What Is the Medicare Shared Savings Program?

Old Couple using a laptop to find the best Medicare Shared Savings Program

Whenever a new administration enters the White House, Medicare is one of the biggest issues the incoming President and his team must handle. The race is on to make the health care system sustainable. As a result, Medicare is transforming from a fee-for-service system, where physicians are paid depending on what they do (prescriptions, etc.), to a system where value is key and doctors receive payment according to the quality of outcomes.

The Role of the Medicare Shared Savings Program (MSSP)

In this program, accountable care organizations (ACOs) earn money for taking care of Medicare beneficiaries and are allowed keep part of any money they save the system. According to CMS, there are now 480 ACOs participating in the MSSP, and they serve over nine million people. Ninety-nine new organizations joined for 2017, and the program is growing at a remarkable rate. On January 1, 2016, the program served just 1.3 million Medicare beneficiaries.

The purpose of the Medicare Shared Savings Program is to encourage providers to improve the quality of care while decreasing unnecessary costs. Eligible providers, hospitals, and physicians must join an ACO to participate, and the program is gaining steam because high-quality providers can potentially earn substantial rewards.

How Do Providers Earn?

First, only ACOs that serve a minimum of 5,000 Medicare beneficiaries are eligible. All providers must:

  • Promote beneficiary engagement and evidence-based medicine.
  • Provide internal reports on quality and cost metrics.
  • Provide coordinated care across and among specialists, primary care physicians, and acute/post-acute providers.

Here are a few things for providers to note:

Different Tracks

The MSSP consists of three tracks, and the incentives vary across the trio. Providers willing to take more risk are capable of gaining greater rewards. Beneficiary assignment dictates who becomes an ACO patient and decides how much an organization earns.

With Tracks 1 and 2, patients are assigned at the end of the year, so you cannot focus on specific patients. With Track 3, you receive the list before the end of the year, and organizations that take the highest risk get the most information.

Benchmarks and Caps

The “Shared Savings” part of the program relates to incentives, and the CMS sets a number of benchmarks. Organizations receive money when they reduce expenditures based on the CMS’ cost and quality benchmarks. For Track 1, you receive 50 percent of all generated savings. This increases to 60 percent on Track 2 and 75 percent on Track 3.

Medicare has set a cap on what it pays organizations for saving money. For Track 1, you receive 10 percent of benchmarked expenditures. This rises to 15 percent on Track 2 and 20 percent on Track 3.

Minimum Savings Rate

Organizations must save a certain amount before they are eligible for rewards. For Track 1, you must save 2to3.9 percent of the cost benchmark; the exact percentage depends on the number of patients you treat. The rate is lower for ACOs that treat a large number of patients. For Tracks 2 and 3, organizations can choose no savings limit, a range between 0.5 and 2 percent, or a range that depends on the number of patients seen.

Minimum Loss Rate

This only applies to Tracks 2 and 3, where the minimum loss rate is the same as the minimum savings rate. If you exceed the benchmark by a certain percentage, you must pay part of the cost to the CMS.

MSSP Performance and Quality Measures

The key tenet of the MSSP is the use of quality performance measures by ACOs. It is certainly a tricky task as providers are expected to link financial performance with quality. The CMS says that quality measures must focus on continuous improvement, and it revolves around these three goals:

  • Improved care for patients
  • Improved health for populations
  • A reduction in expenditures

There are 33 measures used to measure clinical quality, and they include four sections:

  1. Preventive Health
  2. At-risk Populations
  3. Patient and Caregiver Experience
  4. Care Coordination and Patient Safety

Final Words

The MSSP will continue to evolve, although it is important to note that setting up an ACO costs an average of $1.6 million. The government has actively sought to improve the program over the last few years; we are interested to see whether the new administration will continue along this path.

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