Among other reasons, CMS may terminate an ACO from participating in the Medicare Shared Savings Program if the ACO avoids “patients at risk” to reduce the likelihood of increasing costs to the ACO.  The Affordable Care Act, however, does not define which patients are at risk. In the recently release proposed ACO rule, CMS proposes to define “patients at risk” as an “at-risk beneficiary,” which is a beneficiary who:

  • has a high risk score on the CMS–HCC risk adjustment model;
  • is considered high cost due to having two or more hospitalizations each year;
  • is dually eligible for Medicare and Medicaid;
  • has a high utilization pattern; or
  • has had a recent diagnosis that is expected to result in increased cost.

This definition raises a number of questions. First, given that the CMS-HCC risk adjustment model was developed for use in determining payments in the Medicare Advantage (“MA”) program, the effect of its use in the Shared Savings Program on the financial viability of ACOs is unclear.  Under the MA program, MA plans receive a monthly capitation rate for each beneficiary.  The CMS–HCC risk adjustment model is then used to decrease this rate for lower-cost beneficiaries and to increase it for higher-cost beneficiaries.   According to CMS, this model “reduces the incentives for these plans to risk select only the healthiest beneficiaries and avoids indirectly penalizing plans that provide care for the most seriously ill beneficiaries.”   Unlike MA plans that are compensated for higher cost beneficiaries, ACOs will need to find ways to care for these patients without the same financial assistance.
Second, whereas CMS assesses a beneficiary’s score on the CMS-HCC risk adjustment model on a monthly basis to adjust payments accordingly, how CMS will use the model in the context of ACOs remains unclear.   For example, will CMS consider a beneficiary to be at-risk for the current year if the beneficiary had a high score for the previous year?   If CMS will consider only the beneficiary’s score at the time the alleged avoidance occurred, what timeframe will CMS use to calculate the score (e.g., prior year, six months, or month)?
Third, while some of these categories are easily verifiable (e.g., Medicare/Medicaid dually eligible patients), how CMS will determine the other categories is unclear.  Does a beneficiary fall within the category for multiple hospitalizations after just one year or is this category only for beneficiaries who are hospitalized multiple times year after year?  Likewise, which diagnoses will result in increased costs?
In light of the questions raised by the definition of an at-risk beneficiary, it is not surprising that CMS is requesting comments on the definition, including whether other beneficiary characteristics should be considered. Therefore, this definition will likely be further refined in the final rule.