Rule2024-22054
Medicare Program: Mitigating the Impact of Significant, Anomalous, and Highly Suspect Billing Activity on Medicare Shared Savings Program Financial Calculations in Calendar Year 2023
Primary source
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Published
September 27, 2024
Effective
October 15, 2024
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule addresses policies for assessing performance year (PY) 2023 financial performance of Medicare Shared Savings Program (Shared Savings Program) Accountable Care Organizations (ACOs); establishing benchmarks for ACOs starting agreement periods in 2024, 2025, and 2026; and calculating factors used in the application cycle for ACOs applying to enter a new agreement period beginning on January 1, 2025, and the change request cycle for ACOs continuing their participation in the program for PY 2025, as a result of significant, anomalous, and highly suspect billing activity for selected intermittent urinary catheters on Medicare Durable Medical Equipment, Prosthetics, Orthotics & Supplies (DMEPOS) claims. Under the Shared Savings Program, providers of services and suppliers that participate in ACOs continue to receive traditional Medicare fee-for-service (FFS) payments under Medicare Parts A and B, but the ACO may be eligible to receive a shared savings payment if it meets specified quality and savings requirements. ACOs participating in two-sided models may also share in losses. In this final rule, we respond to public comments we received on the proposal to mitigate the impact of significant, anomalous, and highly suspect billing activity on Medicare Shared Savings Program financial calculations in calendar year (CY) 2023.
Full Text
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<title>Federal Register, Volume 89 Issue 188 (Friday, September 27, 2024)</title>
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[Federal Register Volume 89, Number 188 (Friday, September 27, 2024)]
[Rules and Regulations]
[Pages 79152-79172]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-22054]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 425
[CMS-1799-F]
RIN 0938-AV20
Medicare Program: Mitigating the Impact of Significant,
Anomalous, and Highly Suspect Billing Activity on Medicare Shared
Savings Program Financial Calculations in Calendar Year 2023
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule addresses policies for assessing performance
year (PY) 2023 financial performance of Medicare Shared Savings Program
(Shared Savings Program) Accountable Care Organizations (ACOs);
establishing
[[Page 79153]]
benchmarks for ACOs starting agreement periods in 2024, 2025, and 2026;
and calculating factors used in the application cycle for ACOs applying
to enter a new agreement period beginning on January 1, 2025, and the
change request cycle for ACOs continuing their participation in the
program for PY 2025, as a result of significant, anomalous, and highly
suspect billing activity for selected intermittent urinary catheters on
Medicare Durable Medical Equipment, Prosthetics, Orthotics & Supplies
(DMEPOS) claims. Under the Shared Savings Program, providers of
services and suppliers that participate in ACOs continue to receive
traditional Medicare fee-for-service (FFS) payments under Medicare
Parts A and B, but the ACO may be eligible to receive a shared savings
payment if it meets specified quality and savings requirements. ACOs
participating in two-sided models may also share in losses. In this
final rule, we respond to public comments we received on the proposal
to mitigate the impact of significant, anomalous, and highly suspect
billing activity on Medicare Shared Savings Program financial
calculations in calendar year (CY) 2023.
DATES: These regulations are effective on October 15, 2024.
FOR FURTHER INFORMATION CONTACT: Richard (Chase) Kendall, (410) 786-
1000, or <a href="/cdn-cgi/l/email-protection#a2f1cac3d0c7c6f1c3d4cbccc5d1f2d0cdc5d0c3cfe2c1cfd18ccacad18cc5cdd4"><span class="__cf_email__" data-cfemail="4b18232a392e2f182a3d22252c381b39242c392a260b28263865232338652c243d">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
CPT (Current Procedural Terminology) Copyright Notice
Throughout this final rule, we use CPT codes and descriptions to
refer to a variety of services. We note that CPT codes and descriptions
are copyright 2019 American Medical Association. All Rights Reserved.
CPT is a registered trademark of the American Medical Association
(AMA). Applicable Federal Acquisition Regulations (FAR) and Defense
Federal Acquisition Regulations (DFAR) apply.
I. Background
A. Statutory Background on Shared Savings Program Financial
Calculations
Section 1899 of the Social Security Act (the Act) (42 U.S.C.
1395jjj), as added by section 3022 of the Patient Protection and
Affordable Care Act (Pub. L. 111-148, enacted March 23, 2010),
establishes the general requirements for payments to participating
Accountable Care Organizations (ACOs) in the Shared Savings Program.
Specifically, section 1899(d)(1)(A) of the Act provides that providers
of services and suppliers participating in an ACO will continue to
receive payment under the original Medicare fee-for-service program
under Parts A and B in the same manner as they would otherwise be made.
However, section 1899(d)(1)(A) of the Act also provides for an ACO to
receive payment for shared savings provided that the ACO meets both the
quality performance standards established by the Secretary and
demonstrates that it has achieved savings against a benchmark of
expected average per capita Medicare FFS expenditures. Additionally,
section 1899(i) of the Act authorizes the Secretary to use other
payment models in place of the one-sided model described in section
1899(d) of the Act. This provision authorizes the Secretary to select a
partial capitation model or any other payment model that the Secretary
determines will improve the quality and efficiency of items and
services furnished to Medicare beneficiaries without additional program
expenditures. We have used our authority under section 1899(i)(3) of
the Act to establish the Shared Savings Program's two-sided payment
models (see for example, 80 FR 32771 and 32772, and 83 FR 67834 through
67841) and to mitigate shared losses owed by ACOs affected by extreme
and uncontrollable circumstances during performance year (PY) 2017 and
subsequent performance years (82 FR 60916 and 60917, 83 FR 59974
through 59977), among other uses of this authority described elsewhere
in this final rule.
Section 1899(d)(1)(B)(i) of the Act specifies that, in each year of
the agreement period, an ACO is eligible to receive payment for shared
savings only if the estimated average per capita Medicare expenditures
under the ACO for Medicare FFS beneficiaries for Parts A and B
services, adjusted for beneficiary characteristics, is at least the
percent specified by the Secretary below the applicable benchmark under
section 1899(d)(1)(B)(ii) of the Act. Section 1899(d)(1)(B)(ii) of the
Act addresses how ACO benchmarks are to be established and updated
under the Shared Savings Program. This provision specifies that the
Secretary shall estimate a benchmark for each agreement period for each
ACO using the most recent available 3 years of per beneficiary
expenditures for Parts A and B services for Medicare FFS beneficiaries
assigned to the ACO. This benchmark shall be adjusted for beneficiary
characteristics and such other factors as the Secretary determines
appropriate and updated by the projected absolute amount of growth in
national per capita expenditures for Parts A and B services under the
original Medicare FFS program, as estimated by the Secretary.
In past rulemaking, we have used our authority under sections
1899(d)(1)(B)(ii) and 1899(i)(3) of the Act to establish adjustments to
the benchmark and program expenditure calculations, respectively, to
exclude certain Medicare Parts A and B payments. In the November 2011
final rule (76 FR 67920 through 67922), we adopted an alternate payment
methodology that excluded Indirect Medical Education (IME) and
Disproportionate Share Hospital (DSH) payments from ACO benchmark and
performance year expenditures due to concerns that the inclusion of
these amounts would incentivize ACOs to avoid referring patients to the
types of providers that receive these payments. In the Calendar Year
(CY) 2023 Physician Fee Schedule final rule (87 FR 69954 through
69956), we excluded new supplemental payments to Indian Health Service/
Tribal hospitals and hospitals located in Puerto Rico consistent with
our longstanding policy to exclude IME, DSH and uncompensated care
payments from ACOs' assigned and assignable beneficiary expenditure
calculations. In the interim final rule with comment period entitled
``Medicare and Medicaid Programs; Basic Health Program, and Exchanges;
Additional Policy and Regulatory Revisions in Response to the COVID-19
Public Health Emergency and Delay of Certain Reporting Requirements for
the Skilled Nursing Facility Quality Reporting Program'' which was
effective on May 8, 2020, and appeared in the May 8, 2020 Federal
Register (85 FR 27550) (hereinafter referred to as the ``May 8, 2020
COVID-19 IFC''), we established a methodology to adjust Shared Savings
Program financial calculations to account for the COVID-19 Public
Health Emergency (85 FR 27577 through 27582). Specifically, we
established a methodology that would exclude all Medicare Parts A and B
FFS payment amounts for a beneficiary's episode of care for treatment
of COVID-19 to prevent distortion to, among other calculations, an
ACO's benchmark and program expenditure calculations.
We published a proposed rule entitled ``Significant, Anomalous, and
Highly Suspect Billing Activity on Medicare Shared Savings Program
Financial Calculations in Calendar Year 2023, which appeared in the
July 3, 2024 Federal Register (89 FR 55168) (hereinafter referred to as
the ``SAHS
[[Page 79154]]
billing activity proposed rule''). In the SAHS billing activity
proposed rule, we proposed to use our authority under sections
1899(d)(1)(B)(ii) and 1899(i)(3) of the Act to make adjustments to the
Shared Savings Program's benchmark and program expenditure
calculations, among other calculations, to remove payment amounts for
codes displaying significant, anomalous, and highly suspect (SAHS)
billing activity in CY 2023. We proposed this rule to mitigate the
impact of SAHS billing activity for selected intermittent urinary
catheter supplies on Shared Savings Program calculations.
B. Background on Significant, Anomalous, and Highly Suspect Billing
Activity in Calendar Year 2023
In the SAHS billing activity proposed rule (89 FR 55169), we
explained that recently, ACOs and other interested parties have raised
concerns about an increase in billing to Medicare for selected
intermittent urinary catheter supplies on Durable Medical Equipment,
Prosthetics, Orthotics & Supplies (DMEPOS) claims in CY 2023, alleging
that the increase in payments represents fraudulent activity (the
``alleged conduct''). Numerous ACOs have alerted the Centers for
Medicare & Medicaid Services (CMS) to potential impacts on their PY
2023 expenditures because of the increased catheter billings.
In early 2023, CMS detected a suspicious increase in billing for
urinary catheters. Using our authority to suspend payments, CMS quickly
stopped payment on almost all of these claims and began investigating
the suppliers who were billing.<SUP>1 2</SUP> Since then, the top 15
billers of suspicious catheter claims have had their Medicare
enrollment revoked.
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\1\ In the preamble to the proposed rule, we stated our
investigation into the matter was ongoing, and that we had made
referrals to law enforcement, recouped payments, and terminated
certain suppliers from the Medicare program (89 FR 55169). We
clarify in this final rule that, CMS stopped payment to the
suppliers for these claims, thus no recoupments were needed.
\2\ As claim suspensions are the ``withholding of payment . . .
from a provider or supplier of an approved Medicare payment amount
before a determination of the amount of the overpayment exists, or
until the resolution of an investigation of a credible allegation of
fraud,'' 42 CFR 405.370, amounts suspended are considered payable
under the Shared Savings Program.
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As explained in the proposed rule, CMS continues to adapt its
monitoring, investigative targeting, and data analytics programs to
prevent future fraud, waste, and abuse. CMS also continues to work
closely with the Department of Health and Human Services Office of
Inspector General and Department of Justice, as well as our Unified
Program Integrity Contractors, to investigate health care fraud
activities, such as those involving urinary catheter supplies, that
exploit the Medicare program.
The observed DMEPOS billing volume for intermittent urinary
catheters in CY 2023 represents SAHS billing activity. Generally, this
means that a given HCPCS or CPT code exhibits a level of billing that
represents a significant claims increase either in volume or dollars
(for example, dollar volume significantly above prior year, or claims
volume beyond expectations) with national or regional impact (for
example, not only impacting one or few ACOs) and represents a deviation
from historical utilization trends that is unexpected and is not
clearly attributable to reasonably explained changes in policy or the
supply or demand for covered items or services. The billing level is
significant and represents billing activity that would cause
significantly inaccurate and inequitable payments and repayment
obligations in the Shared Savings Program if not addressed.
We explained that current Shared Savings Program regulations,
codified at 42 CFR part 425, do not provide a basis for CMS to adjust
program expenditure or revenue calculations to remove the impact of
SAHS billing activity such as that arising from the alleged conduct in
advance of issuing an initial determination. CMS may reopen an initial
determination or a final agency determination and issue a revised
initial determination at any time in the case of fraud or similar
fault, and not later than 4 years after the date of the notification to
the ACO of the initial determination of savings or losses for the
relevant performance year for good cause (Sec. 425.315). This does not
allow for CMS to address SAHS billing activity, which must be addressed
prior to conducting financial reconciliation, which is an initial
determination, to prevent significant inequity and inaccurate payment
determinations.
We explained that we shared (and continue to share) the concerns
recently raised by some ACOs and other interested parties that SAHS
billing activity for the selected codes for intermittent urinary
catheters would impact Shared Savings Program calculations for PY 2023
and we are also concerned about the impact on other program
calculations based on CY 2023 data. Specifically, we are concerned that
absent mitigation measures, this SAHS billing activity would inflate
Medicare Parts A and B payment amounts, including:
<bullet> PY 2023 reconciliation calculations, including
expenditures for each ACO's assigned beneficiaries for PY 2023, the
national-regional blended update factor used to update the benchmark
for all ACOs (refer to Sec. 425.601(b)), and factors based on ACO
participant revenue to determine the loss recoupment limits for ACOs
participating under two-sided models of the BASIC track (Levels C, D,
E) (refer to Sec. 425.605(d)).
<bullet> Historical benchmark calculations for establishing the
benchmark for ACOs beginning new agreement periods on January 1, 2024,
January 1, 2025, or January 1, 2026, for which CY 2023 serves as
benchmark year (BY) 3, BY2 and BY1, respectively (refer to Sec.
425.652(a)).
<bullet> Factors used in the application cycle for ACOs applying to
enter a new agreement period beginning on January 1, 2025, and the
change request cycle for ACOs continuing their participation in the
program for PY 2025, including data used to determine an ACO's
eligibility for Advance Investment Payments under Sec. 425.630(b), or
for the CMS Innovation Center's new ACO Primary Care Flex Model (ACO PC
Flex Model) for the January 1, 2025, start date based on ACO revenue
status (high revenue or low revenue), and to determine repayment
mechanism amounts for ACOs entering, or continuing in, two-sided models
for PY 2025 (refer to Sec. 425.204(f)).
