[Federal Register Volume 82, Number 246 (Tuesday, December 26, 2017)]
[Rules and Regulations]
[Pages 60912-60919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27920]



[[Page 60912]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 425

[CMS-1702--IFC]
RIN 0938-AT51


Medicare Program; Medicare Shared Savings Program: Extreme and 
Uncontrollable Circumstances Policies for Performance Year 2017

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Interim final rule with comment period.

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SUMMARY: This interim final rule with comment period establishes 
policies for assessing the financial and quality performance of 
Medicare Shared Savings Program (Shared Savings Program) Accountable 
Care Organizations (ACOs) affected by extreme and uncontrollable 
circumstances during performance year 2017, including the applicable 
quality reporting period for the performance year. Under the Shared 
Savings Program, providers of services and suppliers that participate 
in ACOs continue to receive traditional Medicare fee-for-service (FFS) 
payments under Parts A and B, but the ACO may be eligible to receive a 
shared savings payment if it meets specified quality and savings 
requirements. ACOs in performance-based risk agreements may also share 
in losses. This interim final rule with comment period establishes 
extreme and uncontrollable circumstances policies for the Shared 
Savings Program that will apply to ACOs subject to extreme and 
uncontrollable events, such as Hurricanes Harvey, Irma, and Maria, and 
the California wildfires, effective for performance year 2017, 
including the applicable quality data reporting period for the 
performance year.

DATES: 
    Effective date: These regulations are effective on January 20, 
2018.
    Comment date: To be assured consideration, comments must be 
received at one of the addresses provided below, no later than 5 p.m. 
on February 20, 2018.

ADDRESSES: In commenting, please refer to file code CMS-1702-IFC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission. You may submit comments in one of four 
ways (please choose only one of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to www.regulations.gov. Follow the instructions for 
``submitting a comment.''
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1702-IFC, P.O. Box 8016, 
Baltimore, MD 21244-8013. Please allow sufficient time for mailed 
comments to be received before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1702-IFC, Mail 
stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW, Washington, DC 20201. 
(Because access to the interior of the Hubert H. Humphrey Building is 
not readily available to persons without federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850. If you intend to deliver your 
comments to the Baltimore address, please call telephone number (410) 
786-7195 in advance to schedule your arrival with one of our staff 
members. Comments mailed to the addresses indicated as appropriate for 
hand or courier delivery may be delayed and received after the comment 
period. For information on viewing public comments, see the beginning 
of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Sabrina Ahmed, (410) 786-7499.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that website to view 
public comments.

I. Background

    Stakeholders representing Medicare Shared Savings Program (Shared 
Savings Program) Accountable Care Organizations (ACOs) located in the 
geographic areas impacted by Hurricanes Harvey, Irma, and Maria and the 
California wildfires have reported significant impacts on healthcare 
provider operations and on area infrastructure. (For more detailed 
information, see the interim final rule with comment period titled 
Medicare Program; Quality Payment Program: Extreme and Uncontrollable 
Circumstance Policy for the Transition Year that appeared in the 
Federal Register on November 16, 2017 (hereinafter referred to as the 
Quality Payment Program IFC) (82 FR 53568 and 53895). For example, 
Hurricane Maria devastated Puerto Rico on September 20, 2017. 
Stakeholders located in Puerto Rico report that while federal and local 
agencies have been working around the clock to restore infrastructure 
in Puerto Rico, local communication systems are still not fully 
functioning, some residents do not have water services, and many 
residents do not have access to electric power. Under such 
circumstances, healthcare providers report that their main focus is to 
manage chronically ill patients; provide essential services such as 
dialysis, chemotherapy, and blood transfusions; deal with trauma; and 
dispense maintenance medications, including insulin. Many healthcare 
providers in Puerto Rico have been unable to reopen their offices not 
only because they lack power and water, but also because access to fuel 
for operating alternate power generators has been limited.
    In addition, other stakeholders report that the loss of 
infrastructure has significantly affected the utilization and cost of 
services furnished to the Medicare beneficiaries they serve. For 
example, stakeholders representing ACOs in Florida indicate there has 
been a significant increase in emergency department services, 
hospitalizations, and skilled nursing facility (SNF) admissions because 
of Hurricane Irma. They believe that the increased numbers

