60912 Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 425 

[CMS–1702—IFC] 

RIN 0938–AT51 

Medicare Program; Medicare Shared 

Savings Program: Extreme and 

Uncontrollable Circumstances Policies 

for Performance Year 2017 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Interim final rule with comment 

period. 

SUMMARY: This interim final rule with 

comment period establishes policies for 

assessing the financial and quality 

performance of Medicare Shared 

Savings Program (Shared Savings 

Program) Accountable Care 

Organizations (ACOs) affected by 

extreme and uncontrollable 

circumstances during performance year 

2017, including the applicable quality 

reporting period for the performance 

year. Under the Shared Savings 

Program, providers of services and 

suppliers that participate in ACOs 

continue to receive traditional Medicare 

fee-for-service (FFS) payments under 

Parts A and B, but the ACO may be 

eligible to receive a shared savings 

payment if it meets specified quality 

and savings requirements. ACOs in 

performance-based risk agreements may 

also share in losses. This interim final 

rule with comment period establishes 

extreme and uncontrollable 

circumstances policies for the Shared 

Savings Program that will apply to 

ACOs subject to extreme and 

uncontrollable events, such as 

Hurricanes Harvey, Irma, and Maria, 

and the California wildfires, effective for 

performance year 2017, including the 

applicable quality data reporting period 

for the performance year. 

DATES:

Effective date: These regulations are 

effective on January 20, 2018. 

Comment date: To be assured 

consideration, comments must be 

received at one of the addresses 

provided below, no later than 5 p.m. on 

February 20, 2018. 

ADDRESSES: In commenting, please refer 

to file code CMS–1702–IFC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. You may submit 

comments in one of four ways (please 

choose only one of the ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to www.regulations.gov. Follow the 

instructions for ‘‘submitting a 

comment.’’ 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1702–IFC, P.O. Box 8016, 

Baltimore, MD 21244–8013. Please 

allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1702–IFC, 

Mail stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW, Washington, 

DC 20201. (Because access to the 

interior of the Hubert H. Humphrey 

Building is not readily available to 

persons without federal government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your comments 

to the Baltimore address, please call 

telephone number (410) 786–7195 in 

advance to schedule your arrival with 

one of our staff members. Comments 

mailed to the addresses indicated as 

appropriate for hand or courier delivery 

may be delayed and received after the 

comment period. For information on 

viewing public comments, see the 

beginning of the SUPPLEMENTARY

INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Sabrina Ahmed, (410) 786–7499. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following 

website as soon as possible after they 

have been received: http://

regulations.gov. Follow the search 

instructions on that website to view 

public comments. 

I. Background 

Stakeholders representing Medicare 

Shared Savings Program (Shared 

Savings Program) Accountable Care 

Organizations (ACOs) located in the 

geographic areas impacted by 

Hurricanes Harvey, Irma, and Maria and 

the California wildfires have reported 

significant impacts on healthcare 

provider operations and on area 

infrastructure. (For more detailed 

information, see the interim final rule 

with comment period titled Medicare 

Program; Quality Payment Program: 

Extreme and Uncontrollable 

Circumstance Policy for the Transition 

Year that appeared in the Federal 

Register on November 16, 2017 

(hereinafter referred to as the Quality 

Payment Program IFC) (82 FR 53568 and 

53895). For example, Hurricane Maria 

devastated Puerto Rico on September 

20, 2017. Stakeholders located in Puerto 

Rico report that while federal and local 

agencies have been working around the 

clock to restore infrastructure in Puerto 

Rico, local communication systems are 

still not fully functioning, some 

residents do not have water services, 

and many residents do not have access 

to electric power. Under such 

circumstances, healthcare providers 

report that their main focus is to manage 

chronically ill patients; provide 

essential services such as dialysis, 

chemotherapy, and blood transfusions; 

deal with trauma; and dispense 

maintenance medications, including 

insulin. Many healthcare providers in 

Puerto Rico have been unable to reopen 

their offices not only because they lack 

power and water, but also because 

access to fuel for operating alternate 

power generators has been limited. 

In addition, other stakeholders report 

that the loss of infrastructure has 

significantly affected the utilization and 

cost of services furnished to the 

Medicare beneficiaries they serve. For 

example, stakeholders representing 

ACOs in Florida indicate there has been 

a significant increase in emergency 

department services, hospitalizations, 

and skilled nursing facility (SNF) 

admissions because of Hurricane Irma. 

They believe that the increased numbers 


ethrower on DSK3G9T082PROD with RULES
Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Rules and Regulations 60913 

of medical services being furnished in 

their geographic areas is a direct result 

of hurricane-related factors affecting 

healthcare providers that are beyond 

their control. Stakeholders report that, 

in some cases, beneficiaries located in 

hurricane-affected areas who are being 

treated for chronic conditions, such as 

diabetes, have limited access to their 

primary clinicians and have not been 

able to obtain timely refills for their 

prescribed medications, resulting in an 

increased volume of hospital and SNF 

admissions, as well as increased 

volumes of other medical services. 

Stakeholders suggest that beneficiaries 

in affected areas are more likely to be 

admitted to hospitals and SNFs, and to 

require other additional medical 

services when basic infrastructure has 

been damaged, such as when 

beneficiaries are unable to utilize 

ventilators or other medically necessary 

equipment at home or in another less 

intensive setting because of widespread 

electrical outages. Further, ACOs 

located in affected areas report that ACO 

providers/suppliers, including hospitals 

and SNFs, are struggling to help 

beneficiaries meet their post-discharge 

needs, including for housing, family 

support, and personal care. 

Stakeholders report that as a result, in 

some cases, patients may have remained 

in inpatient facilities due to the lack of 

appropriate post-discharge services. 

