Medicare and Medicaid Programs; CY 2026 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program wnership that reduces the ACO’s number of assigned beneficiaries could constitute a significant change (as described at § 425.214) for the ACO, adversely affecting the ACO’s participant agreement and jeopardizing the ACO’s continued participation in the Shared Savings Program. At § 425.214(a)(3), a significant change occurs when an ACO is no longer able to meet the eligibility or requirements of the Shared Savings Program. To avoid confusion for ACOs and their ACO participants as well as to establish a clear and consistent process for the recognition of claims billed by the TIN of an ACO participant that has recently experienced a CHOW, we propose to add new paragraph § 425.118(b)(3) to require an ACO to submit to CMS for review an ACO participant change request for a CHOW resulting in a change to the ACO participant’s Medicare enrolled TIN whereby the surviving Medicare enrolled TIN has no Medicare billing claims history in a form and manner set by CMS. We are proposing to require an ACO to submit an ACO participant change request for a CHOW resulting in a change to the TIN throughout the performance year, no later than 30 days after the CHOW and outside of the change request cycl ACO to submit an ACO participant change request for a CHOW resulting in a change to the TIN throughout the performance year, no later than 30 days after the CHOW and outside of the change request cycle. We propose that this requirement be limited to instances where the surviving TIN is newly enrolled in PECOS with no prior Medicare billing claims history to limit program disruption such as adversely affecting quality performance. We propose at § 425.118(b)(3) that if CMS approves the change request containing a new ACO participant TIN, the ACO participant list would be updated in the form and manner specified by CMS. We propose that CMS would have sole discretion whether to approve the ACO participant change request for a CHOW. In alignment with proposed § 425.118(b)(3) and (b)(4)(iii) and upon CMS approval of the change request submitted with the TIN, we would adjust the ACO’s assignment, performance year financial calculations, and the requirement that the ACO must submit quality data as described at §§ 425.508 and 425.510 for the applicable performance year on behalf of eligible professionals that bill under the TIN of an ACO participant. We would process these adjustments durin a as described at §§ 425.508 and 425.510 for the applicable performance year on behalf of eligible professionals that bill under the TIN of an ACO participant. We would process these adjustments during the applicable Quality Payment Program (QPP) snapshot dates for the relevant Performance Period. The adjustments would reflect the addition of the surviving Medicare enrolled TIN with no prior Medicare billing claims history as a result of a CHOW to the ACO participant list as the changes become effective during the performance year. While we considered allowing ACOs to submit all change of ownership requests outside of the change request cycle, we propose limiting the out-of- cycle change of ownership requests to those ACO participant TINs without a prior Medicare billing claims history to avoid large discrepancies between the benchmark year patient population and the performance year patient population. To mitigate any disruptions in program calculations, we would require the surviving Medicare enrolled TIN to have no Medicare billing claims history, meaning that the TIN does not have any paid claims for prior benchmark or performance years. This proposal does not apply to a CHOW i Medicare enrolled TIN to have no Medicare billing claims history, meaning that the TIN does not have any paid claims for prior benchmark or performance years. This proposal does not apply to a CHOW in which a TIN is absorbed into an existing TIN and the surviving TIN has prior Medicare billing claims history. Approval of the change request would not allow prior claims from the certified ACO participant TIN to be reprocessed under the surviving ACO participant TIN. Additionally, this proposal would mitigate operational impacts, including determining expenditures used in financial reconciliation, determining an ACO’s quality sample, and producing quarterly and annual reports. We propose to incorporate the ACO participants’ surviving Medicare enrolled TINs with no prior Medicare billing claims history into the ACO’s assignment, historical benchmark, performance year financial calculations, or the obligation of the ACO to report quality data on behalf of eligible professionals that bill under the TIN of an ACO participant, when processed during applicable QPP snapshot dates for the relevant Performance Period, during the performance year in which they are approved (§ 425.118(b)(4)(iii nder the TIN of an ACO participant, when processed during applicable QPP snapshot dates for the relevant Performance Period, during the performance year in which they are approved (§ 425.118(b)(4)(iii)). Effectuating an ACO participant change request for a CHOW resulting in a surviving Medicare enrolled TIN with no prior Medicare billing claims history during the performance year could prevent an ACO participant from losing its status to participate in an ACO. This proposal, if finalized, would support such ACO participant’s ability to retain its assigned beneficiaries and facilitate the provision of high-quality, value- based, evidence-based care. Under our proposal at § 425.118(b)(4)(iii), it is important to consider the operational impact. For example, the Quality Payment Program (QPP) updates eligibility data at multiple points throughout the year to assist ACOs in planning their Shared Savings Program participation. The QPP updates are based on past and current Medicare Part B claims and PECOS data. The Shared Savings Program sends ACO participant files to QPP, which then applies specific criteria to inform ACO eligibility reports. We review Alternative Payment Model (APM) par ims and PECOS data. The Shared Savings Program sends ACO participant files to QPP, which then applies specific criteria to inform ACO eligibility reports. We review Alternative Payment Model (APM) participation four times for every performance year for clinicians and practices that are members of APMs (each review is called a ‘‘snapshot’’). The first three snapshots are processed using the most current data available at the time. For CMS to meet operational processes such as QPP Determinations and APM Incentive Payments, ACOs would need to submit a change request in sufficient time for CMS to review, approve, and the ACO certify, the revised ACO participant list without affecting annual adjustments under proposed § 425.118(b)(4)(iii). We will make available the operational considerations each PY to ensure ACOs are aware of the schedule considerations impacting the QPP Determination and APM Incentive Payments schedule. Additionally, under proposed § 425.118(b)(4)(iii), CMS would then adjust the ACO’s assignment, financial calculations, the requirement for submission of quality data at § 425.508 and § 425.510 on behalf of eligible professionals that bill under the TIN of an ACO parti just the ACO’s assignment, financial calculations, the requirement for submission of quality data at § 425.508 and § 425.510 on behalf of eligible professionals that bill under the TIN of an ACO participant to reflect the addition of entities to the ACO participant list as they become effective during the performance year. This would be accomplished by providing ACOs with a mechanism to report an ACO participant CHOW that resulted in a new ACO participant TIN with no VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00311 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32662 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules prior claims history on their certified ACO participant list and requiring that ACOs submit supporting documentation in the form and manner specified by CMS under proposed § 425.118(b)(3). Our proposal would redesignate the current § 425.118(b)(3) as § 425.118(b)(4) and add new paragraph § 425.118(b)(3), and § 425.118(b)(4)(iii). We propose to add new § 425.118(b)(3) to require an ACO to submit notice and supporting documentation according to the for 25.118(b)(4) and add new paragraph § 425.118(b)(3), and § 425.118(b)(4)(iii). We propose to add new § 425.118(b)(3) to require an ACO to submit notice and supporting documentation according to the form and manner specified by CMS to demonstrate that a CHOW resulting in a change to the Medicare enrolled TIN has taken place. This supporting documentation would include information and material currently collected by CMS during the annual change request cycle when an ACO participant has merged with or been acquired by another entity. Should we finalize our proposals for § 425.118(b)(3) and (b)(4)(iii), we would provide additional guidance on the types of documentation that would suffice to meet the form and manner requirements. This supporting documentation could include a bill of sale, joinder agreement, or other legal document demonstrating a CHOW resulting in a new Medicare-enrolled TIN. Documentation demonstrating the surviving Medicare enrolled TIN with no prior Medicare billing claims history could also include documentation from the Internal Revenue Service (IRS) or from a state’s Secretary of State (for example, IRS W–9, Employer Identification Number registration, or TIN assig s history could also include documentation from the Internal Revenue Service (IRS) or from a state’s Secretary of State (for example, IRS W–9, Employer Identification Number registration, or TIN assignment notice), or an affidavit explaining the CHOW resulting in the surviving Medicare enrolled TIN and confirming reassignment from the original ACO participant TIN to the surviving ACO participant TIN. This could include an attestation from the ACO that all the providers and suppliers that previously assigned their right to receive Medicare payment to the original ACO participant entity’s TIN have reassigned such right to the surviving Medicare enrolled TIN with no prior Medicare billing claims history for the identified ACO participant and will be added to the ACO provider/ supplier list within 30 days in accordance with § 425.118(a)(4). As noted, we would provide guidance on the types of documentation that would suffice, should we finalize our proposals. We propose that the change have an effective date of January 1, 2026, and anticipate this approach would allow some ACOs to remain in the Shared Savings Program without interruption by continuing to utilize ACO participants who may an effective date of January 1, 2026, and anticipate this approach would allow some ACOs to remain in the Shared Savings Program without interruption by continuing to utilize ACO participants who may have experienced a CHOW resulting in a surviving Medicare enrolled TIN with no prior Medicare billing claims history. We seek comments on this proposal. b. SNF Affiliate Change of Ownership (CHOW) Scenarios (1) Background The Medicare Skilled Nursing Facility (SNF) benefit applies to beneficiaries who require a short-term intensive stay in a SNF and skilled nursing and/or skilled rehabilitation care. Pursuant to section 1861(i) of the Act, beneficiaries must have a prior inpatient hospital stay of no fewer than three consecutive days to be eligible for Medicare coverage of inpatient SNF care. This requirement is referred to as the SNF 3-Day Rule. Section 1899(f) of the Act permits the Secretary to waive certain payment or other program requirements necessary to carry out the Shared Savings Program. Specifically, CMS has used the authority under section 1899(f) to waive section 1861(i) of the Act to allow coverage of certain SNF services that are not preceded by a qualifying 3-day inpa s Program. Specifically, CMS has used the authority under section 1899(f) to waive section 1861(i) of the Act to allow coverage of certain SNF services that are not preceded by a qualifying 3-day inpatient hospital stay. The Shared Savings Program’s SNF 3-day rule waiver waives the requirement for a 3- day inpatient hospital stay prior to a Medicare-covered, post-hospital, extended-care service for eligible beneficiaries if certain conditions are met. The SNF 3-day rule waiver at § 425.612(a)(1) allows for Medicare payment for otherwise covered SNF services when ACO providers/suppliers participating in ACOs participating under a two-sided model admit eligible beneficiaries, or certain excluded beneficiaries during a grace period, to an eligible SNF affiliate without a 3-day prior inpatient hospitalization. All other provisions of the section 1861(i) of the Act and regulations regarding Medicare Part A post-hospital extended care services continue to apply. This waiver became available starting January 1, 2017, and all ACOs participating under, or that apply to participate under, Levels C–E of the BASIC track or under the ENHANCED track are eligible to apply for the waiver. It is im starting January 1, 2017, and all ACOs participating under, or that apply to participate under, Levels C–E of the BASIC track or under the ENHANCED track are eligible to apply for the waiver. It is important to note that the Shared Savings Program SNF 3-day rule waiver does not create a new benefit or extend Medicare SNF coverage to patients who could be treated in outpatient settings or who require long-term custodial care. Also, the SNF 3-day rule waiver does not restrict a beneficiary’s choice of provider or supplier. A beneficiary continues to have the option to seek care from any Medicare FFS provider or supplier, including from a SNF or other facility that is not an affiliate of an ACO participating in the Shared Savings Program. If a beneficiary that is assigned to an ACO chooses to receive care from a SNF or other facility that is not an affiliate of the ACO, normal Medicare requirements apply, including the requirement for a 3-day inpatient hospitalization. The SNF 3-day rule waiver is intended to provide ACOs that are participating in certain performance- based risk tracks with additional flexibility to increase quality and decrease costs. As described at § 425.612(d)(2), waiver is intended to provide ACOs that are participating in certain performance- based risk tracks with additional flexibility to increase quality and decrease costs. As described at § 425.612(d)(2), CMS monitors and audits the use of the SNF 3-day rule waiver in accordance with § 425.316. As part of the 3-day rule waiver supplemental application information requirements, at § 425.612(a)(1)(i)(B), ACOs must provide to CMS the list of SNFs with whom the ACO will partner along with executed SNF affiliate agreements between the ACO and each listed SNF. The SNF affiliate agreement with the ACO includes all individual SNFs identified by a CMS Certification Number (CCN) under the Medicare- enrolled SNF TIN that agree to partner with the ACO for purposes of a SNF 3- day rule waiver. The SNF 3-day rule waiver enables eligible SNFs to admit eligible beneficiaries to their SNF without a prior 3-day inpatient hospitalization. To identify an eligible SNF for purposes of a SNF 3-day rule waiver, the SNF’s Medicare enrolled TIN and CCN must appear on the SNF affiliate list. To have and maintain a SNF 3-day rule waiver, an ACO must have at least one approved SNF on its SNF affiliate list to meet he SNF’s Medicare enrolled TIN and CCN must appear on the SNF affiliate list. To have and maintain a SNF 3-day rule waiver, an ACO must have at least one approved SNF on its SNF affiliate list to meet the requirements of § 425.612(a)(1)(i)(B). Similar to the certified ACO participant list, ACOs can submit modifications to their SNF affiliate list in the form and manner specified by CMS (currently submitted during the annual change request cycle), and approved additions to the list become effective on January 1 of the following performance year. Operationally, the Shared Savings Program does not provide a mechanism by which an ACO can add a new TIN to its SNF affiliate list outside of the annual change request cycle, including in situations where a SNF affiliate experiences a CHOW resulting in a change to the Medicare-enrolled TIN. ACOs and SNF affiliates may encounter the same CHOW scenario as described in section III.F.3.a. of this proposed rule for ACO participants. If a SNF affiliate experiences a CHOW resulting in a change to the Medicare-enrolled TIN, it can no longer admit eligible beneficiaries without a prior 3-day inpatient hospitalization due to the VerDate Sep 2014 23:26 e experiences a CHOW resulting in a change to the Medicare-enrolled TIN, it can no longer admit eligible beneficiaries without a prior 3-day inpatient hospitalization due to the VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00312 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32663 change in Medicare enrollment and our current operational processes for receiving and reviewing SNF affiliate list modifications on an annual basis. (2) Proposal To Allow Modifications to the SNF Affiliate List for SNF Affiliate CHOWs During a Performance Year ACOs have requested that we establish a mechanism to report a CHOW which results in a change in the Medicare-enrolled TIN for an approved SNF affiliate, which can be reviewed and effectuated by CMS during the performance year. This would enable the SNF affiliate to continue to participate with the ACO in the SNF 3- day rule waiver during the performance year and not have to wait until the next change request cycle to notify CMS of the change to the Medicare-enrolled TIN for the appr te with the ACO in the SNF 3- day rule waiver during the performance year and not have to wait until the next change request cycle to notify CMS of the change to the Medicare-enrolled TIN for the approved SNF affiliate. We recognize that requiring ACOs to wait until the upcoming change request cycle each performance year to update their SNF affiliate list to reflect an SNF affiliate’s CHOW can interrupt ACO operations. This gap may prevent an ACO from utilizing a SNF affiliate that has undergone a CHOW resulting in a change in Medicare-enrolled TIN for the approved SNF affiliate under the SNF 3- day rule waiver. Therefore, we propose to amend § 425.612(a)(1)(i)(B) by moving the text to § 425.612(a)(1)(i)(B)(1) and revising it to specify that the list of SNFs must include the Medicare enrolled TIN and the CCN of each SNF. We propose this revision to ensure that we can link the SNF CCN with the correct Medicare enrolled TIN. We also propose adding § 425.612(a)(1)(i)(B)(2) to require ACOs to notify CMS no later than 30 days after the change of ownership of a SNF affiliate, identified in accordance with paragraph (a)(1)(i)(B)(1), that has resulted in a change to the Medicare enrolled T to notify CMS no later than 30 days after the change of ownership of a SNF affiliate, identified in accordance with paragraph (a)(1)(i)(B)(1), that has resulted in a change to the Medicare enrolled TIN of the SNF affiliate in the form and manner specified by CMS. We propose to require an ACO to submit such a notification at any point during the performance year that is 30 days after the change in ownership, which would include times outside of the change request cycle. This proposal is limited to a change of ownership of a SNF affiliate that has resulted in a change to the Medicare-enrolled TIN, as the CHOW affects the SNF affiliate’s ability to participate under the 3-day rule waiver. This proposal would not allow an ACO to add a new SNF affiliate as the result of a CHOW. Additionally, we propose to require an ACO to submit supporting documentation demonstrating the change in SNF affiliate TIN similar to that described in section III.F.3.a. of this proposed rule, and in accordance with the form and manner specified by CMS. Supporting documentation could include information from the Internal Revenue Service (IRS) or the State’s Secretary of State, IRS W–9, Employer Identification th the form and manner specified by CMS. Supporting documentation could include information from the Internal Revenue Service (IRS) or the State’s Secretary of State, IRS W–9, Employer Identification Number registration, TIN assignment notice, or an affidavit explaining the TIN change and confirming reassignment from the original SNF affiliate TIN to the new SNF affiliate TIN. Following CMS approval of the ACO’s change request under proposed § 425.612(a)(1)(i)(B) we would send an updated list of approved SNF affiliates to the Medicare Administrative Contractor (MAC). The MAC would process the change; however, an ACO would still need to confirm with its MAC that the change has been fully effectuated. Our proposal does not impact assignment of beneficiaries to an ACO, and therefore would not impact the ACO beneficiaries eligible for the SNF 3-day rule waiver. It would only impact the SNFs that are approved as affiliates to provide care without the required three -day inpatient hospital stay. A recent report released by the Assistant Secretary for Planning and Evaluation (ASPE) found frequent changes of ownership in hospitals and SNFs between 2016 and 2021, reporting that more than 3, tay. A recent report released by the Assistant Secretary for Planning and Evaluation (ASPE) found frequent changes of ownership in hospitals and SNFs between 2016 and 2021, reporting that more than 3,200 SNFs experienced a CHOW.318 Requiring an ACO to submit updates to its SNF affiliate list during the performance year if one of its SNF affiliates experiences a CHOW requires clear policies and procedures associated with such changes. It is important to avoid a scenario where CMS or an ACO is unclear whether a SNF is approved to use the SNF 3-day rule waiver and when that information has been shared with the MAC for proper claims processing. Therefore, it is important to limit the circumstances which allow for ACOs to modify their SNF affiliate lists during a performance year outside of the scenario a CHOW. Overall, the proposal to allow modifications to the SNF affiliate list for SNF affiliate CHOWs resulting in a change to the TIN would benefit CMS, ACOs and their SNF affiliates, and beneficiaries. This change would 318 Changes in Ownership of Skilled Nursing Facilities from 2016–2021: Variations by Size, Occupancy Rate, Penalty Amount, and Type of Ownership, May 10, 2024, https:/ beneficiaries. This change would 318 Changes in Ownership of Skilled Nursing Facilities from 2016–2021: Variations by Size, Occupancy Rate, Penalty Amount, and Type of Ownership, May 10, 2024, https://aspe.hhs.gov/ sites/default/files/documents/ 9c4c5c8f2d48309c83e87f544b1aed90/snf- ownership-changes-variations.pdf. support continuous operations that improve access to quality care and care coordination as beneficiaries transition to a SNF. Historically, SNFs that undergo a CHOW that result in a change to the TIN have been unable to continue participation in the SNF 3-day rule waiver until the next change request cycle. Our proposal, if finalized, would ensure more timely access to skilled nursing care for Medicare beneficiaries. We propose that the change have an effective date of January 1, 2026, and anticipate this approach would provide ACOs the flexibility to continue to utilize the SNF 3-day rule waiver for SNF affiliates who may have experienced a CHOW resulting in a change to the TIN. We seek comments on our proposal. 4. ACO Eligibility and Related Financial Reconciliation Requirements a. Overview Under the Shared Savings Program regulations, CMS ‘‘deems’’ an ACO to have ini e TIN. We seek comments on our proposal. 