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of medical services being furnished in their geographic areas is a 
direct result of hurricane-related factors affecting healthcare 
providers that are beyond their control. Stakeholders report that, in 
some cases, beneficiaries located in hurricane-affected areas who are 
being treated for chronic conditions, such as diabetes, have limited 
access to their primary clinicians and have not been able to obtain 
timely refills for their prescribed medications, resulting in an 
increased volume of hospital and SNF admissions, as well as increased 
volumes of other medical services. Stakeholders suggest that 
beneficiaries in affected areas are more likely to be admitted to 
hospitals and SNFs, and to require other additional medical services 
when basic infrastructure has been damaged, such as when beneficiaries 
are unable to utilize ventilators or other medically necessary 
equipment at home or in another less intensive setting because of 
widespread electrical outages. Further, ACOs located in affected areas 
report that ACO providers/suppliers, including hospitals and SNFs, are 
struggling to help beneficiaries meet their post-discharge needs, 
including for housing, family support, and personal care. Stakeholders 
report that as a result, in some cases, patients may have remained in 
inpatient facilities due to the lack of appropriate post-discharge 
services.
    Under the Shared Savings Program, ACOs that successfully meet 
quality and savings requirements can share a percentage of the achieved 
savings with Medicare. Eligible ACOs share in savings only if they meet 
both the quality performance standards and generate shareable savings 
(see Sec. Sec.  425.604(a)(7), (b) and (c); 425.606(a)(7), (b) and (c); 
and 425.610(a)(7), (b) and (c)). ACOs participating in a two-sided risk 
model are required to share losses with the Medicare program when 
expenditures over the benchmark exceed the minimum loss rate (see 
Sec. Sec.  425.606(b), (f) and (g); and 425.610(b), (f) and (g)). ACOs 
have expressed concerns that disaster-related effects on their ACO 
participants and assigned beneficiary population could affect their 
ability to successfully meet the quality performance standards, and in 
the case of ACOs under performance-based risk, to avoid shared losses. 
Stakeholders are concerned about the impact on ACO performance results 
when comparing performance year expenditures that reflect disaster-
related spikes in utilization and costs of medical services against 
historical benchmarks that do not include the costs of a disaster. For 
instance, in light of the challenges being faced by healthcare 
providers in Puerto Rico, stakeholders estimate that it might take ACO 
participants in Puerto Rico from 3 to 6 months, at a minimum, to comply 
with quality measures reporting requirements for performance year 2017. 
Stakeholders are also concerned that ACOs and ACO participants affected 
by disasters could be unfairly assessed for performance year 2017 based 
on the quality and claims data that would be available during financial 
reconciliation for performance year 2017. For example, stakeholders 
have expressed the following concerns:
     There could be very limited ability to obtain beneficiary 
survey responses to the Consumer Assessment of Healthcare Providers and 
Systems (CAHPS) survey through phone calls and mailings. Further, the 
widespread devastation of infrastructure and the impact on healthcare 
providers would likely adversely impact beneficiary access to care and 
beneficiary ratings of services, which could negatively affect results 
on the CAHPS survey measures.
     ACO quality performance scores could be adversely affected 
by a limited ability to furnish and/or submit claims for cancer 
screening services, diabetic eye exams, or other preventive services. 
This would impact ACOs' quality performance scores because higher rates 
are better for many of the quality measures, such as ACO-19 Colorectal 
Cancer Screening or ACO-20 Breast Cancer Screening.
     There could be a high number of unplanned hospital and SNF 
admissions, and high use of emergency room services due to multiple 
disaster-related factors, such as beneficiary exposure to contagious 
illnesses and limited access to medicines for beneficiaries with 
chronic conditions. This could significantly impact ACOs' quality 
performance scores because lower rates of admissions are better for 
measures, such as ACO-35 SNF 30-day All-Cause Readmission Measure or 
ACO-36 All-Cause Unplanned Admissions for Patients with Diabetes.
     The impact of the disasters on an ACO's financial 
performance could be unpredictable as a result of the increase in 
utilization and cost of services furnished to the Medicare 
beneficiaries it serves. In some cases, ACO participants might be 
unable to coordinate care because of migration of patient populations 
leaving the impacted areas. Stakeholders have expressed concerns that 
existing Track 2 and Track 3 ACOs may be unable to remain in a two-
sided risk track if they are held fully accountable for repaying shared 
losses associated with these disasters. We also note that our 
experience with the Shared Savings Program has been that the majority 
of ACOs that owe shared losses subsequently terminate their agreements.
    These stakeholders further suggest that in the future providers and 
suppliers could be reluctant to participate in the Shared Savings 
Program under a two-sided risk model because of concerns that ACOs 
participating under a two-sided risk model could be required to share 
losses with the Medicare program for expenditures resulting from 
extreme and uncontrollable circumstances.
    Disasters may have several possible effects on our ability to 
measure ACO quality performance. For instance, displacement of 
beneficiaries may make it difficult for ACOs to access medical record 
data required for quality reporting, as well as reduce the beneficiary 
response rate on survey measures. Further, for practices damaged by a 
disaster, the medical records needed for quality reporting may be 
inaccessible.
    We also believe that disasters may affect the infrastructure of ACO 
participants, ACO providers/suppliers, and potentially the ACO legal 
entity itself, thereby disrupting routine operations related to their 
participation in the Shared Savings Program and achievement of program 
goals. The effects of a disaster could include challenges in 
communication between the ACO and its participating providers and 
suppliers and in implementation of and participation in programmatic 
activities. These factors could jeopardize an ACO's ability to remain 
in the program, particularly for ACOs that have accepted performance-
based risk under Tracks 2 and 3. Stakeholders have requested that we 
develop policies under the Shared Savings Program to recognize the 
impact of extreme and uncontrollable circumstances on ACO quality and 
financial performance.