Under the Shared Savings Program, 

ACOs that successfully meet quality and 

savings requirements can share a 

percentage of the achieved savings with 

Medicare. Eligible ACOs share in 

savings only if they meet both the 

quality performance standards and 

generate shareable savings (see 

§§ 425.604(a)(7), (b) and (c); 

425.606(a)(7), (b) and (c); and 

425.610(a)(7), (b) and (c)). ACOs 

participating in a two-sided risk model 

are required to share losses with the 

Medicare program when expenditures 

over the benchmark exceed the 

minimum loss rate (see §§ 425.606(b), (f) 

and (g); and 425.610(b), (f) and (g)). 

ACOs have expressed concerns that 

disaster-related effects on their ACO 

participants and assigned beneficiary 

population could affect their ability to 

successfully meet the quality 

performance standards, and in the case 

of ACOs under performance-based risk, 

to avoid shared losses. Stakeholders are 

concerned about the impact on ACO 

performance results when comparing 

performance year expenditures that 

reflect disaster-related spikes in 

utilization and costs of medical services 

against historical benchmarks that do 

not include the costs of a disaster. For 

instance, in light of the challenges being 

faced by healthcare providers in Puerto 

Rico, stakeholders estimate that it might 

take ACO participants in Puerto Rico 

from 3 to 6 months, at a minimum, to 

comply with quality measures reporting 

requirements for performance year 2017. 

Stakeholders are also concerned that 

ACOs and ACO participants affected by 

disasters could be unfairly assessed for 

performance year 2017 based on the 

quality and claims data that would be 

available during financial reconciliation 

for performance year 2017. For example, 

stakeholders have expressed the 

following concerns: 

• There could be very limited ability 

to obtain beneficiary survey responses 

to the Consumer Assessment of 

Healthcare Providers and Systems 

(CAHPS) survey through phone calls 

and mailings. Further, the widespread 

devastation of infrastructure and the 

impact on healthcare providers would 

likely adversely impact beneficiary 

access to care and beneficiary ratings of 

services, which could negatively affect 

results on the CAHPS survey measures. 

• ACO quality performance scores 

could be adversely affected by a limited 

ability to furnish and/or submit claims 

for cancer screening services, diabetic 

eye exams, or other preventive services. 

This would impact ACOs’ quality 

performance scores because higher rates 

are better for many of the quality 

measures, such as ACO–19 Colorectal 

Cancer Screening or ACO–20 Breast 

Cancer Screening. 

• There could be a high number of 

unplanned hospital and SNF 

admissions, and high use of emergency 

room services due to multiple disasterrelated factors, such as beneficiary 

exposure to contagious illnesses and 

limited access to medicines for 

beneficiaries with chronic conditions. 

This could significantly impact ACOs’ 

quality performance scores because 

lower rates of admissions are better for 

measures, such as ACO–35 SNF 30-day 

All-Cause Readmission Measure or 

ACO–36 All-Cause Unplanned 

Admissions for Patients with Diabetes. 

• The impact of the disasters on an 

ACO’s financial performance could be 

unpredictable as a result of the increase 

in utilization and cost of services 

furnished to the Medicare beneficiaries 

it serves. In some cases, ACO 

participants might be unable to 

coordinate care because of migration of 

patient populations leaving the 

impacted areas. Stakeholders have 

expressed concerns that existing Track 2 

and Track 3 ACOs may be unable to 

remain in a two-sided risk track if they 

are held fully accountable for repaying 

shared losses associated with these 

disasters. We also note that our 

experience with the Shared Savings 

Program has been that the majority of 

ACOs that owe shared losses 

subsequently terminate their 

agreements. 

These stakeholders further suggest 

that in the future providers and 

suppliers could be reluctant to 

participate in the Shared Savings 

Program under a two-sided risk model 

because of concerns that ACOs 

participating under a two-sided risk 

model could be required to share losses 

with the Medicare program for 

expenditures resulting from extreme 

and uncontrollable circumstances. 

Disasters may have several possible 

effects on our ability to measure ACO 

quality performance. For instance, 

displacement of beneficiaries may make 

it difficult for ACOs to access medical 

record data required for quality 

reporting, as well as reduce the 

beneficiary response rate on survey 

measures. Further, for practices 

damaged by a disaster, the medical 

records needed for quality reporting 

may be inaccessible. 

We also believe that disasters may 

affect the infrastructure of ACO 

participants, ACO providers/suppliers, 

and potentially the ACO legal entity 

itself, thereby disrupting routine 

operations related to their participation 

in the Shared Savings Program and 

achievement of program goals. The 

effects of a disaster could include 

challenges in communication between 

the ACO and its participating providers 

and suppliers and in implementation of 

and participation in programmatic 

activities. These factors could 

jeopardize an ACO’s ability to remain in 

the program, particularly for ACOs that 

have accepted performance-based risk 

under Tracks 2 and 3. Stakeholders have 

requested that we develop policies 

under the Shared Savings Program to 

recognize the impact of extreme and 

uncontrollable circumstances on ACO 

quality and financial performance. 

