[Federal Register Volume 89, Number 128 (Wednesday, July 3, 2024)]
[Proposed Rules]
[Pages 55168-55180]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14601]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 425
[CMS-1799-P]
RIN 0938-AV20
Medicare Program: Mitigating the Impact of Significant,
Anomalous, and Highly Suspect Billing Activity on Medicare Shared
Savings Program Financial Calculations in Calendar Year 2023
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule addresses policies for assessing
performance year (PY) 2023 financial performance of Medicare Shared
Savings Program (Shared Savings Program) Accountable Care Organizations
(ACOs); establishing benchmarks for ACOs starting agreement periods in
2024, 2025, and 2026; and calculating factors used in the application
cycle for ACOs applying to enter a new agreement period beginning on
January 1, 2025, and the change request cycle for ACOs continuing their
participation in the program for PY 2025, as a result of significant,
anomalous, and highly suspect billing activity for selected
intermittent urinary catheters on Medicare Durable Medical Equipment,
Prosthetics, Orthotics & Supplies (DMEPOS) claims. 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 Medicare 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 participating in two-sided models may also
share in losses.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by July 29, 2024.
ADDRESSES: In commenting, please refer to file code CMS-1799-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
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-1799-P,P.O. Box 8016,
Baltimore, MD 21244-8016.
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-1799-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Richard (Chase) Kendall, (410) 786-
1000, or [email protected].
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://www.regulations.gov. Follow the search instructions on that website to
view public comments. CMS will not post on Regulations.gov public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at https://www.regulations.gov/.
CPT (Current Procedural Terminology) Copyright Notice
Throughout this proposed rule, we use CPT codes and descriptions to
refer to a variety of services. We note that CPT codes and descriptions
are copyright 2019 American Medical Association. All Rights Reserved.
CPT is a registered trademark of the American Medical Association
(AMA). Applicable Federal Acquisition Regulations (FAR) and Defense
Federal Acquisition Regulations (DFAR) apply.
I. Background
A. Statutory Background on Shared Savings Program Financial
Calculations
Section 1899 of the Social Security Act (the Act) (42 U.S.C.
1395jjj), as added by section 3022 of the Patient Protection and
Affordable Care Act (Pub. L. 111-148, enacted March 23, 2010),
establishes the general requirements for payments to participating
Accountable Care Organizations (ACOs) in the Shared Savings Program.
Specifically, section 1899(d)(1)(A) of the Act provides that providers
of services and suppliers participating in an ACO will continue to
receive payment under the original Medicare fee-for-service program
under Parts A and B in the same manner as they would otherwise be made.
However, section 1899(d)(1)(A) of the Act also provides for an ACO to
receive payment for shared savings provided that the ACO meets both the
quality performance standards established by the Secretary and
demonstrates that it has achieved savings against a benchmark of
expected average per capita Medicare FFS expenditures. Additionally,
section 1899(i) of the Act authorizes the Secretary to use other
payment models in place of the one-sided model described in section
1899(d) of the Act. This provision authorizes the Secretary to select a
partial capitation model or any other payment model that the Secretary
determines will improve the quality and efficiency of items and
services furnished to Medicare beneficiaries without additional program
expenditures. We have used our authority under section 1899(i)(3) of
the Act to establish the Shared Savings Program's two-sided payment
models (see for example, 80 FR 32771 and 32772, and 83 FR 67834 through
67841) and to mitigate shared losses owed by ACOs affected by extreme
and uncontrollable circumstances during performance year (PY) 2017 and
subsequent performance years (82 FR 60916 and 60917, 83 FR 59974
through 59977), among other uses of this
[[Page 55169]]
authority described elsewhere in this proposed rule.
Section 1899(d)(1)(B)(i) of the Act specifies that, in each year of
the agreement period, an ACO is eligible to receive payment for shared
savings only if the estimated average per capita Medicare expenditures
under the ACO for Medicare FFS beneficiaries for Parts A and B
services, adjusted for beneficiary characteristics, is at least the
percent specified by the Secretary below the applicable benchmark under
section 1899(d)(1)(B)(ii) of the Act. Section 1899(d)(1)(B)(ii) of the
Act addresses how ACO benchmarks are to be established and updated
under the Shared Savings Program. This provision specifies that the
Secretary shall estimate a benchmark for each agreement period for each
ACO using the most recent available 3 years of per beneficiary
expenditures for Parts A and B services for Medicare FFS beneficiaries
assigned to the ACO. This benchmark shall be adjusted for beneficiary
characteristics and such other factors as the Secretary determines
appropriate and updated by the projected absolute amount of growth in
national per capita expenditures for Parts A and B services under the
original Medicare FFS program, as estimated by the Secretary.
In past rulemaking, we have used our authority under sections
1899(d)(1)(B)(ii) and 1899(i)(3) of the Act to establish adjustments to
the benchmark and program expenditure calculations, respectively, to
exclude certain Medicare Parts A and B payments. In the November 2011
final rule (76 FR 67920 through 67922), we adopted an alternate payment
methodology that excluded Indirect Medical Education (IME) and
Disproportionate Share Hospital (DSH) payments from ACO benchmark and
performance year expenditures due to concerns that the inclusion of
these amounts would incentivize ACOs to avoid referring patients to the
types of providers that receive these payments. In the Calendar Year
(CY) 2023 Physician Fee Schedule final rule (87 FR 69954 through
69956), we excluded new supplemental payments to Indian Health Service/
Tribal hospitals and hospitals located in Puerto Rico consistent with
our longstanding policy to exclude IME, DSH and uncompensated care
payments from ACOs' assigned and assignable beneficiary expenditure
calculations. In the interim final rule with comment period entitled
``Medicare and Medicaid Programs; Basic Health Program, and Exchanges;
Additional Policy and Regulatory Revisions in Response to the COVID-19
Public Health Emergency and Delay of Certain Reporting Requirements for
the Skilled Nursing Facility Quality Reporting Program'' which was
effective on May 8, 2020, and appeared in the May 8, 2020 Federal
Register (85 FR 27550) (hereinafter referred to as the ``May 8, 2020
COVID-19 IFC''), we established a methodology to adjust Shared Savings
Program financial calculations to account for the COVID-19 Public
Health Emergency (85 FR 27577 through 27582). Specifically, we
established a methodology that would exclude all Medicare Parts A and B
FFS payment amounts for a beneficiary's episode of care for treatment
of COVID-19 to prevent distortion to, among other calculations, an
ACO's benchmark and program expenditure calculations.
B. Background on Significant, Anomalous, and Highly Suspect Billing
Activity in Calendar Year 2023
Recently, ACOs and other interested parties have raised concerns
about an increase in billing to Medicare for selected intermittent
urinary catheter supplies on Durable Medical Equipment, Prosthetics,
Orthotics & Supplies (DMEPOS) claims in CY 2023, alleging that the
increase in payments represents fraudulent activity (the ``alleged
conduct''). Numerous ACOs have alerted the Centers for Medicare &
Medicaid Services (CMS) to potential impacts on their PY 2023
expenditures because of the increased catheter billings.
As of the time of this proposed rule, our investigation into the
matter is ongoing, and we have taken initial actions in response. We
have made referrals to law enforcement, recouped improper Medicare
payments, and terminated certain suppliers from the Medicare program.
CMS continues to adapt its monitoring, investigative targeting, and
data analytics programs to prevent future fraud, waste, and abuse. CMS
also continues to work closely with the Department of Health and Human
Services Office of Inspector General and Department of Justice, as well
as our Uniform Program Integrity Contractors, to investigate health
care fraud activities that exploit our Federal program, such as those
involving urinary catheter supplies.
The observed DMEPOS billing volume for intermittent urinary
catheters in CY 2023 represents significant, anomalous, and highly
suspect (SAHS) billing activity. Generally, this means that a given
HCPCS or CPT code exhibits a level of billing that represents a
significant claims increase either in volume or dollars (for example,
dollar volume significantly above prior year, or claims volume beyond
expectations) with national or regional impact (for example, not only
impacting one or few ACOs) and represents a deviation from historical
utilization trends that is unexpected and is not clearly attributable
to reasonably explained changes in policy or the supply or demand for
covered items or services. The billing level is significant and
represents billing activity that would cause significantly inaccurate
and inequitable payments and repayment obligations in the Shared
Savings Program if not addressed.
