Fact Sheets Jul 08, 2024

Fact Sheet: Calendar Year (CY) 2025 Medicare Physician Fee Schedule Proposed Rule (CMS-1807-P)-Medicare Shared Savings Program Proposals

On July 10, 2024, the Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2025 Medicare Physician Fee Schedule (PFS) proposed rule (CMS-1807-P) that includes changes to the Shared Savings Program to further advance Medicare’s value-based care strategy of growth, alignment, and equity.

As of January 1, 2024, the Medicare Shared Savings Program (Shared Savings Program) has 480 Accountable Care Organizations (ACOs) with over 634,000 health care providers and organizations providing care to over 10.8 million assigned beneficiaries. ACOs are now delivering care to nearly 50% of people with Traditional Medicare. The policy changes to the Shared Savings Program finalized in the CY 2023 PFS final rule (87 FR 69777 through 69979) and CY 2024 PFS final rule (88 FR 79093 through 79232) are expected to grow participation in the program and increase the number of beneficiaries assigned to ACOs by up to four million over the next several years. These policies are expected to drive growth in participation, particularly in rural and underserved areas, promote equity, and advance alignment across accountable care initiatives, and are central to achieving CMS’ goal of having 100% of people with Traditional Medicare in a care relationship with accountability for quality and total cost of care by 2030. Nineteen newly formed ACOs in the Shared Savings Program are participating in a new payment option beginning in 2024 that is enabling these ACOs to receive more than $20 million in advance investment payments (AIPs) for caring for underserved communities. 

This Fact Sheet summarizes the major proposed changes to the Shared Savings Program that are included in the CY 2025 PFS proposed rule and select issues on which we seek comment. We are proposing to establish a new “prepaid shared savings” option to assist eligible ACOs with a history of earning shared savings to encourage investments that would aid beneficiaries, such as investments in direct beneficiary services and investments to improve care coordination through staffing or healthcare infrastructure. We are also proposing modifications to the Shared Savings Program’s financial methodology to encourage ACO participation in the Shared Savings Program by removing barriers for ACOs serving underserved communities and increasing incentives to enter and remain in the program through the application of a proposed health equity benchmark adjustment. Additionally, we propose several policies to align quality measure reporting with the Universal Foundation of quality measures and promote digital quality measure reporting. 

To improve the accuracy, fairness, and integrity of Shared Savings Program financial calculations, we are proposing a methodology to account for the impact of improper payments in recalculating performance year and benchmark expenditures used in financial reconciliation upon reopening a payment determination, along with a methodology for excluding payment amounts for Healthcare Common Procedure Coding System (HCPCS) and Current Procedural Terminology (CPT) codes exhibiting significant, anomalous, and highly suspect (SAHS) billing activity during CY 2024 or subsequent calendar years that warrant adjustment. These proposals complement proposals in a separately issued proposed rule, “Medicare Program: Mitigating the Impact of Significant, Anomalous, and Highly Suspect Billing Activity on Medicare Shared Savings Program Financial Calculations in Calendar Year 2023” (herein referred to as the Shared Savings Program SAHS billing activity proposed rule; CMS-1799-P) that seeks to address SAHS billing activity associated with selected intermittent catheter supplies in CY 2023.

In addition, building off of a comment solicitation in CY 2024 PFS rulemaking, through a new request for information in this proposed rule, we are seeking comments on financial arrangements that could allow for higher risk and potential reward than are available under the current ENHANCED track within the Shared Savings Program, including the design of and trade-offs between financial model features. 

There will be a 60-day public comment period on the CY 2025 PFS proposed rule. CMS encourages all interested members of the public, including ACOs, providers, suppliers, and Medicare beneficiaries, to submit comments so that CMS can consider them as we develop the final rule. The 60-day comment period closes on September 9, 2024. Comments can be submitted at: https://www.regulations.gov/ (in commenting please refer to file code CMS-1807-P).