II. Provisions of the Interim Final Rule 

A. Shared Savings Program Extreme 

and Uncontrollable Circumstances 

Policies for Performance Year 2017 

We agree with stakeholders that the 

financial and quality performance of 

ACOs located in areas subject to 

extreme and uncontrollable 

circumstances could be significantly 

and adversely affected. We also agree 

that due to the widespread disruptions 

that have occurred during 2017 in areas 

affected by Hurricanes Harvey, Irma, 

and Maria, and the California wildfires, 

new policies are warranted for assessing 


ethrower on DSK3G9T082PROD with RULES
60914 Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Rules and Regulations 

quality and financial performance of 

Shared Savings Program ACOs in the 

affected areas. We believe it is 

appropriate to adopt policies to address 

stakeholder concerns that displacement 

of beneficiaries may make it difficult for 

ACOs to access medical record data 

required for quality reporting, and might 

reduce the beneficiary response rate on 

survey measures. In addition, medical 

records needed for quality reporting 

may be inaccessible. We also believe it 

is appropriate to adopt policies to 

address stakeholders’ concerns that 

ACOs might be held responsible for 

sharing losses with the Medicare 

program resulting from catastrophic 

events outside the ACO’s control given 

the increase in utilization, migration of 

patient populations leaving the 

impacted areas, and the mandatory use 

of natural disaster payment modifiers 

making it difficult to identify whether a 

claim would otherwise have been 

denied under normal Medicare fee-forservice (FFS) rules. 

Under the Shared Savings Program, 

we do not currently have policies for 

addressing ACO quality performance 

scoring and the determination of the 

shared losses owed by ACOs 

participating under performance-based 

risk tracks in the event of an extreme or 

uncontrollable circumstance. In the 

Quality Payment Program IFC (82 FR 

53895), we established an automatic 

policy to address extreme and 

uncontrollable circumstances, including 

Hurricanes Harvey, Irma, and Maria, for 

the Merit-based Incentive Payment 

System (MIPS) for the 2017 performance 

year. (The specific regions identified as 

being affected by Hurricanes Harvey, 

Irma, and Maria for the 2017 MIPS 

performance year are provided in detail 

in section III.B.1.e. of the Quality 

Payment Program IFC (82 FR 53898)). In 

the Quality Payment Program IFC, we 

stated that should additional extreme 

and uncontrollable circumstances arise 

for the 2017 MIPS performance period 

that trigger the automatic extreme and 

uncontrollable circumstance policy 

under the Quality Payment Program, we 

would communicate that information 

through routine communication 

channels, including but not limited to 

issuing program memoranda, emails to 

stakeholders, and notices on the Quality 

Payment Program website, qpp.cms.gov 

(82 FR 53897). For example, we recently 

issued guidance to stakeholders 

indicating that the MIPS Extreme and 

Uncontrollable Circumstance Policy 

also applies to MIPS eligible clinicians 

affected by the California wildfires (see 

https://www.cms.gov/Medicare/QualityPayment-Program/Resource-Library/ 

Interim-Final-Rule-with-Comment-factsheet.pdf). 

We believe it is also appropriate to 

establish automatic extreme and 

uncontrollable circumstances policies 

under the Shared Savings Program for 

performance year 2017 due to the 

urgency of providing relief to Shared 

Savings Program ACOs impacted by 

Hurricanes Harvey, Irma, and Maria, 

and the California wildfires, because 

their quality scores could be adversely 

affected by these disasters and some 

ACOs could be at risk for additional 

shared losses due to the costs associated 

with these extreme and uncontrollable 

events. Therefore, given the broad 

impact of the three hurricanes and the 

wildfires, and to address any additional 

extreme and uncontrollable 

circumstances that may arise during 

2017 or the quality data reporting period 

for the performance year, we are 

establishing the policies described 

below for the Shared Savings Program 

for performance year 2017. 

For program clarity and to reduce 

unnecessary burdens on affected ACOs, 

we are aligning the automatic extreme 

and uncontrollable circumstances 

policies under the Shared Savings 

Program with the policy established 

under the Quality Payment Program. 

Specifically, the Shared Savings 

Program extreme and uncontrollable 

circumstances policies will apply when 

we determine that an event qualifies as 

an automatic triggering event under the 

Quality Payment Program. We will use 

the determination of an extreme and 

uncontrollable circumstance under the 

Quality Payment Program, including the 

identification of affected geographic 

areas and applicable time periods, for 

purposes of determining the 

applicability of the extreme and 

uncontrollable circumstances policies 

with respect to both financial 

performance and quality reporting 

under the Shared Savings Program. 

These policies will also apply with 

respect to the determination of the 

ACO’s quality performance in the event 

that an extreme and uncontrollable 

event occurs during the applicable 

quality data reporting period for 

performance year 2017 and the 

reporting period is not extended. We 

believe it is appropriate to extend these 

policies to encompass the quality 

reporting period, unless the reporting 

period is extended, because we would 

not have the quality data necessary to 

measure an ACO’s quality performance 

for 2017 if the ACO were unable to 

submit its quality data as a result of a 

disaster occurring during the 

submission window. For example, if an 

extreme and uncontrollable event were 

to occur in February 2018, which is 

during the quality data reporting period 

for performance year 2017 that is 

currently scheduled to end on March 

16, 2018 at 8 p.m. eastern daylight time, 

then the extreme and uncontrollable 

circumstances policies would apply for 

quality data reporting for performance 

year 2017, if the reporting period is not 

extended. We do not believe it is 

appropriate to extend this policy to 

encompass the quality data reporting 

period if the reporting period is 

extended because affected ACOs would 

have an additional opportunity to 

submit their quality data, enabling us to 

measure their quality performance in 

2017. However, we note that, because a 

disaster that occurs after the end of the 

performance year would have no impact 

on the determination of an ACO’s 

financial performance for performance 

year 2017, we will make no adjustment 

to shared losses in the event an extreme 

or uncontrollable event occurs during 

the quality data reporting period. 

1. Determination of Quality Performance 

Scores for ACOs in Affected Areas 

ACOs and their ACO participants and 

ACO providers/suppliers are frequently 

located across several different 

geographic regions or localities, serving 

a mix of beneficiaries who may be 

differentially impacted by hurricanes, 

wildfires, or other triggering events. 

