With the goals of sustaining current participation, encouraging new participation and advancing participants along the risk spectrum in the Medicare Shared Savings Program, the Centers for Medicare & Medicaid (CMS) proposed new rules for comment on December 1, 2014.1 These rules are important because they determine an Accountable Care Organization's (ACO's) opportunity for success and specifically their ability to earn shared savings. An organization's real and perceived probability for such success is a major determinant of whether the organization will have the confidence to participate in the program and, in particular, accept down-side economic risk.

The proposed rules and changes are directionally correct in helping ACOs more successfully implement population health programs, a key driver for improving quality and reducing costs, which directly correlates with financial success. For example, revisions to the benchmark determination methodology are important to recognize local cost variation and those ACOs with historic good performance. It is unfortunate when organizations that are superior performers, based on their experience and expertise, are compromised based on that historic success. Changes that relieve ACOs of the administrative burden associated with beneficiary data sharing are also valuable changes to the program.

However, CMS proposes to apply a number of key changes to only the new Track 3 two-sided risk model. These include prospective attribution which allows the ACO to know which patients are included in their population, allowing the organization to better focus their management resources and potential waivers to certain rules. These proposed changes include those related to the required three-day stay in a hospital before a stay in a skilled nursing facility, the requirement that one receiving home care must be home bound and the requirement that hospital discharge planners refrain from recommending certain participating PAPs (post-acute providers). Waivers of these rules are important to an ACO being able to successfully implement care coordination and care management programs, key hallmarks of successful population management.

The selective application of prospective attribution and the waivers would limit their benefit to those ACOs that are already sufficiently confident in their performance to accept down-side risk sharing. These are the most sophisticated and best performing ACOs – the ones that need the changes the least. New and struggling ACOs would remain handicapped because they are not permitted to optimally implement important population health programs or to implement them most efficiently. Prospective attribution and the waivers should be the norm for all ACOs. Success will best build confidence and encourage participants to advance along the risk spectrum. The reward for programs that advance their competencies and take on down-side risk should be greater magnitudes of upside shared savings. Other than the degree of risk sharing, key program parameters that influence an ACO's ability to be successful should be the same. This would allow all ACOs to build population management programs in a stable optimized environment and gain the expertise and confidence they need.

In one key area, CMS could have gone further and proposed that ACOs offer incentives to patients to keep their care within the network. Keeping care within the ACO network is a key success driver for good care coordination. The proposed rule takes a first step with respect to post-acute referrals; however, all ACOs should be given greater opportunities, with guard rails, to keep patients in network.

These suggestions would create a simpler and more uniform program that should provide administrative simplification for CMS. More importantly, optimizing program parameters for all participants will encourage more program participation and accelerate participant advancement along the risk spectrum commensurate with their success at generating shared savings. These suggestions would create a win – win for everyone.

1"Proposed Changes to the Medicare Shared Savings Program Regulations." CMS.gov. Centers for Medicare & Medicaid Services, December 2 2014. Accessed January 6, 2015.,

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About the author

Dr. Jonathan Niloff is Vice President and Chief Medical Officer, Population Health, McKesson. He was the founder and chief medical officer for MedVentive, which is now a part of McKesson. In his current role, he is responsible for the strategic development of population health analytics and solutions. Dr. Niloff has over 25 years of health care experience as a physician, medical director, professor, author and health care technology innovator.