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In June 2016, AmSurg Corp. and Envision Healthcare Holdings, Inc. (Envision) announced they have signed a definitive merger agreement pursuant to which the companies will combine in an all-stock transaction. Upon completion of the merger, which is expected to be tax-free to the shareholders of both organizations, the combined company will be named Envision Healthcare Corporation and co-headquartered in Nashville, Tennessee and Greenwood Village, Colorado. The company's common stock is expected to trade on the New York Stock Exchange under the ticker symbol: EVHC. Bass, Berry & Sims served as lead counsel on the transaction, led by Jim Jenkins. Read more.

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Encouraging "Riskier Business" for ACOs: CMS Issues New Final Rule


June 30, 2015

On June 9, 2015, the Centers for Medicare & Medicaid Services ("CMS") published in the Federal Register1 a final regulation ("the 2015 Final Rule") implementing certain changes for Accountable Care Organizations ("ACOs") participating in the Medicare Shared Savings Program ("MSSP"). One of the primary purposes of the 2015 Final Rule is to "encourage greater ACO participation in risk-based models."2 The 2015 Final Rule also includes, in its more than 150 pages, provisions designed to accomplish a number of other purposes, such as enhanced data-sharing, greater independence in ACO governance, and refinements in the beneficiary assignment process. This article will cover selected highlights of the 2015 Final Rule.


CMS originally developed the MSSP pursuant to Section 3022 of the Patient Protection and Affordable Care Act of 2010 ("PPACA"), which added Section 1899 to the Social Security Act. Under the MSSP, ACOs that reach specified levels of quality and savings are given a share of the savings achieved by Medicare. Some ACOs also incur financial risk and potential losses for not meeting those goals.3 ACOs that do not have financial risk are "Track 1" ACOs, and those that incur financial risk are "Track 2" ACOs. There are currently more than 400 ACOs, serving more than seven million beneficiaries, participating in the MSSP.

CMS explains in its comments to the 2015 Final Rule that, in 2011 (the year that the original final ACO regulation was released), Medicare made almost no payments to providers through alternative payment models, but that today such payments represent approximately 20% of Medicare payments.4 Sylvia Burwell, Secretary of the Department of Health and Human Services ("HHS"), announced in March 2015 the goal of tying 30% of Medicare fee-for-service payments to quality and value by 2016 and by 2018 making 50% of payments through alternative payment models, such as the MSSP. ACOs and the MSSP will play an increasingly important role in HHS accomplishing this goal.5

Encouraging Greater ACO Participation in Risk-Based Models

To accomplish the goal of encouraging greater participation in risk-based models, CMS has modified the MSSP in several respects in the 2015 Final Rule, including as follows:

  • Allowing ACOs to renew their three-year participation agreement, and specifically allowing Track 1 ACOs to continue participating under a one-sided participation agreement after their initial agreement ends (thereby hopefully allowing them to gain more experience and become more ready to accept risk).
  • Providing ACOs under performance-based risk tracks the choice of several symmetrical thresholds for the Minimum Savings Rate (MSR) and the Minimum Loss Rate (MLR). The ACOs can (1) set their MSR and MLR symmetrically at 0% (in other words, they share in both savings and losses from the first dollar), (2) set their MSR and MLR symmetrically in increments of 0.5% ranging between 0.5% and 2%, or (3) set their MSR and MLR according to the size of their patient population using the existing scale for the one-sided model.
  • Creating "Track 3," a new alternative performance-based track with a two-sided risk model that incorporates a higher sharing rate of 75% (in relation to greater risk), prospective assignment of beneficiaries, and the opportunity to apply for a programmatic waiver of the three-day skilled nursing facility ("SNF") rule in order to permit payment for otherwise-covered SNF services when a prospectively assigned beneficiary is admitted to a SNF without a prior three-day inpatient stay.
  • Resetting the benchmark for an ACO's subsequent agreement periods by (1) integrating previous financial performance (specifically, in resetting the historical benchmark for ACOs entering their second agreement period, CMS will make an adjustment to reflect the average per capita amount of savings earned by the ACO in its first agreement period, reflecting the ACO's financial and quality performance and number of assigned beneficiaries during that agreement period); and (2) equally weighting benchmarks.