Current Shared Savings Program regulations, codified at 42 CFR part
425, do not provide a basis for CMS to adjust program expenditure or
revenue calculations to remove the impact of SAHS billing activity such
as that arising from the alleged conduct in advance of issuing an
initial determination. CMS may reopen an initial determination or a
final agency determination and issue a revised initial determination at
any time in the case of fraud or similar fault, and not later than 4
years after the date of the notification to the ACO of the initial
determination of savings or losses for the relevant performance year
for good cause (Sec. 425.315). This does not allow for CMS to address
SAHS billing activity, which must be addressed prior to conducting
financial reconciliation, which is an initial determination, to prevent
significant inequity and inaccurate payment determinations.
We share the concerns recently raised by some ACOs and other
interested parties that SAHS billing activity surrounding the selected
codes for intermittent urinary catheters would impact Shared Savings
Program calculations for PY 2023 and we are also concerned about the
impact on other program calculations based on CY 2023 data.
Specifically, we are concerned that absent mitigation measures, this
SAHS billing activity would inflate Medicare Parts A and B payment
amounts, including:
PY 2023 reconciliation calculations, including
expenditures for each ACO's assigned beneficiaries for PY 2023, the
national-regional blended update factor used to update the benchmark
for all ACOs (refer to Sec. 425.601(b)), and factors based on ACO
participant revenue to determine the loss recoupment limits for ACOs
participating under two-sided models of the BASIC track (Levels C, D,
E) (refer to Sec. 425.605(d)).
Historical benchmark calculations for establishing the
benchmark for ACOs beginning new agreement periods on
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January 1, 2024, January 1, 2025, or January 1, 2026, for which CY 2023
serves as benchmark year (BY) 3, BY2 and BY1, respectively (refer to
Sec. 425.652(a)).
Factors used in the application cycle for ACOs applying to
enter a new agreement period beginning on January 1, 2025, and the
change request cycle for ACOs continuing their participation in the
program for PY 2025, including data used to determine an ACO's
eligibility for Advance Investment Payments under Sec. 425.630(b), or
for the CMS Innovation Center's new ACO Primary Care Flex Model (ACO PC
Flex Model) for the January 1, 2025, start date based on ACO revenue
status (high revenue or low revenue), and to determine repayment
mechanism amounts for ACOs entering, or continuing in, two-sided models
for PY 2025 (refer to Sec. 425.204(f)).
The accuracy of the Shared Savings Program's determination of an
ACO's financial performance (through a process referred to as financial
reconciliation) in terms of the ACO's eligibility for and amount of a
shared savings payment or liability for shared losses, depends on the
accuracy of claims data. Absent CMS action, the SAHS billing activity
would affect PY 2023 financial reconciliation program-wide rather than
being limited to ACOs that have assigned beneficiaries directly
impacted by the issue. For instance:
An ACO with assigned beneficiaries impacted by the SAHS
billing activity for intermittent urinary catheters will see an
increase in performance year expenditures, reducing the ACO's shared
savings or increasing the amount of shared losses owed by the ACO. The
impact on the ACO's performance may be partially mitigated if the SAHS
billing activity also increases the ACO's regional service area
expenditures and the national expenditures used to calculate the two-
way national-regional blended benchmark update factor.
An ACO with assigned beneficiary expenditures and regional
service area expenditures with little or no impact from the SAHS
billing activity will receive a relatively higher benchmark update
under the national-regional blended update factors used in PY 2023
reconciliation, and therefore, may appear to perform better as a result
of the national impact of the intermittent urinary catheters billing
increase, resulting in higher earned performance payments or lower or
no losses for the ACO.
Unaddressed, the SAHS billing activity will distort the historical
benchmarks for an ACO that entered an agreement period beginning on
January 1, 2024, or will enter an agreement period beginning on January
1, 2025, or January 1, 2026 (for which CY 2023 will continue to be a
benchmark year) and the accuracy of any future financial reconciliation
performed against those benchmarks. Similarly, inaccurate revenue and
expenditure calculations based on CY 2023 data may affect an ACO's
revenue status and the amount of funds an ACO in a two-sided model must
secure as a repayment mechanism, one of the program's important
safeguards for protecting the Medicare Trust Funds. Given the scope of
the SAHS billing activity, there is a high likelihood that, absent CMS
action, shared savings and losses calculations for PY 2023, and for
future performance years where CY 2023 is a benchmark year, will be
significantly impacted for ACOs. Under these circumstances, some ACOs
are likely to experience adverse impacts (for example, lower or no
shared savings or higher shared losses) while other ACOs will
experience windfall gains (for example, higher shared savings or lower
or no shared losses).
Failing to address SAHS billing activity that occurred in CY 2023
would jeopardize the integrity of the Shared Savings Program. There are
480 ACOs in the Shared Savings Program with over 608,000 health care
providers who care for 10.8 million assigned FFS beneficiaries.\1\ In
PY 2022, the most recent year for which data is available, savings
achieved by ACOs relative to benchmarks amounted to $4.3 billion, of
which ACOs received shared savings payments totaling $2.5 billion, and
Medicare retained $1.8 billion in savings.\2\ ACOs are held accountable
for 100 percent of total Medicare Parts A and B expenditures for their
assigned beneficiary populations (with limited exceptions). This
incentivizes ACOs to generate savings for the Medicare program as they
have the opportunity to share in those savings if certain requirements
are met. It also discourages the ACO from generating unnecessary
expenditures for Medicare as they may be required to repay those
amounts to CMS. Accountable care arrangements such as this cannot
function if the ACO may be held responsible for all SAHS billing
activity that is outside of their control. Holding an ACO accountable
for substantial losses due to SAHS billing activity, such as that
observed in connection with the increase in billing for intermittent
urinary catheters, is not only inequitable but will dramatically
increase the level of risk associated with participation, making the
Shared Savings Program unattractive.
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\1\ Refer to CMS, Shared Savings Program Fast Facts--As of
January 1, 2024, available at https://www.cms.gov/files/document/2024-shared-savings-program-fast-facts.pdf.
\2\ Refer to CMS, Shared Savings Program Performance Year
Financial and Quality Results, 2022, available at https://data.cms.gov/medicare-shared-savings-program/performance-year-financial-and-quality-results/data.
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For these reasons, it is thus timely and appropriate to undertake
notice and comment rulemaking to propose an approach for mitigating the
impact of SAHS billing activity in CY 2023 on Shared Savings Program
financial calculations.
II. Provisions of the Proposed Regulations
A. Identifying Codes Displaying Significant, Anomalous, and Highly
Suspect Billing Activity in CY 2023
DMEPOS billing to Medicare for selected intermittent urinary
catheter supplies has increased significantly since the first quarter
of CY 2023, with a relatively small number of suppliers submitting a
large majority of all claims for these devices. At a program level,
spending in these codes remained less than 0.1 percent of total FFS
spending in every year from CY 2016 to CY 2022 before increasing to
nearly 1 percent in CY 2023. The SAHS billing activity has had a
national impact, as evidenced by discussion of the issue in the 2024
Medicare Trustees Report, which noted a significant increase in
suspected fraudulent spending on certain intermittent catheters in
2023. The DME projections in the report include the assumption that
this suspected fraud will be addressed during 2024.\3\
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\3\ The Boards of Trustees, Federal Hospital Insurance and
Federal Supplementary Medical Insurance Trust Funds, ``2024 Annual
Report of the Boards of Trustees of the Federal Hospital Insurance
and Federal Supplementary Medical Insurance Trust Funds'', available
at https://www.cms.gov/oact/tr/2024.
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Based on our evaluation of billing trends for individual catheter
codes across CY 2023 and in consultation with the CMS Center for
Program Integrity (CPI) and the CMS Office of the Actuary (OACT), we
have determined that two specific HCPCS codes displayed SAHS billing
activity in CY 2023: A4352 (Intermittent urinary catheter; Coude
(curved) tip, with or without coating (Teflon, silicone, silicone
elastomeric, or hydrophilic, etc.), each) and A4353 (Intermittent
urinary catheter, with insertion supplies). Both HCPCS codes were
billed at significantly higher rates in CY 2023 compared to CY 2022
(claims increasing by 163 percent for A4352 and by over 5,000 percent
for A4353), for which CMS was unable to
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identify a clear justification for the increases (for example, neither
represent a newly adopted code for which a natural increase in billing
might be expected). The change in claim volume is significant and
unexplained, and if not addressed, would cause inaccurate and
inequitable payments and repayment obligations in the Shared Savings
Program. Furthermore, the growth in claims is not attributable to
Medicare providers or suppliers participating in Shared Savings Program
ACOs and thus outside of the ACOs' ability to reasonably control.