Therefore, we need to establish a policy 

for determining when an ACO, which 

may have ACO participants and ACO 

providers/suppliers located in multiple 

geographic areas, should qualify for the 

automatic extreme and uncontrollable 

circumstance policies for the 

determination of quality performance. 

We will determine whether an ACO has 

been affected by an extreme and 

uncontrollable circumstance by 

determining whether 20 percent or more 

of the ACO’s assigned beneficiaries 

resided in counties designated as an 

emergency declared area in performance 

year 2017, as determined under the 

Quality Payment Program as discussed 

in section III.B.1.e. of the Quality 

Payment Program IFC (82 FR 53898) or 

the ACO’s legal entity is located in such 

an area. An ACO’s legal entity location 

is based on the address on file for the 

ACO in CMS’ ACO application and 

management system. We are using 20 

percent of the ACO’s assigned 

beneficiary population as the minimum 

threshold to establish an ACO’s 

eligibility for the policies regarding 

quality reporting and quality 

performance scoring included in this 

interim final rule with comment period 

because we believe the 20 percent 

threshold provides a reasonable way to 


ethrower on DSK3G9T082PROD with RULES
Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Rules and Regulations 60915 

identify ACOs whose quality 

performance may have been adversely 

affected by an extreme or uncontrollable 

circumstance, while excluding ACOs 

whose performance would not likely be 

significantly affected. The 20 percent 

threshold was selected to account for 

the effect of an extreme or 

uncontrollable circumstance on an ACO 

that has the minimum number of 

assigned beneficiaries to be eligible for 

the program (5,000 beneficiaries), and in 

consideration of the average total 

number of unique beneficiaries for 

whom quality information is required to 

be reported in the combined CAHPS 

survey sample (860 beneficiaries) and 

the CMS web interface sample 

(approximately 3,500 beneficiaries). 

(There may be some overlap between 

the CAHPS sample and the CMS web 

interface sample.) Therefore, we 

estimated that an ACO with an assigned 

population of 5,000 beneficiaries 

typically would be required to report 

quality information on a total of 4,000 

beneficiaries. Thus, we believe the 20 

percent threshold ensures that an ACO 

with the minimum number of assigned 

beneficiaries would have an adequate 

number of beneficiaries across the 

CAHPS and CMS web interface samples 

in order to fully report on these 

measures. Of the ACOs we have 

estimated will be impacted by the 

disasters in 2017, 92 percent have more 

than 20 percent of their assigned 

beneficiaries residing in emergency 

declared areas. However, we also 

understand that some ACOs that have 

fewer than 20 percent of their assigned 

beneficiaries residing in affected areas 

have a legal entity that is located in an 

emergency declared area. Consequently, 

their ability to quality report may be 

equally impacted since the ACO legal 

entity may be unable to collect the 

information from the ACO participants 

or experience infrastructure issues 

related to capturing, organizing and 

reporting the data to CMS. If less than 

20 percent of the ACO’s assigned 

beneficiaries reside in an affected area 

and the ACO’s legal entity is not located 

in a county designated as an affected 

area, then we believe that there is 

unlikely to be a significant impact upon 

the ACO’s ability to report or on the 

representativeness of the quality 

performance score that is determined for 

the ACO. 

We will determine what percentage of 

the ACO’s performance year assigned 

population was affected by a disaster 

based on the final list of beneficiaries 

assigned to the ACO for the performance 

year. Although beneficiaries are 

assigned to ACOs under Track 1 and 

Track 2 based on preliminary 

prospective assignment with 

retrospective reconciliation after the end 

of the performance year, these ACOs 

will be able to use their quarterly 

assignment lists, which include 

beneficiaries’ counties of residence, for 

early insight into whether they are 

likely to meet the 20 percent threshold. 

We have used preliminary information 

on beneficiary assignment for the 2017 

performance year to estimate the 

number of ACOs that were affected by 

the hurricanes and the California 

wildfires in 2017. We estimate that 105 

of the 480 ACOs (approximately 22 

percent) would meet the minimum 

threshold of having 20 percent or more 

of their assigned beneficiaries residing 

in an area designated as impacted by 

Hurricanes Harvey, Irma, and Maria, 

and the California wildfires or have 

their legal entity located in one of these 

areas. 

For purposes of determining quality 

performance scoring for performance 

year 2017, if 20 percent or more of an 

ACO’s assigned beneficiaries reside in 

an area impacted by the disaster or the 

ACO’s legal entity is located in such an 

area, the ACO’s minimum quality score 

will be set to equal the mean Shared 

Savings Program ACO quality score for 

all ACOs for performance year 2017. We 

are setting the minimum quality score 

equal to the mean quality score for all 

Shared Savings Program ACOs 

nationwide, because the mean reflects 

the full range of quality performance 

across all ACOs in the Shared Savings 

Program. More specifically, the mean 

ACO quality score is equal to the 

combined ACO quality score for all 

ACOs meeting the quality performance 

standard for the performance year 

divided by the total number of ACOs 

meeting the quality performance 

standard for the performance year. To 

illustrate, we note that the mean Shared 

Savings Program ACO quality 

performance score for all participating 

ACOs for performance year 2016 was 

approximately 95 percent. In the event 

an affected ACO is able to complete 

quality reporting for performance year 

2017, and the ACO’s calculated quality 

score is higher than the mean Shared 

Savings Program ACO quality score, 

then we would apply the higher score. 

In earlier rulemaking, we finalized a 

policy under which ACOs that 

demonstrate quality improvement on 

established quality measures from yearto-year will be eligible for up to 4 bonus 

points per domain (79 FR 67927 through 

67931, § 425.502(e)(4)). To earn bonus 

points, an ACO must demonstrate a net 

improvement in performance on 

measures within a domain. If an ACO is 

not able to complete quality reporting 

for performance year 2017, it will not be 

possible for us to assess the ACO’s 

improvement on established quality 

measures since performance year 2016. 

