the risk adjustment process…to better reflect factors that providers in the program could encounter…” These would be welcomed changes.

House Representative Jodey Arrington R-Texas

The Accountable Care in Rural America Act

Additional legislation concerning the Medicare Shared Savings Program is also making its way through the House. The Accountable Care in Rural America Act hopes to facilitate greater equity for participating providers (and their patients) in rural areas. Currently, spending and quality metrics that determine value-based payments are calculated based on regional data of all patients. However, this method of calculation places rural regions at a disadvantage: because their Medicare population percentage is often higher compared to urban areas, they tend to receive less. This is the case even if they reduce costs by equivalent amounts.

In an effort to correct this situation, this bipartisan bill would remove Medicare beneficiaries from the regional calculations. In other words, only non-Medicare patients would be used to determine spending and quality benchmarks. This would create a more just formula in determining target thresholds for both rural and urban providers. As a result, each would receive a comparable value-based payment when such targets are met. This change may allow a more even playing field for rural and urban providers. But it remains to be determined if this will allow more accurate and fair benchmarks to be defined. 

A Work in Progress

Hopefully Congress will continue to invest in and prioritize bills that will further incentivize progressive steps in the adoption of value-based models. Evidence already supports that the shift to value-based healthcare is beneficial, when executed properly: in 2020, the Medicare Shared Savings Program saved CMS roughly $1.2 billion. ACOs, Direct Contracting, and other value-based healthcare models will continue to evolve over time, whether through new legislation or rule changes by CMS. Therefore, it will be important for providers to follow ongoing changes in relevant legislation in order to make good choices.

1 King, R. (2021). NAACOS asks CMS to give ACOs more time to sign up for MSSP amid decline in participation. FierceHealthcare.com. Retrieved from https://www.fiercehealthcare.com/payer/naacos-asks-cms-to-give-acos-more-time-to-sign-up-for-mssp-amid-decline-participation

2 King, R. (2021). New bill seeks to reverse slide in ACO participation with more shared savings. FierceHealthcare.com. Retrieved from https://www.fiercehealthcare.com/payer/new-bill-seeks-to-reverse-slide-aco-participation-more-shared-savings

3  King, R. (2021). Bill aims to fix glitch that penalizes rural ACOs even if they generate savings. FierceHealthcare.com. Retrieved from https://www.fiercehealthcare.com/payer/bill-aims-to-fix-glitch-penalizes-rural-acos-even-if-they-generate-savings