Proposed 2023 Physician Fee Schedule: Big changes to MSSP are on the horizon

July 22, 2022

The Centers for Medicare & Medicaid Services (CMS) issued the proposed Physician Fee Schedule (PFS) for 2023 on July 7. Aledade’s Senior Vice President for Policy & Economics Travis Broome hosted a webinar into what the proposal means for the thousands of independent primary care practices, clinics, and health centers in Aledade ACOs, as well as for physicians across the country. 

In case you missed the webinar or just want a recap, this blog will focus mainly on the many significant proposed changes to the Medicare Shared Savings Program (MSSP) contained in the proposal with a short summary of some of the non-related MSSP related proposals. 

Advance Investment Payments could help recruit more practices into ACOs.

CMS has set a goal to get 100% of Medicare beneficiaries into a value-based care model by 2030. Increasing participation in accountable care organizations (ACOs), especially in underserved areas, is a critical strategy to meeting that while advancing the agency’s commitment to health equity. The proposed PFS aims to encourage the formation of new ACOs in both rural and urban areas with underserved beneficiaries by making advance investment payments (AIP) available to certain qualifying ACOs beginning January 1, 2024. This initiative is modeled after the ACO Investment Model, and CMS outlines the criteria for eligibility as follows:

  1. The ACO cannot be renewing or a re-entering ACO;
  2. The ACO must be participating under the BASIC track;
  3. The ACO cannot be experienced with performance-based risk Medicare ACO initiatives; and,
  4. The ACO must be designated as low revenue.

The payments are made quarterly on a per basis basis. The amounts based on the beneficiary’s Area Deprivation Index (ADI) score and whether they have Medicaid. This yields higher payments for underserved beneficiaries. The proposed rule includes guidelines of how ACOs should use AIPs, such as to increase staffing, strategies to support addressing social determinants of health,  support care coordination capabilities, and other criteria. CMS is seeking comment on the different proposals to structure the risk factors-based score and other elements of the AIP.  

Unlike the ACO Investment Model which focused on rural areas, the AIP as proposed would be a broader program weighted toward low Area Deprivation Index that could increase opportunities for ACOs participating in the BASIC track to share in savings through expanded criteria.

Moving to administrative benchmarking will solve some, but not all, of the rural glitch.

Aledade has been clear in our advocacy to CMS around the importance of solving the rural glitch. For ACOs with large market share (often in rural areas), if they succeed in lowering costs, they lower costs for the entire region. Their regional trend comes down, which essentially means they are penalized for lowering costs. It also results in situations where ACOs are paid differently for the same performance. The Proposed 2023 PFS does not directly solve the rural glitch, but offers a roundabout way of addressing it through the proposal for administrative benchmarking. 

There are 11.4 million beneficiaries in MSSP. Medicare Advantage continues to grow every year. Original Medicare is not growing. CMS recognizes it is time to get away from pure fee-for-service comparisons, and is proposing moving toward administrative benchmarking. Instead of benchmark trends based on observing spending trends in the performance year, CMS is proposing to make a projection: What do we think the cost trends would have been without MSSP and the Innovation Center? There is an extensive RFI in the proposed PFS discussing the path towards administrative benchmarking.

For new ACO agreements in 2024, CMS is proposing a prospective growth factor that would create a three-way blend, along with observed national and regional growth rates, to update a benchmark for each performance year of the ACO’s agreement period. Projecting is not always easy (as anyone who tried to project in 2019 what might happen to health care in 2020 could tell you), so CMS is proposing to retain some discretion to decrease the weight of the three-way blend. However, the value here is to move away from observed trends so we must be prepared to accept divergence from observed trends and projections; otherwise there is no need for the projection.

This does not directly solve the rural glitch, but it does lessen its impact by fifty percent and will be a major positive shift for those ACOs that have a large market share and could see their shared savings grow significantly. Ultimately, Aledade is focused on creating the best benchmark for the future and the move to administrative benchmarking will be a big advocacy focus for us this year and in the coming years as we seek 100 percent participation in accountable care models by 2030.

Risk score changes aim to advance health equity. 

CMS is proposing to account for changes in ACOs’ demographic risk scores before applying its 3 percent cap on hierarchical condition categories (HCC) risk scores and to apply the cap in aggregate across all four enrollment types (aged, disabled, dual eligible, and ESRD). Demographic risk scores are based on age, sex, and Medicaid status. The proposed PFS notes that revising how the existing 3 percent cap on positive prospective HCC risk score growth better accounts for medically complex, high-cost patient populations while guarding against coding intensity. 