Therefore, if an ACO receives a quality 

score based on the mean quality score, 

the ACO is not eligible for bonus points 

awarded based on quality improvement. 

We believe it is appropriate to adjust 

the quality performance scores for ACOs 

in affected areas because we anticipate 

that such ACOs will likely be unable to 

collect or report the necessary 

information to CMS as a result of the 

extreme and uncontrollable 

circumstance, and/or the ACO’s quality 

performance score will be significantly 

and adversely affected. Section 

1899(b)(3)(C) of the Act gives us the 

authority to establish the quality 

performance standards used to assess 

the quality of care furnished by ACO. 

Accordingly, we are modifying the 

quality performance standard specified 

under § 425.502 by amending paragraph 

(e)(4) and adding a new paragraph (f) to 

address potential adjustments to the 

quality performance score for 

performance year 2017 of ACOs 

determined to be affected by extreme 

and uncontrollable circumstances. For 

performance year 2017, including the 

applicable quality data reporting period 

for the performance year if the reporting 

period is not extended, in the event that 

we determine that 20 percent or more of 

an ACO’s final list of assigned 

beneficiaries for the performance year, 

as determined under subpart E of the 

Shared Savings Program regulations, 

reside in an area that is affected by an 

extreme and uncontrollable 

circumstance as determined under the 

Quality Payment Program, or that the 

ACO’s legal entity is located in such an 

area, we will use the following approach 

to calculate the ACO’s quality 

performance score instead of the 

methodology specified in § 425.502(a) 

through (e). 

• The ACO’s minimum quality score 

will be set to equal the mean Shared 

Savings Program ACO quality score for 

performance year 2017. 

• If the ACO is able to completely and 

accurately report all quality measures, 

we will use the higher of the ACO’s 

quality score or the mean Shared 

Savings Program ACO quality score. 

• If the ACO receives a quality score 

based on the mean, the ACO is not 

eligible for bonus points awarded based 

on quality improvement. 

We will apply determinations made 

under the Quality Payment Program 

with respect to whether an extreme and 

uncontrollable circumstance has 

occurred and the affected areas. We 


ethrower on DSK3G9T082PROD with RULES
60916 Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Rules and Regulations 

have sole discretion to determine the 

time period during which an extreme 

and uncontrollable circumstance 

occurred, the percentage of the ACO’s 

assigned beneficiaries residing in the 

affected areas, and the location of the 

ACO legal entity. 

For purposes of the MIPS APM 

scoring standard, MIPS eligible 

clinicians in Medicare Shared Savings 

Program ACOs that do not completely 

report quality for 2017; and therefore, 

receive the mean ACO quality score 

under the Shared Savings Program 

would receive a score of zero percent in 

the MIPS quality performance category. 

However, these MIPS eligible clinicians 

would receive a score of 100 percent in 

the improvement activities (IAs) 

performance category, which would be 

sufficient for them to receive a 2017 

MIPS final score above the performance 

threshold. This would result in at least 

a slight positive MIPS payment 

adjustment in 2019. Additionally, if the 

ACO participants are able to report 

advancing care information (ACI), the 

MIPS eligible clinicians in the ACO will 

receive an ACI performance category 

score under the APM scoring standard 

which would further increase their final 

score under MIPS. 

2. Mitigating Shared Losses for ACOs 

Participating in a Performance-Based 

Risk Track 

In addition, we are modifying the 

payment methodology under Tracks 2 

and 3 established under the authority of 

section 1899(i) of the Act to mitigate 

shared losses owed by ACOs affected by 

extreme and uncontrollable 

circumstances during performance year 

2017. Under this policy, we will reduce 

the ACO’s shared losses, if any, 

determined to be owed under the 

existing methodology for calculating 

shared losses in part 425, subpart G, of 

the regulations by an amount 

determined by multiplying the shared 

losses by two factors: (1) The percentage 

of the total months in the performance 

year affected by an extreme and 

uncontrollable circumstance; and (2) the 

percentage of the ACO’s assigned 

beneficiaries who reside in an area 

affected by an extreme and 

uncontrollable circumstance. We will 

determine the percentage of the ACO’s 

performance year assigned beneficiary 

population that was affected by the 

disaster based on the final list of 

beneficiaries assigned to the ACO for 

the performance year. For example, 

assume that an ACO is determined to 

owe shared losses of $100,000 for 

performance year 2017, a disaster was 

declared for October through December 

during the performance year, and 25 

percent of the ACO’s assigned 

beneficiaries reside in the disaster area. 

In this scenario, we would adjust the 

ACO’s losses in the following manner: 

$100,000¥($100,000 × 0.25 × 0.25) = 

$100,000¥$6,250 = $93,750. 

We believe it is appropriate to adopt 

this policy to address stakeholders’ 

concerns that ACOs could be held 

responsible for sharing losses with the 

Medicare program resulting from 

catastrophic events outside the ACO’s 

control given the increase in utilization, 

difficulty of coordinating care for 

patient populations leaving the 

impacted areas, and the mandatory use 

of natural disaster payment modifiers 

making it difficult to identify whether a 

claim would otherwise have been 

denied under normal Medicare FFS 

rules. Absent this relief, we believe 

ACOs that are currently participating in 

Tracks 2 and 3 may reconsider whether 

they are able to continue their 

participation in the Shared Savings 

Program under a performance-based risk 

track. The approach we are adopting in 

this interim final rule with comment 

period balances the need to offer relief 

to affected ACOs with the need to 

continue to hold those ACOs 

accountable for losses incurred during 

the months in which there was no 

applicable disaster declaration and for 

the assigned beneficiary population that 

was outside the area affected by the 

disaster. We also note that these policies 

do not change the status of Track 2 or 

Track 3 of the Shared Savings Program 

as an Advanced Alternative Payment 

Model (APM) for purposes of the 

Quality Payment Program, or prevent an 

eligible clinician in a performancebased risk ACO from becoming a 

Qualifying APM Participant for 

purposes of the APM incentive under 

the Quality Payment Program. 