The accuracy of the Shared Savings Program's determination of an
ACO's financial performance (through a process referred to as financial
reconciliation) in terms of the ACO's eligibility for and amount of a
shared savings payment or liability for shared losses, depends on the
accuracy of claims data. Absent CMS action, the SAHS billing activity
would affect PY 2023 financial reconciliation program-wide rather than
being limited to ACOs that have assigned beneficiaries directly
impacted by the issue. For instance:
<bullet> An ACO with assigned beneficiaries impacted by the SAHS
billing activity for intermittent urinary catheters would see an
increase in performance year expenditures, reducing the ACO's shared
savings or increasing the amount of shared losses owed by the ACO. The
impact on the ACO's performance may be partially mitigated if the SAHS
billing activity also increases the ACO's regional service area
expenditures and the national expenditures used to calculate the two-
way national-regional blended benchmark update factor.
<bullet> An ACO with assigned beneficiary expenditures and regional
service area expenditures with little or no impact from the SAHS
billing activity would
[[Page 79155]]
receive a relatively higher benchmark update under the national-
regional blended update factors used in PY 2023 reconciliation, and
therefore, may appear to perform better as a result of the national
impact of the intermittent urinary catheters billing increase,
resulting in higher earned performance payments or lower or no losses
for the ACO.
Unaddressed, the SAHS billing activity would distort the historical
benchmarks for an ACO that entered an agreement period beginning on
January 1, 2024, or will enter an agreement period beginning on January
1, 2025, or January 1, 2026 (for which CY 2023 will continue to be a
benchmark year) and the accuracy of any future financial reconciliation
performed against those benchmarks. Similarly, inaccurate revenue and
expenditure calculations based on CY 2023 data may affect an ACO's
revenue status and the amount of funds an ACO in a two-sided model must
secure as a repayment mechanism, one of the program's important
safeguards for protecting the Medicare Trust Funds. Given the scope of
the SAHS billing activity, there is a high likelihood that, absent CMS
action, shared savings and losses calculations for PY 2023, and for
future performance years where CY 2023 is a benchmark year, would be
significantly impacted for ACOs. Under these circumstances, some ACOs
are likely to experience adverse impacts (for example, lower or no
shared savings or higher shared losses) while other ACOs would
experience windfall gains (for example, higher shared savings or lower
or no shared losses).
In the SAHS billing activity proposed rule (89 FR 55170), we
explained that failing to address SAHS billing activity that occurred
in CY 2023 would jeopardize the integrity of the Shared Savings
Program. There are 480 ACOs in the Shared Savings Program with over
608,000 health care providers who care for 10.8 million assigned FFS
beneficiaries.\3\ In PY 2022, the most recent year for which data is
available, savings achieved by ACOs relative to benchmarks amounted to
$4.3 billion, of which ACOs received shared savings payments totaling
$2.5 billion, and Medicare retained $1.8 billion in savings.\4\ ACOs
are held accountable for 100 percent of total Medicare Parts A and B
expenditures for their assigned beneficiary populations (with limited
exceptions). This incentivizes ACOs to generate savings for the
Medicare program as they have the opportunity to share in those savings
if certain requirements are met. It also discourages the ACO from
generating unnecessary expenditures for Medicare as they may be
required to repay those amounts to CMS. Accountable care arrangements
such as this cannot function if the ACO may be held responsible for all
SAHS billing activity that is outside of their control. Holding an ACO
accountable for substantial losses due to SAHS billing activity, such
as that observed in connection with the increase in billing for
intermittent urinary catheters, is not only inequitable but would
dramatically increase the level of risk associated with participation,
making the Shared Savings Program unattractive.
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\3\ Refer to CMS, Shared Savings Program Fast Facts--As of
January 1, 2024, available at <a href="https://www.cms.gov/files/document/2024-shared-savings-program-fast-facts.pdf">https://www.cms.gov/files/document/2024-shared-savings-program-fast-facts.pdf</a>.
\4\ Refer to CMS, Shared Savings Program Performance Year
Financial and Quality Results, 2022, available at <a href="https://data.cms.gov/medicare-shared-savings-program/performance-year-financial-and-quality-results/data">https://data.cms.gov/medicare-shared-savings-program/performance-year-financial-and-quality-results/data</a>.
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For these reasons, we determined it was timely and appropriate to
undertake notice and comment rulemaking to propose an approach for
mitigating the impact of SAHS billing activity in CY 2023 on Shared
Savings Program financial calculations. In this Background section of
the final rule, we summarize and respond to general comments we
received related to CMS undertaking notice and comment rulemaking on
this topic. In the following sections of this final rule, we summarize
and respond to public comments we received on the specific proposals
outlined in the SAHS billing activity proposed rule and discuss our
final policies after taking into consideration the public comments.
Comment: Most commenters expressed broad support for the proposed
rule or general support for the proposed rule with additional
recommendations. Many commenters stated their ``strong,'' ``full,'' or
``general'' support for the proposed rule and urged CMS to finalize the
proposals. Many commenters also commended CMS for taking action to
address concerns raised by ACOs and other interested parties about the
impact of SAHS billing activity for the catheter codes, and many also
characterized CMS's attention to the matter as ``prompt,'' ``swift,''
``timely,'' or ``responsive to stakeholder input.'' No commenters
expressed general opposition to the proposed rule.
Supportive commenters offered a variety of reasons why they
believed undertaking rulemaking was appropriate to mitigate SAHS
billing activity for selected catheter codes. Many commenters agreed
that the proposals would ensure the accuracy, fairness, or integrity of
Shared Savings Program financial calculations. One commenter described
the proposal as a ``crucial step'' and a ``necessary and well-supported
measure'' to ensure or enhance the accuracy, fairness, and integrity of
financial calculations in the Shared Savings Program. A couple of
commenters agreed with CMS that addressing the SAHS billing activity
promptly is essential to preventing inaccurate and inequitable payment
and repayment obligations for ACOs, with one also stating that the
proposals will help ``rectify the financial distortions'' caused by the
SAHS billing activity for the catheter codes. One commenter stated that
the proposed rule highlights CMS's dedication to addressing fraud as
well as ensuring that the Shared Savings Program operates effectively
while fostering a more transparent and equitable system. Other
commenters stated that the proposals would improve sustainability of
the Shared Savings Program. For instance, one commenter claimed that an
``accurate and fair reconciliation process will ensure that health
systems, ACOs and providers continue to participate in value-based care
models with CMS in the future,'' and a couple of other commenters
asserted that the proposals will help keep ACOs in the program. Another
commenter said that the proposals are important to ``maintain a strong,
predictable ACO program,'' and another mentioned that not addressing
the SAHS billing activity could lead to ACOs leaving the program.
Response: We thank commenters for their support for CMS's actions
to undertake notice and comment rulemaking to mitigate the impact of
SAHS billing activity on Medicare Shared Savings Program financial
calculations in CY 2023. We agree with the commenters who stated that
mitigating the impact of SAHS billing activity in CY 2023 is important
for promoting continued integrity and fairness and improving the
accuracy of Shared Savings Program financial calculations.
Additionally, addressing the SAHS billing activity promptly is
essential to preventing inaccurate and inequitable payment and
repayment obligations for ACOs. We agree with the commenters that this
course of action will in turn support the sustainability of the Shared
Savings Program.
Comment: Commenters addressed the role that ACOs play in the
identification of SAHS billing activity or fraud, waste, and abuse in
Medicare. Many commenters representing ACOs stated that their ACO
reported SAHS billing activity for catheter codes to regulatory
[[Page 79156]]
or law enforcement agencies, with one adding that ``as an ACO, it is
our responsibility to report suspect fraud to authorities,'' and
another stating that they will be submitting documentation about
suspect claims for their ACO beneficiaries to the HHS Office of
Inspector General (HHS-OIG). Other commenters credited ACOs for playing
a role in identifying the SAHS billing activity for catheter codes in
CY 2023. One commenter stated their belief that ACOs are ``well
positioned to detect anomalous billing'' given their ongoing and in-
depth analysis of claims and utilization data, and others noted that
the HHS-OIG identified ACOs as sources to uncover potential fraud,
waste, and abuse by identifying patterns of unusual billing. One
commenter stated they will continue to monitor for SAHS billing
activity. Some commenters stated there are opportunities to improve how
ACOs report fraud or better educate ACOs on the processes CMS and HHS-
OIG undertake to investigate fraud.
Response: We agree that ACOs are well positioned to support
monitoring efforts that will improve the integrity of the Medicare
program. ACOs have tools to detect unusual or suspect billing among
their assigned beneficiary population through data reports provided by
CMS and through their own data systems. We appreciate ACOs' efforts to
alert CMS to potential impacts on their PY 2023 expenditures because of
the increased catheter billings. ACOs are encouraged to report
potential fraud or abuse by submitting a complaint to the CMS Center
for Program Integrity (CPI), Fraud Investigations Group (FIG), Division
of Provider Investigations (DPI) at https:<a href="/cdn-cgi/l/email-protection#fbd4d49f8b92d592958f9a909ebb989688d5939388d59c948d">//<span class="__cf_email__" data-cfemail="7612061f581f1802171d1336151b05581e1e0558111900">[email protected]</span></a>.
ACOs can also report potential fraud or abuse by submitting a complaint
to the OIG website,\5\ OIG hotline at 1-800-HHS-TIPS (1-800-447-8477),
TTY at 1-800-377-4950, by fax at 1-800-223-8164, or by mailing to:
Office of Inspector General ATTN: OIG HOTLINE OPERATIONS P.O. Box 23489
Washington, DC 20026. ACOs suspecting healthcare fraud, waste, or abuse
are encouraged to visit the CMS CPI website \6\ at <a href="https://www.cms.gov/medicare/medicaid-coordination/center-program-integrity">https://www.cms.gov/medicare/medicaid-coordination/center-program-integrity</a>, for more
information.
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\5\ <a href="https://oig.hhs.gov/fraud/report-fraud/">https://oig.hhs.gov/fraud/report-fraud/</a>.
\6\ <a href="https://www.cms.gov/medicare/medicaid-coordination/center-program-integrity/reporting-fraud">https://www.cms.gov/medicare/medicaid-coordination/center-program-integrity/reporting-fraud</a>.
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As described above, CMS continues to investigate the matter and we
have taken initial actions in response. We have made referrals to law
enforcement and terminated certain suppliers from the Medicare program.
CMS also continues to work closely with the HHS-OIG and Department of
Justice, as well as our Unified Program Integrity Contractors, to
investigate health care fraud activities, such as those involving
urinary catheters, that exploit the Medicare program. We also undertook
this notice and comment rulemaking to propose an approach for
mitigating the impact of SAHS billing activity in CY 2023 on Shared
Savings Program financial calculations.
Comment: A couple of commenters appeared to interpret the proposals
as new rules for providers to follow in their billing practices. One
commenter, while stating their support for preventing ``fraudulent
practices that jeopardize the program's sustainability and unfairly
impact the financial calculations for participating providers,''
cautioned that CMS should not put in place ``compliance requirements
that overly burden honest providers'' and recommended that CMS provide
additional support and resources to help providers understand and
comply with the new requirements. The other commenter, while
characterizing the proposed rule as ensuring fairness, accuracy in
financial calculations, fraud prevention, and cost control, also stated
that one potential drawback was that ``some providers might feel
unfairly targeted or burdened by additional scrutiny and adjustments.''
Response: We clarify that rules or requirements for providers in
how they bill or are paid by Medicare are beyond the scope of this
proposed rule. The proposed changes do not impose new rules or
requirements related to provider billing and payment. The proposed
changes are specific to ACOs and Shared Savings Program calculations to
mitigate the impact of SAHS billing activity in CY 2023 that would
otherwise be included in Shared Savings Program expenditure and revenue
calculations under the current regulations governing the Shared Savings
Program.
II. Provisions of the Regulations
A. Identifying Codes Displaying Significant, Anomalous, and Highly
Suspect Billing Activity in CY 2023
As we explained in the SAHS billing activity proposed rule (89 FR
55170), DMEPOS billing to Medicare for selected intermittent urinary
catheter supplies has increased significantly since the first quarter
of CY 2023, with a relatively small number of suppliers submitting a
large majority of all claims for these devices. At a program level,
spending in these codes remained less than 0.1 percent of total FFS
spending in every year from CY 2016 to CY 2022 before increasing to
nearly 1 percent in CY 2023. The SAHS billing activity has had a
national impact, as evidenced by discussion of the issue in the 2024
Medicare Trustees Report, which noted a significant increase in
suspected fraudulent spending on certain intermittent catheters in
2023. The DME projections in the report include the assumption that
this suspected fraud would be addressed during 2024.\7\
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\7\ The Boards of Trustees, Federal Hospital Insurance and
Federal Supplementary Medical Insurance Trust Funds, ``2024 Annual
Report of the Boards of Trustees of the Federal Hospital Insurance
and Federal Supplementary Medical Insurance Trust Funds'', available
at <a href="https://www.cms.gov/oact/tr/2024">https://www.cms.gov/oact/tr/2024</a>.
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We explained that based on our evaluation of billing trends for
individual catheter codes across CY 2023 and in consultation with the
CMS Center for Program Integrity (CPI) and the CMS Office of the
Actuary (OACT), we have determined that two specific HCPCS codes
displayed SAHS billing activity in CY 2023: A4352 (Intermittent urinary
catheter; Coude (curved) tip, with or without coating (Teflon,
silicone, silicone elastomeric, or hydrophilic, etc.), each) and A4353
(Intermittent urinary catheter, with insertion supplies). Both HCPCS
codes were billed at significantly higher rates in CY 2023 compared to
CY 2022 (claims increasing by 163 percent for A4352 and by over 5,000
percent for A4353), for which CMS was unable to identify a clear
justification for the increases (for example, neither represent a newly
adopted code for which a natural increase in billing might be
expected). The change in claim volume is significant and unexplained,
and if not addressed, would cause inaccurate and inequitable payments
and repayment obligations in the Shared Savings Program. Furthermore,
the growth in claims is not attributable to Medicare providers or
suppliers participating in Shared Savings Program ACOs and thus outside
of the ACOs' ability to reasonably control.
Comment: Many commenters agreed with CMS' determination that HCPCS
codes A4352 and A4353 displayed SAHS billing activity in CY 2023.
Multiple commenters specifically referred to HCPCS codes A4352 and
A4353 when expressing their support for CMS' proposals, with many
others stating their support with less specificity--for instance
stating their support for CMS to address billing activity associated
with ``catheters,''
[[Page 79157]]
``the HCPCS codes,'' or ``the catheter codes.''
Some commenters supported their agreement that the two catheter
codes displayed SAHS billing activity by including data to highlight
how billing activity for the selected catheter codes impacted their ACO
expenditures, and other commenters offered data on the impact on
national assignable FFS expenditures.