II. Provisions of the Interim Final Rule

A. Shared Savings Program Extreme and Uncontrollable Circumstances 
Policies for Performance Year 2017

    We agree with stakeholders that the financial and quality 
performance of ACOs located in areas subject to extreme and 
uncontrollable circumstances could be significantly and adversely 
affected. We also agree that due to the widespread disruptions that 
have occurred during 2017 in areas affected by Hurricanes Harvey, Irma, 
and Maria, and the California wildfires, new policies are warranted for 
assessing

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quality and financial performance of Shared Savings Program ACOs in the 
affected areas. We believe it is appropriate to adopt policies to 
address stakeholder concerns that displacement of beneficiaries may 
make it difficult for ACOs to access medical record data required for 
quality reporting, and might reduce the beneficiary response rate on 
survey measures. In addition, medical records needed for quality 
reporting may be inaccessible. We also believe it is appropriate to 
adopt policies to address stakeholders' concerns that ACOs might be 
held responsible for sharing losses with the Medicare program resulting 
from catastrophic events outside the ACO's control given the increase 
in utilization, migration of patient populations leaving the impacted 
areas, and the mandatory use of natural disaster payment modifiers 
making it difficult to identify whether a claim would otherwise have 
been denied under normal Medicare fee-for-service (FFS) rules.
    Under the Shared Savings Program, we do not currently have policies 
for addressing ACO quality performance scoring and the determination of 
the shared losses owed by ACOs participating under performance-based 
risk tracks in the event of an extreme or uncontrollable circumstance. 
In the Quality Payment Program IFC (82 FR 53895), we established an 
automatic policy to address extreme and uncontrollable circumstances, 
including Hurricanes Harvey, Irma, and Maria, for the Merit-based 
Incentive Payment System (MIPS) for the 2017 performance year. (The 
specific regions identified as being affected by Hurricanes Harvey, 
Irma, and Maria for the 2017 MIPS performance year are provided in 
detail in section III.B.1.e. of the Quality Payment Program IFC (82 FR 
53898)). In the Quality Payment Program IFC, we stated that should 
additional extreme and uncontrollable circumstances arise for the 2017 
MIPS performance period that trigger the automatic extreme and 
uncontrollable circumstance policy under the Quality Payment Program, 
we would communicate that information through routine communication 
channels, including but not limited to issuing program memoranda, 
emails to stakeholders, and notices on the Quality Payment Program 
website, qpp.cms.gov (82 FR 53897). For example, we recently issued 
guidance to stakeholders indicating that the MIPS Extreme and 
Uncontrollable Circumstance Policy also applies to MIPS eligible 
clinicians affected by the California wildfires (see https://www.cms.gov/Medicare/Quality-Payment-Program/Resource-Library/Interim-Final-Rule-with-Comment-fact-sheet.pdf).
    We believe it is also appropriate to establish automatic extreme 
and uncontrollable circumstances policies under the Shared Savings 
Program for performance year 2017 due to the urgency of providing 
relief to Shared Savings Program ACOs impacted by Hurricanes Harvey, 
Irma, and Maria, and the California wildfires, because their quality 
scores could be adversely affected by these disasters and some ACOs 
could be at risk for additional shared losses due to the costs 
associated with these extreme and uncontrollable events. Therefore, 
given the broad impact of the three hurricanes and the wildfires, and 
to address any additional extreme and uncontrollable circumstances that 
may arise during 2017 or the quality data reporting period for the 
performance year, we are establishing the policies described below for 
the Shared Savings Program for performance year 2017.
    For program clarity and to reduce unnecessary burdens on affected 
ACOs, we are aligning the automatic extreme and uncontrollable 
circumstances policies under the Shared Savings Program with the policy 
established under the Quality Payment Program. Specifically, the Shared 
Savings Program extreme and uncontrollable circumstances policies will 
apply when we determine that an event qualifies as an automatic 
triggering event under the Quality Payment Program. We will use the 
determination of an extreme and uncontrollable circumstance under the 
Quality Payment Program, including the identification of affected 
geographic areas and applicable time periods, for purposes of 
determining the applicability of the extreme and uncontrollable 
circumstances policies with respect to both financial performance and 
quality reporting under the Shared Savings Program. These policies will 
also apply with respect to the determination of the ACO's quality 
performance in the event that an extreme and uncontrollable event 
occurs during the applicable quality data reporting period for 
performance year 2017 and the reporting period is not extended. We 
believe it is appropriate to extend these policies to encompass the 
quality reporting period, unless the reporting period is extended, 
because we would not have the quality data necessary to measure an 
ACO's quality performance for 2017 if the ACO were unable to submit its 
quality data as a result of a disaster occurring during the submission 
window. For example, if an extreme and uncontrollable event were to 
occur in February 2018, which is during the quality data reporting 
period for performance year 2017 that is currently scheduled to end on 
March 16, 2018 at 8 p.m. eastern daylight time, then the extreme and 
uncontrollable circumstances policies would apply for quality data 
reporting for performance year 2017, if the reporting period is not 
extended. We do not believe it is appropriate to extend this policy to 
encompass the quality data reporting period if the reporting period is 
extended because affected ACOs would have an additional opportunity to 
submit their quality data, enabling us to measure their quality 
performance in 2017. However, we note that, because a disaster that 
occurs after the end of the performance year would have no impact on 
the determination of an ACO's financial performance for performance 
year 2017, we will make no adjustment to shared losses in the event an 
extreme or uncontrollable event occurs during the quality data 
reporting period.
1. Determination of Quality Performance Scores for ACOs in Affected 
Areas
    ACOs and their ACO participants and ACO providers/suppliers are 
frequently located across several different geographic regions or 
localities, serving a mix of beneficiaries who may be differentially 
impacted by hurricanes, wildfires, or other triggering events. 
Therefore, we need to establish a policy for determining when an ACO, 
which may have ACO participants and ACO providers/suppliers located in 
multiple geographic areas, should qualify for the automatic extreme and 
uncontrollable circumstance policies for the determination of quality 
performance. We will determine whether an ACO has been affected by an 
extreme and uncontrollable circumstance by determining whether 20 
percent or more of the ACO's assigned beneficiaries resided in counties 
designated as an emergency declared area in performance year 2017, as 
determined under the Quality Payment Program as discussed in section 
III.B.1.e. of the Quality Payment Program IFC (82 FR 53898) or the 
ACO's legal entity is located in such an area. An ACO's legal entity 
location is based on the address on file for the ACO in CMS' ACO 
application and management system. We are using 20 percent of the ACO's 
assigned beneficiary population as the minimum threshold to establish 
an ACO's eligibility for the policies regarding quality reporting and 
quality performance scoring included in this interim final rule with 
comment period because we believe the 20 percent threshold provides a 
reasonable way to

