[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

[[Page 55171]]

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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \12\ Refer to discussion in the CY 2023 PFS final rule, 87 FR 
69869 through 69870.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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