We also explored an alternative 

approach for mitigating the potential 

losses for ACOs in performance-based 

risk tracks that are affected by extreme 

and uncontrollable circumstances. 

Under this approach, we would remove 

claims for services furnished to assigned 

beneficiaries in the impacted areas by 

an ACO participant that are submitted 

with a natural disaster modifier before 

calculating financial performance. 

However, we believe that this 

alternative approach could, for some 

affected ACOs, result in the exclusion of 

a significant amount of their total claims 

at financial reconciliation, making it 

very difficult to measure the ACOs’ 

financial performance. 

We also want to emphasize that all 

ACOs will continue to be entitled to 

share in any savings they may achieve 

for performance year 2017. The 

calculation of savings and the 

determination of shared savings 

payment amounts will not be affected 

by the policies to address extreme and 

uncontrollable circumstances. ACOs in 

all three tracks of the program will 

receive shared savings payments, if any, 

as determined under part 425, subpart 

G. 

We also considered the possible 

impact of extreme and uncontrollable 

circumstances on an ACO’s 

expenditures for purposes of 

determining the benchmark (§§ 425.602 

and 425.603). The additional costs 

incurred as a result of an extreme or 

uncontrollable circumstance would 

likely impact the benchmark 

determined for the ACO’s subsequent 

agreement period in the Shared Savings 

Program, as performance years of the 

current agreement period become the 

historical benchmark years for the 

subsequent agreement period. We 

currently believe that the increase in 

expenditures for a particular calendar 

year would result in a higher benchmark 

value when the same calendar year is 

used to determine the ACO’s historical 

benchmark, and in calculating 

adjustments to the rebased benchmark 

based on regional FFS expenditures 

(§ 425.603). We believe that any effect of 

including these additional expenditures 

in determining the ACO’s benchmark 

for the subsequent agreement period 

could be mitigated somewhat because 

the ACO’s expenditures during the three 

base years included in the benchmark 

are weighted equally, and regional 

expenditures would also increase as a 

result of the disaster. Therefore, we 

anticipate the effect on the regional 

adjustment under § 425.603(c)(9) would 

be minimal. Although we are not 

modifying the program’s historical 

benchmark methodology in this interim 

final rule with comment period, we plan 

to observe the impact of the 2017 

hurricanes and wildfires on ACO 

expenditures, and may revisit the need 

to make adjustments to the methodology 

for calculating the benchmark in future 

rulemaking. 

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. In assessing 

the impacts of the policy for mitigating 

shared losses for Track 2 and Track 3 

ACOs affected by extreme and 


ethrower on DSK3G9T082PROD with RULES
Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Rules and Regulations 60917 

uncontrollable circumstances in 2017, 

we considered: The impact of the 

potential loss of participation in the 

program by ACOs affected by disasters 

should we not implement the policy 

described in this interim final rule with 

comment period, and the anticipated 

minimal impact of adjusting losses for 

ACOs affected by disasters, as described 

in the regulatory impact statement. On 

the basis of this assessment, we believe 

incorporating this extreme and 

uncontrollable circumstances policy 

into the payment methodologies for 

Tracks 2 and 3 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. 

We also note that to the extent the 

policies in this interim final rule with 

comment constitute a change to the 

Shared Savings Program payment 

methodology for 2017 after the start of 

the performance year, we believe that, 

consistent with section 1871(e)(1)(A)(ii) 

of the Act, and for reasons discussed in 

section III of this interim final rule with 

comment period, it would be contrary to 

the public interest not to adjust the 

shared losses calculated for ACOs in 

Tracks 2 and 3 to reflect the impact of 

the extreme and uncontrollable 

circumstances during 2017. 

We invite comments on the policies 

being finalized in this interim final rule 

with comment period for performance 

year 2017, including the applicable 

quality data reporting period for 

performance year 2017 under the 

Shared Savings Program. We believe 

these automatic extreme and 

uncontrollable circumstance policies 

will reduce burden and financial 

uncertainty for ACOs, ACO participants, 

and ACO providers/suppliers affected 

by catastrophes, including ACOs 

affected by Hurricanes Harvey, Irma, 

and Maria, and the California wildfires, 

and will also align with existing 

Medicare policies under the Quality 

Payment Program for 2017. 

We note that in future rulemaking, we 

intend to propose permanent policies 

under the Shared Savings Program to 

address extreme and uncontrollable 

circumstances in future performance 

years. Therefore, we also invite public 

comment on policies and issues that we 

should consider when developing 

proposals for these permanent policies. 

We also welcome comments on how 

to address the impact of extreme and 

uncontrollable events on historical 

benchmark calculations, which we will 

consider in developing any future 

proposals. In particular, we seek 

comments as to whether and how the 

historical benchmark should be adjusted 

to reflect extreme and uncontrollable 

events that occur during a benchmark 

year, how to establish the threshold for 

determining whether a significant 

change in expenditures occurred, 

whether and how to account for changes 

in expenditures that have an aggregate 

positive or negative impact on the 

historical benchmark, and whether and 

how to reweight the benchmark years 

when calculating the historical 

benchmark if one or more benchmark 

years is impacted by an extreme and 

uncontrollable event. 