4. ACO Eligibility and Related Financial Reconciliation Requirements a. Overview Under the Shared Savings Program regulations, CMS ‘‘deems’’ an ACO to have initially satisfied the statutory requirement to have at least 5,000 assigned Medicare FFS beneficiaries (section 1899(b)(2)(D) of the Act), if 5,000 or more beneficiaries are historically assigned to the ACO participants in each of the three historical benchmark years as defined at § 425.110(a)(2). Since the start of the Shared Savings Program, we have denied the applications of ACOs applying to participate in the program if the number of assigned beneficiaries was below 5,000 beneficiaries in any historical benchmark year. This policy was established to align with the statutory requirement and to ensure CMS is able to reliably and accurately assess ACO financial and quality performance. The purpose of the historical benchmark is to establish a fair and reliable baseline to compare with performance year expenditures in the calculation of an ACO’s shared savings or losses. As an ACO’s assigned beneficiary population decreases, the ability of CMS to reliably and accurately assess ACO finan ormance year expenditures in the calculation of an ACO’s shared savings or losses. As an ACO’s assigned beneficiary population decreases, the ability of CMS to reliably and accurately assess ACO financial and quality performance also decreases. In the November 2011 final rule (see for example, 76 FR 67807 and 67808), we expressed the benefit of a 5,000- beneficiary minimum to maintain program eligibility and allow CMS to assess ACO financial and quality performance, while also planning a course of action for when an ACO falls below the 5,000-beneficiary minimum. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00313 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32664 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules Furthermore, CMS finalized the minimum savings rate (MSR) for ACOs with at least 5,000 assigned beneficiaries such that the MSR for each ACO would be based on increasing confidence intervals as the number of assigned beneficiaries increases (76 FR 67928 and 67929). At the same time, CMS recognized the higher uncertainty regarding expenditures for smaller n increasing confidence intervals as the number of assigned beneficiaries increases (76 FR 67928 and 67929). At the same time, CMS recognized the higher uncertainty regarding expenditures for smaller ACOs and CMS’s desire to encourage program participation by smaller ACOs. Accordingly, CMS set the confidence interval at 90 percent for ACOs with 5,000 beneficiaries assigned, resulting in an MSR of 3.9 percent for those ACOs. For ACOs with 20,000 and 50,000 assigned beneficiaries, CMS set the confidence interval at 95 percent and 99 percent, respectively, for those ACOs, resulting in MSRs of 2.5 percent and 2.2 percent (76 FR 67928). As ACO size increases from 5,000 to 20,000 assigned beneficiaries (or similarly from 20,000 to 50,000), CMS blends the MSRs between the two neighboring confidence intervals, resulting in the MSRs as shown in Table 6 of the November 2011 final rule (76 FR 67928). Building on the November 2011 final rule, in the December 2018 final rule, CMS finalized a variable MSR and Minimum Loss Rate (MLR) for ACOs that fall below 5,000 beneficiaries in the performance year according to assigned beneficiary ranges and based on a confidence interval of 90 precent, as a le MSR and Minimum Loss Rate (MLR) for ACOs that fall below 5,000 beneficiaries in the performance year according to assigned beneficiary ranges and based on a confidence interval of 90 precent, as a way to better ensure that the program is rewarding or holding accountable ACOs for actual performance, not normal expenditure fluctuations (83 FR 67927) (§§ 425.605 and 425.610). Although most ACOs are able to reach the 5,000 beneficiaries assigned minimum, we recognize that this requirement does prevent some applicants from participating in the Shared Savings Program. Since the inception of the program, we have gained additional experience with the requirement to have 5,000 beneficiaries assigned in each benchmark year, and experience with how this requirement relates to the integrity and stability of financial performance calculations. This experience has provided additional information that shows we can both retain the financial integrity of benchmark calculations and ensure CMS can reliably and accurately assess ACO financial and quality performance while allowing for ACOs that have fewer than 5,000 beneficiaries assigned in their benchmark years to enter the program, if we impleme iably and accurately assess ACO financial and quality performance while allowing for ACOs that have fewer than 5,000 beneficiaries assigned in their benchmark years to enter the program, if we implement additional safeguards that protect ACOs and the Trust Funds. As described in this section of this proposed rule, we propose changes to the Shared Savings Program eligibility requirements to allow for participation by ACOs with a minimum of 5,000 assigned beneficiaries in their third benchmark year, even if the ACO has fewer than 5,000 assigned beneficiaries in benchmark year (BY) 1, BY2, or both (see section III.F.4.b.(2)(a)). Further, we propose safeguards to limit ACOs entering a new agreement period with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, at the time of application, to participation in the BASIC track (see section III.F.4.b.(2)(b) of this proposed rule). We also propose additional safeguards for ACOs with fewer than 5,000 assigned beneficiaries in any of their benchmark years, by applying an alternative performance payment limit and loss recoupment limit for these ACOs (see III.F.4.c.(1).(b) of this proposed rule), and excluding these ACOs from leveragi eir benchmark years, by applying an alternative performance payment limit and loss recoupment limit for these ACOs (see III.F.4.c.(1).(b) of this proposed rule), and excluding these ACOs from leveraging policies providing certain low revenue ACOs participating in the BASIC track with additional opportunities to share in savings (see III.F.4.c.(2).(b) of this proposed rule). b. ACO Eligibility Requirement (1) Background (a) Background on Assigned Beneficiary Minimum Requirement Section 1899(b)(2)(D) of the Act requires participating ACOs to include primary care ACO professionals that are sufficient for the number of Medicare FFS beneficiaries assigned to the ACO and that, at a minimum, the ACO shall have at least 5,000 such beneficiaries assigned to it under section 1899(c) of the Act in order to be eligible to participate in the Shared Savings Program. In the November 2011 final rule (76 FR 67808), in alignment with the statutory requirement at section 1899(b)(2)(D) of the Act, CMS established that for an ACO to satisfy the requirement to have at least 5,000 assigned beneficiaries, the ACO must have 5,000 or more beneficiaries historically assigned to the ACO participants in each o ablished that for an ACO to satisfy the requirement to have at least 5,000 assigned beneficiaries, the ACO must have 5,000 or more beneficiaries historically assigned to the ACO participants in each of the 3 benchmark years. See § 425.110(a)(2). We described the importance of maintaining at least 5,000 assigned beneficiaries with respect to both eligibility of the ACO to participate in the program and the ability of CMS to reliably and accurately assess ACO financial and quality performance. However, we also noted in that rule (76 FR 67807) that we understood circumstances may change during an ACO’s agreement period, and that an ACO’s assigned population may vary accordingly, and if the ACO falls below 5,000 beneficiaries during the agreement period, the ACO will be subject to compliance actions (described at §§ 425.216 and 425.218). Additionally, in the November 2011 final rule (76 FR 67929), we finalized the MSR/MLR with a sliding scale that varies based on the number of beneficiaries assigned to the ACO from 5,000 up to 60,000. The largest ACOs with over 50,000 assigned beneficiaries had 99 percent confidence intervals. At the same time, CMS also recognized ACOs with the minimum s assigned to the ACO from 5,000 up to 60,000. The largest ACOs with over 50,000 assigned beneficiaries had 99 percent confidence intervals. At the same time, CMS also recognized ACOs with the minimum 5,000 assigned beneficiaries must meet a higher MSR of 3.9 percent to be eligible for shared savings payments, based on a confidence interval of 90 percent (76 FR 67927). In the CY 2025 PFS final rule (89 FR 98085 through 98086), we finalized a policy to sunset the requirement at § 425.110(b)(2) that CMS will terminate an ACO’s participation agreement and determine that an ACO is not eligible to share in savings for that performance year if an ACO’s assigned beneficiary population is not at least 5,000 by the end of the performance year specified by CMS in its request for a corrective action plan. We explained that this requirement could be sunset because the policy finalized in the December 2018 final rule (83 FR 67925 through 67929), to use a variable MSR/MLR when performing shared savings and shared losses calculations if an ACO’s assigned beneficiary population fell below 5,000 for the performance year, was effective in protecting both CMS and the ACO from inappropriate overpaymen ngs and shared losses calculations if an ACO’s assigned beneficiary population fell below 5,000 for the performance year, was effective in protecting both CMS and the ACO from inappropriate overpayments or underpayments and reduced the financial risk of allowing ACOs to continue to participate in the Shared Savings Program if they experience a reduction in assigned beneficiaries. As we have explained in prior rulemaking, the MSR/MLR protects against an ACO earning shared savings or being liable for shared losses when the change in expenditures represents normal, or random, variation rather than actual program performance (see, for example, 83 FR 67923 through 67926). After gaining 13 years of experience administering the Shared Savings Program, including lessons learned from applying the requirement at section 1899(b)(2)(D) of the Act that ‘‘[a]t a minimum, the ACO shall have at least 5,000 such beneficiaries assigned to it [. . .] in order to be eligible to participate in the ACO program,’’ we have determined it is in the best interest of Medicare beneficiaries, the Trust Funds, and participating ACOs to modify the requirement at § 425.110(a)(2) so that it better supports the goal ram,’’ we have determined it is in the best interest of Medicare beneficiaries, the Trust Funds, and participating ACOs to modify the requirement at § 425.110(a)(2) so that it better supports the goals of the Shared Savings Program. As the program grows in experience, the VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00314 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32665 programmatic guardrails can be changed to better incentivize ACOs, especially those that have successfully participated in the program, to participate in the program while maintaining CMS’s ability to reliably and accurately assess ACO financial and quality performance. Historically, the 5,000 assigned beneficiary benchmark year minimum has been implemented across all benchmark years to assess an ACO’s financial and quality performance. However, after reviewing historical data and program operations, we believe the 5,000 -beneficiary benchmark year minimum can be applied to BY3 only, which provides the most recent data available prior to an ACO er reviewing historical data and program operations, we believe the 5,000 -beneficiary benchmark year minimum can be applied to BY3 only, which provides the most recent data available prior to an ACO entering an agreement period, to maximize the goals and benefit of the Shared Savings Program. The 5,000-beneficiary benchmark year minimum applied across all benchmark years helps to ensure that CMS is able to reliably and accurately assess ACO financial and quality performance during the Shared Savings Program application process. However, this beneficiary threshold is most critical in assessing BY3. Specifically, during the application cycle, CMS makes available to all currently participating ACOs and all applicant ACOs estimates of the number of assigned beneficiaries for each of the three benchmark years. The BY3 assignment provided is based on the most recently available 24 months of Medicare beneficiary claims data. The application cycle occurs during the calendar year that corresponds to BY3, and we run assignment based upon the 24 months prior to the end date of the most recent quarter available. Therefore, BY3 is the most current assignment run we produce during the applicati nds to BY3, and we run assignment based upon the 24 months prior to the end date of the most recent quarter available. Therefore, BY3 is the most current assignment run we produce during the application cycle for assessing the number of assigned beneficiaries an ACO has at the time they are applying to participate in the Shared Savings Program. (b) Background on Track Specific Requirements for Participation Options With the December 2018 final (83 FR 67831 through 67841), we finalized the availability of participation options under the BASIC track and ENHANCED track for ACOs entering an agreement period beginning on July 1, 2019, and in subsequent years. We refer readers to section III.F.2.a of this proposed rule for a detailed description of background on Shared Savings Program participation options. The BASIC track and the ENHANCED track offer differing levels of risk and potential reward. See §§ 425.600(a)(3) to (4), 425.605, and 425.610. In general, an ACO that meets or exceeds its MSR, and otherwise qualifies for a shared savings payment, shares in savings at a sharing rate specified by the ACO’s participation track (and level, if applicable), not to exceed a performance payme MSR, and otherwise qualifies for a shared savings payment, shares in savings at a sharing rate specified by the ACO’s participation track (and level, if applicable), not to exceed a performance payment limit (a percentage of the ACO’s updated historical benchmark). There is a limited exception for eligible low revenue ACOs participating under the BASIC track, under which an ACO that does not meet the MSR requirement but meets other criteria may qualify for a shared savings payment, at a lower sharing rate, in accordance with § 425.605(h). An ACO under a two-sided model that meets or exceeds its MLR shares in losses at a shared loss rate specified by the ACO’s participation track (and level, if applicable), not to exceed a loss recoupment limit (a percentage of the ACO’s updated historical benchmark). In summary: • The BASIC track (see §§ 425.600(a)(4) and 425.605) includes a ‘‘glide path’’, from one-sided model Levels A and B to incrementally higher levels of performance-based risk under Levels C, D, and E. ++ Under Level A and B of the BASIC track, an ACO may share in savings at a sharing rate of up to 40 percent (§ 425.605(d)(1)(i)(A) and (d)(1)(ii)(A)), not to exceed 10 percent der Levels C, D, and E. ++ Under Level A and B of the BASIC track, an ACO may share in savings at a sharing rate of up to 40 percent (§ 425.605(d)(1)(i)(A) and (d)(1)(ii)(A)), not to exceed 10 percent of updated benchmark (§ 425.605(d)(1)(i)(B) and (d)(1)(ii)(B)). ++ Under Level C of the BASIC track, an ACO may share in savings at a sharing rate of up to 50 percent (§ 425.605(d)(1)(iii)(A)), not to exceed 10 percent of updated benchmark (§ 425.605(d)(1)(iii)(B)), and may share in losses at a loss sharing rate of 30 percent (§ 425.605(d)(1)(iii)(C)), not to exceed 2 percent of total Medicare Parts A and B FFS revenue of the ACO participants in the ACO capped at 1 percent of updated benchmark (§ 425.605(d)(1)(iii)(D)). ++ Under Level D of the BASIC track, an ACO may share in savings at a sharing rate of up to 50 percent (§ 425.605(d)(1)(iv)(A)), not to exceed 10 percent of updated benchmark (§ 425.605(d)(1)(iv)(B)), and may share in losses at a loss sharing rate of 30 percent (§ 425.605(d)(1)(iv)(C)), not to exceed 4 percent of total Medicare Parts A and B FFS revenue of the ACO participants in the ACO capped at 2 percent of updated benchmark (§ 425.605(d)(1)(iv)(D)). ++ Under Level d)(1)(iv)(C)), not to exceed 4 percent of total Medicare Parts A and B FFS revenue of the ACO participants in the ACO capped at 2 percent of updated benchmark (§ 425.605(d)(1)(iv)(D)). ++ Under Level E of the BASIC track, an ACO may share in savings at a sharing rate of up to 50 percent (§ 425.605(d)(1)(v)(A)), not to exceed 10 percent of updated benchmark (§ 425.605(d)(1)(v)(B)), and may share in losses at a loss sharing rate of 30 percent (§ 425.605(d)(1)(v)(C)), not to exceed 8 percent of total Medicare Parts A and B FFS revenue of the ACO participants in the ACO capped at 4 percent of updated benchmark (§ 425.605(d)(1)(v)(D)). The loss recoupment limit is the percentage of revenue specified in the revenue- based nominal amount standard under the Quality Payment Program (42 CFR 414.1415(c)(3)(i)(A)) capped at 1 percentage point higher than the expenditure-based nominal risk amount (§ 414.1415(c)(3)(i)(B)). • Under the ENHANCED track (§§ 425.600(a)(3) and 425.610), with the highest level of risk and potential reward under the Shared Savings Program, an ACO may share in savings at a sharing rate of up to 75 percent (§ 425.610(d)), not to exceed 20 percent of updated benchmark (§ 4 evel of risk and potential reward under the Shared Savings Program, an ACO may share in savings at a sharing rate of up to 75 percent (§ 425.610(d)), not to exceed 20 percent of updated benchmark (§ 425.610(e)), and may share in losses at a loss sharing rate not less than 40 percent and not to exceed 75 percent (§ 425.610(f)), capped at 15 percent of updated benchmark (§ 425.610(g)). Currently, CMS allows ACOs to choose to participate in either the BASIC track or ENHANCED track (see § 425.600(a), and see also § 425.226(a)), provided the ACO meets the eligibility criteria set forth in 42 CFR part 425 Subpart B. An ACO must select a Shared Savings Program participation option for which CMS determines it is eligible under § 425.600(g). An ACO entering the BASIC track may elect to start at any level for which it is eligible, based on its experience with performance-based risk Medicare ACO initiatives (refer to § 425.600(a)(4)(i)(C)(1) and (g)). During the application cycle, CMS conducts a prescreening assessment to evaluate an ACO’s eligibility for its selected level. The evaluation includes verifying whether the ACO complies with general program requirements and the ability of the ACO prescreening assessment to evaluate an ACO’s eligibility for its selected level. The evaluation includes verifying whether the ACO complies with general program requirements and the ability of the ACO to take on risk (83 FR 41806). See §§ 425.202(a) and 425.204. Also, part of this check assesses the ACO’s ability to provide an adequate repayment mechanism for shared losses if the chosen track is two-sided (§ 425.204(f)(3)(i)). CMS may deny an ACO applicant’s application if the ACO applicant fails to satisfy the requirements of the Shared Savings Program on the basis of information contained in and submitted with the application per § 425.206(a)(1). (2) Proposed Revisions (a) Allow ACOs To Enter the Shared Savings Program With Fewer Than 5,000 Assigned Beneficiaries in BY1, BY2, or Both The present requirement in § 425.110(a)(2) for an applicant ACO to have at least 5,000 assigned Medicare VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00315 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32666 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules FFS beneficiaries in eac P3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32666 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules FFS beneficiaries in each of the 3 historical benchmark years, as described in section III.F.4.b.(1)(a), is the most common reason we deny ACO applicants’ applications. In evaluating potential changes to this eligibility policy at § 425.110(a), we considered ways to increase flexibility regarding the minimum number of assigned beneficiaries required in benchmark years, to continue to support new and previously successful renewing and re- entering ACOs participating in the Shared Savings Program, while minimizing adverse financial impacts to ACOs and the Shared Savings Program that may arise from program participation by ACOs with fewer than 5,000 beneficiaries assigned in one or more historical benchmark years. Consequently, we propose to amend our requirements at § 425.110(a)(2) to specify that, for agreement periods beginning on or after, January 1, 2027, ACOs applying to enter a new agreement period would be required to have at least 5,000 assigned beneficiaries in the ACO’s BY3 but could be under 5,000 as riods beginning on or after, January 1, 2027, ACOs applying to enter a new agreement period would be required to have at least 5,000 assigned beneficiaries in the ACO’s BY3 but could be under 5,000 assigned beneficiaries in BY1, BY2, or both. Currently, on the basis of § 425.110(a)(2), we deny an applicant ACO’s application to enter or renew its participation in the program if the ACO would be assigned fewer than 5,000 beneficiaries in any of benchmark years 1 to 3. Under the policy we are proposing, ACOs would not be prevented, on the basis of § 425.110(a)(2), from entering the program if they are below 5,000 assigned beneficiaries in BY1, BY2, or both. We propose to sunset the current policy regarding ACOs with fewer than 5,000 assigned beneficiaries in any of the benchmark years after December 31, 2026, and make this change applicable for ACOs applying to enter new agreement periods beginning January 1, 2027, and for subsequent agreement periods. We are proposing to apply this modified approach for agreement periods beginning January 1, 2027, instead of January 1, 2026, because the application cycle for agreement periods starting January 1, 2026, is underway and this proposal, i ied approach for agreement periods beginning January 1, 2027, instead of January 1, 2026, because the application cycle for agreement periods starting January 1, 2026, is underway and this proposal, if finalized, would not be finalized until November 2025, by which point we will be preparing to grant or deny applications for agreement periods starting January 1, 2026, in early December.319 We believe this proposal is consistent with the statutory requirements at 319 See Medicare Shared Savings Program, Key Application Actions and Deadlines For Agreement Period Beginning on January 1, 2026, available at https://www.cms.gov/files/document/key- application-dates-and-deadlines-2026.pdf. section 1899(b)(2)(D) of the Act that ‘‘At a minimum, the ACO shall have at least 5,000 [Medicare FFS] beneficiaries assigned to it under subsection (c) in order to be eligible to participate in the ACO program,’’ because the proposal requires that an ACO must meet the 5,000-beneficiary minimum before entering an agreement period. While the statute established this requirement, subsequent rulemaking defines its specific implementation parameters such as benchmark years. This proposed update aligns with ing an agreement period. While the statute established this requirement, subsequent rulemaking defines its specific implementation parameters such as benchmark years. This proposed update aligns with both the statutory requirements at section 1899(b)(2)(D) of the Act and requirements of this proposed rule. Over the last several Shared Savings Program application cycles for ACOs entering a new agreement period, about 2 percent of applicants on average were denied participation in the program due to the ACOs having fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, while still having more than 5,000 assigned beneficiaries in BY3 and meeting all other program eligibility requirements. Additionally, the proposed revisions would allow new, renewing, and re-entering ACOs that have been successful in the program previously and who fall under 5,000 assigned beneficiaries in BY1 and/or BY2 to continue to participate in the Shared Savings Program as long as such ACOs meet all other Shared Savings Program requirements. This proposal would provide greater flexibility on the requirement to have 5,000 assigned beneficiaries in each benchmark year, but it also could introduce risk for ared Savings Program requirements. This proposal would provide greater flexibility on the requirement to have 5,000 assigned beneficiaries in each benchmark year, but it also could introduce risk for both the ACO and the program. For example, as an ACO’s assigned beneficiary population decreases, variability in the population’s expenditures increases because a few beneficiaries with unusually high or unusually low expenditures could have a substantive impact on an ACO’s overall expenditures. The reduction in the size of the ACO’s assigned beneficiary population in benchmark years could result in variability in benchmark calculations that could cause shared savings payments or shared losses owed to be based on normal expenditure fluctuations, rather than reflect ACO performance in the program. Accordingly, we are also proposing safeguards to address variability in calculations and to protect both ACOs and Medicare Trust Funds in the proposals discussed in sections III.F.4.b. and III.F.4.c. of this proposed rule. We propose to revise § 425.110 as follows. At § 425.110(a), we propose to revise paragraph (2) by adding the introductory phrase, ‘‘For agreement periods beginning before Ja .c. of this proposed rule. We propose to revise § 425.110 as follows. At § 425.110(a), we propose to revise paragraph (2) by adding the introductory phrase, ‘‘For agreement periods beginning before January 1, 2027’’, to limit the timing of applicability of the provision. We propose to add new paragraph (3) to § 425.110(a) specifying that for agreement periods beginning on or after January 1, 2027, we determine whether an ACO has 5,000 or more beneficiaries historically assigned to the ACO participants in each of the 3 benchmark years, as calculated using the assignment methodology set forth in subpart E of this part. We also propose to specify under new § 425.110(a)(3) that we would use the most recent data available to estimate the number of assigned beneficiaries in the third benchmark year. Additionally, we propose to specify in new § 425.110(a)(3)(i) through (ii) the following provisions in connection with our determination of whether an ACO has 5,000 or more assigned beneficiaries in its benchmark years. • We would deem an ACO to have initially satisfied the requirement to have at least 5,000 assigned beneficiaries as specified at § 425.110(a)(1) if 5,000 or more beneficiaries in its benchmark years. • We would deem an ACO to have initially satisfied the requirement to have at least 5,000 assigned beneficiaries as specified at § 425.110(a)(1) if 5,000 or more beneficiaries are historically assigned to the ACO participants in the third benchmark year. • If an ACO has fewer than 5,000 assigned beneficiaries in either the first benchmark year, the second benchmark year, or both, the ACO may only participate under the BASIC track in accordance with new § 425.600(h)(3) (as described in sections III.F.2. and III.F.4.b.