Response: We appreciate the specific feedback from commenters and
agree that the observed DMEPOS billing volume for A4352 (Intermittent
urinary catheter; Coude (curved) tip, with or without coating (Teflon,
silicone, silicone elastomeric, or hydrophilic, etc.), each) and A4353
(Intermittent urinary catheter, with insertion supplies) in CY 2023
represents SAHS billing activity.
Comment: One commenter stated they identified and reported
``anomalous billing activity'' for an additional catheter billing
procedure code (HCPCS code A4351) and that the proposal to identify
HCPCS codes A4352 and A4353 as SAHS billing activity in CY 2023 does
not fully address the potential ``bias'' in financial calculations for
their ACO of SAHS billing activity for catheter services.
Response: We defined SAHS billing activity in the proposed rule (89
FR 55169) to mean that a given HCPCS or CPT code exhibits a level of
billing that represents a significant claims increase either in volume
or dollars (for example, dollar volume significantly above prior year,
or claims volume beyond expectations) with national or regional impact
(for example, not only impacting one or few ACOs) and represents a
deviation from historical utilization trends that is unexpected and is
not clearly attributable to reasonably explained changes in policy or
the supply or demand for covered items or services. The billing level
is significant and represents billing activity that would cause
significantly inaccurate and inequitable payments and repayment
obligations in the Shared Savings Program if not addressed.
In developing the proposed rule, we assessed the impact of an
increase in billing to Medicare for intermittent urinary catheter
services on DMEPOS claims in CY 2023. We determined that billing
activity for HCPCS codes A4352 and A4353 was SAHS billing activity
while A4351 was not. HCPCS codes A4352 and A4353 were billed at
significantly higher rates in CY 2023 compared to CY 2022 (claims
increasing by 163 percent for A4352 and by over 5,000 percent for
A4353), for which CMS was unable to identify a clear justification for
the increases (for example, neither represent a newly adopted code for
which a natural increase in billing might be expected). We also
determined that the change in claim volume was significant and
unexplained, and if not addressed, would cause inaccurate and
inequitable payments and repayment obligations in the Shared Savings
Program.
Our assessment found that billing activity for HCPCS code A4351,
however, was not SAHS billing activity. Compared to catheter codes
A4352 and A4353, billing for HCPCS code A4351 exhibited a much smaller
increase between CY 2022 and CY 2023, with claims rising by
approximately 16 percent. Also, unlike A4352 and A4353, where the
unexplained billing increase represented the vast majority of spending
on those codes in CY 2023, the billing increase for A4351 represented a
small proportion of total billing activity for the code in CY 2023. We
determined that this level of billing did not represent a significant
claims increase with national or regional impact that unexpectedly
deviated from historical utilization trends. We also determined that
the increase in utilization of HCPCS code A4351 was not clearly a
billing level that was representative of activity that would cause
significantly inaccurate and inequitable payments and repayment
obligations in the Shared Savings Program if not addressed. This
conclusion was based on our finding that the increase in billing for
the code was so small relative to overall spending for most ACOs and to
overall national or regional spending that it would be unlikely to have
significant program-wide impacts on payment and repayment obligations.
However, we will continue to monitor the billing activity with this
code in partnership with our program integrity colleagues.
Comment: Some commenters stated that, in addition to catheter
codes, codes for skin substitutes exhibited SAHS billing activity in CY
2023. Other commenters urged CMS to assess or evaluate whether
additional codes warranted adjustment in Shared Savings Program
calculations and cited increases in billing for skin substitutes as an
example.
Response: We assessed the impact of an increase in billing to
Medicare for skin substitutes and determined that the billing activity
for these services was not SAHS billing activity.\8\ Specifically, we
found that increases in billing activity for skin substitutes were
explained by the deviation in Local Coverage Determinations (LCDs)
across Medicare Administrative Contractors and the variety of
innovative products which fall under this area, which made these
services more available in CY 2023.\9\ However, we will continue to
monitor this area and work with our program integrity partners.
Furthermore, as part of our larger strategy to address SAHS billing
activity and improper payments on Shared Savings Program financial
calculations, CMS has proposals in the CY 2025 PFS proposed rule,
including (respectively): to adjust Shared Savings Program calculations
to mitigate the impact of SAHS billing activity occurring in CY 2024
and subsequent calendar years, and 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.
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\8\ Refer to the definition of SAHS billing activity stated
elsewhere in this final rule.
\9\ Medicare Administrative Contractors also released a proposed
LCD on April 25, 2024 for skin substitute grafts/cellular and
tissue-based products for the treatment of diabetic foot ulcers and
venous leg ulcers. See <a href="https://www.cms.gov/newsroom/press-releases/cms-statement-proposed-local-coverage-determination-lcd-skin-substitute-grafts/cellular-and-tissue">https://www.cms.gov/newsroom/press-releases/cms-statement-proposed-local-coverage-determination-lcd-skin-substitute-grafts/cellular-and-tissue</a>.
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Comment: Some commenters identified additional codes or services
that they believed exhibited SAHS billing activity in CY 2023 or
warranted additional evaluation by CMS. Specifically, commenters
mentioned: glucose monitoring, laboratory services, telemedicine,
ventilators, diabetic supplies, collagen dressings, and other
unspecified DMEPOS supplies billed by the same suppliers involved in
the anomalous catheter billing. Several commenters suggested that the
billing activity associated with some of these codes had regional,
rather than national impacts, and there would be a detrimental impact
to ACO savings unless accounted for by CMS.
Response: We appreciate commenters notifying us of their concerns
over billing activity in CY 2023 for other services; however, only the
billing for urinary catheter services met the definition of SAHS
billing activity as finalized in this rule with respect to CY 2023. We
defined SAHS billing activity in the proposed rule to mean that a given
HCPCS or CPT code exhibits a level of billing that represents a
significant claims increase either in volume or dollars (for example,
dollar volume significantly above prior year, or claims volume beyond
expectations) with national or regional impact (for example, not only
impacting one or few ACOs) and represents a deviation from
[[Page 79158]]
historical utilization trends that is unexpected and is not clearly
attributable to reasonably explained changes in policy or the supply or
demand for covered items or services (89 FR 55169). The billing level
is significant and represents billing activity that would cause
significantly inaccurate and inequitable payments and repayment
obligations in the Shared Savings Program if not addressed. Unlike the
two urinary catheter codes, some of the other services mentioned by
commenters were too broad in nature to be considered SAHS billing
activity. While a group of codes may exhibit patterns that could
constitute SAHS billing activity, each individual code must still
exhibit SAHS billing activity for it to be considered under the
definition of SAHS billing activity we relied on in our proposal. Some
of the commenters' concerns span entire claim types or hundreds of
procedure codes, suggesting that SAHS billing activity existed only in
aggregate and not for any individual code. For the other services
suggested by commenters that were more specific in nature, the facts
necessary to support a determination of SAHS billing activity had not
been developed at the time of this rulemaking.
We narrowly crafted the definition of SAHS billing activity in part
out of fairness to ACOs. Both under this rule and a related proposal in
the CY 2025 Medicare Physician Fee Schedule (PFS) (89 FR 61909 through
61916) to address future instances of SAHS billing activity, we are
mindful of equitable concerns that may arise from CMS revising
standards for the calculation of an ACO's financial performance after
the start of a performance year or, in the case of CY 2023, the
completion of the performance year. More specifically, we described
that for billing activity to be considered SAHS, the billing activity
would need to show a significant claims increase either in volume or
dollars and have national or regional impact. These high standards are
appropriate because the remedy we are using to correct for SAHS billing
activity is the broad exclusion of the relevant CPT or HCPCS code from
certain important financial calculations, and this could have mixed
impact on Shared Savings Program ACOs. Without these high standards,
ACOs are more likely to be held liable for losses that they would not
be otherwise be accountable for or have a reduction in or loss of their
shared savings.
We remain committed to evaluating other cases when improper
payments may have been made and assessing the impact on Shared Savings
Program calculations. For these reasons, we proposed two policies of
general applicability in the CY 2025 PFS (89 FR 61596) to address
instances of improper billing and payments. The first proposal in the
CY 2025 PFS proposed rule would allow CMS to address instances of SAHS
billing activity occurring in CY 2024 or subsequent years prior to
financially reconciling the performance year in which the activity
occurred (89 FR 61909 through 61916). Under the proposal, following the
end of each calendar year, we would determine whether any codes
exhibited SAHS billing activity (defined as described elsewhere in this
final rule) and adjust expenditure and revenue calculations to exclude
payment amounts. We would make these adjustments both when the calendar
year serves as a benchmark or performance year. Additionally, under the
proposed policy, we would adjust historical benchmarks used to
reconcile the performance year when the SAHS activity occurred to
remove payment amounts for the codes from benchmark year expenditures.
The second proposal would provide relief to ACOs that are affected
by instances of fraud or other improper payments that may not meet the
definition of SAHS billing activity (89 FR 61892 through 61909) or for
which there is not enough information available at the close of the
affected calendar year to make a determination of whether SAHS billing
activity occurred. Under this proposal, an ACO could request the
reopening of its previously completed financial reconciliation results
so that they can be reevaluated for inaccuracies as a result of new
information being available. In the CY 2025 PFS proposed rule (89 FR
61596) we invited interested parties to comment on these proposals.
Comment: Several commenters also urged CMS to consider HCPCS codes
A4352 and A4353 as displaying SAHS billing activity for time periods
beyond CY 2023. Multiple commenters urged CMS to remove--or assess
whether to remove--the selected catheter codes from CY 2024, with some
referencing CMS's proposals in the CY 2025 PFS rule related to
mitigating SAHS billing activity occurring in CY 2024 and subsequent
years. One of these commenters also urged CMS to assess whether billing
for the selected catheter codes in CY 2022 constitutes SAHS billing
activity and recommended that CMS and HHS-OIG review potentially
fraudulent claims for other DMEPOS provided between 2022 and 2024. One
commenter expressed concerns that limiting the scope of the adjustment
to the selected catheter claims and to the CY 2023 time period would
not fully address the ``bias'' affecting its ACO.
Response: With respect to any billing increases of the selected
catheter codes in CY 2024, we note that this is outside the scope of
this final rule. However, in the CY 2025 PFS proposed rule (89 FR 61909
through 61916), we proposed policies to mitigate the impact of SAHS
billing activity occurring in CY 2024 or subsequent calendar years.
Specifically, we proposed that CMS may determine at its sole discretion
that the billing of specified HCPCS or CPT codes represents SAHS
billing activity in CY 2024 or subsequent calendar years that warrants
adjustments to Shared Savings Program calculations.
With respect to performance years prior to CY 2023, we note that
CMS has already completed financial reconciliation for those years, and
therefore the policy approach proposed in the SAHS billing proposed
rule and adopted in this final rule would not address any billing
increases of catheter codes. As discussed elsewhere in this final rule,
the Shared Savings Program reopening policy proposal in the CY 2025 PFS
proposed rule (89 FR 61892 through 61909) presents a mechanism by which
issues affecting already reconciled performance years may be addressed.
Final Action: After consideration of public comments, we are
finalizing our proposal to specify in the Shared Savings Program
regulations at Sec. 425.670(b) that CMS has determined that the
billing of HCPCS codes A4352 (Intermittent urinary catheter; Coude
(curved) tip, with or without coating (Teflon, silicone, silicone
elastomeric, or hydrophilic, etc.), each) and A4353 (Intermittent
urinary catheter, with insertion supplies) represents significant,
anomalous, and highly suspect billing activity for CY 2023 that would
cause significantly inaccurate and inequitable payments and repayment
obligations in the Shared Savings Program if not addressed.
B. Removing Payment Amounts for Codes Displaying Significant,
Anomalous, and Highly Suspect Billing Activity in Calendar Year 2023
From Shared Savings Program Expenditure and Revenue Calculations
Given our concerns about leaving the SAHS billing activity
unaddressed and the limitations with using an approach available under
the current regulations (as we describe elsewhere in this rule), we
proposed to revise the policies governing Shared Savings Program
financial calculations to mitigate the impact of SAHS billing activity
for selected catheter codes identified for CY
[[Page 79159]]
2023. The provisions would rely on our authority under section
1899(d)(1)(B)(ii) of the Act to adjust benchmark expenditures for
beneficiary characteristics and such other factors as the Secretary
determines appropriate. Here, we proposed to adjust the benchmark to
remove payments for the specified catheter codes from the determination
of benchmark expenditures. We proposed to use our authority under
section 1899(i)(3) of the Act to apply this adjustment to certain other
program calculations, including the determination of performance year
expenditures.
We proposed to exclude all Medicare Parts A and B payment amounts
for the selected catheter HCPCS codes on DMEPOS claims from expenditure
and revenue calculations for CY 2023. We would perform these
adjustments for calculations for CY 2023 when it is the performance
year, including when CY 2023 is used to calculate the ACO's performance
year expenditures and when it is used to calculate the national-
regional blended update to the benchmark used in determining financial
performance for PY 2023, and also when CY 2023 is a benchmark year for
ACOs in agreement periods beginning on January 1, 2024, January 1,
2025, or January 1, 2026. In performing this adjustment, we would
remove payment amounts for the selected catheter HCPCS codes on DMEPOS
claims submitted by any supplier; that is, we would not limit the
exclusion to payment amounts on claims submitted by certain suppliers
that may have individually displayed SAHS billing activity so as to
protect the integrity of any potential investigations which may be
ongoing.
Specifically, we would adjust the following Shared Savings Program
calculations, as applicable, to exclude all Medicare Parts A and B
payment amounts on DMEPOS claims (claim types 72 and 82) \10\
associated with HCPCS codes A4352 and A4353 in CY 2023:
---------------------------------------------------------------------------
\10\ We note that in some Shared Savings Program documentation
(see, for example, Table 2 in the Medicare Shared Savings Program,
Shared Savings and Losses, Assignment and Quality Performance
Standard Methodology Specifications (version #11, January 2023),
available at <a href="https://www.cms.gov/files/document/medicare-shared-savings-program-shared-savings-and-losses-and-assignment-methodology-specifications.pdf-2">https://www.cms.gov/files/document/medicare-shared-savings-program-shared-savings-and-losses-and-assignment-methodology-specifications.pdf-2</a>), we classify claim type 72 (along
with claim type 71) as Carrier (including physician/supplier Part B)
and we classify claim type 82 (along with claim type 81) as DME. We
will continue to use these classifications, which are based on the
type of carrier to which the claim was submitted, for other program
operations. As described by the CMS Research Data Assistance Center
(ResDAC), claim type 71 refers to local carrier non-DMEPOS claims,
72 to local carrier DMEPOS claims, 81 to durable medical equipment
regional carrier (DMERC) non-DMEPOS claims, and 82 to DMERC DMEPOS
claims (see <a href="https://resdac.org/cms-data/variables/nch-claim-type-code">https://resdac.org/cms-data/variables/nch-claim-type-code</a>).