III. Waiver of Proposed Rulemaking 

Under 5 U.S.C. 553(b) of the 

Administrative Procedure Act (APA), 

the agency is required to publish a 

notice of the proposed rule in the 

Federal Register before the provisions 

of a rule take effect. Similarly, section 

1871(b)(1) of the Act requires the 

Secretary to provide for notice of the 

proposed rule in the Federal Register 

and provide a period of not less than 60 

days for public comment. Section 

553(b)(B) of the APA provides for 

exceptions from the notice and 

comment requirements; in cases in 

which these exceptions apply, section 

1871(b)(2)(C) of the Act provides for 

exceptions from the notice and 60-day 

comment period requirements of the Act 

as well. Section 553(b)(B) of the APA 

and section 1871(b)(2)(C) of the Act 

authorize an agency to dispense with 

normal rulemaking requirements for 

good cause if the agency makes a 

finding that the notice and comment 

process is impracticable, unnecessary, 

or contrary to the public interest. 

We find that there is good cause to 

waive the notice and comment 

requirements under sections 553(b)(B) 

of the APA and section 1871(b)(2)(C) of 

the Act due to the impact of the recent 

disasters, as described in section I of 

this interim final rule with comment 

period, and the need to provide relief to 

impacted Shared Savings Program 

ACOs, ACO participants, and ACO 

providers/suppliers. Based on the size 

and scale of the destruction and 

displacement caused by these disasters 

in the affected regions, we believe it is 

likely that some ACOs and their ACO 

participants and ACO providers/ 

suppliers have been significantly 

adversely affected by these events. It is 

possible that some ACO providers/ 

suppliers may lack access to their EHR 

technology or other clinical data they 

would need in order to submit quality 

data for the 2017 performance period. 

Undertaking notice-and-comment rulemaking would not provide certainty for 

ACOs that must prepare now for quality 

reporting for performance year 2017, 

which begins on January 22, 2018. 

Moreover, there is no certainty that a 

final rule could be issued and in effect 

before the end of the quality reporting 

period for performance year 2017 on 

March 16, 2018. Absent this certainty, 

the prudent action for impacted ACOs 

would be to direct their attention and 

resources to attempt to report quality 

data for performance year 2017. 

We believe it is likely that despite this 

effort, many affected ACOs would be 

unable to completely, accurately, and 

timely report given the lack of clinical 

information and infrastructure as a 

result of the disasters. This would result 

in unnecessary burden to impacted 

ACOs and their ACO participants and 

ACO providers/suppliers in the event a 

final rule is issued during or after the 

quality data submission period, and the 

ACO would have been afforded relief 

under the policies included in the final 

rule. Further, absent this certainty, 

ACOs participating under Tracks 2 and 

3 that are located in disaster areas and 

that have experienced increased 

utilization would be concerned about 

being at risk for shared losses and 

would likely direct their attention and 

resources to contingency planning 

activities to develop options for 

offsetting the potential additional costs. 

These ACOs may also reconsider 

whether they are able to continue to 

their participation in the Shared Savings 

Program in a performance-based risk 

track. We believe it is also possible that 

potential ACO applicants could be 

reluctant to initiate the necessary 

advance planning and investments 

required to develop the capability to 

participate under a two-sided risk 

model during future performance years 

if they believe that we would be hesitant 

to provide similar flexibility in the 

event of future disasters, such that they 

may be at risk for losses resulting from 

circumstances beyond their control. 

Consequently, we believe it is in the 

public interest to adopt these interim 

final policies to provide relief to 

affected ACOs and their ACO 

participants and ACO providers/ 

suppliers by mitigating the negative 

effects of the disasters during 

performance year 2017 on their quality 

and financial performance under the 

Shared Savings Program and allowing 

them to direct their resources toward 

caring for their patients and repairing 

structural damage to facilities. 


ethrower on DSK3G9T082PROD with RULES
60918 Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Rules and Regulations 

We find that it would be 

impracticable and contrary to the public 

interest to undergo notice and comment 

procedures before finalizing, on an 

interim basis with an opportunity for 

public comment, policies under the 

Shared Savings Program to address 

extreme and uncontrollable 

circumstances that impact an entire 

region or locale in performance year 

2017, including the applicable quality 

data reporting period. Therefore, we 

find good cause to waive the notice of 

proposed rulemaking as provided under 

section 553(b)(B) of the APA and section 

1871(b)(2)(C) of the Act and to issue this 

interim final rule with an opportunity 

for public comment. We are providing a 

60-day public comment period as 

specified in the DATES section of this 

document. 

IV. Collection of Information 

Requirements 

As stated in section 3022 of the 

Patient Protection and Affordable Care 

Act, Chapter 35 of title 44, United States 

Code, shall not apply to the Shared 

Savings Program. However, we note that 

this document does not impose any new 

information collection requirements 

(that is, reporting, recordkeeping, or 

third-party disclosure requirements). 

V. Regulatory Impact Statement 

These policies for addressing extreme 

and uncontrollable circumstances are 

unlikely to have a significant economic 

impact on the Shared Savings Program. 

We estimated the impact of these 

policies by simulating their effect on 

actual 2016 financial and quality 

performance results, the most recent 

available reconciled financial and 

quality results, for the ACOs currently 

participating in the program that are 

potentially impacted by these policies. 

The total increase in shared savings 

payments and total reduction in shared 

loss payments anticipated for ACOs 

impacted by the policies in this rule in 

2017 is estimated to be approximately 

$3.5 million in total (which would 

round to zero assuming precision to the 

nearest $10 million). This interim final 

rule is not subject to the requirements 

of Executive Order 13771 because it is 

expected to result in no more than de 

minimis costs. 

VI. Response to Public Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

public comments we receive by the date 

and time specified in the DATES section 

of this document, and, when we 

proceed with a subsequent document, 

we will respond to the public comments 

in the preamble to that document. 