There will be a 30-day comment period for the Shared Savings Program SAHS billing activity proposed rule (CMS-1799-P). The 30-day comment period closes on July 29, 2024. Comments can be submitted at: https://www.regulations.gov/ (in commenting please refer to file code CMS-1799-P). For a fact sheet on the Shared Savings Program SAHS billing activity proposed rule, please visit: https://www.cms.gov/newsroom/fact-sheets/proposed-rule-mitigating-impact-significant-anomalous-and-highly-suspect-billing-activity-medicare

Prepaid Shared Savings

CMS is proposing to establish a new “prepaid shared savings” option for eligible ACOs with a history of earning shared savings. Eligible ACOs that apply and are approved to receive prepaid shared savings would receive advances of earned shared savings that they can use to make investments that would aid beneficiaries, including beneficiaries in underserved communities, such as investments in direct beneficiary services and investments to improve care coordination and quality through staffing or healthcare infrastructure. Eligible ACOs include those participating in Levels C-E of the BASIC track or the ENHANCED track with consistent prior success in earning shared savings in the Shared Savings Program. Eligible ACOs would be eligible for quarterly payments to invest in staffing, healthcare infrastructure, and additional services for beneficiaries. 

At least 50% of prepaid shared savings would be required to be spent on direct beneficiary services not otherwise payable in Traditional Medicare that have a reasonable expectation of improving or maintaining the health or overall function of the beneficiary, such as meals, transportation, dental, vision, hearing, and Part B cost-sharing reductions. Additionally, up to 50% of the prepaid shared savings can be spent on staffing and healthcare infrastructure. Part of our intent with this proposal is to improve beneficiary engagement while allowing ACOs the flexibility to better address patient needs. This proposal also builds on allowing ACOs to address health-related social needs in partnership with community-based providers, starting to tackle the very problems that underlie health disparities. ACOs that receive prepaid shared savings would repay them through earned shared savings, similar to those ACOs receiving advance investment payments. However, ACOs receiving prepaid shared savings would be required to directly repay any outstanding balance to CMS if the ACO is unable to repay that balance through earned shared savings. ACOs would be required to continue to maintain their existing repayment mechanisms that CMS can use to recoup any funding in the event that the ACO does not earn shared savings or cannot otherwise repay the amount owed to CMS. CMS would carefully monitor ACO performance to minimize overpayments to ACOs that do not continue to earn shared savings. If an ACO works with a community-based organization to provide services to beneficiaries through prepaid shared savings, it would satisfy the regulatory requirement that an ACO establish plans to address the needs of its population by partnering with community stakeholders. 

ACOs would be able to apply to participate in the prepaid shared savings payment option during the annual application cycle, and we propose the initial application cycle to apply for prepaid shared savings would be for a January 1, 2026 start date.

Health Equity Benchmark Adjustment 

In order to provide a greater financial incentive for ACOs to serve more beneficiaries from underserved communities and encourage practices already serving higher proportions of beneficiaries from underserved communities to enter and remain in the Shared Savings Program, we are proposing a Health Equity Benchmark Adjustment (HEBA). For agreement periods beginning on January 1, 2025, and in subsequent years, we are proposing to adjust an ACO’s historical benchmark using a HEBA based on the proportion of the ACO’s assigned beneficiaries who are enrolled in the Medicare Part D low-income subsidy (LIS) or dually eligible for Medicare and Medicaid. The proposed HEBA would offer a third method of upwardly adjusting an ACO’s historical benchmark. We would adjust the ACO’s historical benchmark using the highest of three values, either a positive regional adjustment, the prior savings adjustment, or the HEBA. The HEBA proposal is informed by CMS’ initial experience with the ACO REACH Model,  which includes a HEBA, that has been associated with increased participation in ACOs by safety net providers. Increasing access to providers participating in ACOs in rural and other underserved areas remains a priority for CMS to help address inequities in participation and grow accountable care. We note that, if finalized, the proposed prepaid shared savings option would operate synergistically with the proposed HEBA, in that ACOs that have been successful in earning shared savings while serving larger proportions of beneficiaries from underserved communities would, in subsequent years, have additional capabilities through prepaid shared savings to address the unmet health-related social needs of the beneficiaries they serve. 