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<bullet> Calculation of Medicare Parts A and B FFS expenditures for
an ACO's assigned beneficiaries for all purposes including the
following: Establishing, adjusting, updating, and resetting the ACO's
historical benchmark and determining performance year expenditures.
<bullet> Calculation of FFS expenditures for assignable
beneficiaries as used in determining county-level FFS expenditures and
national Medicare FFS expenditures, including the following
calculations:
++ Determining average county FFS expenditures based on
expenditures for the assignable population of beneficiaries in each
county in the ACO's regional service area according to Sec. Sec.
425.601(c) and 425.654(a) for purposes of calculating the ACO's
regional FFS expenditures.
++ Determining the 99th percentile of national Medicare FFS
expenditures for assignable beneficiaries for purposes of the
following:
--Truncating assigned beneficiary expenditures used in calculating
benchmark expenditures under Sec. 425.652(a)(4), and performance year
expenditures under Sec. Sec. 425.605(a)(3) and 425.610(a)(4).
--Truncating expenditures for assignable beneficiaries in each
county for purposes of determining county FFS expenditures according to
Sec. Sec. 425.601(c)(3) and 425.654(a)(3).
--Truncating expenditures for assignable beneficiaries for purposes
of determining truncated national per capita FFS expenditures for
purposes of calculating the Accountable Care Prospective Trend (ACPT)
according to Sec. 425.660(b)(3).
++ Determining truncated national per capita expenditures FFS per
capita expenditures for assignable beneficiaries for purposes of
calculating the ACPT according to Sec. 425.660(b)(3).
++ Determining national per capita expenditures for Parts A and B
services under the original Medicare FFS program for assignable
beneficiaries for purposes of capping the regional adjustment to the
ACO's historical benchmark according to Sec. 425.656(c)(3), and
capping the prior savings adjustment according to Sec.
425.658(c)(1)(ii).
++ Determining national growth rates that are used as part of the
blended growth rates used to trend forward benchmark year (BY) 1 and
BY2 expenditures to BY3 according to Sec. 425.652(a)(5)(ii) and as
part of the blended growth rates used to update the benchmark according
to Sec. Sec. 425.601(b)(2) and 425.652(b)(2)(i).
<bullet> Calculation of Medicare Parts A and B FFS revenue of ACO
participants for purposes of calculating the ACO's loss recoupment
limit under the BASIC track as specified in Sec. 425.605(d).
<bullet> Calculation of total Medicare Parts A and B FFS revenue of
ACO participants and total Medicare Parts A and B FFS expenditures for
the ACO's assigned beneficiaries for purposes of identifying whether an
ACO is a high revenue ACO or low revenue ACO, as defined under Sec.
425.20, and determining an ACO's eligibility to receive advance
investment payments according to Sec. 425.630.
<bullet> Calculation or recalculation of the amount of the ACO's
repayment mechanism arrangement according to Sec. 425.204(f)(4).
This approach recognizes that SAHS billing activity has the
potential to impact an ACO's savings and loss determination for both PY
2023 (the year when the SAHS billing activity occurred) and future
performance years for which CY 2023 is a benchmark year. Making
adjustments when the affected period represents a performance year or
benchmark year is consistent with our approach for the exclusion of
payment amounts for episodes of care for treatment of COVID-19 that we
established in the May 8, 2020 COVID-19 IFC (85 FR 27577 through
27581).
The listed calculations reflect the same set of calculations that
CMS adjusts for a beneficiary's episode of care for treatment of COVID-
19, specified at Sec. 425.611(c), as amended by the CY 2021 PFS final
rule (85 FR 85044), the CY 2023 PFS final rule (87 FR 70241), and the
CY 2024 PFS final rule (88 FR 79548), with a few exceptions. First,
Sec. 425.611(c) includes certain provisions that are not relevant for
the proposed policy.\11\ Second, the proposed policy includes
calculations related to truncated national per capita expenditures used
in determining the
[[Page 79160]]
ACPT as described in Sec. 425.660(b)(3) that are not included in Sec.
425.611(c).\12\
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\11\ This includes provisions under Sec. Sec. 425.600, 425.602,
425.603, 425.604, and 425.606 which are not relevant for the
proposed policy because they are not applicable to PY 2023 or for
agreement periods where CY 2023 is a benchmark year. It also
includes certain provisions under Sec. 425.601 which are not
relevant for the proposed policy because the proposed policy does
not include adjustments to benchmark year calculations for the
benchmarks used to financially reconcile ACOs for PY 2023. These
provisions are relevant for the COVID-19 episode exclusion policy
under Sec. 425.611 because they are applicable to performance or
benchmark years that overlap with the PHE for COVID-19.
\12\ When establishing the ACPT in the CY 2023 PFS final rule,
we noted that the first ACPT release would be published in 2024 for
agreement periods beginning on January 1, 2024, and would provide a
projected annualized growth rate (or rates) relative to the 2023
benchmark year (BY3). We noted further that to the extent that
Medicare projections made at that time (2024) anticipated lingering
effects from the COVID-19 pandemic then they would be reflected in
the ACPT (see 87 FR 69894), and we opted not to amend Sec. 425.611
to include adjustments of ACPT-related calculations. However, given
the known nation-wide impact of the SAHS billing activity in CY
2023, it is appropriate to propose making adjustments to ACPT-
related calculations in this proposed rule.
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For agreement periods beginning on January 1, 2024, and in
subsequent years, CMS incorporates a fixed projected growth rate
determined at the beginning of the ACO's agreement period called the
ACPT into the blended update factor described in Sec. 425.652(b) when
updating an ACO's benchmark for each performance year of the agreement
period.\13\ Specifically, the ACPT is an annual rate of growth in
projected expenditures during the ACO's 5-year agreement period
relative to BY3 and is calculated using a modified version of the
existing FFS United States Per Capita Cost (USPCC) growth trend
projections. The USPCCs are calculated by OACT and projects Medicare
program spending for various recurring deliverables, including the
Medicare Trustees Report and the Advance Notice and Announcement of
Medicare Advantage capitation rates and Part C and Part D payment
policies. These publications include both historical and projected
future Medicare spending amounts expressed on a per capita basis. The
Modified USPCC Annualized Growth Rate used for calculating the ACPT in
the Shared Savings Program reflects the following: (1) exclusion of IME
and DSH payments, and the supplemental payment for Indian Health
Service/Tribal hospitals and Puerto Rico hospitals; and (2) inclusion
of payments associated with hospice claims (see Sec. 425.660(b)(1),
see also 87 FR 69882).
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\13\ For more details on the ACPT and the terminology used to
describe it, refer to the CY 2023 PFS final rule (87 FR 69881
through 69898) and Medicare Shared Savings Program, Shared Savings
and Losses, Assignment and Quality Performance Standard Methodology,
Specifications of the Accountable Care Prospective Trend (ACPT) and
Three-Way Blended Benchmark Update Factor (May 2023, Version #1),
available at <a href="https://www.cms.gov/files/document/medicare-ssp-acpt-specifications.pdf">https://www.cms.gov/files/document/medicare-ssp-acpt-specifications.pdf</a>.
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In considering whether to propose adjusting calculations used for
the ACPT, we considered whether adjusting Shared Savings Program
calculations detailed earlier in this section to exclude all payment
amounts for the selected catheter codes but not adjusting projected
growth rates used in the three-way blend would result in a bias. We
expected that a bias would be introduced if we adjusted Shared Savings
Program calculations to remove SAHS billing activity from expenditures
but did not make an adjustment for SAHS billing activity from the
corresponding year used in ACPT projections. We thus determined it was
necessary to adjust the ACPT to promote continued integrity and
fairness and improve the accuracy of Shared Savings Program financial
calculations. This ensures that the projected growth rates in future
years (for which billing for the selected catheter claims is expected
to revert to typical levels) will not be biased.
As noted in the Regulatory Impact Statement (section V. of this
final rule), we anticipate that the magnitude and direction of the net
impact of these various adjustments may vary from ACO to ACO. For
example, excluding the selected catheter payments may reduce an ACO's
performance year expenditures, but may also reduce the performance year
regional and national expenditures and, in turn, the update factors
applied to the ACO's historical benchmark. If the reduction to an ACO's
expenditures is larger than the reduction to the national-regional
blended update to the benchmark (indicating that the ACO's performance
year assigned population was disproportionately impacted by the SAHS
billing activity than assignable beneficiaries in the ACO's regional
service area or the nation as a whole), the ACO would see an increase
in total savings (or a reduction in total losses) relative to the
current methodology, which makes no adjustments for SAHS billing
activity. Conversely, if the reduction to the ACO's performance year
expenditures is smaller than the reduction to the national-regional
blended update to the benchmark, the ACO would see a decrease in total
savings (or increase in total losses) relative to the current
methodology.
In the SAHS billing activity proposed rule (89 FR 55172), we
acknowledged that by excluding all payments for the selected HCPCS
codes from CY 2023 calculations, we would exclude some payments that
would have been made during the period in the absence of SAHS billing
activity. This, in turn, would create some degree of inconsistency
between performance year expenditure calculations and expenditure
calculations for the historical benchmark against which the performance
year will be reconciled, as years not directly affected by the SAHS
billing activity include some level of payments for the selected codes.
We explained that we considered whether to propose adjusting historical
benchmarks that will be used for PY 2023 financial reconciliation to
remove all payments for the selected codes from benchmark year
expenditures (for example, for an ACO that started an agreement period
in 2022, adjusting the benchmark used for PY 2023 financial
reconciliation to remove payments for the selected codes from benchmark
years 2019, 2020, and 2021). We explained that we opted against this
approach for two reasons.
First, historical billing for the selected catheter HCPCS codes has
generally been relatively low, including in recent years. As noted in
the Regulatory Impact Statement (section V. of this final rule),
billing for these codes remained less than 0.1 percent of total FFS
billing in every year from 2016 to 2022, the period encompassing all
benchmark years for ACOs being financially reconciled for PY 2023.
Thus, in a year not impacted by SAHS billing activity, payments for
these codes would likely represent only a very small portion of an
ACO's total per capita expenditures or total expenditures for an ACO's
regional service area or the national assignable population. This
conclusion is supported by analysis at the regional level. Tabulating
the difference in per capita spending for these codes at the Hospital
Referral Region (HRR) from national average per capita spending across
2016 to 2022 (and expressing such difference as a percentage of per
capita spending) results in a standard deviation of only 0.03
percentage points. Therefore, we believe that the impact of adjusting
the benchmarks to be used for PY 2023 financial reconciliation to
exclude the selected catheter payments would be very small.
Second, adjusting benchmarks for over 450 ACOs being reconciled for
PY 2023 would require the recalculation of ACO, national, and regional
expenditures for seven benchmark calendar years and recalculation of
benchmarks under multiple benchmarking methodologies. Performing these
adjustments would delay the issuance of initial determinations, and
thus the disbursement of earned performance payments, potentially by
several months. The SAHS billing activity in CY 2023 was unforeseen and
could not have been planned for or integrated into existing operational
timelines. It would take time to recompute expenditure calculations for
multiple years and benchmark calculations for multiple cohorts of ACOs
and review and
[[Page 79161]]
validate the results. Such a delay would be harmful to ACOs and the
beneficiaries they care for, as ACOs rely on earned performance
payments for critical investments in care delivery. The negative
implications of a prolonged delay to the issuance of initial
determinations and earned performance payments for PY 2023 would
outweigh the potential benefits gained by adjusting the benchmarks,
especially as we anticipate the magnitude of the impact of such
adjustments would be small.
Section 1899(d)(1)(B)(ii) of the Act permits the Secretary to
adjust the benchmark for beneficiary characteristics and such other
factors as the Secretary determines appropriate. This rule relies on
this authority to remove payments for the specified catheter codes from
the determination of benchmark expenditures where CY 2023 serves as a
benchmark year when establishing benchmarks for ACOs in agreement
periods beginning in January 2024, 2025, or 2026.
Other changes are authorized by section 1899(i)(3) of the Act.
Specifically, we rely on section 1899(i)(3) of the Act to remove
payment amounts for HCPCS or CPT codes for which CMS has identified
SAHS billing activity from the following calculations: (1) performance
year expenditures; (2) updates to the historical benchmark; and (3) ACO
participants' Medicare FFS revenue used for multiple purposes across
the Shared Savings Program, including determinations of loss sharing
limits in the two-sided models of the BASIC track \14\ and
determinations of eligibility for advance investment payments.\15\
Section 1899(i)(3) of the Act requires that we determine that the
alternative payment methodology adopted under that provision will
improve the quality and efficiency of items and services furnished to
Medicare beneficiaries, without resulting in additional program
expenditures. The adjustments we proposed, which would remove payment
amounts for codes with identified SAHS billing activity from the
specified Shared Savings Program calculations specified in a new
section of the regulations at Sec. 425.670, would capture and remove
from program calculations expenditures that are outside of an ACO's
control, but that could significantly affect the ACO's performance
under the program. In particular, failing to remove these payments
would create highly variable savings and loss results for individual
ACOs that happen to have over-representation or under-representation of
SAHS billing activity for the selected codes among their assigned
beneficiary populations.
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\14\ See Sec. 425.605(d)(1)(iii)(D), 425.605(d)(1)(iv)(D), and
425.605(d)(1)(v)(D) for BASIC track Levels C, D and E, respectively.
\15\ See Sec. 425.630(b).
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As described in the Regulatory Impact Statement (section V. of this
final rule), excluding payment amounts for the selected catheter HCPCS
codes from the specified calculations is not expected to result in an
increase in spending beyond the expenditures that would otherwise occur
under the statutory payment methodology in section 1899(d) of the Act.
Further, these adjustments to our calculations to remove payment
amounts for these codes will promote continued integrity and fairness
and improve the accuracy of Shared Savings Program financial
calculations as well as timely completion of PY 2023 financial
reconciliation. As a result, we expect these policies will support ACOs
continued participation in the Shared Savings Program and the program's
goals of lowering growth in Medicare FFS expenditures and improving the
quality of care furnished to Medicare beneficiaries.
