2025 Medicare Physician Fee Schedule Final Rule: Shared Savings Program Provisions

On November 1, 2024, the Centers for Medicare & Medicaid Services (CMS) released the CY 2025 Medicare Physician Fee Schedule (PFS) final rule. The updates focus on enhancing the Medicare Shared Savings Program (Shared Savings Program) to advance value-based care, equity, and growth, with an emphasis on expanding support for Accountable Care Organizations (ACOs) in underserved areas. CMS aims to have all Traditional Medicare beneficiaries in accountable care arrangements emphasizing quality and cost management by 2030.

Key Highlights of the CY 2025 PFS Final Rule

  • Prepaid Shared Savings
    CMS introduces “prepaid shared savings” for high-performing ACOs, providing advance payments to support direct beneficiary services and healthcare infrastructure, especially in underserved areas. At least 50% of these funds must go toward medically appropriate services not covered by Traditional Medicare, addressing the specific needs of vulnerable populations.
  • Health Equity Benchmark Adjustment (HEBA)
    To incentivize participation in underserved areas, CMS is implementing the HEBA, which adjusts ACOs’ financial benchmarks based on the number of low-income or dual-eligible beneficiaries they serve. ACOs with at least 15% of such beneficiaries are eligible, supporting equitable access to quality care.
  • APP Plus Quality Measure Set
    Shared Savings Program ACOs will adopt the APP Plus quality measure set by 2025, aligning with CMS’s Universal Foundation measures for streamlined, clinically relevant quality reporting. This measure set will gradually expand from six to 11 measures by 2028.
  • Digital Quality Measurement Transition
    To improve interoperability and data accuracy, CMS is prioritizing digital quality measurement via electronic Clinical Quality Measures (eCQMs). CMS will incentivize ACOs to adopt eCQMs, supporting efficient data collection and reporting, with incentives extended through 2025.

CMS is finalizing the Complex Organization Adjustment for the CY 2025 performance period and 2027 MIPS payment year to address reporting challenges for virtual groups and APM entities, including Shared Savings Program ACOs.

1. Complex Organization Adjustment

Virtual Groups and APM Entities will receive one measure achievement point for each compliant eCQM submitted, capped at 10 points per measure. Total points cannot exceed 10% of the total available for the MIPS quality performance category.

2. Mitigating SAHS Billing Impact

To reduce the effect of Significant, Anomalous, and Highly Suspect (SAHS) billing on Shared Savings Program calculations starting in CY 2024, CMS will exclude Medicare Parts A and B payments from financial assessments related to SAHS billing. Ongoing monitoring will identify and address any irregular billing trends.

3. Reopening ACO Payment Determinations

Finalized modifications will allow CMS to adjust calculations for improper payments. ACOs can request the reopening of payment determinations to account for identified overpayments or improper amounts, ensuring fair financial assessments.

4. Other Modifications

  • Eligibility Requirements: ACOs that fall below 5,000 assigned beneficiaries can regain eligibility before renewal.
  • Beneficiary Assignment Methodology: The definition of primary care services will be updated to reflect recent Medicare PFS changes.
  • Beneficiary Notification Requirements: ACOs must now provide follow-up notifications within 180 days of initial communications, rather than at the next primary care service.

These updates enhance the Shared Savings Program’s fairness and functionality, ensuring ACOs are not unfairly penalized for factors beyond their control. Effective January 1, 2025, these rules aim to promote equitable access to quality care and strengthen value-based payment systems.

 


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