Alternative Payment Model (APM) Performance Pathway (APP) Plus Quality Measure Set, Scoring Methodology, and Incentives to Report via electronic Clinical Quality Measures (eCQMs) 

To promote alignment with CMS’ quality programs and adoption of the Universal Foundation measure set, we are proposing to create the APP Plus quality measure set that aligns with the Adult Universal Foundation quality measures. Creating alignment with the Adult Universal Foundation measures would better align the quality measures reported by Shared Savings Program ACOs with the Medicaid Core Sets, the Marketplace Quality Rating System, and Medicare Advantage and Part D Star Ratings, which have previously adopted or are in the process of adopting the quality measures in the Universal Foundation. For performance year 2025 and subsequent performance years, we are proposing to require Shared Savings Program ACOs to report the APP Plus quality measure set. The APP quality measure set would no longer be available for reporting by Shared Savings Program ACOs. 

The APP Plus quality measure set would incrementally grow to comprise of 11 measures, consisting of the six measures in the existing APP quality measure set and five newly proposed measures from the Adult Universal Foundation measure set that would be incrementally incorporated into the APP Plus quality measure set over performance years 2025 through 2028. There would be eight measures in the APP Plus quality measure set for Shared Savings Program ACOs in performance year 2025, nine measures in performance years 2026 and 2027, and 11 measures in performance years 2028 and subsequent performance years. We intend to update the APP Plus quality measure set as new measures are added to or removed from the Adult Universal Foundation measure set in the future. ACOs would be required to report on all measures in the measure set annually. 

We are also proposing to streamline the collection types available for Shared Savings Program ACOs reporting the APP Plus quality measure set to focus on eCQM and Medicare Clinical Quality Measure for Accountable Care Organizations Participating in the Shared Savings Program (Medicare CQM) collection types. To reduce reporting operational challenges, MIPS CQMs would not be available as a collection type, focusing ACOs’ efforts on the implementation of the APP Plus quality measure set, while continuing to encourage the adoption of eCQMs. When calculating MIPS Quality performance category scores, ACOs would be scored on all required measures in the APP Plus quality measure set using the APP scoring policies, and ACOs reporting Medicare CQMs would be scored using flat benchmarks for the measures’ first two performance periods in MIPS. 

We believe that our proposal to establish the APP Plus quality measure set to align with the Adult Universal Foundation measure set should also aim to prioritize the eCQM collection type — the gold standard collection type that underlies the Digital Quality Measurement (dQM) Strategic Roadmap, and use Medicare CQMs as the transition step on our building-block approach for ACOs’ progress to adopt digital quality measurement.

Table 1 below displays a complete list of the proposed quality measures to be included in the APP Plus quality measure set for Shared Savings Program ACOs. These proposed quality measures will be added to the APP Plus quality measure set incrementally over performance years 2025 through 2028. 

Table 1: Proposed Quality Measures in the APP Plus Quality Measure Set for Shared Savings Program ACOs 

Quality #Measure TitleCollection TypePerformance Year Phase In
321CAHPS for MIPSCAHPS for MIPS Survey

2025

479Hospital-Wide, 30-day, All-Cause Unplanned Readmission (HWR) Rate for MIPS Eligible Clinician Groups Administrative Claims

2025

484Clinician and Clinician Group Risk-standardized Hospital Admission Rates for Patients with Multiple Chronic ConditionsAdministrative Claims

2025

001Diabetes: Hemoglobin A1c (HbA1c) Poor Control eCQM/Medicare CQM

2025

134Preventive Care and Screening: Screening for Depression and Follow-up PlaneCQM/Medicare CQM

2025

236Controlling High Blood PressureeCQM/Medicare CQM

2025

113Colorectal Cancer Screening eCQM/Medicare CQM

2025

112Breast Cancer ScreeningeCQM/Medicare CQM

2025

305  Initiation and Engagement of Substance Use Disorder TreatmenteCQM/Medicare CQM 

2026

487Screening for Social Drivers of HealtheCQM/Medicare CQM 

2028

493Adult Immunization StatuseCQM/Medicare CQM 

2028

To account for the organizational complexities faced by virtual groups and APM Entities, including Shared Savings Program ACOs, when reporting eCQMs, we are proposing to establish a Complex Organization Adjustment beginning in the CY 2025 performance period/2027 MIPS payment year. A Virtual Group and an APM Entity would receive one measure achievement point for each submitted eCQM that meets the data completeness and case minimum requirements. Each reported eCQM may not score more than 10 measure achievement points and the total achievement points (numerator) may not exceed the total available measure achievement points (denominator) for the MIPS Quality performance category. The Complex Organization Adjustment for a Virtual Group or APM Entity may not exceed 10% of the total available measure achievement points in the MIPS Quality performance category. The adjustment would be added for each measure submitted at the individual measure level.