(2)(b) of this proposed rule). (b) Require an ACO With Fewer Than 5,000 Assigned Beneficiaries in BY1, BY2, or Both To Participate Only Under BASIC Track Providing greater flexibility around the requirement to have 5,000 assigned beneficiaries in BY1, BY2, or both may introduce risk to the program. As explained in section III.F.4.b.(1)(b) of this proposed rule, as an ACO’s assigned beneficiary population decreases, variability in the population’s average expenditures increases. The reduction in the size of the ACO’s assigned beneficiary population in benchmark years could result in variability in benchmark calculations that could cause shared sa erage expenditures increases. The reduction in the size of the ACO’s assigned beneficiary population in benchmark years could result in variability in benchmark calculations that could cause shared savings payments or shared losses owed to be based on normal variation in expenditures, rather than reflect ACO performance in the program. We propose that if an ACO, when entering a new agreement period, is under the 5,000-beneficiary minimum in BY1, BY2, or both, but meets this requirement in BY3, the ACO may only enter an agreement period in the BASIC track, to VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00316 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32667 reduce the potential risk to the ACO and to the Shared Savings program as described in section III.F.4.b.(2)(a) of this proposed rule. Currently, we allow ACOs to choose to participate in either the BASIC track or ENHANCED track, as long as they meet all applicable eligibility criteria, including the requirements to participate under performance-based risk, a o choose to participate in either the BASIC track or ENHANCED track, as long as they meet all applicable eligibility criteria, including the requirements to participate under performance-based risk, as described in section III.F.4.b.(1).(b) of this proposed rule. See § 425.600(a)(4)(i)(C)(4), and (g). We apply eligibility checks for an applicant ACO’s track selection during the annual application cycle and communicate track eligibility to the ACO through the Participations Options Report. Under the proposed approach, during the application cycle, we would review an ACO’s track selection in combination with its number of assigned beneficiaries in each benchmark year and provide information to the ACO about its participation options. ACOs would receive an opportunity to correct deficiencies and/or make updates or modifications to the ACO’s change request(s) during two rounds of RFI (Request for Information) submission periods in Phase 1 of the application cycle. We would also provide a final disposition of an ACO’s eligibility for program participation, and we would deny applicants from participation in the program if they do not meet all eligibility criteria. We propose that this ch inal disposition of an ACO’s eligibility for program participation, and we would deny applicants from participation in the program if they do not meet all eligibility criteria. We propose that this change would be applicable for ACOs applying to enter new agreement periods beginning on or after January 1, 2027. As described in section III.F.4.c.(1)(b). of this proposed rule, an ACO with fewer than 5,000 assigned beneficiaries in one or both of benchmark years 1 and 2 could experience variability in benchmark calculations which could cause shared savings payments or shared losses owed to be based on normal expenditure fluctuations, rather than reflect actual program performance, because a small number of beneficiaries either with unusually high or unusually low expenditures could substantially affect the variability of the benchmark calculations. This proposal to limit ACOs in this situation to the BASIC track protects these ACOs from incurring a larger shared losses rate of up to 75 percent (see § 425.610(f)(4)), and it protects the Medicare Trust Funds from paying a larger shared savings rate of up to 75 percent (see § 425.610(d)(4)), which could result under the ENHANCED track, a rcent (see § 425.610(f)(4)), and it protects the Medicare Trust Funds from paying a larger shared savings rate of up to 75 percent (see § 425.610(d)(4)), which could result under the ENHANCED track, attributable to variability in benchmark calculations associated with ACOs with fewer than 5,000 assigned beneficiaries in one or both of benchmark years 1 and 2 rather than actual program performance. We seek comments on the proposals to allow ACOs to enter the Shared Savings Program if they have fewer than 5,000 assigned beneficiaries in BY1, BY2, or both (but have at least 5,000 assigned beneficiaries in BY3) and the requirement that these ACOs may only enter an agreement period in the BASIC track. As described in sections III.F.2 and III.F.4.b.(2).(a) of this rule, we propose to specify a related provision in new § 425.600(h)(3), applicable for agreement periods beginning on or after January 1, 2027, that if an ACO is determined to have fewer than 5,000 assigned beneficiaries in either the first benchmark year, the second benchmark year, or both, in accordance with § 425.110(a)(3) (as proposed to be revised), the ACO may only enter the BASIC track. As described in further detail in the first benchmark year, the second benchmark year, or both, in accordance with § 425.110(a)(3) (as proposed to be revised), the ACO may only enter the BASIC track. As described in further detail in section III.F.2 of this proposed rule, under this proposed approach, an ACO may enter a level of risk and potential reward under the BASIC track in accordance with the requirements of new § 425.600(h). c. Calculating Shared Savings and Losses for ACOs That Fall Below 5,000 Assigned Beneficiaries (1) Apply an Alternative Performance Payment Limit and Loss Recoupment Limit During Financial Reconciliation for ACOs That Fall Below 5,000 Assigned Beneficiaries in any Benchmark Year (a) Background Section 1899(d)(2) of the Act addresses how payments for shared savings are to be determined and states that the Secretary shall establish limits on the total amount of shared savings that may be paid to an ACO under that provision. Section 1899(i) of the Act authorizes the Secretary to use other payment models rather than the one- sided model described in section 1899(d) of the Act, as long as the Secretary determines that the other payment model(s) will improve the quality and efficiency of items nt models rather than the one- sided model described in section 1899(d) of the Act, as long as the Secretary determines that the other payment model(s) 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.320 Under the authority granted 320 See earlier rulemaking establishing two-sided models, including Track 3 (subsequently renamed the ENHANCED track) (80 FR 32771 and 32772), and the BASIC track (83 FR 67834 through 67841). We also used our authority under section 1899(i)(3) of the Act to remove payment amounts for episodes by sections 1899(d)(2) and 1899(i)(1) of the Act, over time we have adopted methods to determine and limit performance payments and loss recoupment. We refer readers to discussions in earlier rulemaking on establishing the performance payment limit and loss recoupment limit for Levels A through E of the BASIC track (83 FR 67842 through 67857) and the ENHANCED track (formerly named Track 3, see 80 FR 32778 and 32779). The track- or level- specific ca loss recoupment limit for Levels A through E of the BASIC track (83 FR 67842 through 67857) and the ENHANCED track (formerly named Track 3, see 80 FR 32778 and 32779). The track- or level- specific caps are described in section III.F.4.b.(1)(b) of this proposed rule. When we calculate the performance payment limit, which is the maximum amount of earned shared savings an ACO can receive in a performance year, in the determination of an ACO’s shared savings, we first calculate an ACO’s per capita updated benchmark expenditures for the performance year and then multiply this value by the ACO’s assigned beneficiary person years 321 for the performance year, which equals their total benchmark expenditures. We then calculate the performance payment limit as a percentage of total benchmark expenditures, with the applicable percentage dependent on the ACO’s track/level of participation (either 10 percent for all levels of the BASIC track, or 20 percent for the ENHANCED track). An ACO’s earned shared savings payment is capped at the ACO’s performance payment limit amount. See §§ 425.600(a)(3)–(4), 425.605, and 425.610 and the discussion in section III.F.4.b.(1).(b) of this proposed rule. Wh shared savings payment is capped at the ACO’s performance payment limit amount. See §§ 425.600(a)(3)–(4), 425.605, and 425.610 and the discussion in section III.F.4.b.(1).(b) of this proposed rule. When we calculate the benchmark- based loss recoupment limit, which is the maximum amount of losses an ACO can owe in a performance year, in the determination of an ACO’s shared losses, we calculate an ACO’s per capita benchmark expenditures and then multiply this value by the ACO’s assigned beneficiary person years for the performance year, which equals their total benchmark expenditures. CMS then calculates the loss recoupment limit as a percentage of total benchmark expenditures, with the applicable of care for treatment of COVID–19 (see § 425.611(c)(3) and 85 FR 27577 through 27582), SAHS billing activity for CY 2023 (see § 425.670(c)(3) and 89 FR 79161), and SAHS billing activity, from ACO participants’ Medicare FFS revenue used to determine the loss recoupment limit in the two-sided models of the BASIC track for CY 2024 and subsequent calendar years (see § 425.672(c)(3) and 89 FR 98199 and 98200). 321 Person years are the fraction of the year during which the beneficiary was enroll dels of the BASIC track for CY 2024 and subsequent calendar years (see § 425.672(c)(3) and 89 FR 98199 and 98200). 321 Person years are the fraction of the year during which the beneficiary was enrolled in each Medicare enrollment type. To calculate person years: CMS sums the number of Shared Savings Program-eligible months for the beneficiary for each Medicare enrollment type; CMS then divides this number by 12 (the number of months in a calendar year). VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00317 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32668 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules percentage dependent on the ACO’s track/level of participation as described at §§ 425.600(a)(3) through (4), 425.605, and 425.610 and in section III.F.4.b.(1).(b).: either 1 percent for Level C, 2 percent for Level D, or 4 percent for Level E of the BASIC track, or 15 percent for the ENHANCED track. With respect to ACOs participating in two-sided model levels of the BASIC track, the loss recoupment limit is a percentage of total Medicare Parts A and B FFS revenue 5 percent for the ENHANCED track. With respect to ACOs participating in two-sided model levels of the BASIC track, the loss recoupment limit is a percentage of total Medicare Parts A and B FFS revenue of the ACO participants in the ACO (revenue-based loss recoupment limit) not to exceed a percentage of the ACO’s updated benchmark (benchmark-based loss recoupment limit). CMS calculates the revenue-based loss recoupment limit as a percentage of total Medicare Parts A and B FFS revenue of the ACO participants in the ACO. If the amount of the ACO’s revenue-based loss recoupment limit exceeds the amount of the benchmark-based loss recoupment limit, CMS applies the benchmark-based loss recoupment limit. Refer to § 425.605(d)(1)(iii)(D), (d)(1)(iv)(D), and (d)(1)(v)(D). The percentages of the revenue-based and benchmark-based loss recoupment limits vary based on the Level of the BASIC track, as described in section III.F.4.b.(1).(b)., providing for increasing performance- based risk along the two-sided model levels of the BASIC track’s glide path: 2 percent of ACO participant revenue capped at 1 percent of updated benchmark under Level C; 4 percent of ACO participant revenue capped at 2 p two-sided model levels of the BASIC track’s glide path: 2 percent of ACO participant revenue capped at 1 percent of updated benchmark under Level C; 4 percent of ACO participant revenue capped at 2 percent of updated benchmark under Level D; and 8 percent of ACO participant revenue capped at 4 percent of updated benchmark under Level E. We detailed how CMS performs the calculation of the benchmark-based performance payment limits and loss recoupment limits in programmatic material, including publicly available specifications documents. See, for example, Medicare Shared Savings Program, Shared Savings and Losses, Assignment and Quality Performance Standard Methodology Specifications, (December 2024, Version #12), available at https://www.cms.gov/files/document/ medicare-shared-savings-program- shared-savings-and-losses-and- assignment-methodology- specifications.pdf-3 (see section 4.3 ‘‘Performance Year Financial Reconciliation Calculations’’ and section 3.3 ‘‘ACO Participants’ Revenue’’). (b) Proposed Revisions For ACOs with fewer than 5,000 assigned beneficiaries in any benchmark year, we are proposing an alternative limit to performance payments and loss recoupment applicable fo ’’). (b) Proposed Revisions For ACOs with fewer than 5,000 assigned beneficiaries in any benchmark year, we are proposing an alternative limit to performance payments and loss recoupment applicable for these ACOs in agreement periods beginning on or after January 1, 2027. We propose that this policy would apply during financial reconciliation for any performance year in an agreement period for which the ACO was assigned fewer than 5,000 beneficiaries in any benchmark year. These alternative caps would help to safeguard ACOs and the Medicare Trust Funds by imposing stricter limits on performance payments and loss recoupment for ACOs with fewer than 5,000 assigned beneficiaries in any of their benchmark years at the time of financial reconciliation compared to the limits on performance payments and loss recoupment under the current methodology. The proposed timing of applicability for this policy would be consistent with the timing of applicability for our proposed approach to allow participation by ACOs with 5,000 assigned beneficiaries in BY3, and fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, described in section III.F.4.b.(2) of this proposed rule. There are a numb icipation by ACOs with 5,000 assigned beneficiaries in BY3, and fewer than 5,000 assigned beneficiaries in BY1, BY2, or both, described in section III.F.4.b.(2) of this proposed rule. There are a number of possible circumstances that could cause an ACO’s assigned beneficiary population in the benchmark years to fall below 5,000 assigned beneficiaries. Under our proposal, for agreements periods beginning on or after January 1, 2027, we would allow for participation by ACOs with fewer than 5,000 assigned beneficiaries in BY1, BY2, or both (as described in section III.F.4.b.(2) of this proposed rule). Additionally, regardless of the number of assigned beneficiaries an ACO has at the time of program entry, the ACO’s assigned population for its benchmark years may be adjusted during the course of its 5year agreement period. For example, as described in § 425.652(a)(9), an ACO may receive an adjusted historical benchmark because of changes in the ACO’s assigned beneficiary population in the benchmark years of the ACO’s current agreement period due to the addition and removal of ACO participants or ACO providers/suppliers in accordance with § 425.118(b), a change to the ACO’s beneficiary benchmark years of the ACO’s current agreement period due to the addition and removal of ACO participants or ACO providers/suppliers in accordance with § 425.118(b), a change to the ACO’s beneficiary assignment methodology selection at § 425.226(a)(1), or changes to the beneficiary assignment methodology specified in 42 CFR part 425 Subpart E, among other changes. Participant list changes occurring within an agreement period, for example, could result in an ACO falling below 5,000 historically assigned beneficiaries in any benchmark year, including BY3, for the purpose of the performance year financial reconciliation. Under this proposed approach, we would use an alternative calculation for the benchmark-based 322 performance payment limits and loss recoupment limits, in which we would compute an ACO’s total benchmark expenditures as the product of an ACO’s per capita updated benchmark expenditures and the ACO’s assigned beneficiary person years from the benchmark year with the lowest number of assigned beneficiaries. We note that we only would use this alternative calculation if an ACO has fewer than 5,000 historically assigned beneficiaries in a benchmark year; otherwise, we woul number of assigned beneficiaries. We note that we only would use this alternative calculation if an ACO has fewer than 5,000 historically assigned beneficiaries in a benchmark year; otherwise, we would use our current performance payment limit calculation that uses the ACO’s assigned beneficiary person years from Benchmark Year 3 (BY3). More specifically, we would multiply the person years for assigned beneficiaries for the benchmark year with the lowest number of assigned beneficiaries by the ACO’s per capita benchmark expressed as a single value to get an ACO’s alternative total benchmark expenditures. We would calculate the product of the track/level specific percentage used to calculate the benchmark-based performance payment limit, as described in section III.F.4.b.(1).(b).) or loss recoupment limit, as described in section III.F.4.b.(1).(b)) and the ACO’s alternative amount of total benchmark expenditures. We would also continue to compute a benchmark-based performance payment limit and loss recoupment limit for the ACO, as described in section III.F.4.b.(1).(b)), specified for the ACO’s track/level of participation. We propose to compare the alternative benchmark-based perfo mit and loss recoupment limit for the ACO, as described in section III.F.4.b.(1).(b)), specified for the ACO’s track/level of participation. We propose to compare the alternative benchmark-based performance payment limit or loss recoupment limit (calculated using assigned beneficiary person years from the benchmark year with the lowest number of assigned beneficiaries) with the benchmark-based performance payment limit or loss recoupment limit calculated with assigned beneficiary person years for the performance year. We would apply the lesser of these two aforementioned amounts (in absolute value) in determining the final performance payment limit or loss recoupment limit. This approach would ensure that no ACO would receive a larger cap with the alternative performance payment limit or loss recoupment limit than it would receive under the current methodology. 322 This proposal would not change the calculation of the revenue-based loss sharing limit. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00318 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesda 5 Jkt 265001 PO 00000 Frm 00318 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32669 We propose to specify the proposed approach in amendments to the Shared Savings Program regulations at new § 425.605(i) (BASIC track) and new § 425.610(l) (ENHANCED track). At new § 425.605(i), we propose to include provisions to codify the existing approach to calculating the performance payment limit under new paragraph (i)(1)(i), and the loss recoupment limit under new paragraph (i)(2)(i). We propose to specify under new paragraphs (i)(1)(ii) and (i)(2)(ii) of § 425.605 provisions for how CMS determines whether to apply an alternative performance payment limit or loss recoupment limit (respectively), if an ACO has fewer than 5,000 assigned beneficiaries in BY1, BY2, or BY3, in conducting financial reconciliation for each performance year, for agreement periods beginning on or after January 1, 2027. At this new § 425.610(l)(1) to (2), we propose to include provisions to codify the existing approach to calculating the performance payment limit, ement periods beginning on or after January 1, 2027. At this new § 425.610(l)(1) to (2), we propose to include provisions to codify the existing approach to calculating the performance payment limit, and the loss recoupment limit. We propose to specify under new paragraph (l)(3) of § 425.610 provisions for how CMS determines whether to apply an alternative performance payment limit or loss recoupment limit if an ACO has fewer than 5,000 assigned beneficiaries in BY1, BY2, or BY3, in conducting financial reconciliation for each performance year, for agreement periods beginning on or after January 1, 2027. This proposed policy to potentially reduce the limit on performance payments and loss recoupment limit when an ACO falls below 5,000 assigned beneficiaries in any benchmark year would safeguard the overall financial integrity of the Shared Savings Program, including the Trust Funds, and protect ACOs. The proposed policy would potentially limit shared savings and shared losses in the event that a historical benchmark may be less reliable due to a smaller (fewer than 5,000) assigned beneficiary population size in any benchmark year. As previously discussed in this section, as an ACO’ ent that a historical benchmark may be less reliable due to a smaller (fewer than 5,000) assigned beneficiary population size in any benchmark year. As previously discussed in this section, as an ACO’s assigned beneficiary population decreases, variability in the population’s expenditures increases. The reduction in the size of the ACO’s assigned beneficiary population in benchmark years could result in variability in benchmark calculations, which could cause shared savings payments made to the ACO or shared losses owed to be based on normal expenditure fluctuations, rather than reflect actual program performance. We expect these alternative caps to apply to ACOs rarely; when applied, we expect these alternative caps to have limited reductions to an ACO’s shared savings or shared losses payments but to provide adequate protections and risk mitigation in outlier cases. In an analysis of performance year reconciliation data for performance years 2020–2023, CMS found that on average, only 2 percent of ACOs at the time of financial reconciliation have at least one benchmark year below 5,000 assigned beneficiaries. Tables 49 and 50 below provide examples of the alternative performance p 2 percent of ACOs at the time of financial reconciliation have at least one benchmark year below 5,000 assigned beneficiaries. Tables 49 and 50 below provide examples of the alternative performance payment limit and alternative loss recoupment limit calculations that would apply for an ACO with fewer than 5,000 assigned beneficiaries in at least one benchmark year under this proposal. BILLING CODE 4120–01–P 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00319 Fmt 4701 Sfmt 4725 E:\FR\FM\16JYP3.SGM 16JYP3 / > H P G 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00320 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00321 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32672 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules through 84756; 85 FR 84785 through 84793; 86 FR 65273 through 65279; 87 FR 69821 through 69825; 88 FR 79163 through 79174; 89 FR 98087 through . 