B. Removing Payment Amounts for Codes Displaying Significant,
Anomalous, and Highly Suspect Billing Activity in Calendar Year 2023
From Shared Savings Program Expenditure and Revenue Calculations
Given our concerns about leaving SAHS billing activity unaddressed
and the limitations with using an approach available under the current
regulations (as we described elsewhere in this proposed rule), we
propose to revise the policies governing Shared Savings Program
financial calculations to mitigate the impact of SAHS billing activity
for selected catheter codes identified for CY 2023. The proposals would
rely on our authority under section 1899(d)(1)(B)(ii) of the Act to
adjust benchmark expenditures for beneficiary characteristics and such
other factors as the Secretary determines appropriate. Here, we are
proposing to adjust the benchmark to remove payments for the specified
catheter codes from the determination of benchmark expenditures. We
propose to use our authority under section 1899(i)(3) of the Act to
apply this adjustment to certain other program calculations, including
the determination of performance year expenditures.
We propose to exclude all Medicare Parts A and B payment amounts
for the selected catheter HCPCS codes on DMEPOS claims from expenditure
and revenue calculations for CY 2023. We would perform these
adjustments for calculations for CY 2023 when it is the performance
year, including when CY 2023 is used to calculate the ACO's performance
year expenditures and when it is used to calculate the national-
regional blended update to the benchmark used in determining financial
performance for PY 2023, and also when CY 2023 is a benchmark year for
ACOs in agreement periods beginning on January 1, 2024, January 1,
2025, or January 1, 2026. In performing this adjustment, we would
remove payment amounts for the selected catheter HCPCS codes on DMEPOS
claims submitted by any supplier; that is, we would not limit the
exclusion to payment amounts on claims submitted by certain suppliers
that may have individually displayed SAHS billing activity so as to
protect the integrity of any potential investigations which may be
ongoing.
Specifically, we would adjust the following Shared Savings Program
calculations, as applicable, to exclude all Medicare Parts A and B
payment amounts on DMEPOS claims (claim types 72 and 82) \4\ associated
with HCPCS codes A4352 and A4353 in CY 2023:
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\4\ We note that in some Shared Savings Program documentation
(see, for example, Table 2 in the Medicare Shared Savings Program,
Shared Savings and Losses, Assignment and Quality Performance
Standard Methodology Specifications (version #11, January 2023),
available at https://www.cms.gov/files/document/medicare-shared-savings-program-shared-savings-and-losses-and-assignment-methodology-specifications.pdf-2), we classify claim type 72 (along
with claim type 71) as Carrier (including physician/supplier Part B)
and we classify claim type 82 (along with claim type 81) as DME. We
will continue to use these classifications, which are based on the
type of carrier to which the claim was submitted, for other program
operations. As described by the CMS Research Data Assistance Center
(ResDAC), claim type 71 refers to local carrier non-DMEPOS claims,
72 to local carrier DMEPOS claims, 81 to durable medical equipment
regional carrier (DMERC) non-DMEPOS claims, and 82 to DMERC DMEPOS
claims (see https://resdac.org/cms-data/variables/nch-claim-type-code).
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Calculation of Medicare Parts A and B FFS expenditures for
an ACO's assigned beneficiaries for all purposes including the
following: Establishing, adjusting, updating, and resetting the ACO's
historical benchmark and determining performance year expenditures.
Calculation of FFS expenditures for assignable
beneficiaries as used in determining county-level FFS expenditures and
national Medicare FFS expenditures, including the following
calculations:
++ Determining average county FFS expenditures based on
expenditures for the assignable population of beneficiaries in each
county in the ACO's regional service area according to Sec. Sec.
425.601(c) and 425.654(a) for purposes of calculating the ACO's
regional FFS expenditures.
++ Determining the 99th percentile of national Medicare FFS
expenditures for assignable beneficiaries for purposes of the
following:
-- Truncating assigned beneficiary expenditures used in calculating
benchmark expenditures under Sec. 425.652(a)(4), and performance year
expenditures under Sec. Sec. 425.605(a)(3) and 425.610(a)(4).
-- Truncating expenditures for assignable beneficiaries in each
county for purposes of determining county FFS expenditures according to
Sec. Sec. 425.601(c)(3) and 425.654(a)(3).
-- Truncating expenditures for assignable beneficiaries for
purposes of determining truncated national per capita FFS expenditures
for purposes of calculating the Accountable Care Prospective Trend
(ACPT) according to Sec. 425.660(b)(3).
++ Determining truncated national per capita expenditures FFS per
capita expenditures for assignable beneficiaries for purposes of
calculating the ACPT according to Sec. 425.660(b)(3).
++ Determining national per capita expenditures for Parts A and B
services under the original Medicare FFS program for assignable
beneficiaries for purposes of capping the regional adjustment to the
ACO's historical benchmark according to Sec. 425.656(c)(3), and
capping the prior savings adjustment according to Sec.
425.658(c)(1)(ii).
++ Determining national growth rates that are used as part of the
blended growth rates used to trend forward benchmark year (BY) 1 and
BY2 expenditures to BY3 according to Sec. 425.652(a)(5)(ii) and as
part of the blended growth rates used to update the benchmark according
to Sec. Sec. 425.601(b)(2) and 425.652(b)(2)(i).
Calculation of Medicare Parts A and B FFS revenue of ACO
participants for purposes of calculating the ACO's loss recoupment
limit under the BASIC track as specified in Sec. 425.605(d).
Calculation of total Medicare Parts A and B FFS revenue of
ACO participants and total Medicare Parts A and B FFS expenditures for
the ACO's assigned beneficiaries for purposes of identifying whether an
ACO is a high revenue ACO or low revenue ACO, as defined under Sec.
425.20, and determining an ACO's eligibility to receive advance
investment payments according to Sec. 425.630.
Calculation or recalculation of the amount of the ACO's
repayment mechanism arrangement according to Sec. 425.204(f)(4).
This approach would recognize that SAHS billing activity has the
potential to impact an ACO's savings and loss determination for both PY
2023 (the year when the SAHS billing activity occurred) and future
performance years for which CY 2023 is a benchmark year. Making
adjustments when the affected period represents a performance year or
benchmark year is consistent with our approach for the exclusion of
payment amounts for episodes of care for treatment of COVID-19 that we
[[Page 55172]]
established in the May 8, 2020 COVID-19 IFC (85 FR 27577 through
27581).
The listed calculations reflect the same set of calculations that
CMS adjusts for a beneficiary's episode of care for treatment of COVID-
19, specified at Sec. 425.611(c), as amended by the CY 2021 PFS final
rule (85 FR 85044), the CY 2023 PFS final rule (87 FR 70241), and the
CY 2024 PFS final rule (88 FR 79548), with a few exceptions. First,
Sec. 425.611(c) includes certain provisions that are not relevant for
the proposed policy.\5\ Second, the proposed policy includes
calculations related to truncated national per capita expenditures used
in determining the ACPT as described in Sec. 425.660(b)(3) that are
not included in Sec. 425.611(c).\6\
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\5\ This includes provisions under Sec. Sec. 425.600, 425.602,
425.603, 425.604, and 425.606 which are not relevant for the
proposed policy because they are not applicable to PY 2023 or for
agreement periods where CY 2023 is a benchmark year. It also
includes certain provisions under Sec. 425.601 which are not
relevant for the proposed policy because the proposed policy does
not include adjustments to benchmark year calculations for the
benchmarks used to financially reconcile ACOs for PY 2023. These
provisions are relevant for the COVID-19 episode exclusion policy
under Sec. 425.611 because they are applicable to performance or
benchmark years that overlap with the PHE for COVID-19.
\6\ When establishing the ACPT in the CY 2023 PFS final rule, we
noted that the first ACPT release would be published in 2024 for
agreement periods beginning on January 1, 2024, and would provide a
projected annualized growth rate (or rates) relative to the 2023
benchmark year (BY3). We noted further that to the extent that
Medicare projections made at that time (2024) anticipated lingering
effects from the COVID-19 pandemic then they would be reflected in
the ACPT (see 87 FR 69894), and we opted not to amend Sec. 425.611
to include adjustments of ACPT-related calculations. However, given
the known nation-wide impact of the SAHS billing activity in CY
2023, it is appropriate to propose making adjustments to ACPT-
related calculations in this proposed rule.
