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Op-Ed

Comments on the Medicare Shared Savings Program

Editor's Note:

This comment letter is part of the USC-Brookings Schaeffer Initiative for Health Policy, which is a partnership between Economic Studies at Brookings and the University of Southern California Schaeffer Center for Health Policy & Economics. The Initiative aims to inform the national health care debate with rigorous, evidence-based analysis leading to practical recommendations using the collaborative strengths of USC and Brookings. The original version of this comment was submitted to the Centers for Medicare and Medicaid Services on September 6, 2022.

Matthew Fiedler submitted a comment letter in response to a recent proposed rule issued by the Centers for Medicare and Medicaid Services (CMS) that included several proposals related to the Medicare Shared Savings Program (MSSP), Medicare’s main accountable care organization (ACO) program. The letter makes three main points on CMS’ proposals:

  • CMS should proceed with its proposals to limit negative regional adjustments and adjust ACO benchmarks for prior savings. These proposals would help ensure that high-cost providers have a path to participate in the MSSP without reintroducing strong “ratchet effects” that discourage participants from reducing spending. CMS should, however, consider modifying its proposed prior savings adjustment to ensure that these adjustments do not “fade out” too quickly over time. Moreover, relying on a prior savings adjustment does have important limitations. Thus, over the longer term, CMS and Congress should strengthen the negative financial consequences for providers that opt out of the MSSP, which would reduce concerns about selective participation and allow CMS to return to a benchmark methodology more like its current one.
  • CMS should abandon its proposal to use projected spending growth, rather than just realized spending growth, to update ACO benchmarks within an agreement period. Due to the likelihood of substantial projection errors, this approach would expose ACOs to considerable financial risk and, in expectation, create significant fiscal costs for the federal government. Alternative approaches, like using larger geographic regions to compute the regional component of the existing trend factor or updating benchmarks based on realized spending growth plus a fixed amount (e.g., 0.25 percentage points) could address CMS’ concerns about how ACOs’ efforts to reduce spending are affecting trend factors without introducing projection errors.
  • CMS should proceed with its proposal to relax the 3% limit on increases in ACO risk scores during an agreement period. If anything, CMS should consider going further. Risk adjustment discourages ACOs from trying to attract healthier enrollees and avoid sicker ones, and it encourages ACOs to participate in the MSSP by reducing financial uncertainty from fluctuations in patient mix. The cap on risk score increases, even in its modified form, makes the MSSP risk adjustment system less effective in achieving these goals. Furthermore, contrary to what CMS asserts in the proposed rule, ACO efforts to capture additional diagnoses may not increase federal costs, on net, after accounting for effects on payments to Medicare Advantage plans (although they still consume real resources).

Read the full comment letter here.

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