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules through 84756; 85 FR 84785 through 84793; 86 FR 65273 through 65279; 87 FR 69821 through 69825; 88 FR 79163 through 79174; 89 FR 98087 through 98101) to reflect additions or modifications to the codes that have been recognized for payment under the PFS and to incorporate other changes to the definition of primary care services for purposes of the Shared Savings Program. For the performance year beginning on January 1, 2025, and subsequent performance years, we defined primary care services for purposes of assigning beneficiaries to ACOs under § 425.402 at § 425.400(c)(1)(ix). b. Proposed Revisions Based on feedback from ACOs and our further review of the HCPCS and CPT codes that are currently used for payment under the PFS or that we are proposing to use for payment under the PFS starting in CY 2026, we have determined it would be appropriate to amend the definition of primary care services used in the Shared Savings Program assignment methodology to include certain additional codes for the performance year starting on January 1, 2026, and subsequent performance years, in order to remain consistent with billing and coding un ignment methodology to include certain additional codes for the performance year starting on January 1, 2026, and subsequent performance years, in order to remain consistent with billing and coding under the PFS. We propose to specify a revised definition of primary care services used for assignment for the performance year starting on January 1, 2026, and subsequent performance years in a new provision of the Shared Savings Program at § 425.400(c)(1)(x) to include the list of HCPCS and CPT codes specified at § 425.400(c)(1)(ix), as well as the following additions: Enhanced Care Model Management Services (HCPCS codes (GPCM1, GPCM2, and GPCM3), and the deletion of Social Determinants of Health Risk Assessment Services (HCPCS code G0136), if finalized under Medicare FFS payment policy. We propose to use the new provision at § 425.400(c)(1)(x) for determining beneficiary assignment for the performance year starting on January 1, 2026, and in subsequent performance years. The following provides additional information about the CPT and HCPCS codes that we are proposing to add to the definition of primary care services used for purposes of beneficiary assignment: Enhanced Care Model Mana vides additional information about the CPT and HCPCS codes that we are proposing to add to the definition of primary care services used for purposes of beneficiary assignment: Enhanced Care Model Management Services (HCPCS Codes GPCM1, GPCM2, and GPCM3): In section II.G of this proposed rule, we are proposing three new add-on HCPCS codes to allow for payment under the PFS when BHI or CoCM are furnished in conjunction with APCM services for practitioners who meet the requirements to furnish both services. Specifically, we are proposing to allow for payment of the following codes, discussed in more detail below, under the PFS: GPCM1, an add-on code that mirrors 99492 (CoCM initial month), GPCM2, an add-on code that mirrors 99493 (subsequent months) for CoCM services delivered to patients also receiving APCM services, and GPCM3, an add-on code for general behavioral health integration services that mirrors CPT code 99484 (20 minutes or more of BHI services) for BHI services delivered to patients also receiving APCM services. • HCPCS code GPCM1 (Initial psychiatric collaborative care management, in the first calendar month of behavioral health care manager activities, in consultation w atients also receiving APCM services. • HCPCS code GPCM1 (Initial psychiatric collaborative care management, in the first calendar month of behavioral health care manager activities, in consultation with a psychiatric consultant and directed by the treating physician or other qualified health care professional, with the following required elements: outreach to and engagement in treatment of a patient directed by the treating physician or other qualified health care professional, initial assessment of the patient, including administration of validated rating scales, with the development of an individualized treatment plan, review by the psychiatric consultant with modifications of the plan, if recommended, entering patient in a registry and tracking patient follow-up and progress using the registry, with appropriate documentation, and participation in weekly caseload consultation with the psychiatric consultant, and provision of brief interventions using evidence-based techniques such as behavioral activation, motivational interviewing, and other focused treatment strategies (list separately and in addition to the Advanced Primary Care Management code.)). • HCPCS code GPCM2(Subseque s behavioral activation, motivational interviewing, and other focused treatment strategies (list separately and in addition to the Advanced Primary Care Management code.)). • HCPCS code GPCM2(Subsequent psychiatric collaborative care management, in a subsequent month of behavioral health care manager activities, in consultation with a psychiatric consultant, and directed by the treating physician or other qualified health care professional, with the following required elements: tracking patient follow-up and progress using the registry, with appropriate documentation, participation in weekly caseload consultation with the psychiatric consultant, ongoing collaboration with and coordination of the patient’s mental health care with the treating physician or other qualified health care professional and any other treating mental health providers, additional review of progress and recommendations for changes in treatment, as indicated, including medications, based on recommendations provided by the psychiatric consultant, provision of brief interventions using evidence-based techniques such as behavioral activation, motivational interviewing, and other focused treatment strategies, monit by the psychiatric consultant, provision of brief interventions using evidence-based techniques such as behavioral activation, motivational interviewing, and other focused treatment strategies, monitoring of patient outcomes using validated rating scales, and relapse prevention planning with patients as they achieve remission of symptoms and/or other treatment goals and are prepared for discharge from active treatment. (list separately and in addition to Advanced Primary Care Management code)). • HCPCS code GPCM3(Care management services for behavioral health conditions, directed by a physician or other qualified health care professional, per calendar month, with the following required elements: initial assessment or follow-up monitoring, including the use of applicable validated rating scales, behavioral health care planning in relation to behavioral/psychiatric health problems, including revision for patients who are not progressing or whose status changes, facilitating and coordinating treatment such as psychotherapy, pharmacotherapy, counseling and/or psychiatric consultation, and continuity of care with a designated member of the care team (list separately and in addition to ting treatment such as psychotherapy, pharmacotherapy, counseling and/or psychiatric consultation, and continuity of care with a designated member of the care team (list separately and in addition to Advanced Primary Care Management cod)). All of these codes are proposed as optional add-on codes for APCM services that would facilitate providing complementary BHI services by removing the time-based requirements and reducing documentation requirements of the existing BHI and CoCM CPT codes. We believe removing the time-based requirements and reducing the documentation requirements may make primary care practitioners more likely to offer BHI and CoCM services, which would improve access to BHI and CoCM for primary care patients and access to primary care for BHI and CoCM patients. These new HCPCS codes are designed to allow for the payment of services that, when reported as standalone services, are currently included in the definition of primary care services used for purposes of assignment when furnished in conjunction with APCM services: BHI (CPT codes 99484, 99492, 99493 and 99494), CoCM (HCPCS code G2214), and APCM (HCPCS codes G0556, G0557, and G0558) (refer to 82 VerDate Sep 201 nt when furnished in conjunction with APCM services: BHI (CPT codes 99484, 99492, 99493 and 99494), CoCM (HCPCS code G2214), and APCM (HCPCS codes G0556, G0557, and G0558) (refer to 82 VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00322 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32673 FR 53212 through 53213, 85 FR 84750 through 84755, and 89 FR 98087 through 98097, respectively). The new HCPCS codes also are similar to CPT codes 99354 and 99355 (83 FR 59965 through 59968), which likewise are included in the definition of primary care services used for purposes of assignment. Including these new HCPCS codes for BHI and CoCM APCM add-on services into the definition of primary care services used for purposes of assignment would increase the accuracy of assignment based on the provision of primary care by ensuring that all expenditures for BHI and CoCM are used to determine beneficiary assignment. The following provides additional information about the CPT and HCPCS codes that we are proposing to remove from the def all expenditures for BHI and CoCM are used to determine beneficiary assignment. The following provides additional information about the CPT and HCPCS codes that we are proposing to remove from the definition of primary care services used for purposes of beneficiary assignment: HCPCS code G0136 (Administration of a standardized, evidence-based social determinants of health risk assessment tool, 5–15 minutes): In section II.I of this rule, we are proposing to delete HCPCS code G0136 as we have come to believe that the resource costs described by HCPCS code G0136 are already accounted for in existing codes, including but not limited to evaluation and management visits. Accordingly, we are proposing to not include this HCPCS code in the definition of primary care services used for purposes of assignment, beginning January 1, 2026, and in subsequent years, if the deletion is finalized. As part of this revised definition of primary care services used for assigning beneficiaries at § 425.402, we propose to incorporate a provision at § 425.400(c)(1)(x)(C), specifying that the primary care service codes for purposes of assigning beneficiaries include a CPT code identified by CMS that direct we propose to incorporate a provision at § 425.400(c)(1)(x)(C), specifying that the primary care service codes for purposes of assigning beneficiaries include a CPT code identified by CMS that directly replaces a CPT code specified at § 425.400(c)(1)(x)(A) or a HCPCS code specified at § 425.400(c)(1)(x)(B), when the assignment window or expanded window for assignment (as defined at § 425.20) for a benchmark or performance year includes any day on or after the effective date of the replacement code for payment purposes under Medicare FFS. We seek comments on these proposed changes to the definition of primary care services used for assigning beneficiaries at § 425.400(c)(1)(x) to Shared Savings Program ACOs for the performance year starting on January 1, 2026, and subsequent performance years. We also seek comments on any other existing or new HCPCS or CPT codes proposed elsewhere in this proposed rule that we should consider adding to the definition of primary care services for purposes of assignment in future rulemaking. 6. Quality Performance Standard & Other Quality Reporting Requirements a. Background Section 1899(b)(3)(C) of the Act states that the Secretary shall establish q es of assignment in future rulemaking. 6. Quality Performance Standard & Other Quality Reporting Requirements a. Background Section 1899(b)(3)(C) of the Act states that the Secretary shall establish quality performance standards to assess the quality of care furnished by ACOs and seek to improve the quality of care furnished by ACOs over time by specifying higher standards, new measures, or both for purposes of assessing such quality of care. As we stated in the November 2011 final rule establishing the Shared Savings Program (76 FR 67872), our principal goal in selecting quality measures for ACOs has been to identify measures of success in the delivery of high-quality healthcare at the individual and population levels. In the November 2011 final rule, we established a quality measure set spanning four domains: patient experience of care and wherever practicable, caregiver experience of care, care coordination/patient safety, preventative health, and at-risk population (76 FR 67872 through 67891). We have subsequently updated the measures that comprise the quality measure set for the Shared Savings Program through rulemaking in the CY 2015, 2016, 2017, 2019, 2021, 2023, 2024, and 2 ough 67891). We have subsequently updated the measures that comprise the quality measure set for the Shared Savings Program through rulemaking in the CY 2015, 2016, 2017, 2019, 2021, 2023, 2024, and 2025 PFS final rules (79 FR 67907 through 67921, 80 FR 71263 through 71269, 81 FR 80484 through 80489, 83 FR 59708 through 59715, 85 FR 84733 through 84734, 87 FR 69860 through 69863, 88 FR 79112 through 79114, and 89 FR 98124 through 98132, respectively). b. Proposal To Revise the Definition of a ‘‘Beneficiary Eligible for Medicare CQMs’’ (1) Background In the CY 2024 PFS final rule (88 FR 79097 through 79107), for performance year 2024 and subsequent performance years, we established Medicare Clinical Quality Measures for Accountable Care Organizations Participating in the Medicare Shared Savings Program (Medicare CQMs) as a new collection type for Shared Savings Program ACOs within the APP quality measure set and for which the ACO reports quality data on beneficiaries eligible for Medicare CQMs as defined at § 425.20. This option has allowed and continues to allow ACOs to develop experience aggregating data for their Medicare fee- for-service (FFS) patients across their participant T re CQMs as defined at § 425.20. This option has allowed and continues to allow ACOs to develop experience aggregating data for their Medicare fee- for-service (FFS) patients across their participant TINs and provides ACOs with opportunities to develop workflows to allow them to transition to reporting quality data for their entire population through digital quality measurement. As stated in the CY 2024 PFS final rule (88 FR 79101), Medicare CQMs have served and continue to serve as a transition collection type to help some ACOs build the infrastructure, skills, knowledge, and expertise necessary to report all payer/all patient MIPS CQMs and eCQMs by defining a population of beneficiaries that exist within the all payer/all patient MIPS CQM specifications and tethering that population to claims encounters with ACO professionals with specialties used in assignment. Specifically, Medicare CQMs addressed the concern raised by ACOs that for ACOs with a higher proportion of specialty practices, the broader all payer/all patient eligible population would capture beneficiaries with no primary care relationship to the ACO. Further, given ACOs are commonly made up of multiple practices using es, the broader all payer/all patient eligible population would capture beneficiaries with no primary care relationship to the ACO. Further, given ACOs are commonly made up of multiple practices using multiple EHRs, ACOs have been able to utilize Medicare Part A and B claims data to help identify the ACO’s eligible population and validate the ACO’s patient matching and deduplication efforts. We also stated that Medicare CQMs are an all- beneficiary Medicare measure (not just ACO assigned beneficiaries) and are designed to help ACOs address challenges with aggregating patient data required to report Medicare CQMs and the all payer/all patient MIPS CQMs and eCQMs in the future (88 FR 79102). In the CY 2024 PFS final rule (88 FR 79107), we also finalized the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ at § 425.20 as a beneficiary identified for purposes of reporting Medicare CQMs for ACOs participating in the Medicare Shared Savings Program (Medicare CQMs), who is either of the following: • A Medicare FFS beneficiary (as defined at § 425.20) who— ++ Meets the criteria for a beneficiary to be assigned to an ACO described at § 425.401(a); and ++ Had at least one claim wit the following: • A Medicare FFS beneficiary (as defined at § 425.20) who— ++ Meets the criteria for a beneficiary to be assigned to an ACO described at § 425.401(a); and ++ Had at least one claim with a date of service during the measurement period from an ACO professional who is a primary care physician or who has one of the specialty designations included in § 425.402(c), or who is a physician assistant, nurse practitioner, or clinical nurse specialist. • A Medicare FFS beneficiary who is assigned to an ACO in accordance with § 425.402(e) because the beneficiary designated an ACO professional participating in an ACO as responsible for coordinating their overall care. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00323 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32674 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules We discussed in the CY 2024 PFS final rule that, in response to our proposed definition of a ‘‘beneficiary eligible for Medicare CQMs’’ in the CY 2024 PFS proposed rule, many commenters raised questions and concerns regarding how CMS will determin , in response to our proposed definition of a ‘‘beneficiary eligible for Medicare CQMs’’ in the CY 2024 PFS proposed rule, many commenters raised questions and concerns regarding how CMS will determine the appropriate Medicare CQM population for these measures (88 FR 79102). Some commenters noted that the proposed denominator eligibility criteria are similar to, but differ in timeline from, the current assignment methodology and that this creates unnecessary complexity, potentially leading to concerns in identifying the appropriate Medicare ACO population. A few commenters suggested we combine the new Medicare CQM methodology with the existing assignment methodology, which would mitigate potential challenges and ensure a smoother implementation process. Several commenters asked that we clarify if the list of ‘‘beneficiaries eligible for Medicare CQMs’’ is limited to assigned beneficiaries or if it includes all assignable beneficiaries eligible for the measure. In the CY 2024 PFS final rule (88 FR 79102), in response to commenters’ suggestions to align the definition of ‘‘beneficiary eligible for Medicare CQM’’ with our assignment methodology, we noted that our definition of a benef rule (88 FR 79102), in response to commenters’ suggestions to align the definition of ‘‘beneficiary eligible for Medicare CQM’’ with our assignment methodology, we noted that our definition of a beneficiary eligible for Medicare CQMs aims to align Medicare CQMs with the all payer/all patient measure specifications because Medicare CQMs are intended to support ACOs in the transition to all payer/all patient measures. We stated that the definition would limit Medicare CQM reporting to beneficiaries that had an encounter with an ACO professional with a specialty used in assignment or who were voluntarily assigned to the ACO. We noted that our approach would also balance our commitment to the transition to all payer/all patient measures with the need to provide additional support to some ACOs as they build the skills and infrastructure necessary to report digital quality measures. To support ACOs in reporting Medicare CQMs, we finalized that we would provide each ACO with a list of beneficiaries eligible for Medicare CQMs each quarter throughout the performance year as part of the ACO’s Quarterly Informational Reports Packages to give ACOs access to the full 12 months of encounters nec iaries eligible for Medicare CQMs each quarter throughout the performance year as part of the ACO’s Quarterly Informational Reports Packages to give ACOs access to the full 12 months of encounters necessary to report Medicare CQMs (88 FR 79104 through 79105). We stated that the list would be cumulative and updated quarterly to reflect the most recent quarter’s data, and the fourth quarter list of beneficiaries eligible for Medicare CQMs would include encounters with dates of service January 1st through December 31st of the performance year. We stated that the quarterly list would include beneficiary-level age, diagnosis, encounter, and exclusion flags on the list of beneficiaries eligible for Medicare CQMs to aid ACOs in identifying the denominator eligible population for each measure to the extent that such data can be identified through claims and Medicare administrative systems. We also stated that it was important to note that these flags are meant to assist ACOs in the aggregation of data and do not replace the need for ACOs to evaluate their patient population against each Medicare CQM specification prior to submission, including determining the beneficiaries that meet the de of data and do not replace the need for ACOs to evaluate their patient population against each Medicare CQM specification prior to submission, including determining the beneficiaries that meet the denominator criteria for the measure. We now note, by way of additional explanation, that since the list does not apply measure-specific eligibility criteria, the list may include Medicare FFS beneficiaries who are not eligible for inclusion in any of the three Medicare CQMs in the APP quality measure set. Based on our experience with providing ACOs with the quarterly lists of beneficiaries eligible for Medicare CQMs for performance year 2024, we have learned that the complexity of the current definition of a ‘‘beneficiary eligible for Medicare CQMs’’ has continued to create confusion for some Shared Savings Program ACOs. Some of these ACOs have sought additional clarification and guidance from CMS. Revising the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ would be responsive to