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For agreement periods beginning on January 1, 2024, and in
subsequent years, CMS incorporates a fixed projected growth rate
determined at the beginning of the ACO's agreement period called the
ACPT into the blended update factor described in Sec. 425.652(b) when
updating an ACO's benchmark for each performance year of the agreement
period.\7\ Specifically, the ACPT is an annual rate of growth in
projected expenditures during the ACO's 5-year agreement period
relative to BY3 and is calculated using a modified version of the
existing FFS United States Per Capita Cost (USPCC) growth trend
projections. The USPCCs are calculated by OACT and projects Medicare
program spending for various recurring deliverables, including the
Medicare Trustees Report and the Advance Notice and Announcement of
Medicare Advantage capitation rates and Part C and Part D payment
policies. These publications include both historical and projected
future Medicare spending amounts expressed on a per capita basis. The
Modified USPCC Annualized Growth Rate used for calculating the ACPT in
the Shared Savings Program reflects the following: (1) exclusion of IME
and DSH payments, and the supplemental payment for Indian Health
Service/Tribal hospitals and Puerto Rico hospitals; and (2) inclusion
of payments associated with hospice claims (see Sec. 425.660(b)(1),
see also 87 FR 69882).
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\7\ For more details on the ACPT and the terminology used to
describe it, refer to the CY 2023 PFS final rule (87 FR 69881
through 69898) and Medicare Shared Savings Program, Shared Savings
and Losses, Assignment and Quality Performance Standard Methodology,
Specifications of the Accountable Care Prospective Trend (ACPT) and
Three-Way Blended Benchmark Update Factor (May 2023, Version #1),
available at https://www.cms.gov/files/document/medicare-ssp-acpt-specifications.pdf.
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In considering whether to propose adjusting calculations used for
the ACPT, we considered whether adjusting Shared Savings Program
calculations detailed earlier in this section to exclude all payment
amounts for the selected catheter codes but not adjusting projected
growth rates used in the three-way blend would result in a bias. We
expect that a bias would be introduced if we adjusted Shared Savings
Program calculations to remove SAHS billing activity from expenditures
but did not make an adjustment for SAHS billing activity from the
corresponding year used in ACPT projections. We thus determined it was
necessary to adjust the ACPT to promote continued integrity and
fairness and improve the accuracy of Shared Savings Program financial
calculations. This would ensure that the projected growth rates in
future years (for which billing for the selected catheter claims is
expected to revert to typical levels) would not be biased.
As noted in the Regulatory Impact Statement (section VI. of this
proposed rule), we anticipate that the magnitude and direction of the
net impact of these various adjustments may vary from ACO to ACO. For
example, excluding the selected catheter payments may reduce an ACO's
performance year expenditures, but may also reduce the performance year
regional and national expenditures and, in turn, the update factors
applied to the ACO's historical benchmark. If the reduction to an ACO's
expenditures is larger than the reduction to the national-regional
blended update to the benchmark (indicating that the ACO's performance
year assigned population was disproportionately impacted by the SAHS
billing activity than assignable beneficiaries in the ACO's regional
service area or the nation as a whole), the ACO would see an increase
in total savings (or a reduction in total losses) relative to the
current methodology, which makes no adjustments for SAHS billing
activity. Conversely, if the reduction to the ACO's performance year
expenditures is smaller than the reduction to the national-regional
blended update to the benchmark, the ACO would see a decrease in total
savings (or increase in total losses) relative to the current
methodology.
We acknowledge that by excluding all payments for the selected
HCPCS codes from CY 2023 calculations, we would exclude some payments
that would have been made during the period in the absence of any SAHS
billing activity. This, in turn, would create some degree of
inconsistency between performance year expenditure calculations and
expenditure calculations for the historical benchmark against which the
performance year will be reconciled, as years not directly affected by
the SAHS billing activity include some level of payments for the
selected codes. We considered whether to propose adjusting historical
benchmarks that will be used for PY 2023 financial reconciliation to
remove all payments for the selected codes from benchmark year
expenditures (for example, for an ACO that started an agreement period
in 2022, adjusting the benchmark used for PY 2023 financial
reconciliation to remove payments for the selected codes from benchmark
years 2019, 2020, and 2021). We opted against this approach for two
reasons.
First, historical billing for the selected catheter HCPCS codes has
generally been relatively low, including in recent years. As noted in
the Regulatory Impact Statement (section VI. of this proposed rule),
billing for these codes remained less than 0.1 percent of total FFS
billing in every year from 2016 to 2022, the period encompassing all
benchmark years for ACOs being financially reconciled for PY 2023.
Thus, in a year not impacted by SAHS billing activity, payments for
these codes would likely represent only a very small portion of an
ACO's total per capita expenditures or total expenditures for an ACO's
regional service area or the national assignable population. This
conclusion is supported by analysis at the regional level. Tabulating
the difference in per capita spending for these codes at the Hospital
Referral Region (HRR) from national average per capita spending across
2016 to 2022 (and expressing such difference as a percentage of per
capita spending) results in a standard deviation of only 0.03
percentage points. Therefore, we believe that the
[[Page 55173]]
impact of adjusting the benchmarks to be used for PY 2023 financial
reconciliation to exclude the selected catheter payments would be very
small.
Second, adjusting benchmarks for over 450 ACOs being reconciled for
PY 2023 would require the recalculation of ACO, national, and regional
expenditures for seven benchmark calendar years and recalculation of
benchmarks under multiple benchmarking methodologies. Performing these
adjustments would delay the issuance of initial determinations, and
thus the disbursement of earned performance payments, potentially by
several months. The SAHS billing activity in CY 2023 was unforeseen and
could not have been planned for or integrated into existing operational
timelines. It would take time to recompute expenditure calculations for
multiple years and benchmark calculations for multiple cohorts of ACOs
and review and validate the results. Such a delay would be harmful to
ACOs and the beneficiaries they care for, as ACOs rely on earned
performance payments for critical investments in care delivery. The
negative implications of a delay to the issuance of initial
determinations and earned performance payments for PY 2023 outweighs
the potential benefits gained by adjusting the benchmarks, especially
as we anticipate the magnitude of the impact of such adjustments would
be small.
Section 1899(d)(1)(B)(ii) of the Act permits the Secretary to
adjust the benchmark for beneficiary characteristics and such other
factors as the Secretary determines appropriate. This proposal, if
finalized, would rely on this authority to remove payments for the
specified catheter codes from the determination of benchmark
expenditures where CY 2023 serves as a benchmark year when establishing
benchmarks for ACOs in agreement periods beginning in January 2024,
2025, or 2026.
Other changes are proposed using our authority under section
1899(i)(3) of the Act. Specifically, we would rely on section
1899(i)(3) of the Act to remove payment amounts for HCPCS or CPT codes
for which CMS has identified SAHS billing activity from the following
calculations: (1) performance year expenditures; (2) updates to the
historical benchmark; and (3) ACO participants' Medicare FFS revenue
used for multiple purposes across the Shared Savings Program, including
determinations of loss sharing limits in the two-sided models of the
BASIC track \8\ and determinations of eligibility for advance
investment payments.\9\ Section 1899(i)(3) of the Act requires that we
determine that the alternative payment methodology adopted under that
provision would improve the quality and efficiency of items and
services furnished to Medicare beneficiaries, without resulting in
additional program expenditures. The adjustments we are proposing
herein, which would remove payment amounts for codes with identified
SAHS billing activity from the specified Shared Savings Program
calculations specified in a proposed new section of the regulations at
Sec. 425.670, would capture and remove from program calculations
expenditures that are outside of an ACO's control, but that could
significantly affect the ACO's performance under the program. In
particular, failing to remove these payments would create highly
variable savings and loss results for individual ACOs that happen to
have over-representation or under-representation of SAHS billing
activity for the selected codes among their assigned beneficiary
populations.
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\8\ See Sec. 425.605(d)(1)(iii)(D), 425.605(d)(1)(iv)(D), and
425.605(d)(1)(v)(D) for BASIC track Levels C, D and E, respectively.
\9\ See Sec. 425.630(b).