Enhanced Data Sharing

The 2015 Final Rule expands the kinds of aggregate and beneficiary identifiable data that will be made available to ACOs in various reports under the MSSP as well as simplifying the process for beneficiaries to decline claims data sharing. CMS states that "we recognize that the ACO may not have access to information about services provided to its assigned beneficiaries by health care providers and suppliers outside the ACO — information that may be key to the ACO's coordination of care efforts."6 Specific changes made by CMS include the following: 

  • For ACOs in Tracks 1 and 2, CMS is expanding the list of beneficiaries for which data is made available under 42 CFR § 425.702(c)(1) to include all beneficiaries who had a primary care service visit during the previous 12 months with an ACO participant that submits claims for primary care services that are considered in the assignment process.
  • CMS is also expanding the beneficiary identifiable information made available for preliminarily prospectively assigned beneficiaries of ACOs in Tracks 1 and 2 to include additional data points in the following categories: demographic information; health status information; utilization rates of Medicare services; and expenditures related to utilization of services. For Track 3 ACOs, the beneficiary identifiable data included in the reports made available under 42 CFR § 425.702(c) will be limited to the ACO's prospectively assigned beneficiaries.
  • CMS also will begin sharing beneficiary identifiable claims data with ACOs participating under Tracks 1 and 2 that request claims data on beneficiaries who are included on their preliminary prospective assigned beneficiary list or that have received a primary care service from an ACO participant upon whom assignment is based during the most recent 12-month period, at the start of the ACO's agreement period, provided all other requirements for claims data sharing under the Shared Savings Program and HIPAA regulations are met.
  • In addition, CMS finalizes its proposal to share beneficiary identifiable claims data with ACOs participating under Track 3 that request beneficiary identifiable claims data on beneficiaries who are included on their prospectively assigned beneficiary list.
  • CMS will honor any beneficiary request to decline claims data sharing that is received under 42 CFR § 425.708 until such time as the beneficiary may reverse his or her claims data sharing preference to allow data sharing.

Leadership and Governance Changes

The 2015 Final Rule modifies and clarifies the ACO governance requirements to promote the independence of the ACO from sponsoring or participating organizations. Specifically:

  • The 2015 Final Rule provides that an ACO formed by "two or more ACO participants, each of which is identified by a unique TIN," must be a legal entity separate from any of its ACO participants.
  • CMS does permit an ACO formed by a single ACO participant to use its existing legal entity and governing body, provided it satisfies the other requirements in 42 CFR §§ 425.104 and 425.106.
  • Additionally, CMS finalizes its proposal that the governing body must satisfy three criteria: (1) the governing body of the ACO must be the same as the governing body of the legal entity that is the ACO; (2) in the case of an ACO that comprises multiple ACO participants, the governing body must be separate and unique to the ACO, except as provided in 42 CFR § 425.104(c); and (3) the governing body must satisfy all other requirements set forth in 42 CFR § 425.106, including the fiduciary duty requirement.

Beneficiary Assignment Changes

The 2015 Final Rule adds, clarifies, and revises the beneficiary assignment algorithm, including the following:

  • Updating the CPT codes that will be considered to be primary care services. Specifically, CMS finalizes a policy that includes Transitional Care Management (TCM) codes (CPT codes 99495 and 99496) and the Chronic Care Management (CCM) code (CPT code 99490) in the definition of primary care services.
  • Modifying the treatment of claims submitted by certain specialist physicians, NPs, PAs, and CNSs in the assignment algorithm. Specifically, CMS finalizes a policy that would use primary care services furnished by primary care physicians, NPs, PAs, and CNSs under Step 1 of the assignment process, after having identified beneficiaries who received at least one primary care service by a physician in the ACO. Additionally, CMS finalizes finalizing a policy that would exclude certain services provided by certain specialist physicians from Step 2 of the assignment process.

Looking Ahead

The Final Rule goes into effect August 3, 2015, with certain provisions effective November 1, 2015 (regarding beneficiary opportunity to decline claims data sharing) and one provision effective January 1, 2016 (regarding claims data sharing). Certain key changes in the 2015 Final Rule have an applicability date after the effective date of the 2015 Final Rule and do not apply until Performance Year 2016 or 2017.

Stay tuned for additional updates to the MSSP. CMS has already noted that there will be future rulemakings to further refine the MSSP. CMS intends to address additional modifications to MSSP rules in the near term to promote further ACO willingness to take on performance-based risk. CMS indicates that a future rulemaking may include: modifying the assignment technology to hold ACOs accountable for beneficiaries that have designated ACO practitioners as being responsible for their care; waiving the geographic requirement for use of telehealth services; and modifying the methodology for resetting benchmarks by incorporating regional trends and costs.

1 80 Fed. Reg. 32692 et. seq. (June 9, 2015).

2 Id at. 32694.

3 The original final regulation regarding ACOs was published by CMS in November 2011. See 76 Fed. Reg. 67802 (November 2, 2011).

4 80 Fed. Reg. at 32696.

5 Id.

6 80 Fed. Reg. at 32732.

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