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identify ACOs whose quality performance may have been adversely 
affected by an extreme or uncontrollable circumstance, while excluding 
ACOs whose performance would not likely be significantly affected. The 
20 percent threshold was selected to account for the effect of an 
extreme or uncontrollable circumstance on an ACO that has the minimum 
number of assigned beneficiaries to be eligible for the program (5,000 
beneficiaries), and in consideration of the average total number of 
unique beneficiaries for whom quality information is required to be 
reported in the combined CAHPS survey sample (860 beneficiaries) and 
the CMS web interface sample (approximately 3,500 beneficiaries). 
(There may be some overlap between the CAHPS sample and the CMS web 
interface sample.) Therefore, we estimated that an ACO with an assigned 
population of 5,000 beneficiaries typically would be required to report 
quality information on a total of 4,000 beneficiaries. Thus, we believe 
the 20 percent threshold ensures that an ACO with the minimum number of 
assigned beneficiaries would have an adequate number of beneficiaries 
across the CAHPS and CMS web interface samples in order to fully report 
on these measures. Of the ACOs we have estimated will be impacted by 
the disasters in 2017, 92 percent have more than 20 percent of their 
assigned beneficiaries residing in emergency declared areas. However, 
we also understand that some ACOs that have fewer than 20 percent of 
their assigned beneficiaries residing in affected areas have a legal 
entity that is located in an emergency declared area. Consequently, 
their ability to quality report may be equally impacted since the ACO 
legal entity may be unable to collect the information from the ACO 
participants or experience infrastructure issues related to capturing, 
organizing and reporting the data to CMS. If less than 20 percent of 
the ACO's assigned beneficiaries reside in an affected area and the 
ACO's legal entity is not located in a county designated as an affected 
area, then we believe that there is unlikely to be a significant impact 
upon the ACO's ability to report or on the representativeness of the 
quality performance score that is determined for the ACO.
    We will determine what percentage of the ACO's performance year 
assigned population was affected by a disaster based on the final list 
of beneficiaries assigned to the ACO for the performance year. Although 
beneficiaries are assigned to ACOs under Track 1 and Track 2 based on 
preliminary prospective assignment with retrospective reconciliation 
after the end of the performance year, these ACOs will be able to use 
their quarterly assignment lists, which include beneficiaries' counties 
of residence, for early insight into whether they are likely to meet 
the 20 percent threshold. We have used preliminary information on 
beneficiary assignment for the 2017 performance year to estimate the 
number of ACOs that were affected by the hurricanes and the California 
wildfires in 2017. We estimate that 105 of the 480 ACOs (approximately 
22 percent) would meet the minimum threshold of having 20 percent or 
more of their assigned beneficiaries residing in an area designated as 
impacted by Hurricanes Harvey, Irma, and Maria, and the California 
wildfires or have their legal entity located in one of these areas.
    For purposes of determining quality performance scoring for 
performance year 2017, if 20 percent or more of an ACO's assigned 
beneficiaries reside in an area impacted by the disaster or the ACO's 
legal entity is located in such an area, the ACO's minimum quality 
score will be set to equal the mean Shared Savings Program ACO quality 
score for all ACOs for performance year 2017. We are setting the 
minimum quality score equal to the mean quality score for all Shared 
Savings Program ACOs nationwide, because the mean reflects the full 
range of quality performance across all ACOs in the Shared Savings 
Program. More specifically, the mean ACO quality score is equal to the 
combined ACO quality score for all ACOs meeting the quality performance 
standard for the performance year divided by the total number of ACOs 
meeting the quality performance standard for the performance year. To 
illustrate, we note that the mean Shared Savings Program ACO quality 
performance score for all participating ACOs for performance year 2016 
was approximately 95 percent. In the event an affected ACO is able to 
complete quality reporting for performance year 2017, and the ACO's 
calculated quality score is higher than the mean Shared Savings Program 
ACO quality score, then we would apply the higher score.
    In earlier rulemaking, we finalized a policy under which ACOs that 
demonstrate quality improvement on established quality measures from 
year-to-year will be eligible for up to 4 bonus points per domain (79 
FR 67927 through 67931, Sec.  425.502(e)(4)). To earn bonus points, an 
ACO must demonstrate a net improvement in performance on measures 
within a domain. If an ACO is not able to complete quality reporting 
for performance year 2017, it will not be possible for us to assess the 
ACO's improvement on established quality measures since performance 
year 2016. Therefore, if an ACO receives a quality score based on the 
mean quality score, the ACO is not eligible for bonus points awarded 
based on quality improvement.
    We believe it is appropriate to adjust the quality performance 
scores for ACOs in affected areas because we anticipate that such ACOs 
will likely be unable to collect or report the necessary information to 
CMS as a result of the extreme and uncontrollable circumstance, and/or 
the ACO's quality performance score will be significantly and adversely 
affected. Section 1899(b)(3)(C) of the Act gives us the authority to 
establish the quality performance standards used to assess the quality 
of care furnished by ACO. Accordingly, we are modifying the quality 
performance standard specified under Sec.  425.502 by amending 
paragraph (e)(4) and adding a new paragraph (f) to address potential 
adjustments to the quality performance score for performance year 2017 
of ACOs determined to be affected by extreme and uncontrollable 
circumstances. For performance year 2017, including the applicable 
quality data reporting period for the performance year if the reporting 
period is not extended, in the event that we determine that 20 percent 
or more of an ACO's final list of assigned beneficiaries for the 
performance year, as determined under subpart E of the Shared Savings 
Program regulations, reside in an area that is affected by an extreme 
and uncontrollable circumstance as determined under the Quality Payment 
Program, or that the ACO's legal entity is located in such an area, we 
will use the following approach to calculate the ACO's quality 
performance score instead of the methodology specified in Sec.  
425.502(a) through (e).
     The ACO's minimum quality score will be set to equal the 
mean Shared Savings Program ACO quality score for performance year 
2017.
     If the ACO is able to completely and accurately report all 
quality measures, we will use the higher of the ACO's quality score or 
the mean Shared Savings Program ACO quality score.
     If the ACO receives a quality score based on the mean, the 
ACO is not eligible for bonus points awarded based on quality 
improvement.
    We will apply determinations made under the Quality Payment Program 
with respect to whether an extreme and uncontrollable circumstance has 
occurred and the affected areas. We