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As described in the Regulatory Impact Statement (section VI. of
this proposed rule), excluding payment amounts for the selected
catheter HCPCS codes from the specified calculations is not expected to
result in an increase in spending beyond the expenditures that would
otherwise occur under the statutory payment methodology in section
1899(d) of the Act. Further, these adjustments to our calculations to
remove payment amounts for these codes would promote continued
integrity and fairness and improve the accuracy of Shared Savings
Program financial calculations as well as timely completion of PY 2023
financial reconciliation. As a result, we expect these policies would
support ACOs continued participation in the Shared Savings Program and
the program's goals of lowering growth in Medicare FFS expenditures and
improving the quality of care furnished to Medicare beneficiaries.
Based on these considerations, and as specified in the Regulatory
Impact Statement (section VI. of this proposed rule), we have
determined that adjusting certain Shared Savings Program calculations
to remove payment amounts for selected codes identified as having SAHS
billing activity in CY 2023 from the calculation of performance year
expenditures, updates to the historical benchmark, and ACO
participants' Medicare FFS revenue used for multiple purposes across
the Shared Savings Program, meets the requirements for use of our
authority under section 1899(i)(3) of the Act when incorporated into
the existing other payment model we have established pursuant to that
section.
The proposals described in this proposed rule would be applied
retroactively, as they affect a performance year that has already been
completed (PY 2023) and a performance year that has already started (PY
2024). More specifically, we would retroactively apply the changes (if
finalized) to adjust expenditure calculations used in determining
shared savings and losses for PY 2023 and certain other calculations
including to establish historical benchmarks for ACOs entering an
agreement period beginning on January 1, 2024, that would be used to
determine ACO financial performance for PY 2024 and subsequent years of
an ACO's agreement period. Therefore, if finalized, these changes would
constitute retroactive rulemaking. Section 1871(e)(1)(A)(ii) of the Act
permits a substantive change in regulations, manual instructions,
interpretive rules, statements of policy, or guidelines of general
applicability under Title XVIII of the Act to be applied retroactively
to items and services furnished before the effective date of the change
if the failure to apply the change retroactively would be contrary to
the public interest.
Failing to apply the proposed changes retroactively would be
contrary to the public interest because it would unfairly punish Shared
Savings Program ACOs by forcing them to unexpectedly assume a
substantial magnitude of unexpected financial risk for costs outside
their control and not previously contemplated in the Shared Savings
Program, undermining both the sustainability of the Shared Savings
Program and the public's faith in CMS as a fair partner. We did not
fully contemplate the potential for SAHS billing activity outside of an
ACO's control when the Shared Savings Program was established.\10\ For
this reason, the Shared Savings Program financial methodology and the
procedures we have utilized in the past did not provide a means to
adequately account for instances of SAHS billing activity outside of an
ACO's control,
[[Page 55174]]
and thereby the related financial risk is assumed entirely by ACOs. We
view this outcome as particularly inequitable to ACOs because they have
no direct means of controlling such costs. Unlike Medicare Advantage
organizations, ACOs are not responsible for processing claims for their
assigned beneficiaries and otherwise have no means of causing the
denial of such claims. CMS thus cannot reasonably have expected ACOs to
have assumed responsibility for all instances of SAHS billing activity
outside of an ACO's control when they joined the Shared Savings
Program. For these reasons, it would be contrary to the public interest
for CMS to fail to apply a policy mitigating this issue retroactively.
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\10\ See, for example, 76 FR 67948 through 67950. Such
approaches were more focused on policies to support monitoring of
ACO performance and ensuring program integrity.
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Undertaking notice and comment rulemaking for this issue prior to
the start of PY 2023 to avoid retroactive rulemaking was not possible
because we could not have foreseen the SAHS billing activity prior to
the start of the performance year. More specifically, we were only able
to determine that the increase in billing on HCPCS codes A4352 and
A4353 in CY 2023 was significant, anomalous, and highly suspect after
the calendar year ended. To identify that the billing activity in CY
2023 was significant, anomalous, and highly suspect, CMS reviewed
actual billing levels after the calendar year closed and services
furnished in CY 2023 had occurred and the billing level could then be
compared to billing levels observed in prior calendar years.
We are proposing adding and reserving Sec. Sec. 425.661 through
425.669 in subpart G and adding a new section at Sec. 425.670 to
describe adjustments CMS would make to Shared Savings Program
calculations to mitigate the impact of SAHS billing activity occurring
in CY 2023. We propose that Sec. 425.670(b) would specify that CMS has
determined that the billing of HCPCS codes A4352 (Intermittent urinary
catheter; Coude (curved) tip, with or without coating (Teflon,
silicone, silicone elastomeric, or hydrophilic, etc.), each) and A4353
(Intermittent urinary catheter, with insertion supplies) represents
significant, anomalous, and highly suspect billing activity for CY 2023
that warrants adjustment. We propose under Sec. 425.670(c) to specify
the Shared Savings Program calculations for which CMS would exclude all
Medicare Parts A and B FFS payment amounts on DMEPOS claims (claim
types 72 and 82) associated with HCPCS codes A4352 and A4353 and
include references to all relevant sections of the regulations in these
provisions. In Sec. 425.670(d), on the period of adjustment, we
propose to specify that CMS would adjust Shared Savings Program
calculations for SAHS billing activity of HCPCS codes A4352 and A4353
for CY 2023, when CY 2023 is either a performance year or a benchmark
year. We propose to specify under Sec. 425.670(e) that we would make
adjustments for payments associated with HCPCS codes A4352 and A4353
for BY3 in projecting per capita growth in Parts A and B FFS
expenditures, according to Sec. 425.660(b)(1), for purposes of
calculating the ACPT for agreement periods beginning on January 1,
2024.
We seek comment on these proposals.
III. Exception to the 60-Day Comment Period and Possible Reduction or
Waiver of 30-Day Delay in Effective Date of a Final Rule
A. Reduction of the Comment Period to 30 Days
There is an urgent need to address the impact of SAHS billing
activity on Shared Savings Program calculations based on CY 2023 data
used in determining PY 2023 financial performance, in establishing
benchmarks for ACOs participating in agreement periods beginning on
January 1, 2024, and in calculating factors used in the application
cycle for ACOs applying to enter a new agreement period beginning on
January 1, 2025, and the change request cycle for ACOs continuing their
participation in the program for PY 2025.\11\ These program operations
depend on the timely use of CY 2023 data. Notice and comment rulemaking
to consider the proposed adjustments to Shared Savings Program
calculations for SAHS billing activity identified for CY 2023
necessitates delaying key program operations that depend on CY 2023
data, pending the issuance of a final rule that would specify our final
policy as informed by public comment on our proposals. We describe in
this section of this proposed rule the impact of delayed use of CY 2023
data in the aforementioned program operations and approaches that would
allow us to continue to meet the statutory requirements for notice and
comment rulemaking procedures, such as by reducing the comment period,
and possibly reducing or eliminating the delay in the effective date of
a final rule (if issued).
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\11\ Failing to take any action to address this SAHS billing
activity may require CMS to use inaccurate data to make eligibility
determinations and require ACOs establish repayment mechanism
arrangements for inflated amounts that include the impact of SAHS
billing activity.
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Significant delays in the issuance of initial determinations for PY
2023 financial performance, and related shared savings payments, would
be substantially disruptive to ACOs that exclusively receive revenue
from shared savings payments, particularly small, rural, and low
revenue ACOs and those serving underserved populations. With few
exceptions, the Shared Savings Program historically completes
calculations of shared savings and shared losses and issues initial
determinations of ACO financial performance approximately 8 months
after the conclusion of the performance year, and shortly thereafter
issues performance payments to ACOs eligible to share in savings.\12\
CMS initiates payments to ACOs that have earned shared savings for a
performance year in September of the year following the applicable
performance year. ACOs have come to rely on the orderly and timely
calculation of financial reconciliation, and distribution of shared
savings. Modifications to Shared Savings Program financial methodology
as proposed in this proposed rule would necessitate delaying the
delivery of financial reconciliation reports to ACOs, and issuance of
performance payments to ACOs that have earned shared savings.
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\12\ Refer to discussion in the CY 2023 PFS final rule, 87 FR
69869 through 69870.