Based on these considerations, and as specified in the Regulatory
Impact Statement (section V. of this final rule), we have determined
that adjusting certain Shared Savings Program calculations to remove
payment amounts for selected codes identified as having SAHS billing
activity in CY 2023 from the calculation of performance year
expenditures, updates to the historical benchmark, and ACO
participants' Medicare FFS revenue used for multiple purposes across
the Shared Savings Program, meets the requirements for use of our
authority under section 1899(i)(3) of the Act when incorporated into
the existing other payment model we have established pursuant to that
section.
This final rule will be applied retroactively, as it affects a
performance year that has already been completed (PY 2023) and a
performance year that has already started (PY 2024). More specifically,
we are retroactively adjusting expenditure calculations used in
determining shared savings and losses for PY 2023 and certain other
calculations including to establish historical benchmarks for ACOs
entering an agreement period beginning on January 1, 2024, that are
used to determine ACO financial performance for PY 2024 and subsequent
years of an ACO's agreement period. Section 1871(e)(1)(A)(ii) of the
Act permits a substantive change in regulations, manual instructions,
interpretive rules, statements of policy, or guidelines of general
applicability under Title XVIII of the Act to be applied retroactively
to items and services furnished before the effective date of the change
if the failure to apply the change retroactively would be contrary to
the public interest.
Failing to apply these policies retroactively would be contrary to
the public interest because it would unfairly punish Shared Savings
Program ACOs by forcing them to unexpectedly assume a substantial
magnitude of financial risk for costs that are outside their control
and were not previously contemplated in the Shared Savings Program,
undermining both the sustainability of the Shared Savings Program and
the public's faith in CMS as a fair partner. We did not fully
contemplate the potential for SAHS billing activity outside of an ACO's
control to negatively impact ACOs financially when the Shared Savings
Program was established.\16\ For this reason, the Shared Savings
Program financial methodology and the procedures we have utilized in
the past did not provide a means to adequately account for instances of
SAHS billing activity outside of an ACO's control, and thereby the
related financial risk is assumed entirely by ACOs. We view this
outcome as particularly inequitable to ACOs because they have no direct
means of controlling such costs. Unlike Medicare Advantage
organizations, ACOs are not responsible for processing claims for their
assigned beneficiaries and otherwise have no means of causing the
denial of such claims. CMS thus cannot reasonably have expected ACOs to
have assumed responsibility for all instances of SAHS billing activity
outside of an ACO's control when they joined the Shared Savings
Program. Loss of faith in CMS's ability to effectively administer the
Shared Savings Program by ACOs, providers, and the public would likely
substantially reduce ACO and provider participation in the program.
Reduced participation, in turn, would significantly diminish the
savings generated to the Medicare Trust Funds and quality of care
improvements resulting from the Program and reduce the coordination of
care performed for Medicare beneficiaries when obtaining items and
services from ACO providers and suppliers.\17\ For these reasons, it
[[Page 79162]]
would be contrary to the public interest for CMS to fail to apply a
policy mitigating this issue retroactively.
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\16\ See, for example, 76 FR 67948 through 67950. Such
approaches were more focused on policies to support monitoring of
ACO performance and ensuring program integrity.
\17\ See, for example, Medicare CY 2023 PFS final rule, 87 FR
70195 through 70196 (estimating that the addition of new low revenue
ACOs would produce $3 billion in net savings over a 5-year period).
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Undertaking notice and comment rulemaking for this issue prior to
the start of PY 2023 to avoid retroactive rulemaking was not possible
because we could not have foreseen the SAHS billing activity prior to
the start of the performance year. More specifically, we were only able
to determine that the increase in billing on HCPCS codes A4352 and
A4353 in CY 2023 was significant, anomalous, and highly suspect after
the calendar year ended. To identify that the billing activity in CY
2023 was significant, anomalous, and highly suspect, CMS reviewed
actual billing levels after the calendar year closed and services
furnished in CY 2023 had occurred and the billing level could then be
compared to billing levels observed in prior calendar years.
We proposed adding and reserving Sec. Sec. 425.661 through 425.669
in subpart G and adding a new section at Sec. 425.670 to describe
adjustments CMS would make to Shared Savings Program calculations to
mitigate the impact of SAHS billing activity occurring in CY 2023 (89
FR 55174). We proposed that Sec. 425.670(b) would specify that CMS has
determined that the billing of HCPCS codes A4352 (Intermittent urinary
catheter; Coude (curved) tip, with or without coating (Teflon,
silicone, silicone elastomeric, or hydrophilic, etc.), each) and A4353
(Intermittent urinary catheter, with insertion supplies) represents
significant, anomalous, and highly suspect billing activity for CY 2023
that warrants adjustment. We proposed under Sec. 425.670(c) to specify
the Shared Savings Program calculations for which CMS would exclude all
Medicare Parts A and B FFS payment amounts on DMEPOS claims (claim
types 72 and 82) associated with HCPCS codes A4352 and A4353 and
include references to all relevant sections of the regulations in these
provisions. In Sec. 425.670(d), on the period of adjustment, we
proposed to specify that CMS would adjust Shared Savings Program
calculations for SAHS billing activity of HCPCS codes A4352 and A4353
for CY 2023, when CY 2023 is either a performance year or a benchmark
year. We proposed to specify under Sec. 425.670(e) that we would make
adjustments for payments associated with HCPCS codes A4352 and A4353
for BY3 in projecting per capita growth in Parts A and B FFS
expenditures, according to Sec. 425.660(b)(1), for purposes of
calculating the ACPT for agreement periods beginning on January 1,
2024.
The following is a summary of the comments we received on this
proposal and our responses.
Comment: Many commenters provided input on the methodology outlined
in the proposed rule to mitigate the impact of SAHS billing activity
occurring in CY 2023. Most of these commenters stated their support for
removing payment amounts for the specified catheter HCPCS codes in CY
2023 from the specified Shared Savings Program expenditure and revenue
calculations.
Response: We thank the commenters for their support of the proposed
adjustments to Shared Savings Program calculations. We interpret the
commenters' general descriptions of our proposed adjustments and broad
support for the proposed rule as supportive of all the adjustments to
Shared Savings Program calculations we proposed in the proposed rule
(89 FR 55171 through 55172) and described elsewhere in this section of
the final rule.
Comment: Many supportive commenters specified their support for
removing ``all'' Medicare Part A and B payment amounts related to the
selected catheter codes, or for removing Medicare Part A and B payment
amounts for the selected catheter codes ``by any supplier'' or ``across
all suppliers.''
Response: We thank the commenters for their support of our proposal
to remove payment amounts for the selected catheter HCPCS codes on
DMEPOS claims submitted by any supplier. By removing all catheter HCPCS
payments, we ensure that all of the SAHS billing activity in CY 2023
for the selected catheter codes will be removed from any calculations
used to financially reconcile ACOs for PY 2023 or in future performance
years when CY 2023 serves as a historical benchmark year for an ACO.
This approach ensures that ACO expenditures, as well as regional and
national expenditures, are not distorted by payment amounts for SAHS
billing activity beyond the ACOs' control.
Comment: Many commenters supported the proposal to apply the
adjustments when CY 2023 is a benchmark year for ACOs in the agreement
periods starting in 2024, 2025, or 2026. A couple of commenters stated
their support for removing payment amounts for the specified catheter
codes from the determination of ``benchmark expenditures'' or from ``CY
2023 benchmark expenditures'' without specifying which agreement
periods these adjusted benchmark expenditures would be used to
reconcile.
Response: We thank the commenters for their support of the proposed
adjustments to Shared Savings Program calculations when CY 2023 serves
as a benchmark year. We explain in this section of the final rule that
the adjustments would apply to BY 2023 in calculating the historical
benchmark for agreement periods beginning in 2024, 2025 and 2026. In
contrast, as we also explain in this section of this final rule, we
opted not to propose adjusting historical benchmarks that will be used
for PY 2023 financial reconciliation to remove all payment amounts for
the selected codes from benchmark year expenditures. That means, for
example, that when performing financial reconciliation for PY 2023 for
an ACO that started an agreement period in 2023, we will not adjust the
ACO's historical benchmark to exclude payment amounts for the selected
codes from expenditures for BYs 2020 through 2022.
While some commenters expressed high level support for adjusting
benchmark expenditures, we interpret these comments as supportive of
all the adjustments to Shared Savings Program calculations we proposed
in the proposed rule (89 FR 55171 through 55172) and described
elsewhere in this section of the final rule.
Comment: Some commenters specifically supported the proposal to
exclude all Medicare Parts A and B payment amounts for the selected
catheter codes on DMEPOS claims when CY 2023 is used to calculate the
national-regional blended update to the benchmark used in determining
financial performance for PY 2023. A couple of these commenters
explained that this proposal, alongside the proposals to adjust ACO
expenditures when CY 2023 serves as a performance year and a benchmark
year, was ``a comprehensive approach'' and ``the most
straightforward.'' One commenter stated that the proposals will promote
accuracy and validity of the data used for trending benchmarks.
Response: We thank commenters for their support for the proposal to
remove payment amounts when CY 2023 is used to calculate the national-
regional blended update to the benchmark. We agree with the comments
that removing payment amounts in calculating both ACO expenditures and
update factors is a comprehensive approach, as it will ensure that no
SAHS billing activity for the selected catheter codes is included in
the national-regional blended update factor and promotes symmetry when
[[Page 79163]]
comparing an ACO's performance year expenditures to its updated
benchmark.
Comment: Some commenters also expressed support specifically for
the proposal to exclude all Medicare Parts A and B payment amounts for
the selected catheter codes on DMEPOS claims from CY 2023 in revenue
calculations, or from calculations to determine revenue status and
repayment mechanism amounts in the application and change request cycle
for ACOs applying to enter a new agreement period beginning on January
1, 2025 or continue their participation in the program in PY 2025.
Response: We thank commenters for their support of the proposal.
Comment: Two commenters expressed concern that some ACOs may be
financially disadvantaged by the proposed adjustments to Shared Savings
Program calculations, with one emphasizing that the approach would harm
ACOs that have DME services below national and regional benchmark
trends and thus would have more dollars removed from their benchmark
than from their own expenditures. The commenters encouraged CMS to
ensure that ACOs are not adversely impacted financially by the
adjustments. They requested that--due to the retroactive nature of the
policy--CMS should hold ACOs harmless for the removal of the codes or
limit the impact of the policy using a guardrail (for example, 0.02
percent in either direction) for PY 2023 financial calculations. One
also expressed concern that ACOs could be disadvantaged if CMS removes
the selected catheter codes from BY 2023 but not from future
performance years that are reconciled using a historical benchmark that
includes BY 2023.
Response: We decline to adopt an approach that would have CMS
perform two versions of Shared Savings Program calculations--one that
makes adjustments for SAHS billing activity and one that does not--and
then issuing initial determinations based on the version of the
calculations that would result in a ACO maximizing their shared savings
or minimizing their shared losses for PY 2023 or based on calculations
that impose a guardrail that limits the impact of the proposed policy.
As we explained elsewhere in this final rule, the SAHS billing activity
for the selected catheter codes would cause significantly inaccurate
and inequitable payments and repayment obligations if not addressed. It
would be inequitable for ACOs to be held accountable for SAHS billing
activity that occurred among their assigned population in the
performance year. It would also be inequitable to allow other ACOs
whose assigned populations were less affected by SAHS billing in CY
2023 to benefit from the inclusion of these expenditures in the PY 2023
benchmark update factors. Such ACOs would receive an inaccurate updated
benchmark as a result of SAHS billing activity affecting national or
regional expenditures. Allowing either source of inequity or imposing
an artificial limit on the impacts of excluding the SAHS billing
activity would undermine the integrity, fairness and accuracy of Shared
Savings Program calculations.
As part of our final policy, we also decline to remove the selected
catheter codes from future performance years that are reconciled using
a historical benchmark that includes BY 2023. For example, when
performing financial reconciliation for PY 2024 for an ACO with
benchmark years 2021 through 2023, we will only exclude payment amounts
for the selected catheter codes from BY 2023 expenditures and not from
BY 2021, BY 2022, and PY 2024 expenditures. As we explained in the
proposed rule (89 FR 55172), historical billing for the selected
catheter HCPCS codes has consistently been relatively low, including in
recent years. As noted in the Regulatory Impact Statement (section V.
of this final rule), billing for these codes remained less than 0.1
percent of total FFS billing in every year from 2016 to 2022, the
period encompassing all benchmark years for ACOs being financially
reconciled for PY 2023. Thus, in a year not impacted by SAHS billing
activity, payments for these codes would likely represent only a very
small portion of an ACO's total per capita expenditures or total
expenditures for an ACO's regional service area or the national
assignable population.
Comment: A couple of commenters suggested CMS should modify its
approach to mitigating the impact of SAHS billing activity from the
proposal. One commenter expressed concern over any approach that would
remove catheter codes from the national component of the update factor
used to calculate the benchmark for PY 2023 but not from the regional
component of the update factor. The second commenter stated their
suspicion that the impacts of SAHS billing activity for the catheter
codes varies widely across ACOs and explained their ``hope'' that the
methodology for adjusting historical benchmarks will account for
individual and regional variation in this element, so it does not
adversely impact benchmarks of some over others.
Response: We proposed to exclude all Medicare Parts A and B payment
amounts for the selected catheter HCPCS codes on DMEPOS claims from
expenditure and revenue calculations for CY 2023. We will perform this
adjustment when CY 2023 is used to calculate the ACO's performance year
expenditures and when it is used to calculate the national-regional
blended update to the benchmark used in determining financial
performance for PY 2023.\18\ That is, payment amounts will be removed
from both the national component and the regional component of the
national-regional blended update factor. By applying this adjustment to
both components of the update factor, the adjustment will account for
any individual and regional variation of SAHS billing activity for the
catheter codes so that the impact of the exclusion of the catheter
codes on an ACO is dependent on the degree to which SAHS billing
activity for the catheter codes impacted the ACO's region and the ACO's
beneficiaries. Additionally, we will perform this adjustment when CY
2023 serves as a benchmark year.
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\18\ For PY 2023, the only portion of the financial
reconciliation calculations that retain the codes is the calculation
of historical benchmarks, excluding the national-regional update
factor.