[[Page 60916]]

have sole discretion to determine the time period during which an 
extreme and uncontrollable circumstance occurred, the percentage of the 
ACO's assigned beneficiaries residing in the affected areas, and the 
location of the ACO legal entity.
    For purposes of the MIPS APM scoring standard, MIPS eligible 
clinicians in Medicare Shared Savings Program ACOs that do not 
completely report quality for 2017; and therefore, receive the mean ACO 
quality score under the Shared Savings Program would receive a score of 
zero percent in the MIPS quality performance category. However, these 
MIPS eligible clinicians would receive a score of 100 percent in the 
improvement activities (IAs) performance category, which would be 
sufficient for them to receive a 2017 MIPS final score above the 
performance threshold. This would result in at least a slight positive 
MIPS payment adjustment in 2019. Additionally, if the ACO participants 
are able to report advancing care information (ACI), the MIPS eligible 
clinicians in the ACO will receive an ACI performance category score 
under the APM scoring standard which would further increase their final 
score under MIPS.
2. Mitigating Shared Losses for ACOs Participating in a Performance-
Based Risk Track
    In addition, we are modifying the payment methodology under Tracks 
2 and 3 established under the authority of section 1899(i) of the Act 
to mitigate shared losses owed by ACOs affected by extreme and 
uncontrollable circumstances during performance year 2017. Under this 
policy, we will reduce the ACO's shared losses, if any, determined to 
be owed under the existing methodology for calculating shared losses in 
part 425, subpart G, of the regulations by an amount determined by 
multiplying the shared losses by two factors: (1) The percentage of the 
total months in the performance year affected by an extreme and 
uncontrollable circumstance; and (2) the percentage of the ACO's 
assigned beneficiaries who reside in an area affected by an extreme and 
uncontrollable circumstance. We will determine the percentage of the 
ACO's performance year assigned beneficiary population that was 
affected by the disaster based on the final list of beneficiaries 
assigned to the ACO for the performance year. For example, assume that 
an ACO is determined to owe shared losses of $100,000 for performance 
year 2017, a disaster was declared for October through December during 
the performance year, and 25 percent of the ACO's assigned 
beneficiaries reside in the disaster area. In this scenario, we would 
adjust the ACO's losses in the following manner:

$100,000-($100,000 x 0.25 x 0.25) = $100,000-$6,250 = $93,750.

