Impact of (final rule) 2023 Medicare Physician Fee Schedule

on your ACO’s financial decisions

The Release and Impact of MPFS 2023

The final rule for 2023 Medicare Physician Fee Schedule (MPFS) was released November 1, 2022. It will have the biggest impact on your ACO’s financial opportunities and downside risk exposure since the introduction of the Pathways to Success program. The changes are significant enough that it’s appropriate to think of this rule as launching the third generation of the MSSP ACO program. There are several high impact implications. First, there are changes that will impact all ACOs as early as PY 2023. Second, some ACOs could get a substantial boost to their shared savings opportunity if they renew their agreement period early for PY 2024. Third, for ACOs that might actually see a negative impact that could drive their future track, participant and attribution selections.

These topics are discussed in depth in our webinar on Wed, Nov 16, 2022. Register and request the material below.

Webinar: Impact of (final rule) 2023 MPFS on your ACO’s financial decisions

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Leveraging Advance Investment Payments

While with shared savings, ACOs see a return only after 21 months, the new advance investment payments (AIP) can provide up front cash flows to support ACO operations. These payments could amount up to $3.85M per ACO, are made on a quarterly basis, and can be spent over a 5-year agreement period. While designated for new ACOs, existing ACOs could spin out eligible entities as long as they meet the requirements of being 50% inexperienced, attain a low revenue designation and are in a BASIC track. The amount of the payment is variable depending on health equity metrics: Part D low-income subsidy, Medicaid status, and area deprivation index (ADI).

Considerations for Early Renewal

It’s possible to improve an ACO’s benchmark by renewing early for PY 2024. One reason is that it can remove unfavorable benchmark years, especially if there was a particularly bad impact from COVID in 2020. It also provides an opportunity to reset the 3% risk ratio cap, an important consideration for those who have active HCC gap closure initiatives. Additionally, with the updated cap methodology, it’s possible to take advantage of favorable capping across enrollment types and remove variance due to demographic changes. Finally, it’s possible to nearly eliminate the negative regional adjustment through offsets, prior savings adjustment and a more favorable negative regional adjustment cap.

Participant Selection

An ACO’s participant selection strategy might need to be adjusted as well. For example, attaining low revenue status would make it possible to receive partial savings, despite being below the minimum savings rate (MSR). Low revenue status is designated when the ratio of total expenditures to ACO expenditures is below the 35% threshold. ACOs can model different scenarios of participant lists to identify which would keep them below this threshold. For such cases, upside-only tracks then share at half of the sharing rate if below the minimum savings rate versus getting nothing.

Managing Downside Exposure

ACOs can minimize risk through new model and track glidepath options. This is particularly important with the COVID public health emergency (PHE) likely coming to an end in PY 2023. For cases where shared savings performance is projected to be unfavorable, ACOs now have the ability to go in reverse from ENHANCED back to BASIC Level E. Additionally, new ACOs benefit from a longer onramp to risk by having the option to stay in upside-only tracks for up to 7 performance years.