List of Subjects in 42 CFR Part 425 

Administrative practice and 

procedure, Health facilities, Health 

professions, Medicare, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR part 

425 as set forth below: 

PART 425—MEDICARE SHARED 

SAVINGS PROGRAM 

■ 1. The authority for part 425 

continues to read as follows: 

Authority: Secs. 1102, 1106, 1871, and 

1899 of the Social Security Act (42 U.S.C. 

1302, 1306, 1395hh, and 1395jjj). 

■ 2. Amend § 425.502 by adding 

paragraphs (e)(4)(vi) and (f) to read as 

follows: 

§ 425.502 Calculating the ACO quality 

performance score. 

* * * * * 

(e) * * * 

(4) * * * 

(vi) For performance year 2017, if an 

ACO receives the mean Shared Savings 

Program ACO quality score based on the 

extreme and uncontrollable 

circumstances policies in paragraph (f) 

of this section, the ACO is not eligible 

for bonus points awarded based on 

quality improvement. 

(f) Extreme and uncontrollable 

circumstances. For performance year 

2017, including the applicable quality 

data reporting period for the 

performance year if the quality reporting 

period is not extended, in the event that 

CMS determines 20 percent or more of 

an ACO’s assigned beneficiaries for the 

performance year, as determined under 

subpart E of this part, reside in an area 

identified under the Quality Payment 

Program as being affected by an extreme 

and uncontrollable circumstance or an 

ACO’s legal entity is located in such an 

area, the following approach is used in 

calculating the quality score instead of 

the methodology specified in 

paragraphs (a) through (e) of this 

section. 

(1) The ACO’s minimum quality 

performance score is set to equal the 

mean quality performance score for all 

Shared Savings Program ACOs for 

performance year 2017. 

(2) If the ACO completely and 

accurately reports all quality measures, 

CMS uses the higher of the ACO’s 

quality performance score or the mean 

quality performance score for all Shared 

Savings Program ACOs. 

(3) CMS applies determinations made 

under the Quality Payment Program 

with respect to— 

(i) Whether an extreme and 

uncontrollable circumstance has 

occurred; and 

(ii) The affected areas. 

(4) An ACO’s legal entity location is 

based on the address on file for the ACO 

in CMS’ ACO application and 

management system. 

(5) CMS has sole discretion to 

determine the time period during which 

an extreme and uncontrollable 

circumstance occurred, the percentage 

of the ACO’s assigned beneficiaries 

residing in the affected areas, and the 

location of the ACO legal entity. 

■ 3. Amend § 425.606 by adding 

paragraph (i) to read as follows: 

§ 425.606 Calculation of shared savings 

and losses under Track 2. 

* * * * * 

(i) Extreme and uncontrollable 

circumstances. For performance year 

2017, the following adjustment is made 

in calculating the amount of shared 

losses, after the application of the 

shared loss rate in paragraph (f) of this 

section and the loss recoupment limit in 

paragraph (g) of this section. 

(1) CMS determines the percentage of 

the ACO’s performance year 2017 

assigned beneficiary population affected 

by an extreme and uncontrollable 

circumstance. 

(2) CMS reduces the amount of the 

ACO’s shared losses by an amount 

determined by multiplying the shared 

losses by the percentage of the total 

months in the performance year affected 

by an extreme and uncontrollable 

circumstance, and the percentage of the 

ACO’s assigned beneficiaries who reside 

in an area affected by an extreme and 

uncontrollable circumstance. 

(3) CMS applies determinations made 

under the Quality Payment Program 

with respect to— 

(i) Whether an extreme and 

uncontrollable circumstance has 

occurred; and 

(ii) The affected areas. 

(4) CMS has sole discretion to 

determine the time period during which 

an extreme and uncontrollable 

circumstance occurred and the 

percentage of the ACO’s assigned 

beneficiaries residing in the affected 

areas. 

■ 4. Amend § 425.610 by adding 

paragraph (i) to read as follows: 

§ 425.610 Calculation of shared savings 

and losses under Track 3. 

* * * * * 

(i) Extreme and uncontrollable 

circumstances. For performance year 


ethrower on DSK3G9T082PROD with RULES
Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Rules and Regulations 60919 

2017, the following adjustment is made 

in calculating the amount of shared 

losses, after the application of the 

shared loss rate in paragraph (f) of this 

section and the loss recoupment limit in 

paragraph (g) of this section. 

(1) CMS determines the percentage of 

the ACO’s performance year 2017 

assigned beneficiary population affected 

by an extreme and uncontrollable 

circumstance. 

(2) CMS reduces the amount of the 

ACO’s shared losses by an amount 

determined by multiplying the shared 

losses by the percentage of the total 

months in the performance year affected 

by an extreme and uncontrollable 

circumstance, and the percentage of the 

ACO’s assigned beneficiaries who reside 

in an area affected by an extreme and 

uncontrollable circumstance. 

(3) CMS applies determinations made 

under the Quality Payment Program 

with respect to— 

(i) Whether an extreme and 

uncontrollable circumstance has 

occurred; and 

(ii) The affected areas. 

(4) CMS has sole discretion to 

determine the time period during which 

an extreme and uncontrollable 

circumstance occurred and the 

percentage of the ACO’s assigned 

beneficiaries residing in the affected 

areas. 

Dated: November 28, 2017. 

Seema Verma, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: November 30, 2017. 

Eric D. Hargan, 

Acting Secretary, Department of Health and 

Human Services. 

[FR Doc. 2017–27920 Filed 12–21–17; 4:15 pm] 

BILLING CODE 4120–01–P 


ethrower on DSK3G9T082PROD with RULES