these ACOs and other stakeholder feedback and would reduce ACOs’ burden with respect to the patient matching necessary to report Medicare CQMs. Some of the ACO feedback we have received has been bas o these ACOs and other stakeholder feedback and would reduce ACOs’ burden with respect to the patient matching necessary to report Medicare CQMs. Some of the ACO feedback we have received has been based on the differences between the Medicare CQM beneficiary lists that they have received from CMS and the assignable or assigned beneficiary files that ACOs also receive from CMS. Differences in the beneficiary information obtained from these files has contributed to concerns from ACOs about which beneficiaries to use for quality data reporting through Medicare CQMs. The methodology used to generate the list of ‘‘beneficiaries eligible for Medicare CQMs’’ differs from the methodology described at §§ 425.400, 425.401, 425.402, and 425.404 used to generate the list of beneficiaries assignable to an ACO, that is the universe of beneficiaries who receive at least one primary care service with a date of service during a specified 12- month assignment window from a Medicare-enrolled physician who is a primary care physician or who has one of the specialty designations included at § 425.402(c). These methodologies differ in time frames and encounter codes used, which has led to inquiries by A o is a primary care physician or who has one of the specialty designations included at § 425.402(c). These methodologies differ in time frames and encounter codes used, which has led to inquiries by ACOs and increased burden due to marginal differences in overlapping populations that meet these criteria. Our current definition of a ‘‘beneficiary eligible for Medicare CQMs’’ was intended to create alignment with the all payer/all patient MIPS CQM Specifications. The use of the terms of ‘‘claim’’ and ‘‘measurement period’’ in the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ are consistent with the application of all payer/all patient MIPS CQM Specifications. The codes designated as eligible encounters used to identify the eligible population in all payer/all patient MIPS CQM Specifications only partially overlap with the HCPCS and revenue center codes designated at § 425.400(c) as primary care services for purposes of assignment under the Shared Savings Program. Similarly, the measurement period applicable to each measure in the all payer/all patient MIPS CQM Specifications only partially overlaps with the 12-month period used in assignment (88 FR 79098). These differen the measurement period applicable to each measure in the all payer/all patient MIPS CQM Specifications only partially overlaps with the 12-month period used in assignment (88 FR 79098). These differences mean an ACO may have beneficiaries eligible for Medicare CQMs that are not part of an ACO’s assigned or assignable population. For example, this may occur if the beneficiary has a claim by an ACO professional or specialty designation that is not a primary care service or a claim that occurs during the measurement period but outside the assignment window. (2) Proposed Revisions Considering the concerns raised by ACOs and other interested parties, and our commitment to supporting ACOs in the transition to digital quality measure reporting, we propose to revise the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ at § 425.20 effective January 1, 2025, meaning we propose to apply the revised definition for performance year 2025, as well as for subsequent performance years. Specifically, beginning with performance year 2025 and continuing in subsequent performance years, we propose to revise the definition to require, in (1)(ii)(B) of the definition, ‘‘at least one primary car ically, beginning with performance year 2025 and continuing in subsequent performance years, we propose to revise the definition to require, in (1)(ii)(B) of the definition, ‘‘at least one primary care service with a date of service during the applicable performance year from an ACO professional who is a primary care physician or who has one of the specialty designations included at VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00324 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32675 § 425.402(c), or who is a physician assistant, nurse practitioner, or clinical nurse specialist.’’ We would redesignate the existing (1)(ii) as (1)(ii)(A). The current definition of ‘‘beneficiary eligible for Medicare CQMs’’ requires, in (1)(ii), ‘‘at least one claim with a date of service during the measurement period from an ACO professional who is a primary care physician or who has one of the specialty designations included at § 425.402(c), or who is a physician assistant, nurse practitioner, or clinical nurse specialist.’’ For pe ional who is a primary care physician or who has one of the specialty designations included at § 425.402(c), or who is a physician assistant, nurse practitioner, or clinical nurse specialist.’’ For performance year 2025 and subsequent performance years, the revised definition we are proposing in (1)(ii)(B) would align with our modifications to the stepwise assignment methodology and approach to identifying the beneficiaries assignable to an ACO, as finalized in the CY 2024 PFS final rule (88 FR 79162) and described at § 425.402(a)(5), where nurse practitioners, physician assistants, and clinical nurse specialists were added to the process for identifying beneficiaries assignable to an ACO beginning in performance year 2025. Specifically, the revised definition we are proposing in (1)(ii)(B) uses ‘‘primary care services’’ and ‘‘performance year,’’ instead of ‘‘claims’’ and ‘‘measurement period,’’ respectively, as used in the current definition. The proposed definition in (1)(ii)(B) would continue to align with the special assignment conditions for ACOs, including Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs), as described at § 425.404. We provide a list d continue to align with the special assignment conditions for ACOs, including Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs), as described at § 425.404. We provide a list of ‘‘beneficiaries eligible for Medicare CQMs’’ to each ACO. We would continue to include on that list all beneficiaries for whom a service is reported on an FQHC/RHC claim. As described at § 425.404, we treat a service reported on an FQHC/RHC claim as a primary care service performed by a primary care physician. The proposal to revise the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ would reduce ACOs’ burden in the patient matching necessary to report Medicare CQMs because the list of ‘‘beneficiaries eligible for Medicare CQMs’’ would have greater overlap with the list of beneficiaries that are assignable to an ACO. Specifically, more closely aligning these definitions would mean that, for most ACOs, the large majority of an ACO’s beneficiaries eligible for Medicare CQMs would be part of the list of beneficiaries assignable to an ACO. Therefore, under the proposed definition of a ‘‘beneficiary eligible for Medicare CQMs,’’ most ACOs would have to do less patient matching ld be part of the list of beneficiaries assignable to an ACO. Therefore, under the proposed definition of a ‘‘beneficiary eligible for Medicare CQMs,’’ most ACOs would have to do less patient matching than they presently do because there would be fewer differences between the definition of ‘‘beneficiary eligible for Medicare CQMs’’ and ‘‘assignable beneficiary.’’ The proposal would also help each ACO identify its eligible population and validate the ACO’s patient matching and deduplication efforts because ACOs would see fewer differences between the Medicare CQM beneficiary list and the list of beneficiaries assignable to the ACO. We believe our proposal to revise the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ would substantially address ACOs’ and interested parties’ concerns by better aligning the definitions and clarifying which beneficiaries’ data to use for quality data reporting through Medicare CQMs. We conducted a gap analysis using performance year 2024 data to analyze the overlap of our proposed definition of a ‘‘beneficiary eligible for Medicare CQMs’’ and the current performance year 2025 methodology used to identify beneficiaries assignable to an ACO. Th analyze the overlap of our proposed definition of a ‘‘beneficiary eligible for Medicare CQMs’’ and the current performance year 2025 methodology used to identify beneficiaries assignable to an ACO. The goal of this analysis was to determine whether the proposed change in the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ would accomplish our goal of aligning that population with the list of beneficiaries assignable to an ACO. With the addition of nurse practitioners, physician assistants, and clinical nurse specialists beginning in performance year 2025 for identifying assignable beneficiaries, as well as the proposed change to the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ to require ‘‘primary care services,’’ the overlap between the Medicare CQM eligible population and the list of beneficiaries assignable to an ACO is expected to increase, on average, to 85 percent for most ACOs. We note that the amount of overlap between assignable beneficiaries and beneficiaries eligible for Medicare CQMs will vary across ACOs due to factors like different population composition and different use patterns of non-physician care codes. Overall, we believe that the prop iciaries eligible for Medicare CQMs will vary across ACOs due to factors like different population composition and different use patterns of non-physician care codes. Overall, we believe that the proposed changes will generally help ACOs identify and collect data for the population of beneficiaries eligible for Medicare CQMs and support adoption of Medicare CQMs. Therefore, we propose to revise the definition of a ‘‘beneficiary eligible for Medicare CQMs,’’ at § 425.20, for performance year 2025 and subsequent performance years, to require at least one primary care service with a date of service during the applicable performance year from an ACO professional who is a primary care physician or who has one of the specialty designations included at § 425.402(c), or who is a physician assistant, nurse practitioner, or clinical nurse specialist. To support ACOs in preparing for this proposed change, we will continue to provide the quarterly list based on the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ as finalized in the CY 2024 PFS final rule (88 FR 79097 through 79107) and will add an additional variable to the quarterly list to flag each beneficiary who had a primary c igible for Medicare CQMs’’ as finalized in the CY 2024 PFS final rule (88 FR 79097 through 79107) and will add an additional variable to the quarterly list to flag each beneficiary who had a primary care service visit, beginning with the performance year 2025 Quarter 2 list, to identify ‘‘beneficiaries eligible for Medicare CQMs’’ under the proposed definition. If this proposal is finalized, then the quarterly list, starting with performance year 2025 Quarter 4, would be based on the finalized definition of a ‘‘beneficiary eligible for Medicare CQMs.’’ Section 1871(e)(1)(A) of the Act prohibits the Secretary from applying substantive changes in regulations retroactively before the effective date of the change except where the Secretary determines, as relevant here, that failure to apply the change retroactively would be contrary to the public interest. It is in the public interest to apply our proposed changes to the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ beginning in performance year 2025. Applying these changes starting with performance year 2025 is in the public interest because, absent the proposed changes in the definition, the current definition is an ongo in performance year 2025. Applying these changes starting with performance year 2025 is in the public interest because, absent the proposed changes in the definition, the current definition is an ongoing contributor to ACOs’ confusion regarding which beneficiaries to use for quality data reporting through Medicare CQMs and creates burden for ACOs in patient matching and quality reporting. Minimizing this complexity through our proposed changes in definition will reduce the burden on ACOs that elect to report Medicare CQMs and better enable them to gain experience with aggregating and deduplicating data, since Medicare CQMs are intended to aid in the transition to digital quality measure reporting quality data for an ACO’s entire population. The proposed changes to the definition, and resulting burden reduction, will allow ACOs to devote greater resources to improving care coordination so that they are better positioned to deliver the right care at the right time, all to the benefit of Medicare beneficiaries served by the ACO and Medicare Trust Funds. We believe the proposed changes would have minimal impact on ACOs’ existing processes because the ACO would continue to apply the mea Medicare beneficiaries served by the ACO and Medicare Trust Funds. We believe the proposed changes would have minimal impact on ACOs’ existing processes because the ACO would continue to apply the measure specifications to the population of beneficiaries eligible for Medicare VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00325 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32676 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules CQMs, but the beneficiary population would be based on a list of beneficiaries that better reflects the ACO’s assigned population. We propose to revise the definition of ‘‘Beneficiary eligible for Medicare CQMs’’ at § 425.20, as follows: • We are adding a new paragraph (A) to paragraph (1)(ii) of the definition of ‘‘beneficiary eligible for Medicare CQMs’’ at § 425.20 to establish that, in addition to the requirement in paragraph (1)(i) and for performance year 2024, a beneficiary eligible for Medicare CQMs ‘‘had at least one claim with a date of service during the measurement period from an ACO professional who is a primary care physician o performance year 2024, a beneficiary eligible for Medicare CQMs ‘‘had at least one claim with a date of service during the measurement period from an ACO professional who is a primary care physician or who has one of the specialty designations included at § 425.402(c), or who is a physician assistant, nurse practitioner, or clinical nurse specialist.’’ This proposal would effectively move the existing text of paragraph (1)(ii) to paragraph (1)(ii)(A) and limit the application of the existing text of paragraph (1)(ii) to performance year 2024. • We are adding a new paragraph (B) to paragraph (1)(ii) of the definition of ‘‘beneficiary eligible for Medicare CQMs’’ at § 425.20 to establish that, in addition to the requirement in paragraph (1)(i) and for performance year 2025 and subsequent performance years, a beneficiary eligible for Medicare CQMs ‘‘had at least one primary care service with a date of service during the applicable performance year from an ACO professional who is a primary care physician or who has one of the specialty designations included at § 425.402(c), or who is a physician assistant, nurse practitioner, or clinical nurse specialist.’’ We are seeking public commen care physician or who has one of the specialty designations included at § 425.402(c), or who is a physician assistant, nurse practitioner, or clinical nurse specialist.’’ We are seeking public comments on the proposed changes to the definition of a ‘‘beneficiary eligible for Medicare CQMs’’ at § 425.20. c. Proposals To Remove the Health Equity Adjustment Applied to an ACO’s Quality Score and Revise Certain Terminology in the Shared Savings Program Regulations (1) Background In the CY 2023 PFS final rule (87 FR 69838 through 69857), we finalized a health equity adjustment that would be available for performance year 2023 and subsequent performance years to an ACO that reports the three eCQMs/MIPS CQMs in the APP quality measure set, meeting the data completeness requirement at § 414.1340 for all three eCQMs/MIPS CQMs, and administers the CAHPS for MIPS survey. We finalized that such ACOs may receive up to a maximum of 10 additional points added to their MIPS quality performance category score. The level of the adjustment is based on the joint consideration of an ACO’s performance on quality measures and the population served by the ACO, such that ACOs that perform well on quality m y score. The level of the adjustment is based on the joint consideration of an ACO’s performance on quality measures and the population served by the ACO, such that ACOs that perform well on quality measures and serve a high proportion of beneficiaries who are from underserved neighborhoods (residing in a census block group with an Area Deprivation Index (ADI) national percentile rank of at least 85); or who are eligible for the Medicare Part D Low-Income Subsidy (LIS), or are dually eligible for Medicare and Medicaid would receive a higher number of bonus points added to their MIPS quality performance category score. In the CY 2024 PFS final rule (88 FR 79110 through 79111), we finalized that ACOs reporting Medicare CQMs would be eligible for the health equity adjustment to their quality performance category score. The health equity adjustment was designed to further several goals, including supporting ACOs transitioning to all payer/all patient quality measure reporting, incentivizing ACOs to report eCQMs/MIPS CQMs/ Medicare CQMs, improving quality, and recognizing high-performing ACOs serving underserved populations (87 FR 69841 through 69842; 88 FR 79097). The regulation at § 4 g ACOs to report eCQMs/MIPS CQMs/ Medicare CQMs, improving quality, and recognizing high-performing ACOs serving underserved populations (87 FR 69841 through 69842; 88 FR 79097). The regulation at § 425.512(b) specifies how we calculate an ACO’s health equity adjusted quality performance score for performance year 2023, performance year 2024, and performance year 2025 and subsequent performance years. We also incorporated references to an ACO’s health equity adjusted quality performance score at §§ 425.512(a), 425.512(c), 425.605(d), and 425.610(d) and (f), as applicable. In the CY 2025 PFS final rule, we established or extended additional scoring adjustments for ACOs, such as the Complex Organization Adjustment (89 FR 98116 through 98117 and 89 FR 98105) and the eCQM/MIPS CQM reporting incentive (89 FR 98121 through 98124), respectively. Complex Organization Adjustment: In the CY 2025 PFS final rule (89 FR 98116 through 98117), we established a Complex Organization Adjustment beginning in the CY 2025 performance period/2027 MIPS payment year to account for the organizational complexities faced by Virtual Groups and APM Entities, including Shared Savings Program ACOs, when reportin g in the CY 2025 performance period/2027 MIPS payment year to account for the organizational complexities faced by Virtual Groups and APM Entities, including Shared Savings Program ACOs, when reporting eCQMs. A Virtual Group and an APM Entity will receive one measure achievement point for each submitted eCQM that meets the case minimum requirement at § 414.1380(b)(1)(iii) and the data completeness requirement at § 414.1340. Each reported eCQM may not score more than 10 measure achievement points and the total achievement points (numerator) may not exceed the total available measure achievement points (denominator) for the quality performance category. The Complex Organization Adjustment for a Virtual Group or APM Entity may not exceed 10 percent of the total available measure achievement points in the quality performance category. The adjustment will be added for each eCQM submitted at the individual measure level. Since Shared Savings Program ACOs are APM Entities, this policy is applicable to Shared Savings Program ACOs reporting the APP Plus quality measure set beginning in performance year 2025. eCQM/MIPS CQM Reporting Incentive: We originally adopted an incentive for ACOs to b icable to Shared Savings Program ACOs reporting the APP Plus quality measure set beginning in performance year 2025. eCQM/MIPS CQM Reporting Incentive: We originally adopted an incentive for ACOs to begin transitioning to eCQM/MIPS CQM reporting (herein referred to as the ‘‘eCQM/MIPS CQM reporting incentive’’) in the CY 2022 PFS final rule (86 FR 65261 through 65262). In the CY 2023 PFS final rule, we extended the eCQMs/MIPS CQM reporting incentive through performance year 2024 to align with the timeline for sunsetting of the CMS Web Interface reporting option and to allow ACOs an additional year to gauge their performance on the eCQMs/ MIPS CQMs before full reporting of the measures are required beginning in performance year 2025 (87 FR 69836 through 69838). We further extended the eCQM/MIPS CQM reporting incentive in the CY 2025 PFS final rule (89 FR 98124) to continue to support ACOs in the transition to eCQMs for digital quality measurement reporting. Meeting the criteria for the eCQM/MIPS CQM incentive allows an ACO to meet the quality performance standard and be eligible to receive maximum shared savings and avoid maximum shared losses (if applicable). The extension of the eC CQM/MIPS CQM incentive allows an ACO to meet the quality performance standard and be eligible to receive maximum shared savings and avoid maximum shared losses (if applicable). The extension of the eCQM/MIPS CQM reporting incentive ensures continued support for ACOs as they gain experience reporting all payer/all patient measures. Specifically, for performance year 2025 and subsequent performance years for ACOs reporting eCQMs, and performance years 2025 and 2026 for ACOs reporting MIPS CQMs, an ACO will meet the quality performance standard used to determine eligibility for maximum shared savings and to avoid maximum shared losses, if applicable: • If the ACO reports all of the eCQMs/MIPS CQMs in the APP Plus quality measure set applicable for a performance year, meeting the MIPS VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00326 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32677 data completeness requirement for all eCQMs/MIPS CQMs; • Achieves a quality performance score equivalent to or higher than the 10th pe ol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32677 data completeness requirement for all eCQMs/MIPS CQMs; • Achieves a quality performance score equivalent to or higher than the 10th percentile of the performance benchmark on at least one of the outcome measures in the APP Plus quality measure set; and • Achieves a quality performance score equivalent to or higher than the 40th percentile of the performance benchmark on at least one of the remaining measures in the APP Plus quality measure set (89 FR 98122 through 98124). We stated in the CY 2025 PFS final rule (89 FR 98123) that we believe the increased number of quality measures that will be phased into the APP Plus quality measure set over time will afford ACOs expanded opportunities to satisfy the eCQM/MIPS CQM reporting incentive criteria. For instance, the number of eCQMs/MIPS CQMs in the APP Plus quality measure set will increase from four in performance year 2025 to five in performance year 2026. Once MIPS CQMs are removed from the APP Plus quality measure set in performance year 2027, the number of eCQMs in the APP Plus quality measure set will increase from 5 to 6 in performance year 2027. With the proposed re removed from the APP Plus quality measure set in performance year 2027, the number of eCQMs in the APP Plus quality measure set will increase from 5 to 6 in performance year 2027. With the proposed removal of Quality ID: 487 Screening for Social Drivers of Health from the APP Plus quality measure set as described in section III.F.6.d.