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Delayed use of CY 2023 data would also impair administration of the
Shared Savings Program in 2024 and 2025. CY 2023 data is instrumental
in determining factors used in the application cycle for ACOs applying
to enter a new agreement period beginning on January 1, 2025, and
change request cycle for existing ACOs continuing their participation
in the program for PY 2025. For instance, CY 2023 data will be used in
the calculation of total Medicare Parts A and B FFS revenue of ACO
participants and total Medicare Parts A and B FFS expenditures for the
ACO's assigned beneficiaries for purposes of identifying whether an ACO
is high revenue or low revenue, as defined under Sec. 425.20. The
high/low revenue status is then used to determine an ACO's eligibility
to receive advance investment payments to expand accountable care to
underserved communities according to Sec. 425.630, and an ACO's
eligibility for the CMS Innovation Center's new ACO PC Flex Model for
the January 1, 2025 start date. CY 2023 data will also be the basis for
calculating the amount of required repayment mechanism arrangements for
ACOs entering two-sided models for PY 2025. The proposed approach would
help ensure the accuracy of the calculations used in determining ACO
revenue status and repayment
[[Page 55175]]
mechanism amounts. Delays in the application cycle already underway
could jeopardize our ability to timely issue application dispositions,
execute participation agreements with eligible ACOs for the new
agreement period beginning on January 1, 2025, deliver PY 2025 initial
assignment list reports, and timely deliver initial advance investment
payments for newly eligible ACOs. Substantial delays in change request
cycle milestones also would jeopardize our ability to ensure ACOs have
met program requirements to facilitate their continued participation in
the Shared Savings Program for the performance year beginning on
January 1, 2025.
Modifications to Shared Savings Program financial methodology as
proposed in this proposed rule also necessitate delaying the delivery
of final historical benchmark reports to ACOs. We recognize that
delaying the availability of these program reports to ACOs could hamper
ACOs' ability to set effective cost targets that may depend on the
ACO's projected financial performance based on its benchmark value.
Substantial delays in issuance of the historical benchmark reports to
ACOs could make it more challenging for ACOs to effectively curb growth
in Medicare FFS expenditures, a central aim of the Shared Savings
Program.
Section 1871(b)(1) of the Act generally requires that Medicare
rules must be proposed with a 60-day comment period. Section 1871(b)(2)
of the Act provides that this requirement does not apply where a
statute specifically permits a regulation to be issued in interim final
form or otherwise with a shorter period for public comment; a statute
establishes a specific deadline for the implementation of a provision
and the deadline is less than 150 days after the date of the enactment
of the statute in which the deadline is contained; or subsection (b) of
section 553 of title 5, United States Code, does not apply under
subparagraph (B) of such subsection. Subparagraph (B) of 5 U.S.C.
553(b) provides an exception to the requirement for an agency to
publish a general notice of proposed rulemaking in the Federal Register
when the agency for good cause finds (and incorporates the finding and
a brief statement of reasons therefore in the rules issued) that notice
and public procedure thereon are impracticable, unnecessary, or
contrary to the public interest.
We find that a 60-day comment period is both impracticable and
contrary to the public interest. For the reasons stated in the
following discussion, we are therefore reducing the comment period of
this proposed rule to 30 days. Failing to use a 30-day comment period
in lieu of a 60-day comment period here would be impracticable and
contrary to the public interest in part for the same reasons described
in section II.B. of this proposed rule that failing to apply this rule
retroactively to PY 2023 and PY 2024 would be contrary to the public
interest. Additionally, failing to use the reduced comment period would
be impracticable and contrary to the public interest because the
additional time would not substantially enhance the public's ability to
participate in this rulemaking, and it would substantially impair CMS's
ability to administer the Shared Savings Program, by delaying the
following:
Issuance of initial determinations of shared savings and
shared losses to ACOs for PY 2023.
Disbursement of PY 2023 earned performance payments to
ACOs.
Determination of ACO revenue status used in determining
ACO eligibility for advance investment payments and eligibility for the
ACO PC Flex Model, in connection with the application cycle for ACOs
applying to enter a new agreement period beginning on January 1, 2025.
Calculation of required amounts for repayment mechanism
arrangements for ACOs entering a two-sided model for PY 2025 and the
deadline for ACO submission of repayment mechanism documentation to CMS
for review, to ensure compliance with related requirements.
Calculation of final historical benchmarks for ACOs
beginning an agreement period on January 1, 2024, and delivery of final
historical benchmark reports to ACOs.
It would be contrary to the public interest for ACOs to be harmed
by the delay in administration of the Shared Savings Program caused by
the rule that intended to relieve them from the unexpected harm arising
from SAHS billing activity. A 60-day comment period would likely
necessitate delaying these key operations until at least late 2024,
substantially delaying these operations and related processes, which
would harm ACOs and impair the operation of the Shared Savings Program
and thwart the relief to ACOs that would otherwise be provided by this
rule.
A substantial delay to initial determinations of shared savings and
losses for PY 2023 and disbursement of earned performance payments
would be financially ruinous to the many ACOs that rely on these
payments to operate. For example, in PY 2022, 304 ACOs earned $2.52
billion in performance payments. Shared savings payments are the
primary revenue source of ACOs. Many ACOs, particularly small, rural,
and low revenue ACOs and those serving underserved populations, depend
on receiving shared savings payments on a predictable annual schedule
to continue operating. It is self-evident that enabling ACOs to
continue to operate with minimal disruption is itself in the public
interest and in particular is in the interest of Medicare beneficiaries
whose care is coordinated by ACOs.
Delaying adjudication of application and repayment mechanism
decisions also would jeopardize or prevent CMS and ACOs starting
performance year 2025. CMS and ACOs cannot timely enter into agreements
for the agreement period beginning on January 1, 2025, jeopardizing the
expansion of accountable care to underserved communities, stifling
innovation in primary care payment reform and restricting ACOs' ability
to meet requirements for entering or continuing their participation in
a two-sided model for PY 2025. Phase 1 of the application period closed
June 17, 2024.\13\ Failing to timely adjudicate hundreds of
applications and over ten thousand change requests, for new and
renewing ACOs, and ACOs continuing their participation in Shared
Savings Program, impairs our ability to timely and accurately evaluate
ACOs based on statutorily required eligibility criteria and existing
regulatory requirements. We cannot start performance year 2025 until
all applications and change requests have been reviewed, processed, and
adjudicated.
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\13\ See for example, Medicare Shared Savings Program, Key
Application Actions and Deadlines For Agreement Period Beginning on
January 1, 2025, available at https://www.cms.gov/files/document/key-application-actions-and-deadlines.pdf.
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Additionally, given the limited scope of this proposed rule,
addressing a single issue through proposed changes to the Shared
Savings Program regulations, a 30-day comment period is a reasonable
amount of time for public inspection and comment. Furthermore, many
interested parties have written to the Administrator requesting relief
from SAHS billing activity so they are familiar with this issue and are
likely ready to review the policy and impacts within the thirty day
timeframe.
Furthermore, starting notice and comment rulemaking sooner to allow
a 60-day comment period was impracticable. As we described elsewhere in
this proposed rule, we could not have foreseen the SAHS billing
activity in advance and were
[[Page 55176]]
only able to determine that the increase in billing on HCPCS codes
A4352 and A4353 in CY 2023 was significant, anomalous, and highly
suspect after the calendar year ended. To identify that the billing
activity in CY 2023 was SAHS billing activity, CMS reviewed actual
billing levels after the calendar year closed and services furnished in
CY 2023 had occurred and the billing level could then be compared to
billing levels observed in prior calendar years. Careful analysis of
the billing activity, plus careful analysis of the impact on ACOs in
the Shared Savings Program, was critical to determining whether
mitigation measures were necessary. Given the unprecedented nature of
the circumstances, time was also required to develop the appropriate
proposed mitigation approach. Once we determined that this billing
activity in CY 2023 was significant, anomalous, and highly suspect,
that it was necessary to mitigate its impact on Shared Savings Program
expenditures and revenue calculations, and the appropriate proposed
mitigation approach, we immediately began the process to undertake
notice and comment rulemaking. For the aforementioned reasons, among
others discussed in this section of this proposed rule, we view a
failure to use a reduced comment period as impracticable and contrary
to the public interest, and thus find the agency has good cause to set
a 30-day comment period.
The modifications to the Shared Savings Program financial
methodology proposed in this proposed rule, with a 30-day comment
period, would allow us to maintain timely adjudication of certain
determinations of applicant ACOs' eligibility to participate under the
advance investment payment option, or the ACO PC Flex Model, for an
agreement period beginning on January 1, 2025, and timely finalization
of repayment mechanism arrangements required for ACOs to enter or
continue their participation in two-sided models for PY 2025. While
using a 30-day comment period would minimize disruptions to timelines
for certain milestones, we anticipate that the issuance of initial
determinations and the disbursement of earned performance payments for
PY 2023 would still be delayed by approximately 6 weeks. Where
possible, we will work to reduce delays and will proactively
communicate with ACOs about changes in timelines for these, or other,
milestones.