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Comment: Many commenters in support of the proposals expressed
differing views on the anticipated impact of the proposed changes on
Shared Savings Program ACOs' financial performance. Many supportive
commenters suggested the proposed changes would be financially
advantageous for ACOs or that they will improve the accuracy of CMS'
evaluation of the ACO's financial performance. One commenter stated
that not finalizing the proposed changes and including payment amounts
for SAHS billing activity for catheter codes would have a ``severely
inappropriate impact'' on Shared Savings Program calculations and might
lead to a loss of shared savings for some ACOs. Several commenters
characterized the proposals as helping to hold ACO's ``harmless'' for
SAHS billing activity for the catheter codes on ACO expenditures, with
one stating their belief that ACOs should not be responsible for costs
``that were not associated with the care of their beneficiaries'' and
another stating that ACOs should not be held responsible for
``anomalous Medicare spending'' beyond their control. One commenter
stated that the proposals are vital to supporting ACOs in maintaining
their financial stability, and another stated that the proposals are
vital to ensuring that ACOs are not ``unfairly penalized for expenses
beyond their control.'' Other commenters stated that SAHS
[[Page 79164]]
billing activity ``weakens the integrity'' of the Shared Savings
Program and can have a detrimental impact on organizations' financial
reconciliation.
Some supportive commenters from ACOs described the anticipated
impact the SAHS billing activity would have on their own ACO's
financial performance absent the adjustments to calculations. One
commenter stated their belief that the inclusion of payment amounts for
the catheter codes would ``damage the integrity'' of their ACO's PY
2023 financial reconciliation. A few commenters stated that without
these adjustments their ACOs may not share in savings, shared savings
could be negatively impacted, or their ACOs would have a high
probability of being liable for shared losses. One commenter stated
that if payment amounts for the selected catheter codes were included,
their ACO would have a high probability of being liable for shared
losses. One commenter expressed their belief that removing payment
amounts for the selected catheter codes will lead to a more accurate
and true evaluation of their performance, and another stated that the
proposals will have a substantial impact on their ACO's
``sustainability.'' A couple of commenters asserted their ACO
expenditures were significantly impacted by the SAHS billing activity
for the catheter codes.
Response: We agree with the commenters who stated the changes we
are finalizing in this final rule will improve the accuracy and
integrity of Shared Savings Program calculations. SAHS billing activity
in CY 2023 for the selected catheter codes had a substantial impact on
ACO expenditures as well as national expenditures. Failing to address
SAHS billing activity that occurred in CY 2023 would jeopardize the
integrity of the Shared Savings Program. Holding an ACO accountable for
substantial losses due to the SAHS billing activity is not only
inequitable but will dramatically increase the level of risk associated
with participation, making the Shared Savings Program unattractive. We
also agree with the many commenters who characterized the proposals as
promoting continued integrity and fairness and improving the accuracy
of Shared Savings Program financial calculations. Alternatively,
proceeding with program operations using the current methodology that
does not adjust for SAHS billing activity would cause significantly
inaccurate and inequitable payments and repayment obligations.
Comment: Some commenters who expressed support for the proposed
adjustments to Shared Savings Program calculations acknowledged the
need for the application of the changes retroactively, with one stating
that failure to do so would unfairly punish Shared Savings Program ACOs
and potentially jeopardize the sustainability of the program.
A couple of commenters shared a concern about the retroactive
nature of the changes, with one stating that ``unforeseen financially
harmful calculations'' would be applied after the performance year has
been completed with no time for ACOs to make any changes in decisions
or operations. Both noted that ACOs used data received during the
performance year (which would not have excluded payment amounts
associated with the selected codes) to inform ACO activities, including
strategies, resourced interventions, and participation decisions.
Response: We appreciate the support from some commenters for the
retroactive applicability of this rulemaking, and we acknowledge the
concern expressed by others. Any changes to calculations involving PY
2023 financial reconciliation or final historical benchmarks for ACOs
starting new agreement periods on January 1, 2024, must have
retroactive applicability because PY 2023 is already completed and PY
2024 has already begun. As we explain elsewhere in this section,
applying the proposal retroactively is justifiable and consistent with
our statutory authority because failing to apply the proposed changes
retroactively would be contrary to the public interest. Failure to
modify PY 2023 financial reconciliation and final historical benchmarks
in the manner we describe in this rule would unfairly punish Shared
Savings Program ACOs by forcing them to unexpectedly assume a
substantial magnitude of unexpected financial risk for costs outside
their control and not previously contemplated in the Shared Savings
Program, undermining both the sustainability of the Shared Savings
Program and the public's faith in CMS as a fair partner.
Comment: Several commenters requested that CMS provide ACOs with
information about the payment amounts excluded at the regional level or
at both the regional and national level. A couple of commenters
requested that CMS not remove claims associated with SAHS billing
activity from the monthly claim and claim line feeds (CCLFs),
requesting instead that CMS flag them.
Response: In order to promote transparency in calculations and
address commenter's concerns, within program reports provided with PY
2023 financial reconciliation results, we will provide ACOs with the
per capita amount of the two catheter codes removed from their
performance year assigned beneficiary expenditures consistent with
other spending categories. Medicare claim payment amounts for the two
catheter codes will continue to be included in the monthly Part A, B
and D Medicare CCLF files sent to ACOs.
Comment: Some commenters urged CMS to develop or strengthen
policies and processes to monitor, report, and address SAHS billing
activity should it occur in the future. One commenter, for example,
recommended CMS ``build algorithms to concurrently identify fraud prior
to making payments.'' Another commenter urged CMS to work with ACOs to
improve the process for reporting suspected fraud, waste, and abuse.
Several commenters also urged CMS to finalize policies to mitigate the
impact of SAHS billing activity occurring in CY 2024 and subsequent
years that were proposed in the CY 2025 PFS proposed rule.
Response: We thank commenters on their suggestions for
strengthening policies and processes to monitor for potential fraud,
waste, and abuse. We will share these comments with our program
integrity colleagues, and we note that we have also provided
information to ACOs on ways they can report potential fraud or abuse to
CPI or HHS-OIG. We also thank commenters for their support for proposed
policies to mitigate the impact of SAHS billing activity occurring in
CY 2024 and subsequent years proposed in the CY 2025 PFS proposed rule.
We will summarize and respond to comments submitted directly in
response to that proposed rule within the CY 2025 PFS final rule.
Comment: Some commenters made recommendations for mitigating the
impact of SAHS billing activity on Innovation Center models. Most of
these commenters requested that the Center for Medicare and Medicaid
Innovation (CMS Innovation Center) perform similar adjustments to
mitigate SAHS billing activity for the catheter codes in the ACO
Realizing Equity, Access, and Community Health (ACO REACH) Model,
although several commenters expressed concerns that the approach being
used by the ACO REACH Model would disadvantage ACOs. One commenter
requested that the CMS Innovation Center exclude payment amounts for
the catheter codes from the Bundled Payments for Care Improvement
Advanced Model and the Comprehensive Care for Joint Replacement Model.
[[Page 79165]]
Response: The commenters' suggestions are beyond the scope of this
rulemaking, which addresses adjustments to Shared Savings Program
calculations to mitigate the impact of SAHS billing activity for
selected catheter codes in CY 2023. The CMS Innovation Center did an
assessment of the effects of SAHS billing in 2023 on each model.
Determinations of whether action to address SAHS billing was necessary
were made on a model-by-model basis.
Final Action: After consideration of public comments, we are
finalizing our proposal to retroactively remove payment amounts for
codes displaying SAHS billing activity in CY 2023 from Shared Savings
Program expenditure and revenue calculations. Specifically, we are
finalizing our proposal to add and reserve Sec. Sec. 425.661 through
425.669 in subpart G and add a new section at Sec. 425.670 to describe
adjustments CMS will make to Shared Savings Program calculations to
mitigate the impact of SAHS billing activity occurring in CY 2023.
Section 425.670(b) specifies that CMS has determined that the billing
of HCPCS codes A4352 (Intermittent urinary catheter; Coude (curved)
tip, with or without coating (Teflon, silicone, silicone elastomeric,
or hydrophilic, etc.), each) and A4353 (Intermittent urinary catheter,
with insertion supplies) represents significant, anomalous, and highly
suspect billing activity for CY 2023 that warrants adjustment. Section
425.670(c) specifies the Shared Savings Program calculations for which
CMS will exclude all Medicare Parts A and B FFS payment amounts on
DMEPOS claims (claim types 72 and 82) associated with HCPCS codes A4352
and A4353 and includes references to all relevant sections of the
regulations in these provisions. In Sec. 425.670(d), on the period of
adjustment, we specify that CMS will adjust Shared Savings Program
calculations for SAHS billing activity of HCPCS codes A4352 and A4353
for CY 2023, when CY 2023 is either a performance year or a benchmark
year. We specify under Sec. 425.670(e) that we will make adjustments
for payments associated with HCPCS codes A4352 and A4353 for BY3 in
projecting per capita growth in Parts A and B FFS expenditures,
according to Sec. 425.660(b)(1), for purposes of calculating the ACPT
for agreement periods beginning on January 1, 2024.
III. Reduction of the Comment Period and Reduction of the 30-Day Delay
in Effective Date of This Final Rule
A. Reduction of the Comment Period to 30 Days
In the SAHS billing activity proposed rule (89 FR 55174), we
explained that there is an urgent need to address the impact of SAHS
billing activity on Shared Savings Program calculations based on CY
2023 data used in determining PY 2023 financial performance, in
establishing benchmarks for ACOs participating in agreement periods
beginning on January 1, 2024, and in calculating factors used in the
application cycle for ACOs applying to enter a new agreement period
beginning on January 1, 2025, and the change request cycle for ACOs
continuing their participation in the program for PY 2025.\19\ These
program operations depend on the timely use of CY 2023 data. Notice and
comment rulemaking to consider the proposed adjustments to Shared
Savings Program calculations for SAHS billing activity identified for
CY 2023 has necessitated delaying key program operations that depend on
CY 2023 data, pending the issuance of this final rule that specifies
our final policy as informed by public comment on the SAHS billing
activity proposed rule. We described in the proposed rule the impact of
delayed use of CY 2023 data in the aforementioned program operations
and approaches that would allow us to continue to meet the statutory
requirements for notice and comment rulemaking procedures, such as by
reducing the comment period, and possibly reducing or eliminating the
delay in the effective date of a final rule (if issued).
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\19\ Failing to take any action to address this SAHS billing
activity would result in CMS using inaccurate data to make
eligibility determinations and require ACOs to establish repayment
mechanism arrangements for inflated amounts that include the impact
of SAHS billing activity.
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We explained (89 FR 55174) that significant delays in the issuance
of initial determinations for PY 2023 financial performance, and
related shared savings payments, would be substantially disruptive to
ACOs that exclusively receive revenue from shared savings payments,
particularly small, rural, and low revenue ACOs and those serving
underserved populations. With few exceptions, the Shared Savings
Program historically completes calculations of shared savings and
shared losses and issues initial determinations of ACO financial
performance approximately 8 months after the conclusion of the
performance year, and shortly thereafter issues performance payments to
ACOs eligible to share in savings.\20\ CMS initiates payments to ACOs
that have earned shared savings for a performance year in September of
the year following the applicable performance year. ACOs rely on the
orderly and timely calculation of financial reconciliation, and
distribution of shared savings. We noted that modifications to Shared
Savings Program financial methodology as proposed in the proposed rule
necessitate delaying the delivery of financial reconciliation reports
to ACOs, and issuance of performance payments to ACOs that have earned
shared savings.
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\20\ Refer to discussion in the CY 2023 PFS final rule, 87 FR
69869 through 69870.
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We further explained in the proposed rule (89 FR 55174) that
delayed use of CY 2023 data would also impair administration of the
Shared Savings Program in 2024 and 2025. CY 2023 data are instrumental
in determining factors used in the application cycle for ACOs applying
to enter a new agreement period beginning on January 1, 2025, and
change request cycle for existing ACOs continuing their participation
in the program for PY 2025. For instance, CY 2023 data will be used in
the calculation of total Medicare Parts A and B FFS revenue of ACO
participants and total Medicare Parts A and B FFS expenditures for the
ACO's assigned beneficiaries for purposes of identifying whether an ACO
is high revenue or low revenue, as defined under Sec. 425.20. The
high/low revenue status is then used to determine an ACO's eligibility
to receive advance investment payments to expand accountable care to
underserved communities according to Sec. 425.630, and an ACO's
eligibility for the CMS Innovation Center's new ACO PC Flex Model for
the January 1, 2025 start date. CY 2023 data will also be the basis for
calculating the amount of required repayment mechanism arrangements for
ACOs entering two-sided models for PY 2025. We explained that the
proposed approach would help ensure the accuracy of the calculations
used in determining ACO revenue status and repayment mechanism amounts.
We noted that delays in the application cycle already underway could
jeopardize our ability to timely issue application dispositions,
execute participation agreements with eligible ACOs for the new
agreement period beginning on January 1, 2025, deliver PY 2025 initial
assignment list reports, and timely deliver initial advance investment
payments for newly eligible ACOs. Substantial delays in change
[[Page 79166]]
request cycle milestones also would jeopardize our ability to ensure
ACOs have met program requirements to facilitate their continued
participation in the Shared Savings Program for the performance year
beginning on January 1, 2025.
Finally, we explained (89 FR 55175) that modifications to Shared
Savings Program financial methodology as proposed in the proposed rule
would also necessitate delaying the delivery of final historical
benchmark reports to ACOs. We expressed our recognition that delaying
the availability of these program reports to ACOs could hamper ACOs'
ability to set effective cost targets that may depend on the ACO's
projected financial performance based on its benchmark value and that
substantial delays in issuance of the historical benchmark reports to
ACOs could make it more challenging for ACOs to effectively curb growth
in Medicare FFS expenditures, a central aim of the Shared Savings
Program.
Section 1871(b)(1) of the Act generally requires that Medicare
rules must be proposed with a 60-day comment period. Section 1871(b)(2)
of the Act provides that this requirement does not apply where a
statute specifically permits a regulation to be issued in interim final
form or otherwise with a shorter period for public comment; a statute
establishes a specific deadline for the implementation of a provision
and the deadline is less than 150 days after the date of the enactment
of the statute in which the deadline is contained; or subsection (b) of
section 553 of title 5, United States Code, does not apply under
subparagraph (B) of such subsection. Subparagraph (B) of 5 U.S.C.
553(b) provides an exception to the requirement for an agency to
publish a general notice of proposed rulemaking in the Federal Register
when the agency for good cause finds (and incorporates the finding and
a brief statement of reasons therefore in the rules issued) that notice
and public procedure thereon are impracticable, unnecessary, or
contrary to the public interest.