(2) of this proposed rule, once all of the eCQMs are incorporated into the APP Plus quality measure set and if that proposal is finalized, there would be seven eCQMs. Out of these seven eCQMs, two of them (Quality ID: 001 Diabetes: Glycemic Status Assessment Greater Than 9% and Quality ID: 236 Controlling High Blood Pressure) are outcome measures and focus on the management of chronic conditions. There are also three eCQMs (Quality ID: 112 Breast Cancer Screening, Quality ID: 113 Colorectal Cancer Screening, and Quality ID: 493 Adult Immunization Status) that focus on wellness and prevention. (2) Proposal To Remove the Health Equity Adjustment Applied to an ACO’s Quality Score After further consideration and experience implementing the eCQM/ MIPS reporting incentive and the Complex Organization Adjustment, in conjunction with the previous policies w o an ACO’s Quality Score After further consideration and experience implementing the eCQM/ MIPS reporting incentive and the Complex Organization Adjustment, in conjunction with the previous policies we have finalized with respect to the health equity adjustment, we have concluded that the eCQM/MIPS CQM reporting incentive and the Complex Organization Adjustment provide duplicative incentives to the incentive provided by the health equity adjustment, for ACOs to meet the quality performance standard under the Shared Savings Program. As described in section III.F.6.c.(1) of this proposed rule, an ACO that is eligible for the health equity adjustment may receive up to a maximum of 10 additional points that are added to its MIPS quality performance category score, and the sum of which then becomes the ACO’s health equity adjusted quality performance score (87 FR 69831). The application of the health equity adjustment to an ACO’s MIPS quality performance category score allows the ACO to achieve a higher quality score that would be used to determine whether the ACO meets the quality performance standard. For performance year 2024 and subsequent performance years, if the ACO’s health equi ieve a higher quality score that would be used to determine whether the ACO meets the quality performance standard. For performance year 2024 and subsequent performance years, if the ACO’s health equity adjusted quality performance score is equivalent to or higher than the 40th percentile across all MIPS quality performance category scores, excluding entities/providers eligible for facility- based scoring, then the ACO is determined to have met the quality performance standard under the Shared Savings Program and is eligible to receive maximum shared savings and avoid maximum shared losses (if applicable), at which point additional ACO quality performance points provide no further benefit. Another pathway for an ACO to meet the quality performance standard is to meet the criteria for the eCQM/MIPS CQM reporting incentive as described in section III.F.6.c.(1) of this proposed rule. ACOs that meet the criteria for the eCQM/MIPS CQM reporting incentive would meet the quality performance standard regardless of what their MIPS quality performance category score is and be eligible to receive maximum shared savings and avoid maximum shared losses, if applicable. Based on performance year tandard regardless of what their MIPS quality performance category score is and be eligible to receive maximum shared savings and avoid maximum shared losses, if applicable. Based on performance year 2023 ACO quality results, among 71 ACOs that qualified for the health equity adjustment in performance year 2023, 13 ACOs earned health equity adjustment bonus points with an average of 3.54 bonus points (out of 10) awarded. Since all 13 of the ACOs that received health equity adjustment bonus points also met the criteria for the eCQM/MIPS CQM reporting incentive, these ACOs would have met the quality performance standard to be eligible to receive maximum shared savings and avoid maximum shared losses (if applicable) even if the health equity adjustment bonus points were not applied. This demonstrates the duplicative nature of the health equity adjustment and the eCQM/MIPS CQM reporting incentive. Although limited data is currently available, we expect that this trend will continue and that ACOs that would have received health equity adjustment bonus points are likely to also meet the criteria for the eCQM/MIPS CQM reporting incentive and meet the quality performance standard in future t ACOs that would have received health equity adjustment bonus points are likely to also meet the criteria for the eCQM/MIPS CQM reporting incentive and meet the quality performance standard in future performance years. The Complex Organization Adjustment upwardly adjusts an ACO’s MIPS quality performance category score when the ACO reports eCQMs. As described in section III.F.6.c.(1) of this proposed rule, an ACO will receive one measure achievement point for each submitted eCQM that meets the case minimum requirement at § 414.1380(b)(1)(iii) and the data completeness requirement at § 414.1340, and the Complex Organization Adjustment may be up to 10 percent of the total available measure achievement points in the quality performance category. Based on the quality measures finalized for the APP Plus quality measure set for the Shared Savings Program (89 FR 98128 through 98130), ACOs that report eCQMs will receive the Complex Organization Adjustment to their MIPS quality performance category score on up to four measures (that is, four points) in performance year 2025, 5 measures (that is, five points) in performance year 2026, and 6 measures (that is, six points) in performance year egory score on up to four measures (that is, four points) in performance year 2025, 5 measures (that is, five points) in performance year 2026, and 6 measures (that is, six points) in performance year 2027, if each eCQM meets the case minimum requirement at § 414.1380(b)(1)(iii) and the data completeness requirement at § 414.1340. Should we finalize our proposal to remove Quality ID: 487 Screening for Social Drivers of Health from the APP Plus quality measure set as described in section III.F.6.d.(2) of this proposed rule, for performance year 2028 or the performance year that is one year after the eCQM specification becomes available for Quality ID: 493 Adult Immunization Status, whichever is later, ACOs that report eCQMs would receive the Complex Organization Adjustment on up to seven measures (that is, seven points) if each eCQM meets the case minimum requirement at § 414.1380(b)(1)(iii) and the data completeness requirement at § 414.1340. As the number of eCQMs that ACOs are required to report in the APP Plus quality set grows, the relative value of the Complex Organization Adjustment will increase. Both the health equity adjustment and the Complex Organization Adjustment serve ed to report in the APP Plus quality set grows, the relative value of the Complex Organization Adjustment will increase. Both the health equity adjustment and the Complex Organization Adjustment serve to upwardly adjust an ACO’s quality score in order to increase the ACO’s ability to meet the quality performance standard by achieving a quality score that is VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00327 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32678 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules equivalent to or higher than the 40th percentile across all MIPS quality performance category scores, excluding entities/providers eligible for facility- based scoring. The health equity adjustment and Complex Organization Adjustment are duplicative because they serve a similar function. The Complex Organization Adjustment is accounted for in the calculation of the ACO’s MIPS quality performance category score; whereas, the health equity adjustment bonus points are added to the ACO’s MIPS quality performance category score. Both ultimately increase an ACO’s MI e ACO’s MIPS quality performance category score; whereas, the health equity adjustment bonus points are added to the ACO’s MIPS quality performance category score. Both ultimately increase an ACO’s MIPS quality performance category score and, therefore, improve the ACO’s ability to meet the quality performance standard. As discussed in the CY 2023 PFS final rule, we finalized the health equity adjustment to support ACOs that report all payer/all patient eCQMs/MIPS CQMs, perform high on quality, and serve a high proportion of underserved beneficiaries (87 FR 69838). We further stated that, because every year a greater proportion of ACOs are making the switch to eCQMs, instituting a health equity adjustment for those ACOs making the switch to eCQMs would allow us to study the impacts and make refinements during subsequent rulemaking (87 FR 69839). Moreover, in the CY 2023 PFS final rule, we expressed our concern that ACOs that serve a large portion of beneficiaries dually eligible for Medicare and Medicaid and the Medicare Part D LIS may receive lower quality scores during the switch to eCQMs without an adjustment and, in turn, be incentivized to avoid these populations, delay switch dicare and Medicaid and the Medicare Part D LIS may receive lower quality scores during the switch to eCQMs without an adjustment and, in turn, be incentivized to avoid these populations, delay switching to eCQMs for as long as possible, or even cease participation in the Shared Savings Program altogether (87 FR 69839). We believe that the eCQM/MIPS CQM reporting incentive and the Complex Organization Adjustment sufficiently support ACOs to address the unique challenges they face when reporting all payer/all patient measures and sufficiently support ACOs that serve large proportions of beneficiaries dually eligible for Medicare and Medicaid and the Medicare Part D LIS. Both the eCQM/MIPS reporting incentive and the Complex Organization Adjustment have broader applicability than the health equity adjustment. The eCQM/MIPS CQM reporting incentive is available to all ACOs that report eCQMs/MIPS CQMs and meet the criteria for the reporting incentive; whereas the Complex Organization Adjustment is available to all ACOs that report eCQMs and meet the case minimum requirement at § 414.1380(b)(1)(iii) and the data completeness requirement at § 414.1340 for each eCQM. Due to the criteria th ment is available to all ACOs that report eCQMs and meet the case minimum requirement at § 414.1380(b)(1)(iii) and the data completeness requirement at § 414.1340 for each eCQM. Due to the criteria that need to be met for an ACO to be eligible to receive the health equity adjustment, it only applies to a select group of ACOs that serve large proportions of beneficiaries dually eligible for Medicare and Medicaid and the Medicare Part D LIS. Furthermore, unlike the eCQM/MIPS CQM reporting incentive, the health equity adjustment does not guarantee that ACOs will meet the quality performance standard. We believe that the application of the Complex Organization Adjustment and the extension of the eCQM/MIPS CQM reporting incentive, as finalized in prior rules, have made it unnecessary to continue the policy of applying the health equity adjustment to an ACO’s quality score. The Complex Organization Adjustment and the extension of the eCQM/MIPS CQM reporting incentive underscore our commitment to all payer/all patient quality measure reporting and are more broadly applicable than the health equity adjustment. Therefore, we propose to remove the health equity adjustment applied to an ACO’s t to all payer/all patient quality measure reporting and are more broadly applicable than the health equity adjustment. Therefore, we propose to remove the health equity adjustment applied to an ACO’s quality score beginning in performance year 2025. In alignment with the Administration’s priority to streamline regulations,324 our proposal to remove the health equity adjustment applied to an ACO’s quality score beginning in performance year 2025 would de- duplicate scoring factors and simplify our quality scoring methodology, without reducing the support available under our policies for ACOs to meet the quality performance standard and be eligible to receive maximum shared savings and avoid maximum shared losses (if applicable). Additionally, in the CY 2024 PFS final rule, we finalized that ACOs that report Medicare CQMs would be eligible to have the health equity adjustment added to their quality performance category score when calculating shared savings payments (88 FR 79110). In the CY 2025 PFS final rule, we finalized that beginning in the CY 2025 performance period/2027 MIPS payment year, measures of the Medicare CQM collection type would be scored using flat benchmarks for th CY 2025 PFS final rule, we finalized that beginning in the CY 2025 performance period/2027 MIPS payment year, measures of the Medicare CQM collection type would be scored using flat benchmarks for the measure’s first two performance periods in MIPS (89 FR 98120 and 98121). In performance year 2025, all four Medicare CQMs that are in the APP Plus quality measure will be scored using a flat benchmark. We believe that the use 324 Refer to Executive Order 14192 ‘‘Unleashing Prosperity Through Deregulation’’ https:// www.federalregister.gov/documents/2025/02/06/ 2025-02345/unleashing-prosperity-through- deregulation. of flat benchmarks in a measure’s first two performance periods in MIPS may allow ACOs with high scores to earn maximum or near maximum measure achievement points while allowing for room for quality improvement and rewarding that improvement in subsequent years. Use of flat benchmarks in a measure’s first two performance periods in MIPS also helps to ensure that ACOs with high quality performance on a measure are not penalized as low performers (89 FR 98105). There are scoring scenarios in which ACOs would earn higher measure achievement points under flat benchmarks than t quality performance on a measure are not penalized as low performers (89 FR 98105). There are scoring scenarios in which ACOs would earn higher measure achievement points under flat benchmarks than they would earn under performance period benchmarks, most notable being scenarios in which ACOs have a tight distribution of performance rates on a measure (89 FR 98119). We anticipate that flat benchmarks would provide benefits that are duplicative of the health equity adjustment for ACOs reporting Medicare CQMs for performance year 2025, where performance year 2025 is the measure’s first or second performance period in MIPS using the Medicare CQM collection type. Section 1871(e)(1)(A)(ii) of the Act prohibits the Secretary from retroactively applying a substantive change in Medicare regulations unless, as applicable here, the Secretary determines that failure to apply the change retroactively would be contrary to the public interest. We believe it would be contrary to the public interest to apply the proposed removal of the health equity adjustment applied to an ACO’s quality score prospectively only. As such, we have proposed to apply the removal retroactively, beginning in performan to apply the proposed removal of the health equity adjustment applied to an ACO’s quality score prospectively only. As such, we have proposed to apply the removal retroactively, beginning in performance year 2025. Performance year 2025 will be the first performance year when the Complex Organization Adjustment will apply to ACOs for reporting eCQMs. In performance year 2025, the eCQM/MIPS CQM reporting incentive will continue to be applicable to ACOs, and all Medicare CQMs in the APP Plus quality measure set will be scored using flat benchmarks. As we discussed earlier in this section, the eCQM/MIPS CQM reporting incentive and the Complex Organization Adjustment provide duplicative incentives alongside the incentive provided by the health equity adjustment, for ACOs to meet the quality performance standard under the Shared Savings Program. Performance year 2023 ACO quality results demonstrate the duplicative nature of the health equity adjustment and the eCQM/MIPS CQM reporting incentive, where the ACOs that earned health equity adjustment bonus points also met VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00328 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S ve, where the ACOs that earned health equity adjustment bonus points also met VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00328 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32679 the criteria for the eCQM/MIPS CQM reporting incentive. The health equity adjustment is added to an ACO’s MIPS quality performance category score. ACOs that achieve the quality performance standard by meeting the eCQM/MIPS CQM reporting incentive are evaluated on their performance on measure-level quality performance scores, not the ACO’s MIPS quality performance category score. As such, health equity adjustment bonus points are not used in the determination of the quality performance standard for ACOs that achieve the quality performance standard by meeting the eCQM/MIPS CQM reporting incentive. This dynamic further adds to the confusion and operational complexity of having multiple duplicative incentives for ACOs to meet the quality performance standard under the Shared Savings Program. Both the health equity adjustment and the Comple nd operational complexity of having multiple duplicative incentives for ACOs to meet the quality performance standard under the Shared Savings Program. Both the health equity adjustment and the Complex Organization Adjustment serve to upwardly adjust an ACO’s quality score in order increase the ACO’s ability to meet the quality performance standard. Furthermore, we noted earlier in this section that we anticipate that flat benchmarks would provide benefits that are duplicative of the health equity adjustment for ACOs reporting Medicare CQMs for performance year 2025, where performance year 2025 is the measure’s first or second performance period in MIPS using the Medicare CQM collection type. We also discussed that we believe that the eCQM/MIPS CQM reporting incentive and the Complex Organization Adjustment sufficiently support ACOs to address the unique challenges they face when reporting all payer/all patient measures and sufficiently support ACOs that serve large proportions of beneficiaries dually eligible for Medicare and Medicaid and the Medicare Part D LIS (these are the goals of the health equity adjustment) due to the broader applicability of both the eCQM/MIPS reporting i ficiaries dually eligible for Medicare and Medicaid and the Medicare Part D LIS (these are the goals of the health equity adjustment) due to the broader applicability of both the eCQM/MIPS reporting incentive and the Complex Organization than the health equity adjustment. We believe that it is in the public interest to remove the health equity adjustment applied to an ACO’s quality score beginning in performance year 2025 to simplify our quality scoring methodology for ACOs, while maintaining sufficient support for ACOs to meet the quality performance standard through the application of the eCQM/MIPS CQM reporting incentive, the Complex Organization Adjustment, and use of flat benchmarks for Medicare CQMs. Our proposal would allow ACOs to focus on a simpler scoring methodology that includes more widely applicable incentives, determine how to improve the quality of care furnished to their beneficiaries, and operate with greater focus to improve care coordination activities, thus resulting in the improvement of their performance on quality measures and ability to serve their beneficiaries. Making this change retroactively would provide greater clarity for ACOs by establishing continu ng in the improvement of their performance on quality measures and ability to serve their beneficiaries. Making this change retroactively would provide greater clarity for ACOs by establishing continuity in resource language between performance year 2025 and subsequent performance years, allowing ACOs to plan ahead and have additional time to update internal operations and more easily prepare for consistent quality performance standards. Specifically, we propose to revise and republish paragraph (b) of § 425.512, to include the following proposed amendments: • At § 425.512 removing paragraph (b)(3). • At § 425.512 redesignating paragraphs (b)(4) and (b)(5) as paragraphs (b)(3) and (b)(4), respectively. • Revising references to paragraphs (b)(4) and (b)(5) (which we propose to redesignate as paragraphs (b)(3) and (b)(4)), as follows: ++ At § 425.512 in paragraphs (b)(1) and (b)(2), removing the reference ‘‘paragraph (b)(4)’’ and adding in its place the reference ‘‘paragraph (b)(3)’’. ++ At § 425.512 in paragraph (b)(4)(iii) (which we propose to redesignate as paragraph (b)(3)(iii)), removing the reference ‘‘paragraph (b)(4)(ii)’’ and adding in its place the reference ‘‘paragraph (b) At § 425.512 in paragraph (b)(4)(iii) (which we propose to redesignate as paragraph (b)(3)(iii)), removing the reference ‘‘paragraph (b)(4)(ii)’’ and adding in its place the reference ‘‘paragraph (b)(3)(ii)’’. ++ At § 425.512 in paragraph (b)(4)(iv)(A)(2) (which we propose to redesignate as paragraph (b)(3)(iv)(A)(2)) introductory text, removing the reference ‘‘paragraph (b)(4)(iv)(A)(1)(ii)’’ and adding in its place the reference ‘‘paragraph (b)(3)(iv)(A)(1)(ii)’’. ++ At § 425.512 in paragraph (b)(4)(iv)(B) (which we propose to redesignate as paragraph (b)(3)(iv)(B)), removing the reference ‘‘paragraph (b)(4)(iv)(A)’’ and adding in its place the reference ‘‘paragraph (b)(3)(iv)(A)’’. ++ At § 425.512 in paragraph (b)(4)(v) (which we propose to redesignate as paragraph (b)(3)(v)), removing the references to ‘‘paragraph (b)(4)(iv)(B)’’, ‘‘paragraph (b)(4)(iii)’’, and ‘‘paragraph (b)(4)(iv)’’ and adding in their place the references to ‘‘paragraph (b)(3)(iv)(B)’’, ‘‘paragraph (b)(3)(iii)’’, and ‘‘paragraph (b)(3)(iv)’’, respectively. • At § 425.512 in paragraph (b)(4)(iv)(A)(2)(ii) (which we propose to redesignate as paragraph (b)(3)(iv)(A)(2)(ii)), removing the phrase ‘‘For performa ’’, and ‘‘paragraph (b)(3)(iv)’’, respectively. • At § 425.512 in paragraph (b)(4)(iv)(A)(2)(ii) (which we propose to redesignate as paragraph (b)(3)(iv)(A)(2)(ii)), removing the phrase ‘‘For performance year 2024 and subsequent performance years’’ and adding in its place the phrase ‘‘For performance year 2024’’. • At § 425.512 in paragraph (b)(5) (which we propose to redesignate as paragraph (b)(4)), revising the introductory text and paragraph references to read as follows: ‘‘Use of ACO’s quality score. The ACO’s quality score, determined in accordance with paragraphs (b)(1) through (3) of this section, is used as follows:’’. (3) Proposal To Revise the Terminology in the Shared Savings Program Regulations Used To Describe the Health Equity Adjustment and Other Related Terms To accurately reflect the data used to calculate the health equity adjustment in performance years 2023 and 2024, we propose to revise the terminology used to describe this adjustment and other related terms in the Shared Savings Program regulations. Previously, the term health equity was used in a broad way that could lead to confusion regarding whether or not impermissible features, such as race and ethnicit e Shared Savings Program regulations. Previously, the term health equity was used in a broad way that could lead to confusion regarding whether or not impermissible features, such as race and ethnicity, were included in Shared Savings Program policies (which they are not). No changes in the methodology currently used to calculate the health equity adjustment bonus points or the health equity adjusted quality performance score are being proposed for performance years 2023 and 2024. In revising the terminology used to describe the health equity adjustment, we found that our use of the terms ‘‘quality score’’ and ‘‘quality performance score’’ could lead to confusion. As such, we also propose to revise the terms ‘‘quality score’’ and ‘‘quality performance score’’ at § 425.512. We propose to apply the term ‘‘quality score’’ consistently throughout § 425.512 to mean an ACO-level quality score and also apply the term ‘‘quality performance score’’ to consistently mean a measure-level score. Additionally, we propose to update the cross-references in §§ 425.605 and 425.610 to reference the entirety of § 425.512. With respect to § 425.512(b), we note that the amendments are specified in revis ditionally, we propose to update the cross-references in §§ 425.605 and 425.610 to reference the entirety of § 425.512. With respect to § 425.512(b), we note that the amendments are specified in revised and republished paragraph (b). Specifically, we propose the following conforming revisions to terminology used in the Shared Savings Program at §§ 425.512, 425.605, and 425.610: • At § 425.512 in paragraphs (a)(3)(i), (b)(5)(iv) (which, as discussed later in this section, we propose to redesignate as paragraph (b)(4)(iv)), (c)(2)(i), (c)(2)(ii), and (c)(3)(i) removing the phrase ‘‘quality performance score’’ and adding in its place the phrase ‘‘quality score’’. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00329 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32680 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules • At § 425.512 in paragraphs (a)(4)(i)(A), (a)(5)(i)(A)(1), (a)(5)(i)(B)(1), (a)(5)(i)(C)(1), (a)(7), (b)(1), (b)(2), (c)(3)(ii), (c)(3)(iii), and (c)(3)(iv) removing the phrase ‘‘health equity adjusted quality performance score’’ and adding in its place th ), (a)(5)(i)(B)(1), (a)(5)(i)(C)(1), (a)(7), (b)(1), (b)(2), (c)(3)(ii), (c)(3)(iii), and (c)(3)(iv) removing the phrase ‘‘health equity adjusted quality performance score’’ and adding in its place the phrase ‘‘quality score’’. • At § 425.512 in paragraph (b) subject heading revising to read as follows: ‘‘Calculation of an adjustment to an ACO’s quality score for performance years 2023 and 2024’’. • At § 425.512 in paragraphs (b)(1) and (b)(2), removing the phrase ‘‘health equity adjustment bonus points’’ and adding in its place the phrase ‘‘population and income adjustment bonus points’’. • At § 425.512 in paragraph (b)(4) (which we propose to redesignate as paragraph (b)(3)), revising the introductory text to read as follows: ‘‘Calculation of ACO’s population and income adjustment bonus points. CMS calculates the ACO’s bonus points as follows:’’. • At § 425.512 in paragraph (b)(4)(iv) (which we propose to redesignate as paragraph (b)(3)(iv)), removing the phrase ‘‘an underserved multiplier’’ and adding in its place the phrase ‘‘a multiplier’’. • At § 425.512 in paragraph (b)(4)(iv)(A)(1) (which we propose to redesignate as paragraph (b)(3)(iv)(A)(1)), removing the phrase ‘‘that i iplier’’ and adding in its place the phrase ‘‘a multiplier’’. • At § 425.512 in paragraph (b)(4)(iv)(A)(1) (which we propose to redesignate as paragraph (b)(3)(iv)(A)(1)), removing the phrase ‘‘that is considered underserved’’. • At § 425.512 in paragraph (b)(4)(iv)(B) (which we propose to redesignate as paragraph (b)(3)(iv)(B)), removing the phrase ‘‘health equity adjustment bonus points’’ and adding in its place the phrase ‘‘bonus points’’. • At § 425.512 in paragraph (b)(4)(v) (which we propose to redesignate as paragraph (b)(3)(v)): removing the phrase ‘‘underserved multiplier’’ and adding in its place the phrase ‘‘multiplier’’; and removing the phrase ‘‘health equity adjustment bonus points’’ and adding in its place the phrase ‘‘bonus points’’. • At § 425.605 in paragraphs (d)(1)(i)(A)(3)(ii), (d)(1)(i)(A)(4)(ii), (d)(1)(ii)(A)(3)(ii), (d)(1)(ii)(A)(4)(ii), (d)(1)(iii)(A)(3)(ii), (d)(1)(iii)(A)(4)(ii), (d)(1)(iv)(A)(3)(ii), (d)(1)(iv)(A)(4)(ii), (d)(1)(v)(A)(3)(ii), and (d)(1)(v)(A)(4)(ii) removing the phrase ‘‘health equity adjusted quality performance score calculated according to § 425.512(b)’’ and adding in its place ‘‘quality score calculated according to § 425.512’’. • A A)(4)(ii) removing the phrase ‘‘health equity adjusted quality performance score calculated according to § 425.512(b)’’ and adding in its place ‘‘quality score calculated according to § 425.512’’. • At § 425.610 in paragraphs (d)(3)(ii), for performance year 2025 and subsequent performance years, was specified in Tables 39 through 42 of the CY 2025 PFS final rule (89 FR 98128 through 98132). (d)(4)(ii), (f)(3)(i)(A) and (f)(4)(i)(A) removing the phrase ‘‘health equity adjusted quality performance score calculated according to § 425.512(b)’’ and adding in its place the phrase ‘‘quality score calculated according to § 425.512’’. We seek public comments on these proposed changes. These proposed changes are reflected in Tables 52 and 53 in section III.F.6.f. of this proposed rule. d. Proposal To Update the APP Plus Quality Measure Set (1) Background In the CY 2025 PFS final rule, we created the APP Plus quality measure set to align with the Adult Universal Foundation measures (89 FR 98356) and finalized a phase-in schedule for incorporating measures into the APP Plus quality measure set. We finalized in the CY 2025 PFS final rule (89 FR 98105) that, for performance year 2025 and subseq and finalized a phase-in schedule for incorporating measures into the APP Plus quality measure set. We finalized in the CY 2025 PFS final rule (89 FR 98105) that, for performance year 2025 and subsequent performance years, Shared Savings Program ACOs will be required to report the APP Plus quality measure set. We also finalized that Shared Savings Program ACOs will be required to report on and will be scored on all applicable quality measures in the APP Plus quality measure set according to the phase-in schedule for incorporating measures into the APP Plus quality measure set. We also stated in the CY 2025 PFS final rule (89 FR 98116 through 98117) that the APP Plus quality measure set for Shared Savings Program ACOs will include 11 measures (eight eCQMs/ Medicare CQMs, two administrative claims-based measures, and the CAHPS for MIPS Survey measure) beginning with performance year 2028 or the performance year that is one year after the eCQM specifications become available for Quality ID: 487 Screening for the Social Drivers of Health and Quality ID: 493 Adult Immunization Status, whichever is later, and ACOs will be scored on the required 11 measures. The final APP Plus quality me ID: 487 Screening for the Social Drivers of Health and Quality ID: 493 Adult Immunization Status, whichever is later, and ACOs will be scored on the required 11 measures. The final APP Plus quality measure set for Shared Savings Program ACOs, (2) Proposed Revisions Proposed changes to the following measures that are included in the APP Plus quality measure set are discussed in section IV.A.4.b.(2) of this proposed rule: • Breast Cancer Screening (Quality ID: 112) • Colorectal Cancer Screening (Quality ID: 113) • Preventive Care and Screening: Screening for Depression and Follow- up Plan (Quality ID: 134) (eCQM collection type only) • Clinician and Clinician Group Risk- Standardized Hospital Admission Rates for Patients with Multiple Chronic Conditions (Quality ID: 484) • Screening for Social Drivers of Health (Quality ID: 487) Further discussion and our rationale for the proposed modification or removal of these measures is provided in Table Groups D and DD, and C, respectively, in Appendix 1 of this proposed rule. With the proposed removal of Quality ID: 487 Screening for Social Drivers of Health from the APP Plus quality measure set as described in section IV.A.4.b.(2) and Table endix 1 of this proposed rule. With the proposed removal of Quality ID: 487 Screening for Social Drivers of Health from the APP Plus quality measure set as described in section IV.A.4.b.(2) and Table Group C in Appendix 1 of this proposed rule, we propose that the APP Plus quality measure set for Shared Savings Program ACOs would include ten measures (seven eCQMs/Medicare CQMs, two administrative claims-based measures, and the CAHPS for MIPS Survey measure) beginning with performance year 2028 or the performance year that is 1 year after the eCQM specification becomes available for Quality ID: 493 Adult Immunization Status, whichever is later. ACOs would be scored on the required ten measures. The proposed APP Plus quality measure set for Shared Savings Program ACOs, for performance year 2028 or the performance year that is 1 year after the eCQM specification becomes available for Quality ID: 493, whichever is later, is specified in Table 51 of this proposed rule. BILLING CODE 4120–01–P VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00330 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Re P VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00330 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32681 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00331 Fmt 4701 Sfmt 4725 E:\FR\FM\16JYP3.SGM 16JYP3 / > H P G 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00332 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32683 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00333 Fmt 4701 Sfmt 4725 E:\FR\FM\16JYP3.SGM 16JYP3 / > H P G 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00334 Fmt 4701 Sfmt 4725 E:\FR\FM\16JYP3.SGM 16JYP3 > H P G H P G 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00335 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 23:26 Jul 15, 2025 Jkt 265001 PO 0000 265001 PO 00000 Frm 00335 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00336 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32687 completeness requirement at § 414.1340, and receives a MIPS quality performance category score, then we would use the higher of the ACO’s quality score or the equivalent of the 40th percentile MIPS quality performance category score across all MIPS quality performance category scores, excluding entities/providers eligible for facility-based scoring, for the relevant performance year. Under our proposal, in alignment with § 425.512(c)(2)(ii), if CMS determines the ACO meets the requirements of § 425.512(c)(1), then the ACO’s minimum quality performance score would be set to the equivalent of the 40th percentile MIPS quality performance category score, excluding entities/providers eligible for facility- based scoring, for the relevant performance year. This proposal would the equivalent of the 40th percentile MIPS quality performance category score, excluding entities/providers eligible for facility- based scoring, for the relevant performance year. This proposal would allow an ACO affected by a cyberattack, including ransomware/malware, as determined by the Quality Payment Program, to meet the Shared Savings Program quality performance standard for sharing in savings at the maximum rate under its track and to have any shared losses pro-rated based on the length of the cyberattack, including ransomware/malware, as described in section III.F.7.c.(2) of this proposed rule. Section 1871(e)(1)(A)(ii) of the Act prohibits the Secretary from applying substantive changes in regulations retroactively before the effective date of the change except where the Secretary determines, as relevant here, that failure to apply the change retroactively would be contrary to the public interest. We are aware that cyberattacks, including ransomware/malware, have increased in recent years. It is in the public interest to revise the Shared Savings Program quality and finance EUC policies (the latter of which we discuss in section III.F.7.c. of this proposed rule) to expand recent years. It is in the public interest to revise the Shared Savings Program quality and finance EUC policies (the latter of which we discuss in section III.F.7.c. of this proposed rule) to expand the application of these policies to an ACO at the legal entity level that is affected by an EUC due to a cyberattack, including ransomware/ malware, beginning in performance year 2025. Because ACOs rely heavily on digital infrastructure and third-party vendors, they are increasingly vulnerable to ransomware, data breaches, and system outages. Cyberattacks, including ransomware/ malware, can severely disrupt care coordination, compromise patient data, and disrupt the patient care environment. These disruptions can delay necessary treatments or procedures and reduce the quality of care provided to beneficiaries. We have heard from ACOs that have experienced cyberattacks about the adverse impact on clinical processes. For example, we have heard from ACOs that as a result of a cyberattack, impacted systems were unavailable and manual processes were implemented, including moving to paper records for certain clinical processes in order to continue to provide patient care. For these reasons mpacted systems were unavailable and manual processes were implemented, including moving to paper records for certain clinical processes in order to continue to provide patient care. For these reasons, we understand that cyberattacks can disrupt the patient care environment, and we want ACOs to be able to continue to prioritize patient care during and in the aftermath of a cyberattack. As such, we believe that it is in the public interest to provide relief from the Shared Savings Program quality reporting requirements and by mitigating shared losses to any ACO that has an approved MIPS EUC Exception application due to cyberattack during performance year 2025 so that those ACOs can prioritize patient care during and in the aftermath of a cyberattack. A cyberattack could interfere with the operation of electronic health record systems, affect the integrity of the data used to meet quality reporting requirements, and as a result render ACOs unable to report data that is true, accurate, and complete. Failure to meet the quality performance standard could result in an ACO owing maximum shared losses through no fault of the ACO. If the result of a cyberattack is that an ACO cannot satisf d complete. Failure to meet the quality performance standard could result in an ACO owing maximum shared losses through no fault of the ACO. If the result of a cyberattack is that an ACO cannot satisfactorily meet the quality performance standard, then the ACO may not receive funds they could otherwise use to reinvest into the ACO and continue to improve the quality of care provided. Therefore, should any ACOs experience a cyberattack during 2025, we do not believe it is in the best interest of an ACO’s patient population to disadvantage an ACO from earning shared savings (or for an ACO to incur shared losses) as a result of a disruption caused by a cyberattack. Additionally, a cyberattack could contribute to unpredictable changes to utilization and spending that may have an impact on expenditures for the applicable performance year beyond the ACO’s control. The impact of cyberattacks on physician practices were underscored in a 2024 survey conducted by the American Medical Association, with 90% of respondents at the time of the survey noting that they continued to lose revenue from unpaid claims, 63% noted that they were losing revenue due to the inability to charge patient co-pay , with 90% of respondents at the time of the survey noting that they continued to lose revenue from unpaid claims, 63% noted that they were losing revenue due to the inability to charge patient co-pays or remaining obligations, and 91% had to commit additional staff time and resources to complete revenue cycle tasks.325 Additionally, 42% of respondents were unable to purchase supplies, 29% of respondents were reliant upon private bank loans to fund their practice operations, 42% of respondents noted patients were unable to access coverage and cost information, and 25% shared that patients at the time of the survey continued to face difficulties getting their prescriptions filled.326 These examples illustrate how a cyberattack could impact clinical processes that could contribute to unpredictable utilization and spending. This unpredictable utilization could further skew the results of the data used for quality reporting and assessing whether ACOs met the quality performance standard. Coupled with the previously mentioned impact to data integrity due to the possible need to use paper records to collect and submit quality data, cyberattacks could cause ACOs to submit quality data tha oupled with the previously mentioned impact to data integrity due to the possible need to use paper records to collect and submit quality data, cyberattacks could cause ACOs to submit quality data that is not a true, accurate, and complete reflection of their quality performance. If cyberattacks occur during performance year 2025 and subsequent performance years, we do not wish to hold ACOs who are experiencing extreme and uncontrollable circumstances accountable to a quality performance standard that could be based on inaccurate assessment of their beneficiaries’ utilization of care and to apply the Shared Savings Program finance EUC policies §§ 425.605(f), and 425.610(i) to 100 percent of the ACO’s assigned beneficiaries when an ACO has a MIPS EUC Exception application for a cyberattack, including ransomware/ malware. Thus, we believe it is in the public interest to grant ACOs who have an approved MIPS EUC application relief from the Shared Savings Program quality performance standard so that the standard is accurately assessed and ACOs are not held accountable to an inaccurate assessment of the quality of care they provide based on potentially skewed health care utilization as t d so that the standard is accurately assessed and ACOs are not held accountable to an inaccurate assessment of the quality of care they provide based on potentially skewed health care utilization as the result of a cyberattack and to provide relief to the ACO by mitigating shared losses for the affected performance year. Our proposal would grant relief to ACOs that submit a MIPS EUC Exception application to the Quality Payment Program for a cyberattack, including ransomware/malware, and for which the Quality Payment Program approves the ACO’s MIPS EUC Exception application. We propose the following revisions to the Shared Savings Program regulation at § 425.512(b): 325 American Medical Association (2024). Change Healthcare cyberattack impact: Key takeaways from informal AMA follow-up survey, available at https:// www.ama-assn.org/system/files/change-healthcare- follow-up-survey-results.pdf. 326 Ibid. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00337 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32688 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules • We are rev :\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32688 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules • We are revising paragraph (b)(5)(iv) (which we propose to redesignate as paragraph (b)(4)(iv)), to remove the reference to ‘‘paragraphs (c)(3)(ii) through (c)(3)(iv)’’ and add in its place reference to ‘‘paragraphs (c)(3)(ii) and (c)(3)(iii)’’ consistent with our proposal to limit the applicability of § 425.512(b) to performance years 2023 and 2024, as discussed in section III.F.6.c.(2) of this proposed rule. We propose the following revisions to the Shared Savings Program quality EUC regulation at § 425.512(c): • We are revising paragraph (c)(1) to read as follows, ‘‘CMS determines the ACO was affected by an extreme and uncontrollable circumstance based on any of the following:’’ • We are adding a new paragraph (iii) to (c)(1) to establish that for performance year 2025 and subsequent performance years, the ACO, as defined at § 425.20, is affected by an extreme and uncontrollable circumstance due to a cyberattack, including ransomware/ malware, as determined by the Quality Payment Program. We s ears, the ACO, as defined at § 425.20, is affected by an extreme and uncontrollable circumstance due to a cyberattack, including ransomware/ malware, as determined by the Quality Payment Program. We seek public comments on the proposed changes to the quality EUC policy. We also seek comment on whether there are other scenarios we should consider recognizing under the Shared Savings Program quality and finance EUC policies, while safeguarding against overly broad EUC policies that would allow ACOs to circumvent quality reporting requirements or avoid shared losses. c. Proposal To Revise the EUC Policy To Determine Financial Performance (1) Background As discussed in section III.F.7.a. of this proposed rule, the December 2017 IFC established policies for assessing the financial and quality performance of Shared Savings Program ACOs that were affected by EUCs during performance year 2017. These policies, and their subsequent revisions, are equally applicable for the finance EUC policies. We further refined the finance EUC policies in the May 8, 2020 COVID–19 IFC (85 FR 27550), where we clarified the applicability of the program’s EUC policy to mitigate shared losses for the period of We further refined the finance EUC policies in the May 8, 2020 COVID–19 IFC (85 FR 27550), where we clarified the applicability of the program’s EUC policy to mitigate shared losses for the period of the PHE for COVID–19 starting in January 2020. We explained that catastrophic events outside an ACO’s control could increase the difficulty of coordinating care for patient populations and, due to the unpredictability of changes in utilization and cost of services furnished to beneficiaries, may have a significant impact on expenditures for the applicable performance year (85 FR 27577). These factors could jeopardize the ACO’s ability to succeed in the Shared Savings Program, and ACOs, especially those in performance-based risk tracks, may reconsider whether they are able to continue their participation in the program (85 FR 27577). Under our current policies at §§ 425.605(f)(2) and 425.610(i)(2), ACOs (as defined at § 425.20) that CMS determines to have been affected by an EUC will have their shared losses (if applicable) reduced by an amount that is proportional to the percentage of the year (determined by total months) affected by the EUC(s) and the percentage of the ACO’s performan heir shared losses (if applicable) reduced by an amount that is proportional to the percentage of the year (determined by total months) affected by the EUC(s) and the percentage of the ACO’s performance year-assigned beneficiaries residing in EUC-affected areas. At §§ 425.605(f)(3) and 425.610(i)(3), we apply determinations made by the Quality Payment Program with respect to the following: • Whether an extreme uncontrollable circumstance has occurred; and • The affected areas At §§ 425.605(f)(4) and 425.610(i)(4), CMS has sole discretion to determine the time period during which an EUC occurred and the percentage of the ACO’s assigned beneficiaries residing in the affected areas. (2) Proposed Revisions If the Quality Payment Program approves an ACO’s MIPS EUC Exception application, as an APM Entity, for a cyberattack, including ransomware/malware, for the affected performance year, we propose to apply the Shared Savings Program finance EUC policies at §§ 425.605(f) and 425.610(i) to provide relief to the ACO by mitigating shared losses for the affected performance year. As discussed in section III.F.7.c.(1) of this proposed rule, currently ACOs that we determine to have been affect ovide relief to the ACO by mitigating shared losses for the affected performance year. As discussed in section III.F.7.c.