In order to encourage ACOs to more quickly transition to eCQMs to leverage interoperability and digital data, we are proposing to extend the Shared Savings Program’s eCQM reporting incentive to performance year 2025 and subsequent performance years to continue to support ACOs reporting eCQMs in meeting the Shared Savings Program quality performance standard for sharing in the savings at the maximum sharing rate. The eCQM reporting incentive would apply only to those ACOs that report all of the eCQMs in the APP Plus quality measure set applicable for a performance year and meet the data completeness requirement for all of the eCQMs. The reporting incentive would not apply to ACOs that report a combination of eCQMs/Medicare CQMs or only Medicare CQMs.

For a fact sheet on the CY 2025 Quality Payment Program proposed changes, please visit the QPP Resource Library (cms.gov).

Mitigating the Impact of Significant, Anomalous, and Highly Suspect (SAHS) Billing Activity on Shared Savings Program Financial Calculations in Calendar Year 2024 or Subsequent Calendar Years

Proposals to mitigate the impact of SAHS increases in billing on Shared Savings Program financial calculations in CY 2024 or subsequent calendar years would complement proposals in a proposed rule issued June 28, 2024, “Medicare Program: Mitigating the Impact of Significant, Anomalous, and Highly Suspect Billing Activity on Medicare Shared Savings Program Financial Calculations in Calendar Year 2023” (CMS-1799-P). The Shared Savings Program SAHS billing activity proposed rule seeks to address SAHS billing activity associated with selected intermittent catheter supplies in CY 2023. 

We are proposing in the CY 2025 PFS proposed rule to specify how we would mitigate the impact of SAHS billing activity in CY 2024 or subsequent calendar years by excluding payment amounts from expenditure and revenue calculations for the relevant calendar year for which the SAHS billing activity is identified, as well as from historical benchmarks used to reconcile the ACO for a performance year corresponding to the calendar year for which the SAHS billing activity was identified. We would routinely examine billing trends identified by CMS and other relevant information that had been raised through complaints by ACOs or other interested parties to the Department of Health and Human Services Office of Inspector General or to the CMS Center for Program Integrity. We would seek to identify and monitor any codes that would potentially trigger the adjustment policy and make a final determination as to which codes if any, warrant adjustments for the previous calendar year shortly after the start of the following calendar year. In general, we anticipate that billing activity that meets the high bar to be considered an SAHS billing activity will be a rare occurrence. While we anticipate future SAHS billing occurrences of the scope and magnitude observed for intermittent catheter supplies in CY 2023 to be rare, having a permanent policy in place would allow CMS to move quickly to make adjustments to financial calculations, provide ACOs with greater certainty that they will not be held accountable for SAHS billing activity that is out of their control, and strengthen the integrity of the Shared Savings Program through fair and accurate payment. 

Reopening ACO Payment Determinations 

The Shared Savings Program’s existing financial methodology does not fully account for how to address the impact of improper payments on program calculations. Under the current methodology, we lack the means to account for demanded overpayment determinations that adjust payment amounts after the 3-month claims run-out period that applies in calculating performance year or benchmark year expenditures or aggregate overpayment amounts that do not result in a claim or line-item adjustments. We also lack the means to account for an improper amount identified in a settlement agreement between a provider or supplier and the Government or a court’s judgment, including pursuant to conduct by individuals or entities performing functions or services related to an ACO’s activities. Therefore, we propose to establish a calculation methodology to account for the impact of improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations upon reopening a payment determination. 

We also propose an adjustment to the historical benchmark to account for the impact of improper payments, in the event CMS recalculates a payment determination and issues a revised initial determination for a performance year in a prior agreement period that corresponds to a benchmark year of the ACO’s current agreement period. 