B. Possible Waiver of the 30-Day Delay in Effective Date of a Final
Rule
Section 1871(e)(1)(B)(i) of the Act prohibits a substantive change
in Medicare regulations from taking effect before the end of the 30-day
period beginning on the date the rule is issued or published. However,
section 1871(e)(1)(B)(ii) of the Act permits a substantive rule to take
effect on a date that precedes the end of the 30-day period if the
Secretary finds that a waiver of the 30-day period is necessary to
comply with statutory requirements or that the application of the 30-
day period is contrary to the public interest. The Administrative
Procedure Act (APA), 5 U.S.C. 553(d), similarly requires a 30-day delay
in the effective date of a substantive final rule. This 30-day delay in
effective date can be waived, however, if an agency finds good cause to
support an earlier effective date, among other reasons. 5 U.S.C.
553(d)(3). Should CMS finalize a rule based on this proposed rule, we
would strongly consider reducing or waiving the 30-day delay in
effective date under the provisions described above to the extent that
the delay in effective date would also harm ACOs or thwart the purpose
of this proposal by delaying our timely administration of the Shared
Savings Program functions described in section III.A of this proposed
rule. This waiver would be in part for the same reasons that we are
reducing the comment period on this proposed rule from 60 days to 30
days, as described in section III.A of this proposed rule. We request
comment on this approach, including a possible finding of good cause
and how ACOs are impacted by the delay.
IV. Collection of Information Requirements
Section 1899(e) of the Act provides that chapter 35 of title 44
U.S.C., which includes such provisions as the Paperwork Reduction Act
of 1995, shall not apply to the Shared Savings Program. Accordingly, we
are not setting out burden estimates under this section of the
preamble. Please refer to section VI. (Regulatory Impact Statement) of
this proposed rule for a discussion of the impacts associated with the
proposed changes to the Shared Savings Program as described in section
II. (Provisions of the Proposed Regulations) of this proposed rule.
V. Response to 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 comments we receive
by the date and time specified in the ``DATES'' section of this
preamble, and, when we proceed with a subsequent document, we will
respond to the comments in the preamble to that document.
VI. Regulatory Impact Statement
A. Overview
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), Executive Order 14094 entitled ``Modernizing
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), and Executive Order 13132 on Federalism (August
4, 1999).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). The
Executive Order 14094 entitled ``Modernizing Regulatory Review''
(hereinafter, the Modernizing E.O.) amends section 3(f)(1) of Executive
Order 12866 (Regulatory Planning and Review). A Regulatory Impact
Analysis (RIA) must be prepared for major rules with significant
effects ($200 million or more in any 1 year). Based on our estimates,
OMB's Office of Information and Regulatory Affairs (OIRA) has
determined this rulemaking is not significant per section 3(f)(1) as
measured by the $200 million or more in any 1 year.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
less than $9.0 million to $47.0 million in any 1 year. Individuals and
States are not included in the definition of a small entity. We are not
preparing an analysis for the RFA because we have determined, and the
Secretary certifies, that this proposed rule would not have a
significant economic impact on a substantial number of small entities.
[[Page 55177]]
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 603 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area for Medicare
payment regulations and has fewer than 100 beds. We are not preparing
an analysis for section 1102(b) of the Act because we have determined,
and the Secretary certifies, that this proposed rule would not have a
significant impact on the operations of a substantial number of small
rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2024, that
threshold is approximately $183 million. This rule will have no
consequential effect on State, local, or tribal governments or on the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
B. Analysis
In this proposed rule, we discuss the reasons that excluding
payment amounts incurred in 2023 for two urinary catheter HCPCS codes
\14\ on DMEPOS claims will prevent SAHS billing activity from
deteriorating the accuracy of Shared Savings Program calculations
determining both: (1) shared savings or losses for PY 2023 and (2)
historical benchmarks for future performance years for ACOs entering
agreement periods in 2024, 2025 or 2026. Total FFS spending in the two
specified codes was minimal in preceding years before the SAHS billing
activity in 2023 sharply increased in highly-disparate ways. At a
program level, billing for these codes remained less than 0.1 percent
of total FFS billing in every year from 2016 to 2022 before increasing
to nearly 1 percent in 2023. And while a handful of hospital referral
regions (HRRs) still managed to exhibit billing for the specified codes
totaling less than 0.1 percentage points of total spending,
approximately 10 percent of HRRs showed billing for the specified codes
rising to at least 2 percentage points of total spending. In the most
impacted HRR, billing for these codes in 2023 accounted for over a 5
percentage-point increase in total per capita billing from 2022, an
astonishing and plainly unjustifiable increase in billing for the
medical device supplied under these codes. By analyzing ACO-level
program data, we observed material impacts likely for many PY 2023 ACOs
related to these geographically heterogeneous and highly suspect
increases in spending for the specified urinary catheter codes.
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\14\ A4352 (Intermittent urinary catheter; Coude (curved) tip,
with or without coating (Teflon, silicone, silicone elastomeric, or
hydrophilic, etc.), each), and A4353 (Intermittent urinary catheter,
with insertion supplies).
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A preliminary estimate of PY 2023 performance using fourth-quarter
reports with limited claims runout was used to estimate the impact of
removing the specified codes. Despite limitations inherent in this
analysis (including reliance on non-final beneficiary assignment lists,
the absence of 3-months of claims run out, and the exclusion of risk
adjustment), simulating the removal of actual observed spending for the
specified codes from preliminary estimates for ACO-level spending and
regional and national growth and resulting updated benchmark spending
provides a meaningful approximation of the distribution of impacts that
the policy would have across the mix of ACOs in the program in 2023.
Billing for the specified codes was estimated in this study to have
a nominal impact to overall shared savings (net of losses) across the
mix of ACOs in PY 2023. The neutral overall impact exemplifies to the
fact that billing for these specific codes was not correlated to any
ability for an average ACO to actively manage the rapid growth. For
most ACOs, the inclusion of the specified catheter codes do not
substantially change their estimated financial outcome in PY 2023. When
expressing projected shared savings (or losses) as a percentage of
benchmark, the impact of spending in the specified codes on projected
shared savings (or losses) was projected to be within +/-0.05 percent
for 49 percent of ACOs, within +/-0.10 percent for 72 percent of ACOs,
and within 0.15 percent for 82 percent of ACOs. However, the impacts
will potentially be substantial at the tails of the distribution. Table
1 shows that including the specified codes would have increased the net
earnings for one ACO in the study by an amount equivalent to 1.5
percent of benchmark spending relative to the proposal to exclude such
specified spending. At the other extreme, leaving in the specified
codes was estimated to reduce earnings to another ACO by an amount
equivalent to 2.8 percent of benchmark relative to the proposed method
to exclude such specified codes. The impact estimated at these extremes
highlights the benefit of the proposed policy to prevent highly suspect
billing in the two specified codes from materially impacting outcomes
in the program.
[[Page 55178]]
[GRAPHIC] [TIFF OMITTED] TP03JY24.110
While still providing a valid illustration of the impacts likely
across the distribution of ACOs, the simulation relied on preliminary
data for PY 2023 with less than seven days of claims runout and without
risk adjustment. Because of the limitations in the data used for this
simulation, and because of the potential for the overall impact to be
influenced by the proximity of individual ACO-level outcomes to the
applicable minimum savings rate or minimum loss rate (particularly for
large ACOs), a stochastic simulation was employed to generate a range
of outcomes surrounding the best estimate. Assuming final gross savings
(expressed on percent of benchmark basis) would vary relative to data
used in the analysis under a normal distribution with standard
deviation of 0.3 percentage points, the impact of removing spending in
the specified codes was estimated to reduce overall program shared
savings outlays by $10 million on average, ranging from a $40 million
decrease at the 10th percentile to a $20 million dollar increase at the
90th percentile.