    We believe it is appropriate to adopt this policy to address 
stakeholders' concerns that ACOs could be held responsible for sharing 
losses with the Medicare program resulting from catastrophic events 
outside the ACO's control given the increase in utilization, difficulty 
of coordinating care for patient populations leaving the impacted 
areas, and the mandatory use of natural disaster payment modifiers 
making it difficult to identify whether a claim would otherwise have 
been denied under normal Medicare FFS rules. Absent this relief, we 
believe ACOs that are currently participating in Tracks 2 and 3 may 
reconsider whether they are able to continue their participation in the 
Shared Savings Program under a performance-based risk track. The 
approach we are adopting in this interim final rule with comment period 
balances the need to offer relief to affected ACOs with the need to 
continue to hold those ACOs accountable for losses incurred during the 
months in which there was no applicable disaster declaration and for 
the assigned beneficiary population that was outside the area affected 
by the disaster. We also note that these policies do not change the 
status of Track 2 or Track 3 of the Shared Savings Program as an 
Advanced Alternative Payment Model (APM) for purposes of the Quality 
Payment Program, or prevent an eligible clinician in a performance-
based risk ACO from becoming a Qualifying APM Participant for purposes 
of the APM incentive under the Quality Payment Program.
    We also explored an alternative approach for mitigating the 
potential losses for ACOs in performance-based risk tracks that are 
affected by extreme and uncontrollable circumstances. Under this 
approach, we would remove claims for services furnished to assigned 
beneficiaries in the impacted areas by an ACO participant that are 
submitted with a natural disaster modifier before calculating financial 
performance. However, we believe that this alternative approach could, 
for some affected ACOs, result in the exclusion of a significant amount 
of their total claims at financial reconciliation, making it very 
difficult to measure the ACOs' financial performance.
    We also want to emphasize that all ACOs will continue to be 
entitled to share in any savings they may achieve for performance year 
2017. The calculation of savings and the determination of shared 
savings payment amounts will not be affected by the policies to address 
extreme and uncontrollable circumstances. ACOs in all three tracks of 
the program will receive shared savings payments, if any, as determined 
under part 425, subpart G.
    We also considered the possible impact of extreme and 
uncontrollable circumstances on an ACO's expenditures for purposes of 
determining the benchmark (Sec. Sec.  425.602 and 425.603). The 
additional costs incurred as a result of an extreme or uncontrollable 
circumstance would likely impact the benchmark determined for the ACO's 
subsequent agreement period in the Shared Savings Program, as 
performance years of the current agreement period become the historical 
benchmark years for the subsequent agreement period. We currently 
believe that the increase in expenditures for a particular calendar 
year would result in a higher benchmark value when the same calendar 
year is used to determine the ACO's historical benchmark, and in 
calculating adjustments to the rebased benchmark based on regional FFS 
expenditures (Sec.  425.603). We believe that any effect of including 
these additional expenditures in determining the ACO's benchmark for 
the subsequent agreement period could be mitigated somewhat because the 
ACO's expenditures during the three base years included in the 
benchmark are weighted equally, and regional expenditures would also 
increase as a result of the disaster. Therefore, we anticipate the 
effect on the regional adjustment under Sec.  425.603(c)(9) would be 
minimal. Although we are not modifying the program's historical 
benchmark methodology in this interim final rule with comment period, 
we plan to observe the impact of the 2017 hurricanes and wildfires on 
ACO expenditures, and may revisit the need to make adjustments to the 
methodology for calculating the benchmark in future rulemaking.
    To exercise our authority under section 1899(i)(3) of the Act to 
use other payment models, we must demonstrate that the payment model-- 
(1) `` . . . does not result in spending more for such ACO for such 
beneficiaries than would otherwise be expended . . . if the model were 
not implemented. . . .'' and (2) ``will improve the quality and 
efficiency of items and services furnished under'' Medicare. In 
assessing the impacts of the policy for mitigating shared losses for 
Track 2 and Track 3 ACOs affected by extreme and

[[Page 60917]]

uncontrollable circumstances in 2017, we considered: The impact of the 
potential loss of participation in the program by ACOs affected by 
disasters should we not implement the policy described in this interim 
final rule with comment period, and the anticipated minimal impact of 
adjusting losses for ACOs affected by disasters, as described in the 
regulatory impact statement. On the basis of this assessment, we 
believe incorporating this extreme and uncontrollable circumstances 
policy into the payment methodologies for Tracks 2 and 3 would meet the 
requirements of section 1899(i) of the Act by not increasing 
expenditures above the costs that would be incurred under the statutory 
payment methodology under section 1899(d) of the Act and by encouraging 
affected ACOs to remain in the program, which we believe will increase 
the quality and efficiency of the items and services furnished to the 
beneficiaries they serve. We also note that to the extent the policies 
in this interim final rule with comment constitute a change to the 
Shared Savings Program payment methodology for 2017 after the start of 
the performance year, we believe that, consistent with section 
1871(e)(1)(A)(ii) of the Act, and for reasons discussed in section III 
of this interim final rule with comment period, it would be contrary to 
the public interest not to adjust the shared losses calculated for ACOs 
in Tracks 2 and 3 to reflect the impact of the extreme and 
uncontrollable circumstances during 2017.
    We invite comments on the policies being finalized in this interim 
final rule with comment period for performance year 2017, including the 
applicable quality data reporting period for performance year 2017 
under the Shared Savings Program. We believe these automatic extreme 
and uncontrollable circumstance policies will reduce burden and 
financial uncertainty for ACOs, ACO participants, and ACO providers/
suppliers affected by catastrophes, including ACOs affected by 
Hurricanes Harvey, Irma, and Maria, and the California wildfires, and 
will also align with existing Medicare policies under the Quality 
Payment Program for 2017.
    We note that in future rulemaking, we intend to propose permanent 
policies under the Shared Savings Program to address extreme and 
uncontrollable circumstances in future performance years. Therefore, we 
also invite public comment on policies and issues that we should 
consider when developing proposals for these permanent policies.
    We also welcome comments on how to address the impact of extreme 
and uncontrollable events on historical benchmark calculations, which 
we will consider in developing any future proposals. In particular, we 
seek comments as to whether and how the historical benchmark should be 
adjusted to reflect extreme and uncontrollable events that occur during 
a benchmark year, how to establish the threshold for determining 
whether a significant change in expenditures occurred, whether and how 
to account for changes in expenditures that have an aggregate positive 
or negative impact on the historical benchmark, and whether and how to 
reweight the benchmark years when calculating the historical benchmark 
if one or more benchmark years is impacted by an extreme and 
uncontrollable event.