Further, we propose to establish a process by which an ACO could request a reopening of an initial determination of shared savings or shared losses. We also propose revisions to the Shared Savings Program regulations to make clear CMS’ discretion to determine whether to reopen a payment determination and discuss factors we may consider in exercising our discretion to reopen an ACO’s payment determination.  

Comment Solicitation on Establishing Higher Risk and Potential Reward under the ENHANCED Track

Currently, the ENHANCED track offers the highest level of risk and potential reward under the Shared Savings Program. We are seeking additional details from ACOs and other interested parties about the tradeoffs associated with a higher risk / reward option than the current ENHANCED track. We are seeking comment on design features of a potentially higher risk/reward participation option under a potentially revised ENHANCED track, including a discount to the benchmark, tapered sharing arrangements, applying a fixed minimum savings rate, and minimum loss rate of zero percent, changes to the weights used to calculate the regional adjustment to an ACO’s historical benchmark, and alternative payment mechanisms that have been tested by the CMS Innovation Center. We seek feedback that could inform changes to the Shared Savings Program and future CMS Innovation Center ACO models. In addition, the proposed rule includes a discussion of recent interim evaluation results for the first two performance years of the Global and Professional Direct Contracting Model, before its transition to the ACO REACH Model. These evaluation results showed that participating ACOs had mixed results in gross spending but consistent, significant increases in net spending relative to a comparison group of similar fee-for-service Medicare beneficiaries. CMS is reviewing the impact of these increases in net spending on the ACO REACH Model.

Other Modifications to Medicare Shared Savings Program Policies

Eligibility Requirements 

Currently, an ACO that fails to maintain at least 5,000 assigned beneficiaries during an agreement period may be terminated from the Shared Savings Program. CMS is proposing to continue to require ACOs meet the requirement of 5,000 assigned beneficiaries to begin a new agreement period in the Shared Savings Program and would allow ACO’s that fall below 5,000 assigned beneficiaries during the agreement period until time of renewal to meet the requirement. This change would be effective beginning on January 1, 2025.

Beneficiary Assignment Methodology 

CMS assigns Medicare FFS beneficiaries to Shared Savings Program ACOs using claims-based assignment based on their utilization of “primary care services” as defined in the program’s regulations. We propose to revise the definition of primary care services used for purposes of beneficiary assignment under the Shared Savings Program to align with payment policy proposals under the Medicare PFS. Proposed additions to the Shared Savings Program definition of primary care services include Safety Planning Interventions; Post-Discharge Telephonic Follow-up Contacts Intervention; Virtual Check-in Service; Advanced Primary Care Management Services; Cardiovascular Risk Assessment and Risk Management; Interprofessional Consultation; Direct Care Caregiver Training Services; and Individual Behavior Management/Modification Caregiver Training Services. We note that the proposed Advanced Primary Care Management services specifically incorporate reduced administrative requirements for billing these services in an ACO context, which we expect to help grow participation in the Shared Savings Program.

We additionally propose to revise the Shared Savings Program regulations to broaden the existing exception to the voluntary alignment policy to apply to beneficiaries that are claims-based and assigned to entities participating in certain disease- or condition-specific CMS Innovation Center ACO models. These proposed changes to the Shared Savings Program’s assignment methodology would be applicable for the performance year starting on January 1, 2025, and in subsequent performance years.

Beneficiary Notification Requirements

We are proposing to modify the follow-up requirements for the Beneficiary Notification. Currently, the follow-up communication must occur no later than the earlier of the beneficiary's next primary care service visit or 180 days from the date the original written notice was provided. CMS has received feedback from ACOs that it is difficult to provide the notice at the next primary care service, as ACOs do not always know when the beneficiary’s next primary care service will be, and, in some cases, it can be very soon after the beneficiary receives the original beneficiary notification. Therefore, CMS is proposing to remove the requirement that the ACO provide the follow-up communication at the next primary care service and would instead only require ACOs to provide the follow-up communication within 180 days of the original beneficiary notification. Additionally, for ACOs under preliminary prospective assignment with retrospective reconciliation, we are proposing to limit the population of beneficiaries who must receive the beneficiary notice to those beneficiaries who are more likely to be assigned to the ACO when compared to the population of beneficiaries who must receive the written notification under current regulations. These changes would be effective beginning on January 1, 2025.

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