While this does not solve the issue faced by ACOs in regions with faster than average risk growth, it does acknowledge the fact that as patients age, they become more sick. There is nothing an ACO can do to prevent those demographic changes so we support the proposal to exclude demographic risk growth from the risk cap. We will be encouraging CMS to apply the same rules to regional risk scores as ACO risk scores to avoid any unintended arbitrage.

Quality score changes in 2023 shift to a sliding scale.

CMS is proposing to adopt an alternative, lower quality performance standard for ACOs that do not meet the higher performance standards required for shared savings at the maximum rate. Currently, as long as ACOs hit the 30th to 40th percentile on quality scores they get their full shared savings, but for those who fail to meet that threshold, they get none. CMS is proposing to get rid of this harsh cut off and instead return to a sliding scale based on the ACO’s final quality score. 

This proposal is a welcome development for ACOs that are serving the neediest, most vulnerable populations and risk falling off the quality cliff. CMS is also proposing equity bonus points through establishing a health equity adjustment that would add quality bonus points to an ACO’s score when the ACO delivers high quality care to underserved populations–if reporting eCQMs/MIPS CQMs.

Speaking of eCQM, CMS is proposing one extra year (2024) for the incentive to report eCQMs/MIPS CQMs. Sunsetting of the CMS Web Interface, along with the required transition to all-patient all-payer, continues to be performance year 2025. There is still a lack of alignment from stakeholders on how best to measure quality, so we will be spending significant time these next few years advancing the dialogue. 

The proposal also asks for input on the possible addition of future measures related to the social determinants of health and CAHPS questions related to health disparities. 

There are welcome developments in administrative simplification. 

Currently, ACOs must submit their marketing materials for CMS to review. CMS is proposing to remove that requirement and retain the right to request a review of these materials. The agency is also proposing to streamline the SNF 3 day waiver application process by removing the requirement for ACOs to submit plan narratives, though CMS is retaining the right to request these narratives.

Furthermore, CMS is proposing to amend the beneficiary notification requirements to reduce the frequency of beneficiary notifications from once annually to once per agreement period. These proposals, if finalized, would go into effect on January 1, 2023.

Some of the major non-MSSP related proposals we are tracking include payment rate changes and telehealth.

Many of the big headlines from this proposed PFS focused on the payment updates. CMS has proposed a calendar year 2023 conversion factor of $33.0775, a 4.4 percent reduction from 2022. This reduction is largely a result of the expiration of the 3.0 percent increase in PFS payments for calendar year 2022, as well as changes to several evaluation and management (E/M) code families due to statutory budget neutrality requirements. This is a significant blow to primary care physicians with inflation being what it is. Aledade will be working with stakeholders to advocate for Congress addressing this before the end of the year. 

There were no major changes to telehealth in the proposed PFS, as CMS leaned on the 151 day post public health emergency extension of pandemic related flexibilities that Congress put in place earlier this year. The PHE was extended last week, so those flexibilities will remain in place through 2022. What could happen in 2023 post PHE? Most Medicare policies revert automatically, after 151 days, including the bundling of the audio only codes. Otherwise, it is up to Congress to act to make the flexibilities patients and physicians have relied on permanent. So far, Congress has passed legislation to make mental telehealth available through audio only modalities for patients who have had an in-person visit in the last 6 months. We will continue to watch the state landscape carefully as many states have already rolled back telehealth flexibilities and so much of telehealth is regulated by the states.

Where we go from here?

Aledade welcomes your comments and thoughts on the Proposed 2023 PFS to help inform our comment letter, which we will be submitting to CMS by the September 6 deadline. In the meantime, we are joining many stakeholders in urging Congress to address the inflation realities physicians are facing. 

For MSSP, we are focusing our advocacy on having Congress address the expiring AAPM bonus, shaping the dialogue on administrative benchmarking to ensure policies are favorable for the growth and sustainability of ACOs, and advocating strongly for a complete solution to the rural glitch. We will be joining ACO stakeholders in continuing to evaluate how the proposed changes would impact the H.R. 4587 Value in Health Care Act, legislation we have been advocating for in the last few years to ensure that ACOs and the shift to value based care is set up for success. 

In addition, we will continue to make our voice heard on how to advance health equity in all programs, and how to ensure we can build on the gains in patient care we have seen with the pandemic-related telehealth flexibilities.