Proposed Rule on Shared Savings Calculations

Proposed Rule on Shared Savings Calculations

On June 28, the Centers for Medicare & Medicaid Services (CMS) announced a Proposed Rule titled Medicare Program: Mitigating the Impact of Significant, Anomalous, and Highly Suspect Billing Activity on Medicare Shared Savings Program Financial Calculations in Calendar Year 2023 (CMS-1799-P). While CMS touts this rule as a step forward in addressing billing abuses within the Medicare Shared Savings Program, it raises questions about the agency’s historical efficacy and commitment to combating fraud.

The Shared Savings Program is designed to promote accountability for the healthcare of Medicare beneficiaries and encourage efficient service delivery. However, recent trends in billing activities, specifically concerning durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), have prompted concerns about the integrity of financial calculations. In the 2023 calendar year (CY), CMS observed a spike in billing for specific intermittent urinary catheter supplies, identified by HCPCS codes A4352 and A4353. This surge in billing could, if not addressed, distort the accuracy of expenditure and revenue calculations critical to the program.

So-called “significant, anomalous, and highly suspect” (SAHS) billing activity is defined by significant, unexplained increases in claim volume or dollars that deviate from historical trends. The Proposed Rule aims to counteract such activities by excluding payments for the identified HCPCS codes from various financial calculations. These calculations are essential for assessing the performance of Accountable Care Organizations (ACOs), establishing benchmarks, and determining revenue status and repayment mechanisms. While this might appear to be a proactive measure, it belies a deeper issue: CMS’s longstanding struggle with timely and effective fraud detection.

The exclusion of these payments will affect expenditure and revenue calculations for assessing 2023 financial performance, establishing benchmarks for ACOs starting new agreement periods in 2024, 2025, and 2026, and determining factors for revenue status and repayment mechanisms. While this might seem like a necessary corrective step, it underscores the agency’s reactive (rather than proactive) stance on fraud.

This Proposed Rule includes a 30-day public comment period, ending on July 29. CMS encourages all interested parties, including ACOs, providers, suppliers, and Medicare beneficiaries, to submit their comments to help shape the final rule. Comments can be submitted at https://www.regulations.gov by referencing file code CMS-1799-P.

One notable aspect of this proposal is the anticipated delay in issuing initial determinations and disbursements of earned performance payments for 2023. The delay, expected to last up to six weeks, is framed as a necessary tradeoff to ensure the timely adjudication of eligibility determinations for ACOs applying for the advance investment payment option or the ACO Primary Care Flex Model for agreement periods starting on Jan. 1, 2025. It also aims to ensure the timely finalization of repayment mechanisms for ACOs entering or continuing participation in two-sided models for 2025. However, this delay raises questions about CMS’s preparedness and agility in handling billing anomalies without causing significant disruptions.

Furthermore, the proposed modifications would delay the calculation of final historical benchmarks and the delivery of related reports for ACOs that began for agreement periods on Jan. 1, 2024. While these delays may pose challenges, they highlight a systemic issue: CMS’s reactive approach to billing abuses, which often leads to delayed corrective actions that can impact ACOs’ operations.

The Proposed Rule also brings to light a critical issue: Medicare’s historical inefficacy in promptly identifying and addressing billing abuses. In numerous instances, significant abuses have gone undetected for years, only to be uncovered later through litigation, sometimes resulting in criminal charges. This history calls into question CMS’s ability to effectively monitor and manage billing practices in real time, undermining the agency’s credibility.

By addressing these billing anomalies, CMS aims to enhance the credibility and effectiveness of the Shared Savings Program. However, the agency’s track record suggests that such measures are often too little, too late. The Proposed Rule represents a reactive approach to issues that should have been addressed proactively through more robust monitoring and fraud detection systems.

As the public comment period progresses, stakeholders are encouraged to voice their concerns and suggestions. It is crucial for CMS to not only refine and finalize this rule, but also to commit to more proactive, effective measures in combating Medicare fraud. The agency’s credibility and the integrity of the Medicare program depend on it.

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Timothy Powell, CPA, CHCP

Timothy Powell is a nationally recognized expert on regulatory matters, including the False Claims Act, Zone Program Integrity Contractor (ZPIC) audits, and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) compliance. He is a member of the RACmonitor editorial board and a national correspondent for Monitor Mondays.

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