We found that a 60-day comment period was both impracticable and
contrary to the public interest (89 FR 55174 through 55176). For the
reasons stated, we therefore reduced the comment period of the proposed
rule to 30 days. We noted in the proposed rule that failing to use a
30-day comment period in lieu of a 60-day comment period would be
impracticable and contrary to the public interest in part for the same
reasons described in section II.B. of the proposed rule that failing to
apply this rule retroactively to PY 2023 and PY 2024 would be contrary
to the public interest. Additionally, we explained that failing to use
the reduced comment period would be impracticable and contrary to the
public interest because the additional time would not substantially
enhance the public's ability to participate in this rulemaking, and it
would substantially impair CMS's ability to administer the Shared
Savings Program, by delaying the following:
<bullet> Issuance of initial determinations of shared savings and
shared losses to ACOs for PY 2023.
<bullet> Disbursement of PY 2023 earned performance payments to
ACOs.
<bullet> Determination of ACO revenue status used in determining
ACO eligibility for advance investment payments and eligibility for the
ACO PC Flex Model, in connection with the application cycle for ACOs
applying to enter a new agreement period beginning on January 1, 2025.
<bullet> Calculation of required amounts for repayment mechanism
arrangements for ACOs entering a two-sided model for PY 2025 and the
deadline for ACO submission of repayment mechanism documentation to CMS
for review, to ensure compliance with related requirements.
<bullet> Calculation of final historical benchmarks for ACOs
beginning an agreement period on January 1, 2024, and delivery of final
historical benchmark reports to ACOs.
We noted that it would be contrary to the public interest for ACOs
to be harmed by the delay in administration of the Shared Savings
Program caused by the rule that intended to relieve them from the
unexpected harm arising from SAHS billing activity (89 FR 55175). A 60-
day comment period would have likely necessitated delaying these key
operations until at least late 2024, substantially delaying these
operations and related processes, which would harm ACOs and impair the
operation of the Shared Savings Program and thwart the relief to ACOs
that would otherwise be provided by this rule.
We explained that a substantial delay to initial determinations of
shared savings and losses for PY 2023 and disbursement of earned
performance payments would be financially ruinous to the many ACOs that
rely on these payments to operate (89 FR 55175). For example, in PY
2022, 304 ACOs earned $2.52 billion in performance payments. Shared
savings payments are the primary revenue source of ACOs. Many ACOs,
particularly small, rural, and low revenue ACOs and those serving
underserved populations, depend on receiving shared savings payments on
a predictable annual schedule to continue operating. We noted that it
is self-evident that enabling ACOs to continue to operate with minimal
disruption is itself in the public interest and in particular is in the
interest of Medicare beneficiaries whose care is coordinated by ACOs.
We explained that delaying adjudication of application and
repayment mechanism decisions also would jeopardize or prevent CMS and
ACOs starting performance year 2025 (89 FR 55175). CMS and ACOs cannot
timely enter into agreements for the agreement period beginning on
January 1, 2025, jeopardizing the expansion of accountable care to
underserved communities, stifling innovation in primary care payment
reform and restricting ACOs' ability to meet requirements for entering
or continuing their participation in a two-sided model for PY 2025.
Phase 1 of the application period closed June 17, 2024.\21\ Failing to
timely adjudicate hundreds of applications and over ten thousand change
requests, for new and renewing ACOs, and ACOs continuing their
participation in Shared Savings Program, would impair our ability to
timely and accurately evaluate ACOs based on statutorily required
eligibility criteria and existing regulatory requirements. We cannot
start performance year 2025 until all applications and change requests
have been reviewed, processed, and adjudicated.
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\21\ See for example, Medicare Shared Savings Program, Key
Application Actions and Deadlines For Agreement Period Beginning on
January 1, 2025, available at <a href="https://www.cms.gov/files/document/key-application-actions-and-deadlines.pdf">https://www.cms.gov/files/document/key-application-actions-and-deadlines.pdf</a>.
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Additionally, we noted that given the limited scope of the proposed
rule, addressing a single issue through proposed changes to the Shared
Savings Program regulations, a 30-day comment period was a reasonable
amount of time for public inspection and comment (89 FR 55175). In
advance of the SAHS billing activity proposed rule, many interested
parties wrote to the Administrator requesting relief from SAHS billing
activity, so they are familiar with this issue and would likely be
ready to review the policy and impacts within the 30-day timeframe.
Furthermore, we explained that starting notice and comment
rulemaking sooner to allow a 60-day comment period was impracticable
(89 FR 55175 through 55176). As we described in the proposed rule, we
could not have foreseen the SAHS billing activity in advance and were
only able to determine that the increase in billing on HCPCS codes
A4352 and A4353 in CY 2023 was significant, anomalous, and
[[Page 79167]]
highly suspect after the calendar year ended. To identify that the
billing activity in CY 2023 was SAHS billing activity, CMS reviewed
actual billing levels after the calendar year closed and services
furnished in CY 2023 had occurred and the billing level could then be
compared to billing levels observed in prior calendar years. Careful
analysis of the billing activity, plus careful analysis of the impact
on ACOs in the Shared Savings Program, was critical to determining
whether mitigation measures were necessary. Given the unprecedented
nature of the circumstances, time was also required to develop the
appropriate proposed mitigation approach. Once we determined that this
billing activity in CY 2023 was significant, anomalous, and highly
suspect, that it was necessary to mitigate its impact on Shared Savings
Program expenditures and revenue calculations, and the appropriate
proposed mitigation approach, we immediately began the process to
undertake notice and comment rulemaking. For the aforementioned
reasons, among others discussed the proposed rule, we found that a
failure to reduce the comment period was impracticable and contrary to
the public interest, and thus found the agency has good cause to set a
30-day comment period.
The modifications to the Shared Savings Program financial
methodology that we are finalizing in this final rule, following the
30-day comment period, will allow us to maintain timely adjudication of
certain determinations of applicant ACOs' eligibility to participate
under the advance investment payment option, or the ACO PC Flex Model,
for an agreement period beginning on January 1, 2025, and timely
finalization of repayment mechanism arrangements required for ACOs to
enter or continue their participation in two-sided models for PY 2025.
While our use of the 30-day comment period will minimize disruptions to
timelines for certain milestones, we anticipate that the issuance of
initial determinations and the disbursement of earned performance
payments for PY 2023 will still be delayed by approximately 6 weeks.
Where possible, we will work to reduce delays and will proactively
communicate with ACOs about changes in timelines for these, or other,
milestones.
Comment: Some commenters requested that CMS extend deadlines by the
same amount of time for the annual application and change request
cycle, including deadlines for risk track selection, participant lists,
and ACO PC Flex Model participation decisions.
Response: While we appreciate the interests of ACOs in requesting
an extension of deadlines in the annual application and change request
cycle by the same amount of time as the delay in issuance of
performance year determinations, we are unable to delay deadlines by
multiple weeks since it would delay application dispositions scheduled
for early December until after the January 1, 2025, agreement period
start date. This would require delaying the start of PY 2025 until
sometime after January 1, 2025. This would, among other things, require
CMS to propose policies for conducting financial calculations using a
non-standard performance year, as was done to accommodate a July 1,
2019, performance year start date in the Share Savings Program final
rule published in December 2018 (83 FR 67816). This would also create
further delays and uncertainty for ACOs. A delay in finalizing
participant lists would delay the publication of PY 2025 initial
assignment lists, hindering ACOs' ability to effectively coordinate
care for their assigned beneficiary populations.
A delay in the start of the Shared Savings Program's performance
year also may have significant adverse consequences for ACO
professionals participating in ACOs. Many Shared Savings Program tracks
are Advanced Alternative Payment Models (APMs) for purposes of the
Quality Payment Program APM incentive. Qualifying APM Participants
(QPs) are not subject to the Merit-based Incentive Payment System
reporting requirements or payment adjustments (though they may have
separate and similar reporting obligations under the Shared Savings
Program). See 42 CFR 414.1310(b)(1)(i) and (ii). For payment years
through CY 2025, QPs also earn a lump-sum APM incentive payment based
on estimated aggregate payments for covered professional services
furnished during the preceding calendar year. See 42 CFR 414.1310;
414.1450. A reduction in the length of the Shared Savings Program's
performance year could cause some ACO professionals to fail to achieve
QP status.
While we are unable to modify Shared Savings Program applications
deadlines for the reasons described previously in this final rule, we
were able to extend the deadline for ACOs to apply to the ACO PC Flex
Model from August 1, 2024, until August 23, 2024, as this delay would
not delay Shared Savings Program application dispositions or the start
of the Model.\22\
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\22\ See <a href="https://www.cms.gov/priorities/innovation/innovation-models/aco-primary-care-flex-model">https://www.cms.gov/priorities/innovation/innovation-models/aco-primary-care-flex-model</a>.
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Furthermore, we are clarifying that we anticipate releasing PY2023
results in late October and making payments to ACOs in mid-November.
Where possible, we will work to reduce delays and will proactively
communicate with ACOs about changes in timelines.
B. Reduction of the 30-Day Delay in Effective Date of This Final Rule
In the proposed rule we explained that section 1871(e)(1)(B)(i) of
the Act prohibits a substantive change in Medicare regulations from
taking effect before the end of the 30-day period beginning on the date
the rule is issued or published (89 FR 55176). Section
1871(e)(1)(B)(ii) of the Act permits a substantive rule to take effect
on a date that precedes the end of the 30-day period if the Secretary
finds that a waiver of the 30-day period is necessary to comply with
statutory requirements or that the application of the 30-day period is
contrary to the public interest. The Administrative Procedure Act
(APA), 5 U.S.C. 553(d), similarly requires a 30-day delay in the
effective date of a substantive final rule. This 30-day delay in
effective date can be waived, however, if an agency finds good cause to
support an earlier effective date, among other reasons. 5 U.S.C.
553(d)(3). We indicated in the proposed rule that, if CMS were to
finalize a rule based on the proposed rule, we would strongly consider
reducing or waiving the 30-day delay in effective date under the
provisions described previously to the extent that the delay in
effective date would also harm ACOs or thwart the purpose of this
provision by delaying our timely administration of the Shared Savings
Program functions as described in section III.A of the proposed rule
(89 FR 55176). We noted that this waiver would be in part for the same
reasons that we reduced the comment period on the proposed rule from 60
days to 30 days, as described in section III.A. of the proposed rule.
We requested comment on this approach, including a possible finding of
good cause and how ACOs would be impacted by the delay.
The following is a summary of the comments we received and our
responses.
Comment: One commenter expressly supported an exception to the 30-
day delay in effective date, while several other commenters urged CMS
to finalize the proposed rule ``as expeditiously as it can within its
legal authority'' and
[[Page 79168]]
others urged CMS to finalize its proposals as quickly as possible to
minimize delays in shared savings distribution.
Response: We thank commenters for their support of measures to
finalize changes to Shared Savings Program regulations expeditiously to
reduce delays to Shared Savings Program operations.
We find that the application of the 30-day period would be
impracticable and contrary to the public interest. In conjunction with
our application of this rule retroactively and the reduction of the
proposed rule's comment period to 30 days, we have determined that, for
us to timely adjudicate applicant ACOs' eligibility to participate
under the advance investment payment option and the ACO PC Flex Model
for agreement periods beginning on January 1, 2025, and timely finalize
repayment mechanisms necessary for ACOs to participate in two-sided
models for PY 2025, we must use expenditure and revenue calculations
for CY 2023, adjusted to exclude all Medicare Parts A and B payment
amounts on DMEPOS claims associated with HCPCS codes A4352 and A4353,
to make certain initial determinations on ACO eligibility and determine
final repayment mechanism amounts, and provide related information to
ACOs no later than October 17, 2024.\23\ Delaying the effective date of
this final rule beyond this date would harm ACOs and ACO professionals,
and thwart the purpose of the rule. Were we to issue initial
determinations for the advance investment payment option and ACO PC
Flex Model, as well as determine final repayment mechanism amounts
after this date, the aforementioned processes would not be complete,
which would jeopardize entry by ACOs into new agreement periods
beginning on January 1, 2025 and continued participation by ACOs in the
Shared Savings Program for the PY beginning on January 1, 2025.
Delaying the start of the PY 2025 would cause the harm to ACOs, ACO
professionals, and CMS described in section III.A. of this final rule.
Therefore, we find that there is good cause to reduce the 30-day delay
in effective date for this final rule to 20 days from date of display,
which provides CMS ample time to issue Phase 1 application dispositions
on or before October 17, 2024 after this rule becomes effective.
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\23\ See for example, Medicare Shared Savings Program, Key
Application Actions and Deadlines For Agreement Period Beginning on
January 1, 2025, available at <a href="https://www.cms.gov/files/document/key-application-actions-and-deadlines.pdf">https://www.cms.gov/files/document/key-application-actions-and-deadlines.pdf</a> (specifying Phase 1
Dispositions to be issued on Oct. 17, 2024, at which time CMS makes
available ACO Participant List and SNF Affiliate List dispositions,
Beneficiary assignment eligibility Phase 1, and AIP eligibility
final disposition). See also, CMS, Center for Medicare & Medicaid
Innovation, ACO Primary Care Flex Model, Request for Applications
(05/30/2024), available at <a href="https://www.cms.gov/files/document/aco-pc-flex-rfa.pdf">https://www.cms.gov/files/document/aco-pc-flex-rfa.pdf</a> (explaining that an applicant ACO will be notified
whether CMS has selected them for participation in the ACO PC Flex
Model during the phase 1 final disposition on October 17, 2024,
which aligns with the Shared Savings Program phase 1 final
dispositions).
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IV. Collection of Information Requirements
Section 1899(e) of the Act provides that chapter 35 of title 44
U.S.C., which includes such provisions as the Paperwork Reduction Act
of 1995, shall not apply to the Shared Savings Program. Accordingly, we
are not setting out any requirements and burden estimates under this
section of the preamble. Please refer to section V. (Regulatory Impact
Statement) of this final rule for a discussion of the impacts
associated with the changes described in section II. (Provisions of the
Regulations) of this preamble.
V. Regulatory Impact Statement
A. Overview
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), Executive Order 14094 entitled ``Modernizing
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), and Executive Order 13132 on Federalism (August
4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). The
Executive Order 14094 entitled ``Modernizing Regulatory Review''
(hereinafter, the Modernizing E.O.) amends section 3(f) of Executive
Order 12866 (Regulatory Planning and Review). A Regulatory Impact
Analysis (RIA) must be prepared for rules that are significant under
section 3(f)(1) of Executive Order 12866. Based on our estimates, OMB's
Office of Information and Regulatory Affairs (OIRA) has determined this
rulemaking is not significant per section 3(f)(1) as measured by the
$200 million or more in any 1 year threshold. OMB's Office of
Information and Regulatory Affairs has determined that this final rule
does not meet the criteria set forth in 5 U.S.C. 804(2).