III. Waiver of Proposed Rulemaking

    Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), 
the agency is required to publish a notice of the proposed rule in the 
Federal Register before the provisions of a rule take effect. 
Similarly, section 1871(b)(1) of the Act requires the Secretary to 
provide for notice of the proposed rule in the Federal Register and 
provide a period of not less than 60 days for public comment. Section 
553(b)(B) of the APA provides for exceptions from the notice and 
comment requirements; in cases in which these exceptions apply, section 
1871(b)(2)(C) of the Act provides for exceptions from the notice and 
60-day comment period requirements of the Act as well. Section 
553(b)(B) of the APA and section 1871(b)(2)(C) of the Act authorize an 
agency to dispense with normal rulemaking requirements for good cause 
if the agency makes a finding that the notice and comment process is 
impracticable, unnecessary, or contrary to the public interest.
    We find that there is good cause to waive the notice and comment 
requirements under sections 553(b)(B) of the APA and section 
1871(b)(2)(C) of the Act due to the impact of the recent disasters, as 
described in section I of this interim final rule with comment period, 
and the need to provide relief to impacted Shared Savings Program ACOs, 
ACO participants, and ACO providers/suppliers. Based on the size and 
scale of the destruction and displacement caused by these disasters in 
the affected regions, we believe it is likely that some ACOs and their 
ACO participants and ACO providers/suppliers have been significantly 
adversely affected by these events. It is possible that some ACO 
providers/suppliers may lack access to their EHR technology or other 
clinical data they would need in order to submit quality data for the 
2017 performance period. Undertaking notice-and-comment rule-making 
would not provide certainty for ACOs that must prepare now for quality 
reporting for performance year 2017, which begins on January 22, 2018. 
Moreover, there is no certainty that a final rule could be issued and 
in effect before the end of the quality reporting period for 
performance year 2017 on March 16, 2018. Absent this certainty, the 
prudent action for impacted ACOs would be to direct their attention and 
resources to attempt to report quality data for performance year 2017.
    We believe it is likely that despite this effort, many affected 
ACOs would be unable to completely, accurately, and timely report given 
the lack of clinical information and infrastructure as a result of the 
disasters. This would result in unnecessary burden to impacted ACOs and 
their ACO participants and ACO providers/suppliers in the event a final 
rule is issued during or after the quality data submission period, and 
the ACO would have been afforded relief under the policies included in 
the final rule. Further, absent this certainty, ACOs participating 
under Tracks 2 and 3 that are located in disaster areas and that have 
experienced increased utilization would be concerned about being at 
risk for shared losses and would likely direct their attention and 
resources to contingency planning activities to develop options for 
offsetting the potential additional costs. These ACOs may also 
reconsider whether they are able to continue to their participation in 
the Shared Savings Program in a performance-based risk track. We 
believe it is also possible that potential ACO applicants could be 
reluctant to initiate the necessary advance planning and investments 
required to develop the capability to participate under a two-sided 
risk model during future performance years if they believe that we 
would be hesitant to provide similar flexibility in the event of future 
disasters, such that they may be at risk for losses resulting from 
circumstances beyond their control. Consequently, we believe it is in 
the public interest to adopt these interim final policies to provide 
relief to affected ACOs and their ACO participants and ACO providers/
suppliers by mitigating the negative effects of the disasters during 
performance year 2017 on their quality and financial performance under 
the Shared Savings Program and allowing them to direct their resources 
toward caring for their patients and repairing structural damage to 
facilities.

[[Page 60918]]

    We find that it would be impracticable and contrary to the public 
interest to undergo notice and comment procedures before finalizing, on 
an interim basis with an opportunity for public comment, policies under 
the Shared Savings Program to address extreme and uncontrollable 
circumstances that impact an entire region or locale in performance 
year 2017, including the applicable quality data reporting period. 
Therefore, we find good cause to waive the notice of proposed 
rulemaking as provided under section 553(b)(B) of the APA and section 
1871(b)(2)(C) of the Act and to issue this interim final rule with an 
opportunity for public comment. We are providing a 60-day public 
comment period as specified in the DATES section of this document.

IV. Collection of Information Requirements

    As stated in section 3022 of the Patient Protection and Affordable 
Care Act, Chapter 35 of title 44, United States Code, shall not apply 
to the Shared Savings Program. However, we note that this document does 
not impose any new information collection requirements (that is, 
reporting, recordkeeping, or third-party disclosure requirements).

V. Regulatory Impact Statement

    These policies for addressing extreme and uncontrollable 
circumstances are unlikely to have a significant economic impact on the 
Shared Savings Program. We estimated the impact of these policies by 
simulating their effect on actual 2016 financial and quality 
performance results, the most recent available reconciled financial and 
quality results, for the ACOs currently participating in the program 
that are potentially impacted by these policies. The total increase in 
shared savings payments and total reduction in shared loss payments 
anticipated for ACOs impacted by the policies in this rule in 2017 is 
estimated to be approximately $3.5 million in total (which would round 
to zero assuming precision to the nearest $10 million). This interim 
final rule is not subject to the requirements of Executive Order 13771 
because it is expected to result in no more than de minimis costs.