C. Compliance With Requirements of Section 1899(i)(3) of the Act
Certain policies, including both existing policies and the proposed
new policy described in this proposed rule, rely upon the authority
granted in section 1899(i)(3) of the Act to use other payment models
that the Secretary determines will improve the quality and efficiency
of items and services furnished under the Medicare program, and that do
not result in program expenditures greater than those that would result
under the statutory payment model. By preventing SAHS spending growth
in the two catheter codes from disrupting the accuracy and fairness of
shared savings and loss outcomes for ACOs in the 2023 performance year,
the proposed policy furthers the goals of quality and efficiency by
protecting the validity and integrity of the program's incentive for
quality and efficiency. The proposal in this proposed rule, together
with all existing program policies (including but not limited to those
requiring authority granted in section 1899(i)(3) of the Act), results
in a program that is expected to improve the quality and efficiency of
items and services furnished under the Medicare program and is not
expected to result in a situation in which the payment methodology
under the Shared Savings Program, including all policies adopted under
the authority of section 1899(i) of the Act, results in more spending
under the program than would have resulted under the statutory payment
methodology in section 1899(d) of the Act.
In the CY 2023 PFS final rule, we estimated that the projected
impact of the payment methodology that incorporates all policies
finalized by that final rule would result in $4.9 billion in greater
program savings compared to a hypothetical baseline payment methodology
that excluded the policies that required section 1899(i)(3) of the Act
authority (see 87 FR 70195 and 70196). The marginal impact of the
proposed changes in the CY 2024 PFS final rule were estimated to lower
net spending by $330 million over the ten-year window for all new
policies combined, including the cap an ACO's regional service area
risk score growth, the addition of a new third step to the beneficiary
assignment methodology, and the revised approach to identify the
assignable beneficiary population (88 FR 79496). The marginal impact of
the proposed changes in this proposed rule
[[Page 55179]]
are estimated to lower net spending by an additional $10 million in net
program shared savings payments for the 2023 performance year, with a
range of uncertainty spanning $40 million lower spending at the 10th
percentile to $20 million higher spending at the 90th percentile. The
cumulative impact of all policies including the proposals in this
proposed rule are estimated to result in more than $4.9 billion in
greater program savings compared to the hypothetical baseline payment
methodology that excludes policies that require 1899(i)(3) of the Act
authority. Therefore, we estimate that the implementation of the
proposal made in this proposed rule would not result in a program with
spending greater than what would result under the statutory payment
model, consistent with the requirements of section 1899(i)(3)(B) of the
Act.
We will continue to reexamine this projection in the future to
ensure that the requirement under section 1899(i)(3)(B) of the Act that
an alternative payment model not result in additional program
expenditures continues to be satisfied. Additional Shared Savings
Program data beginning to accumulate after the end of the COVID-19
public health emergency, along with emerging information on the
characteristics of new entrants in the Shared Savings Program for
agreement periods beginning on January 1, 2024 and January 1, 2025, are
anticipated to gradually improve our ability to reevaluate program
impacts in a comprehensive fashion. In the event that we later
determine that the payment model that includes policies established
under section 1899(i)(3) of the Act no longer meets this requirement,
we would undertake additional notice and comment rulemaking to make
adjustments to the payment model to assure continued compliance with
the statutory requirements.
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on June 27, 2024.
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 proposes to amend 42 CFR part 425 as set forth
below:
PART 425--MEDICARE SHARED SAVINGS PROGRAM
0
1. The authority citation for part 425 continues to read as follows:
Authority: 42 U.S.C. 1302, 1306, 1395hh, and 1395jjj.
Sec. Sec. 425.661 through 425.669 [Reserved]
0
2. Add reserved Sec. Sec. 425.661 through 425.669 to subpart G.
0
3. Section 425.670 is added to subpart G to read as follows:
Sec. 425.670 Adjustments to mitigate the impact of significant,
anomalous, and highly suspect billing activity on Shared Savings
Program financial calculations involving calendar year 2023.
(a) General. This section describes adjustments CMS makes to Shared
Savings Program calculations to mitigate the impact of significant,
anomalous, and highly suspect billing activity occurring in calendar
year 2023.
(b) Significant, anomalous, and highly suspect billing activity for
a HCPCS or CPT code impacting Shared Savings Program calculations. CMS
has determined that the billing of the following HCPCS codes represents
significant, anomalous, and highly suspect billing activity for
calendar year 2023 that warrants adjustment--
(1) A4352 (Intermittent urinary catheter; Coude (curved) tip, with
or without coating (Teflon, silicone, silicone elastomeric, or
hydrophilic, etc.), each); and
(2) A4353 (Intermittent urinary catheter, with insertion supplies).
(c) Applicability of adjustments to performance year and benchmark
year calculations. Notwithstanding any other provision in this part,
CMS adjusts the following Shared Savings Program calculations, as
applicable, to exclude all Medicare Parts A and B fee-for-service
payment amounts on DMEPOS claims (claim types 72 and 82) associated
with a HCPCS code specified in paragraph (b) of this section for the
period specified in paragraph (d) of this section:
(1) Calculation of Medicare Parts A and B fee-for-service
expenditures for an ACO's assigned beneficiaries for all purposes
including the following: Establishing, adjusting, updating, and
resetting the ACO's historical benchmark and determining performance
year expenditures.
(2) Calculation of fee-for-service expenditures for assignable
beneficiaries as used in determining county-level fee-for-service
expenditures and national Medicare fee-for-service expenditures,
including the following calculations:
(i) Determining average county fee-for-service expenditures based
on expenditures for the assignable population of beneficiaries in each
county in the ACO's regional service area according to Sec. Sec.
425.601(c) and 425.654(a) for purposes of calculating the ACO's
regional fee-for-service expenditures.
(ii) Determining the 99th percentile of national Medicare fee-for-
service expenditures for assignable beneficiaries for purposes of the
following:
(A) Truncating assigned beneficiary expenditures used in
calculating benchmark expenditures under Sec. 425.652(a)(4), and
performance year expenditures under Sec. Sec. 425.605(a)(3) and
425.610(a)(4).
(B) Truncating expenditures for assignable beneficiaries in each
county for purposes of determining county fee-for-service expenditures
according to Sec. Sec. 425.601(c)(3) and 425.654(a)(3).
(C) Truncating expenditures for assignable beneficiaries for
purposes of determining truncated national per capita fee-for service
expenditures for purposes of calculating the ACPT according to Sec.
425.660(b)(3).
(iii) Determining truncated national per capita fee-for-service
Medicare expenditures for assignable beneficiaries for purposes of
calculating the ACPT according to Sec. 425.660(b)(3).
(iv) Determining national per capita expenditures for Parts A and B
services under the original Medicare fee-for-service program for
assignable beneficiaries for purposes of capping the regional
adjustment to the ACO's historical benchmark according to Sec.
425.656(c)(3) and capping the prior savings adjustment according to
Sec. 425.658(c)(1)(ii).
(v) Determining national growth rates that are used as part of the
blended growth rates used to trend forward BY1 and BY2 expenditures to
BY3 according to Sec. 425.652(a)(5)(ii) and as part of the blended
growth rates used to update the benchmark according to Sec. Sec.
425.601(b)(2) and 425.652(b)(2)(i).
(3) Calculation of Medicare Parts A and B fee-for-service revenue
of ACO participants for purposes of calculating the ACO's loss
recoupment limit under the BASIC track as specified in Sec.
425.605(d).
(4) Calculation of total Medicare Parts A and B fee-for-service
revenue of ACO participants and total Medicare Parts A and B fee-for-
service expenditures for the ACO's assigned beneficiaries for purposes
of identifying whether an ACO is a high revenue ACO or low revenue ACO,
as defined under Sec. 425.20, and
[[Page 55180]]
determining an ACO's eligibility to receive advance investment payments
according to Sec. 425.630.
(5) Calculation or recalculation of the amount of the ACO's
repayment mechanism arrangement according to Sec. 425.204(f)(4).
(d) Period of adjustment. CMS adjusts the Shared Savings Program
calculations specified in paragraph (c) of this section for
significant, anomalous, and highly suspect billing activity identified
pursuant to paragraph (b) of this section for calendar year 2023, when
calendar year 2023 is either a performance year or a benchmark year.
(e) Adjustments for growth rates used in calculating the ACPT. In
addition to adjustments described in paragraph (c) of this section, CMS
makes adjustments for payments associated with a HCPCS code specified
in paragraph (b) of this section for BY3 in projecting per capita
growth in Parts A and B fee-for-service expenditures, according to
Sec. 425.660(b)(1), for purposes of calculating the ACPT for agreement
periods beginning on January 1, 2024.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-14601 Filed 6-28-24; 4:15 pm]
BILLING CODE 4120-01-P