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
less than $9.0 million to $47.0 million in any 1 year. Individuals and
States are not included in the definition of a small entity. As
explained elsewhere in this section, while this final rule will help
preserve the accuracy of shared savings and losses calculations for
ACOs in the Shared Savings Program, the great majority of ACOs will
experience at most a minimal impact on their PY 2023 financial outcome.
We did not prepare an analysis for the RFA because we determined, and
the Secretary certified, that this final rule will not have a
significant economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 604 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area for Medicare
payment regulations and has fewer than 100 beds. As previously
mentioned in this section of this final rule, all but a small fraction
of ACOs will experience relatively minimal changes in their PY 2023
financial outcome. We did not prepare an analysis for section 1102(b)
of the Act because we determined, and the Secretary certified, that
this final rule will not have a significant impact on the operations of
a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2024, that
threshold is approximately $183 million. This rule imposes no mandates
on State, local, or tribal governments or on the private sector.
[[Page 79169]]
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
B. Analysis
In this final rule, we discuss the reasons that excluding payment
amounts incurred in 2023 for two urinary catheter HCPCS codes \24\ on
DMEPOS claims will prevent SAHS billing activity from deteriorating the
accuracy of Shared Savings Program calculations determining both: (1)
shared savings or losses for PY 2023 and (2) historical benchmarks for
future performance years for ACOs entering agreement periods in 2024,
2025 or 2026. Total FFS spending in the two specified codes was minimal
in preceding years before the SAHS billing activity in 2023 sharply
increased in highly disparate ways. At a program level, billing for
these codes remained less than 0.1 percent of total FFS billing in
every year from 2016 to 2022 before increasing to nearly 1 percent in
2023. And while a handful of hospital referral regions (HRRs) still
managed to exhibit billing for the specified codes totaling less than
0.1 percentage points of total spending, approximately 10 percent of
HRRs showed billing for the specified codes rising to at least 2
percentage points of total spending. In the most impacted HRR, billing
for these codes in 2023 accounted for over a 5 percentage-point
increase in total per capita billing from 2022, an astonishing and
plainly unjustifiable increase in billing for the medical device
supplied under these codes. By analyzing ACO-level program data, we
observed material impacts likely for many PY 2023 ACOs related to these
geographically heterogeneous and highly suspect increases in spending
for the specified urinary catheter codes.
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\24\ A4352 (Intermittent urinary catheter; Coude (curved) tip,
with or without coating (Teflon, silicone, silicone elastomeric, or
hydrophilic, etc.), each), and A4353 (Intermittent urinary catheter,
with insertion supplies).
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Preliminary estimates of PY 2023 performance after removing the
specified codes, using three months of claims runout, and applying risk
adjustment were used to update the impacts estimated for ACO shared
savings and losses. These data were analyzed to estimate the marginal
impact that catheter spending had on each ACO's performance. These
marginal impact estimates continue to rely on analysis performed on
preliminary data without final beneficiary assignment information and
without 3 months of claims runout. Despite these remaining limitations,
the precision in this analysis has increased relative to the analysis
included in the proposed rule.
Billing for the specified codes was estimated in this study to have
a nominal impact to overall shared savings (net of losses) across the
mix of ACOs in PY 2023. The neutral overall impact exemplifies to the
fact that billing for these specific codes was not correlated to any
ability for an average ACO to actively manage the rapid growth. For
most ACOs, the inclusion of the specified catheter codes did not
substantially change their estimated financial outcome in PY 2023. When
expressing projected shared savings (or losses) as a percentage of
benchmark, the impact of spending in the specified codes on projected
shared savings (or losses) was projected to be within +/-0.05 percent
for 56 percent of ACOs, within +/-0.10 percent for 74 percent of ACOs,
and within 0.15 percent for 83 percent of ACOs. However, the impacts
would potentially be substantial at the tails of the distribution.
Table 1 shows that failing to exclude the specified codes would
increase the net earnings for one ACO in the study by an amount
equivalent to 1.5 percent of benchmark spending relative to the policy
we are finalizing to exclude the codes. At the other extreme, leaving
in the specified codes was estimated to reduce earnings to another ACO
by an amount equivalent to 2.4 percent of benchmark relative to the
policy we are finalizing to exclude such specified codes. The impact
estimated at these extremes highlights the benefit of the proposed
policy to prevent highly suspect billing in the two specified codes
from materially impacting outcomes in the program.
[[Page 79170]]
[GRAPHIC] [TIFF OMITTED] TR27SE24.000
While providing a valid illustration of the impacts likely across
the distribution of ACOs, a key component of the simulation relies on
preliminary data for PY 2023 with less than 7 days of claims runout
(specifically, the estimated marginal impact of catheter spending on
each ACO's performance relative to benchmark) versus the 90 day claims
runout used in financial reconciliation. Because of the limitations in
the data used for this simulation, and because of the potential for the
overall impact to be influenced by the proximity of individual ACO-
level outcomes to the applicable minimum savings rate or minimum loss
rate (particularly for large ACOs), a stochastic simulation was
employed to generate a range of outcomes surrounding the best estimate.
Assuming the marginal impact of catheter spending on ACO gross savings
(expressed on percent of benchmark basis) would vary relative to data
used in the analysis under a normal distribution with standard
deviation equal to the higher of (a) 0.1 percentage points or (b) one-
fourth of the absolute value of the marginal percentage impact
estimated for the ACO using preliminary data, the impact of removing
spending in the specified codes across all ACOs combined was estimated
to be roughly budget neutral on average, ranging from a $10 million
decrease at the 10th percentile to a $20 million dollar increase at the
90th percentile.
C. Compliance With Requirements of Section 1899(i)(3) of the Act
Certain policies, including both existing policies and the new
policy described in this final rule, rely upon the authority granted in
section 1899(i)(3) of the Act to use other payment models that the
Secretary determines will improve the quality and efficiency of items
and services furnished under the Medicare program, and that do not
result in program expenditures greater than those that would result
under the statutory payment model. By preventing SAHS spending growth
in the two catheter codes from disrupting the accuracy and fairness of
shared savings and loss outcomes for ACOs in the 2023 performance year,
the policy furthers the goals of quality and efficiency by protecting
the validity and integrity of the program's incentive for quality and
efficiency. The provisions of this final rule, together with all
existing program policies (including but not limited to those requiring
authority granted in section 1899(i)(3) of the Act), result in a
program that is expected to improve the quality and efficiency of items
and services furnished under the Medicare program and is not expected
to result in a situation in which the payment methodology under the
Shared Savings Program, including all policies adopted under the
authority of section 1899(i) of the Act, results in more spending under
the program than would have resulted under the statutory payment
methodology in section 1899(d) of the Act.
In the CY 2023 PFS final rule, we estimated that the projected
impact of the payment methodology that incorporates all policies
finalized by that final rule would result in $4.9 billion in greater
program savings compared to a hypothetical baseline payment methodology
that excluded the policies that required section 1899(i)(3) of the Act
authority (see 87 FR 70195 and 70196). The marginal impact of the
changes in the CY 2024 PFS final rule were estimated to lower net
spending by $330 million over the 10-year window for all new policies
combined, including the cap an ACO's regional service area risk score
growth, the addition of a new third step to the beneficiary assignment
methodology, and the revised approach to identify the assignable
beneficiary population (88 FR 79496). The marginal impact of the
changes in this final rule are estimated to be budget neutral for the
2023 performance year, with a range
[[Page 79171]]
of uncertainty spanning $10 million lower spending at the 10th
percentile to $20 million higher spending at the 90th percentile. The
cumulative impact of all policies including the provisions in this
final rule are estimated to result in more than $4.9 billion in greater
program savings compared to the hypothetical baseline payment
methodology that excludes policies that require 1899(i)(3) of the Act
authority. Therefore, we estimated that the implementation of the
provision made in this final rule would not result in a program with
spending greater than what would result under the statutory payment
model, consistent with the requirements of section 1899(i)(3)(B) of the
Act.
We will continue to reexamine this projection in the future to
ensure that the requirement under section 1899(i)(3)(B) of the Act that
an alternative payment model not result in additional program
expenditures continues to be satisfied. Additional Shared Savings
Program data beginning to accumulate after the end of the COVID-19
public health emergency, along with emerging information on the
characteristics of new entrants in the Shared Savings Program for
agreement periods beginning on January 1, 2024 and January 1, 2025, are
anticipated to gradually improve our ability to reevaluate program
impacts in a comprehensive fashion. In the event that we later
determine that the payment model that includes policies established
under section 1899(i)(3) of the Act no longer meets this requirement,
we will undertake additional notice and comment rulemaking to make
adjustments to the payment model to assure continued compliance with
the statutory requirements.
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on September 23, 2024.
List of Subjects in 42 CFR Part 425
Administrative practice and procedure, Health facilities, Health
professions, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR part 425 as set forth below:
PART 425--MEDICARE SHARED SAVINGS PROGRAM
0
1. The authority citation for part 425 continues to read as follows:
Authority: 42 U.S.C. 1302, 1306, 1395hh, and 1395jjj.
Sec. Sec. 425.661 through 425.669 [Reserved]
0
2. Add reserved Sec. Sec. 425.661 through 425.669 to subpart G.
0
3. Section 425.670 is added to subpart G to read as follows:
Sec. 425.670 Adjustments to mitigate the impact of significant,
anomalous, and highly suspect billing activity on Shared Savings
Program financial calculations involving calendar year 2023.
(a) General. This section describes adjustments CMS makes to Shared
Savings Program calculations to mitigate the impact of significant,
anomalous, and highly suspect billing activity occurring in calendar
year 2023.
(b) Significant, anomalous, and highly suspect billing activity for
a HCPCS or CPT code impacting Shared Savings Program calculations. CMS
has determined that the billing of the following HCPCS codes represents
significant, anomalous, and highly suspect billing activity for
calendar year 2023 that warrants adjustment--
(1) A4352 (Intermittent urinary catheter; Coude (curved) tip, with
or without coating (Teflon, silicone, silicone elastomeric, or
hydrophilic, etc.), each); and
(2) A4353 (Intermittent urinary catheter, with insertion supplies).
(c) Applicability of adjustments to performance year and benchmark
year calculations. Notwithstanding any other provision in this part,
CMS adjusts the following Shared Savings Program calculations, as
applicable, to exclude all Medicare Parts A and B fee-for-service
payment amounts on DMEPOS claims (claim types 72 and 82) associated
with a HCPCS code specified in paragraph (b) of this section for the
period specified in paragraph (d) of this section:
(1) Calculation of Medicare Parts A and B fee-for-service
expenditures for an ACO's assigned beneficiaries for all purposes
including the following: Establishing, adjusting, updating, and
resetting the ACO's historical benchmark and determining performance
year expenditures.
(2) Calculation of fee-for-service expenditures for assignable
beneficiaries as used in determining county-level fee-for-service
expenditures and national Medicare fee-for-service expenditures,
including the following calculations:
(i) Determining average county fee-for-service expenditures based
on expenditures for the assignable population of beneficiaries in each
county in the ACO's regional service area according to Sec. Sec.
425.601(c) and 425.654(a) for purposes of calculating the ACO's
regional fee-for-service expenditures.
(ii) Determining the 99th percentile of national Medicare fee-for-
service expenditures for assignable beneficiaries for purposes of the
following:
(A) Truncating assigned beneficiary expenditures used in
calculating benchmark expenditures under Sec. 425.652(a)(4), and
performance year expenditures under Sec. Sec. 425.605(a)(3) and
425.610(a)(4).
(B) Truncating expenditures for assignable beneficiaries in each
county for purposes of determining county fee-for-service expenditures
according to Sec. Sec. 425.601(c)(3) and 425.654(a)(3).
(C) Truncating expenditures for assignable beneficiaries for
purposes of determining truncated national per capita fee-for service
expenditures for purposes of calculating the ACPT according to Sec.
425.660(b)(3).
(iii) Determining truncated national per capita fee-for-service
Medicare expenditures for assignable beneficiaries for purposes of
calculating the ACPT according to Sec. 425.660(b)(3).
(iv) Determining national per capita expenditures for Parts A and B
services under the original Medicare fee-for-service program for
assignable beneficiaries for purposes of capping the regional
adjustment to the ACO's historical benchmark according to Sec.
425.656(c)(3) and capping the prior savings adjustment according to
Sec. 425.658(c)(1)(ii).
(v) Determining national growth rates that are used as part of the
blended growth rates used to trend forward BY1 and BY2 expenditures to
BY3 according to Sec. 425.652(a)(5)(ii) and as part of the blended
growth rates used to update the benchmark according to Sec. Sec.
425.601(b)(2) and 425.652(b)(2)(i).
(3) Calculation of Medicare Parts A and B fee-for-service revenue
of ACO participants for purposes of calculating the ACO's loss
recoupment limit under the BASIC track as specified in Sec.
425.605(d).
(4) Calculation of total Medicare Parts A and B fee-for-service
revenue of ACO participants and total Medicare Parts A and B fee-for-
service expenditures for the ACO's assigned beneficiaries for purposes
of identifying whether an ACO is a high revenue ACO or low revenue ACO,
as defined under Sec. 425.20, and determining an ACO's eligibility to
[[Page 79172]]
receive advance investment payments according to Sec. 425.630.
(5) Calculation or recalculation of the amount of the ACO's
repayment mechanism arrangement according to Sec. 425.204(f)(4).
(d) Period of adjustment. CMS adjusts the Shared Savings Program
calculations specified in paragraph (c) of this section for
significant, anomalous, and highly suspect billing activity identified
pursuant to paragraph (b) of this section for calendar year 2023, when
calendar year 2023 is either a performance year or a benchmark year.
(e) Adjustments for growth rates used in calculating the ACPT. In
addition to adjustments described in paragraph (c) of this section, CMS
makes adjustments for payments associated with a HCPCS code specified
in paragraph (b) of this section for BY3 in projecting per capita
growth in Parts A and B fee-for-service expenditures, according to
Sec. 425.660(b)(1), for purposes of calculating the ACPT for agreement
periods beginning on January 1, 2024.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-22054 Filed 9-24-24; 4:15 pm]
BILLING CODE 4120-01-P
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</html>Indexed from Federal Register on September 27, 2024.
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