VI. Response to Public Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all public comments we 
receive by the date and time specified in the DATES section of this 
document, and, when we proceed with a subsequent document, we will 
respond to the public comments in the preamble to that document.

List of Subjects in 42 CFR Part 425

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR part 425 as set forth below:

PART 425--MEDICARE SHARED SAVINGS PROGRAM

0
1. The authority for part 425 continues to read as follows:

    Authority: Secs. 1102, 1106, 1871, and 1899 of the Social 
Security Act (42 U.S.C. 1302, 1306, 1395hh, and 1395jjj).


0
2. Amend Sec.  425.502 by adding paragraphs (e)(4)(vi) and (f) to read 
as follows:


Sec.  425.502   Calculating the ACO quality performance score.

* * * * *
    (e) * * *
    (4) * * *
    (vi) For performance year 2017, if an ACO receives the mean Shared 
Savings Program ACO quality score based on the extreme and 
uncontrollable circumstances policies in paragraph (f) of this section, 
the ACO is not eligible for bonus points awarded based on quality 
improvement.
    (f) Extreme and uncontrollable circumstances. For performance year 
2017, including the applicable quality data reporting period for the 
performance year if the quality reporting period is not extended, in 
the event that CMS determines 20 percent or more of an ACO's assigned 
beneficiaries for the performance year, as determined under subpart E 
of this part, reside in an area identified under the Quality Payment 
Program as being affected by an extreme and uncontrollable circumstance 
or an ACO's legal entity is located in such an area, the following 
approach is used in calculating the quality score instead of the 
methodology specified in paragraphs (a) through (e) of this section.
    (1) The ACO's minimum quality performance score is set to equal the 
mean quality performance score for all Shared Savings Program ACOs for 
performance year 2017.
    (2) If the ACO completely and accurately reports all quality 
measures, CMS uses the higher of the ACO's quality performance score or 
the mean quality performance score for all Shared Savings Program ACOs.
    (3) CMS applies determinations made under the Quality Payment 
Program with respect to--
    (i) Whether an extreme and uncontrollable circumstance has 
occurred; and
    (ii) The affected areas.
    (4) An ACO's legal entity location is based on the address on file 
for the ACO in CMS' ACO application and management system.
    (5) CMS has sole discretion to determine the time period during 
which an extreme and uncontrollable circumstance occurred, the 
percentage of the ACO's assigned beneficiaries residing in the affected 
areas, and the location of the ACO legal entity.

0
3. Amend Sec.  425.606 by adding paragraph (i) to read as follows:


Sec.  425.606   Calculation of shared savings and losses under Track 2.

* * * * *
    (i) Extreme and uncontrollable circumstances. For performance year 
2017, the following adjustment is made in calculating the amount of 
shared losses, after the application of the shared loss rate in 
paragraph (f) of this section and the loss recoupment limit in 
paragraph (g) of this section.
    (1) CMS determines the percentage of the ACO's performance year 
2017 assigned beneficiary population affected by an extreme and 
uncontrollable circumstance.
    (2) CMS reduces the amount of the ACO's shared losses by an amount 
determined by multiplying the shared losses by the percentage of the 
total months in the performance year affected by an extreme and 
uncontrollable circumstance, and the percentage of the ACO's assigned 
beneficiaries who reside in an area affected by an extreme and 
uncontrollable circumstance.
    (3) CMS applies determinations made under the Quality Payment 
Program with respect to--
    (i) Whether an extreme and uncontrollable circumstance has 
occurred; and
    (ii) The affected areas.
    (4) CMS has sole discretion to determine the time period during 
which an extreme and uncontrollable circumstance occurred and the 
percentage of the ACO's assigned beneficiaries residing in the affected 
areas.

0
4. Amend Sec.  425.610 by adding paragraph (i) to read as follows:


Sec.  425.610  Calculation of shared savings and losses under Track 3.

* * * * *
    (i) Extreme and uncontrollable circumstances. For performance year

[[Page 60919]]

2017, the following adjustment is made in calculating the amount of 
shared losses, after the application of the shared loss rate in 
paragraph (f) of this section and the loss recoupment limit in 
paragraph (g) of this section.
    (1) CMS determines the percentage of the ACO's performance year 
2017 assigned beneficiary population affected by an extreme and 
uncontrollable circumstance.
    (2) CMS reduces the amount of the ACO's shared losses by an amount 
determined by multiplying the shared losses by the percentage of the 
total months in the performance year affected by an extreme and 
uncontrollable circumstance, and the percentage of the ACO's assigned 
beneficiaries who reside in an area affected by an extreme and 
uncontrollable circumstance.
    (3) CMS applies determinations made under the Quality Payment 
Program with respect to--
    (i) Whether an extreme and uncontrollable circumstance has 
occurred; and
    (ii) The affected areas.
    (4) CMS has sole discretion to determine the time period during 
which an extreme and uncontrollable circumstance occurred and the 
percentage of the ACO's assigned beneficiaries residing in the affected 
areas.

    Dated: November 28, 2017.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: November 30, 2017.
Eric D. Hargan,
Acting Secretary, Department of Health and Human Services.
[FR Doc. 2017-27920 Filed 12-21-17; 4:15 pm]
 BILLING CODE 4120-01-P