(1) of this proposed rule, currently ACOs that we determine to have been affected by an EUC will have their shared losses (if applicable) reduced by an amount that is proportional to the percentage of the year (determined by total months) affected by the EUC(s) and the percentage of the ACO’s performance year-assigned beneficiaries residing in EUC-affected areas. Unlike the determination of an EUC for a natural disaster or PHE that distinguishes the geographic locations impacted by the EUC, the MIPS EUC Exception application captures the APM Entity’s (such as an ACO’s) request for the EUC but does not differentiate geographic area(s) impacted by the EUC. Therefore, we would be unable to determine the percentage of the ACO’s performance year-assigned beneficiaries residing in an EUC-affected area based on the ACO’s submission of an EUC application to the Quality Payment Program in the case of a cyberattack, including ransomware/malware. So, we are proposing to apply the Shared Savings Program finance EUC policies §§ 425.605(f), and 425.610(i) to 100 percent of the nt Program in the case of a cyberattack, including ransomware/malware. So, we are proposing to apply the Shared Savings Program finance EUC policies §§ 425.605(f), and 425.610(i) to 100 percent of the ACO’s assigned beneficiaries when an ACO has a MIPS EUC Exception application for a cyberattack, including ransomware/ malware, approved by the Quality Payment Program for the affected performance year. The MIPS EUC Exception application contains fields that allow an ACO to enter both a start date and an end date for the EUC. The application allows an ACO to provide either a start date and an end date or a start date only (if the EUC still persists at the time the application is submitted to CMS). We propose that if an ACO provides a start date and an end date for the EUC in its application to the Quality Payment Program, then we would use those dates to determine the duration of the EUC. The start date must be provided in the application. The end date may also be provided in the application but is not required. An ACO may subsequently update the end date by contacting the Quality Payment Program Service Center. We further propose that, if an ACO does not provide an end date in the AC ion but is not required. An ACO may subsequently update the end date by contacting the Quality Payment Program Service Center. We further propose that, if an ACO does not provide an end date in the ACO’s MIPS EUC Exception application or by contacting the Quality Payment Program Service Center to provide an end date prior to the end of the application submission period, then we would apply a 90-day default duration for purposes of mitigating shared losses. This 90-day default duration is consistent with the timeframe used for determining a PHE declaration by the Secretary (the declaration lasts for the duration of the emergency or 90 days but may be extended by the Secretary).327 If the ACO’s MIPS EUC Exception application has a start date that occurs less than 90 days before the end of the performance year, and the ACO’s MIPS EUC Exception application does not include an end date for the EUC and the ACO does not provide an end date to CMS in the form and manner CMS specifies, then we propose that December 31 of the performance year would be the end date for which the ACO was impacted by the EUC, since that is when both the MIPS EUC Exception and the performance year 327 See Admini propose that December 31 of the performance year would be the end date for which the ACO was impacted by the EUC, since that is when both the MIPS EUC Exception and the performance year 327 See Administration for Strategic Preparedness & Response website, Declarations of a Public Health Emergency webpage, at https://aspr.hhs.gov/legal/ PHE/pages/default.aspx (describing duration of a public health emergency, among other information). VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00338 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32689 used to calculate shared savings and shared losses end. If an ACO is affected by an EUC that persists from one performance year to a subsequent performance year, then the ACO would be required to submit a MIPS EUC Exception application for each affected performance year. Moreover, as we discussed in the December 2017 IFC (82 FR 60916 through 60917), to exercise our authority under section 1899(i)(3) of the Act to use other payment models, we must demonstrate that the payment model—(1 discussed in the December 2017 IFC (82 FR 60916 through 60917), to exercise our authority under section 1899(i)(3) of the Act to use other payment models, we must demonstrate that the payment model—(1) ‘‘. . . does not result in spending more for such ACO for such beneficiaries than would otherwise be expended . . . if the model were not implemented. . . .’’ and (2) ‘‘will improve the quality and efficiency of items and services furnished under’’ Medicare. As described in section III.F.7.b.(2) for this proposed rule, we assessed the impacts of our proposal for mitigating shared losses for ACOs affected by extreme and uncontrollable circumstances due to a cyberattack, including ransomware/malware, as determined by the Quality Payment Program. We considered the following: the impact of the potential loss of participation in the program by ACOs affected by a cyberattack, including ransomware/malware, as determined by the Quality Payment Program, should we not implement the policy described in this section of this proposed rule, and the anticipated minimal impact of adjusting losses for ACOs affected by a cyberattack, including ransomware/ malware, as determined by the Quality Payment d in this section of this proposed rule, and the anticipated minimal impact of adjusting losses for ACOs affected by a cyberattack, including ransomware/ malware, as determined by the Quality Payment Program. On the basis of this assessment, we believe incorporating this extreme and uncontrollable circumstances policy into the payment methodologies would meet the requirements of section 1899(i) of the Act by not increasing expenditures above the costs that would be incurred under the statutory payment methodology under section 1899(d) of the Act and by encouraging affected ACOs to remain in the program, which we believe will increase the quality and efficiency of the items and services furnished to the beneficiaries they serve. For these reasons, we conclude that our proposal is permissible under our authority as described in section 1899(i)(3) of the Act. Therefore, we propose the following revisions to the Shared Savings Program finance EUC regulations at §§ 425.605 and 425.610: • At § 425.605, we are adding paragraph (f)(2)(ii) to read as follows, ‘‘For performance year 2025 and subsequent performance years, for an ACO as defined at § 425.20 that is determined to be affected by § 425.605, we are adding paragraph (f)(2)(ii) to read as follows, ‘‘For performance year 2025 and subsequent performance years, for an ACO as defined at § 425.20 that is determined to be affected by an extreme and uncontrollable circumstance due to a cyberattack, including ransomware/ malware, for any month of the performance year that is affected, CMS considers 100 percent of the ACO’s assigned beneficiaries to reside in an affected area.’’ • At § 425.605, we are revising paragraph (f)(3) to read as follows, ‘‘CMS applies determinations made under the Quality Payment Program with respect to all of the following (as applicable):’’ • At § 425.605, we are removing the punctuation ‘‘; and’’ at the end of paragraph (f)(3)(i) and adding in its place a period. • At § 425.605, we are adding a new paragraph (f)(3)(iii) to indicate the following: ‘‘The time period during which the ACO was affected by a cyberattack, including ransomware/ malware.’’ • At § 425.605, we are redesignating the paragraph (f)(4) as paragraph (f)(5). • At § 425.605, we are adding a new paragraph (f)(4) to indicate the following: ‘‘CMS will determine the time period during which an ACO is affected by a cyberattack, raph (f)(4) as paragraph (f)(5). • At § 425.605, we are adding a new paragraph (f)(4) to indicate the following: ‘‘CMS will determine the time period during which an ACO is affected by a cyberattack, including ransomware/malware, as follows: ++ At § 425.605 paragraph (f)(4)(i), CMS will use the start and end date indicated on an ACO’s application to the Quality Payment Program for an extreme and uncontrollable circumstance exception due to a cyberattack, including ransomware/ malware, or the start date indicated on the application and an end date subsequently provided by the ACO in the form and manner as specified by CMS. ++ At § 425.605 paragraph (f)(4)(ii), except as specified in paragraph (f)(4)(iii), if no end date is indicated on the ACO’s application or otherwise provided to us in a form and manner specified by us, described in paragraph (f)(4)(i), we will apply a 90-day duration for purposes of determining the time period during which the ACO was affected by the extreme and uncontrollable circumstance. ++ At § 425.605 paragraph (f)(4)(iii), if the start date indicated on the ACO’s application described in paragraph (f)(4)(i), is less than 90 days before the end of the perfor ntrollable circumstance. ++ At § 425.605 paragraph (f)(4)(iii), if the start date indicated on the ACO’s application described in paragraph (f)(4)(i), is less than 90 days before the end of the performance year and no end date is indicated on the ACO’s application or otherwise provided to CMS in the form and manner specified by CMS, described in paragraph (f)(4)(i) of this section, we will apply an end date of December 31st of the performance year for purposes of determining the time period during which the ACO was affected by the extreme and uncontrollable circumstance.’’ • At § 425.610, we are adding paragraph (i)(2)(ii) to read as follows, ‘‘For performance year 2025 and subsequent performance years, for an ACO as defined at § 425.20 that is determined to be affected by an extreme and uncontrollable circumstance due to a cyberattack, including ransomware/ malware, for any month of the performance year that is affected, CMS considers 100 percent of the ACO’s assigned beneficiaries to reside in an affected area.’’ • At § 425.610, we are revising paragraph (i)(3) to read as follows, ‘‘CMS applies determinations made under the Quality Payment Program with respect to all of the follo reside in an affected area.’’ • At § 425.610, we are revising paragraph (i)(3) to read as follows, ‘‘CMS applies determinations made under the Quality Payment Program with respect to all of the following (as applicable):’’ • At § 425.610, we are removing the punctuation ‘‘; and’’ at the end of paragraph (i)(3)(i) and adding in its place a period. • At § 425.610, we are adding a new paragraph (i)(3)(iii) to read as follows: ‘‘The time period during which the ACO was affected by a cyberattack, including ransomware/malware.’’ • At § 425.610, we are adding a new paragraph (i)(4) to indicate the following: ‘‘CMS will determine the time period during which an ACO is affected by a cyberattack, including ransomware/malware, as follows: ++ At § 425.610 paragraph (i)(4)(i), we will use the start and end date indicated on an ACO’s application to the Quality Payment Program for an extreme and uncontrollable circumstance exception due to a cyberattack, including ransomware/malware, or the start date indicated on the application and an end date subsequently provided by the ACO in the form and manner as specified by CMS. ++ At § 425.610 paragraph (i)(4)(ii), and except as specified in paragraph te indicated on the application and an end date subsequently provided by the ACO in the form and manner as specified by CMS. ++ At § 425.610 paragraph (i)(4)(ii), and except as specified in paragraph (i)(4)(iii), if no end date is indicated on the ACO’s application or otherwise provided to us in a form and manner specified by us, described in paragraph (i)(4)(i), we will apply a 90-day duration for purposes of determining the time period during which the ACO was affected by the extreme and uncontrollable circumstance. ++ At § 425.610 paragraph (i)(4)(iii), if the start date indicated on the ACO’s application described in paragraph (i)(4)(i) is less than 90 days before the end of the performance year and no end date is indicated on the ACO’s application or otherwise provided to CMS in the form and manner specified by CMS, described in paragraph (i)(4)(i) of this section, CMS will apply an end date of December 31st of the VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00339 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32690 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Propose Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 32690 Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules performance year for purposes of determining the time period during which the ACO was affected by the extreme and uncontrollable circumstance.’’ • We are redesignating paragraph (i)(4) as paragraph (i)(5). We seek public comments on these proposed changes to the finance EUC policies. d. Proposed Scenarios for the Start and End Dates Provided by ACOs When the MIPS EUC Exception Application Is Submitted to CMS and Applying Our Existing Regulations Scenario 1: ACO provides a start date and end date for the EUC in the application, or the ACO contacts the Quality Payment Program Service Center to provide an end date for the EUC prior to the end of the application submission period. • Application of the quality EUC policy: The quality EUC policy would apply to the ACO for the entire performance year, where we would use the higher of the ACO’s quality score (if the ACO reports quality data on the APP Plus quality measure set) or the equivalent of the 40th percentile MIPS quality perfo ormance year, where we would use the higher of the ACO’s quality score (if the ACO reports quality data on the APP Plus quality measure set) or the equivalent of the 40th percentile MIPS quality performance category score, as established at § 425.512(c)(3)(iv). • Application of the finance EUC policies: The finance EUC policies as established at § 425.605 and § 425.610 would apply for the timeframe captured by the start and end date for the EUC and would apply to 100 percent of the ACO’s assigned beneficiaries for the duration of the EUC. Scenario 2: ACO provides a start date of March 1 for the EUC, but no end date in the application and the ACO does not contact the Quality Payment Program Service Center to provide an end date prior to the end of the application submission period. • Application of the quality EUC policy: The quality EUC policy would apply to the ACO for the entire performance year, where we would use the higher of the ACO’s quality score (if the ACO reports quality data on the APP Plus quality measure set) or the equivalent of the 40th percentile MIPS quality performance category score, as established at § 425.512(c)(3)(iv). • Application of the finance EUC policie a on the APP Plus quality measure set) or the equivalent of the 40th percentile MIPS quality performance category score, as established at § 425.512(c)(3)(iv). • Application of the finance EUC policies: The finance EUC policies as established at §§ 425.605 and 425.610 would apply a start date of March 1 and an end date that would be 90 days from the start date and will apply to 100 percent of the ACO’s assigned beneficiaries for the duration of the EUC. Scenario 3: ACO provides a start date of November 1 for the EUC, but no end date in the application and the ACO does not contact the Quality Payment Program Service Center to provide an end date prior to the end of the application submission period. • Application of the quality EUC policy: The quality EUC policy would apply to the ACO for the entire performance year, where CMS would use the higher of the ACO’s quality score (if the ACO reports quality data on the APP Plus quality measure set) or the equivalent of the 40th percentile MIPS quality performance category score, as established at § 425.512(c)(3)(iv). • Application of the finance EUC policies: The finance EUC policies as established at §§ 425.605 and 425.610 would apply a S quality performance category score, as established at § 425.512(c)(3)(iv). • Application of the finance EUC policies: The finance EUC policies as established at §§ 425.605 and 425.610 would apply a start date of November 1 and an end date of December 31, which is the last day of the performance year, and will apply to 100 percent of the ACO’s assigned beneficiaries for the duration of the EUC. 8. Population Adjustment—Financial Benchmarking Methodology a. Overview In the CY 2025 PFS final rule (89 FR 98574 through 98576), we finalized the Health Equity Benchmark Adjustment (HEBA), aimed at increasing participation in the Shared Savings Program by ACOs that serve an above- average proportion of Medicare Part D enrollees receiving Low Income Subsidy (LIS) or dually eligible beneficiaries and incentivizing ACOs to provide coordinated care to these populations. We believe this policy encourages participation in the Shared Savings Program from ACOs that otherwise may not have considered entering the program, as 45 percent of the ACOs receiving the HEBA in 2025 would not have qualified for the prior savings adjustment or positive regional adjustments, and therefore would have had a les ntering the program, as 45 percent of the ACOs receiving the HEBA in 2025 would not have qualified for the prior savings adjustment or positive regional adjustments, and therefore would have had a less favorable benchmark, had they not received the HEBA. However, since finalizing this policy, we believe it would add clarity to rename the HEBA to ‘‘population adjustment.’’ This proposed revision would more accurately reflect the nature of the adjustment, which accounts for the proportion of the ACO’s assigned beneficiaries who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid. This proposed change seeks to harmonize the adjustment’s name with the naming convention used for the other adjustments—the regional and prior savings adjustments—where the titles explicitly reflect key aspects of their underlying methodology. The adoption of the term ‘‘population adjustment’’ would reflect the specific data inputs and population focus of this adjustment, while also promoting consistency in nomenclature across adjustments. We recognize that the revisions proposed herein differ from the approach proposed in the amendments to the Health Equity Adjustment applie lso promoting consistency in nomenclature across adjustments. We recognize that the revisions proposed herein differ from the approach proposed in the amendments to the Health Equity Adjustment applied to an ACO’s quality score as described in section III.F.6.c. of this proposed rule. However, the intent and effect of these respective sections are distinct and therefore the proposed revisions reflect a separate rationale and methodology. Accordingly, the two sections serve different purposes and warrant distinct treatment within the rule. b. Revise the Terminology in the Shared Savings Program Regulations Used To Describe the Adjustment (1) Background (a) Context for the HEBA Relying on our authority under section 1899(d)(1)(B)(ii) of the Act, we finalized the health equity adjustment to the historical benchmark for agreement periods beginning on January 1, 2025, and in subsequent years (89 FR 98155 through 98166). We finalized provisions of the regulation in 42 CFR part 425, subpart G (see §§ 425.652(a)(8) and 425.662) specifying the methodology for calculating the health equity adjustment to the historical benchmark, determining an ACO’s eligibility for the adjustment, and the ap (see §§ 425.652(a)(8) and 425.662) specifying the methodology for calculating the health equity adjustment to the historical benchmark, determining an ACO’s eligibility for the adjustment, and the applicability of the adjustment. The text included the terms ‘‘health equity benchmark adjustment,’’ ‘‘Health Equity Benchmark Adjustment (HEBA) scaler,’’ and ‘‘HEBA.’’ In the CY 2025 PFS final rule, we noted the limitations of benchmarks based on historically observed spending, as they could be set too low if they are based on the spending of a population of underserved communities. We discussed that without appropriate adjustments, ACOs caring for these populations may face financial penalties even if they succeed in improving access to high-value care during their agreement periods. Additionally, we noted that the Congressional Budget Office (CBO) reported high start-up costs for providers in rural and underserved communities as a barrier to forming ACOs.328 We stated in the CY 2025 PFS proposed rule that these providers may want to participate in ACOs but are disincentivized due to steep start-up costs. The HEBA was finalized to provide additional financial 328 Congressional Budget O roposed rule that these providers may want to participate in ACOs but are disincentivized due to steep start-up costs. The HEBA was finalized to provide additional financial 328 Congressional Budget Office. (April 16, 2024). Medicare Accountable Care Organizations: Past Performance and Future Directions (59879). https:// www.cbo.gov/publication/59879. VerDate Sep 2014 23:26 Jul 15, 2025 Jkt 265001 PO 00000 Frm 00340 Fmt 4701 Sfmt 4702 E:\FR\FM\16JYP3.SGM 16JYP3 3 S L A S O P O R P h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 134 / Wednesday, July 16, 2025 / Proposed Rules 32691 resources to ACOs serving these populations, and to encourage those ACOs to attract and retain beneficiaries from communities that have faced challenges accessing care. The adjustment is calculated based on the number of beneficiaries an ACO serves who are either enrolled in the LIS program or are dually eligible for Medicare and Medicaid, offering a targeted mechanism to reflect the needs of higher-risk populations. (b) HEBA Provisions Finalized in CY 2025 PFS Final Rule For agreement periods beginning on January 1, 2025, and in subsequent years, the Shared Savings to reflect the needs of higher-risk populations. (b) HEBA Provisions Finalized in CY 2025 PFS Final Rule For agreement periods beginning on January 1, 2025, and in subsequent years, the Shared Savings Program utilizes three key mechanisms to upwardly adjust ACO benchmarks: the HEBA, the positive regional adjustment, and the prior savings adjustment. The positive regional adjustment evaluates an ACO’s efficiency compared to its regional service area. The prior savings adjustment reflects an ACO’s historical success in reducing Medicare fee-for- service (FFS) spending growth. The HEBA can increase benchmarks for ACOs with 15 percent or more assigned beneficiaries enrolled in LIS or dually eligible for Medicare/Medicaid, offering a targeted mechanism to reflect the needs of higher-risk populations. These adjustments are not cumulative: ACOs receive the highest applicable adjustment, capped at 5 percent of national FFS per capita expenditures (89 FR 98158). For ACOs serving medically complex and high- cost beneficiaries, the HEBA often becomes their most favorable adjustment as they may not qualify for the regional adjustment or prior savings adjustments. While risk adjustment accounts ex and high- cost beneficiaries, the HEBA often becomes their most favorable adjustment as they may not qualify for the regional adjustment or prior savings adjustments. While risk adjustment accounts for patient health status and dual eligibility status and benchmark calculations stratify expenditures by dual eligibility status, these mechanisms may fall short in fully reflecting costs for ACOs serving LIS or dually eligible beneficiaries in regions with high proportions of dual eligible and LIS populations. This can leave ACOs caring for these populations with unfavorable benchmarks and may reduce their incentive to participate in the program. As explained earlier in this section of this proposed rule, the HEBA addresses this gap by directly increasing benchmarks for ACOs with a significant proportion of LIS or dually eligible beneficiaries, providing a meaningful financial incentive for participation by those ACOs and retention of such beneficiaries. (c) HEBA Impact—Initial Observations As described in the CY 2025 PFS final rule (89 FR 98158), CMS finalized a process to provide ACOs with a preliminary HEBA calculation at the start of their agreement period, using the ACO’s BY3 a ions As described in the CY 2025 PFS final rule (89 FR 98158), CMS finalized a process to provide ACOs with a preliminary HEBA calculation at the start of their agreement period, using the ACO’s BY3 assigned population. This preliminary calculation uses the proportion of the ACO’s BY3 assigned beneficiaries who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid. We specified that we would then update the calculation when the ACO’s historical benchmark is updated at the time of financial reconciliation for the performance year to reflect the ACO’s performance year-assigned population in the calculation of the proportion of the ACO’s assigned beneficiaries who are enrolled in the Medicare Part D LIS or dually eligible for Medicare and Medicaid. Based on internal analysis of PY 2025 preliminary benchmarks,329 among 33 ACOs estimated to receive a HEBA, 13 are new ACOs participating in their first agreement period and would otherwise not have received a positive regional adjustment to the benchmark (for example, ACO spending is above their region’s expenditures) or a prior savings adjustment, since these ACOs are in their first agreement period. This ea