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Two New Milliman White Papers On MSSP Pathways to Success: 

Final Rule Revisions and Data Mining Tactics to Reduce Population Costs

By  Clive Riddle, January 11, 2019

Milliman's Noah Champagne, Charlie Mills, and Jason Karcher published a white paper on January 7th: “Pathways to Success” MSSP final rule: Key revisions to the proposed rule, which was preceded with a paper on January 4th by Kathryn V. Fitch, Adam Laurin, and Michele M. Berrios: “Pathways to Success” MSSP final rule: Faster movement to downside risk increases focus on reducing population costs.

The final rule isn’t a radical departure from the proposed rule, but as Champagne, Mills and Karcher summarize, these are the key changes from the proposed rule:

  • Levels A and B maximum shared savings percentage increased from 25% to 40% while Levels C and D increased from 30% and 40%, respectively, to 50%.
  • Less strict definition of low-revenue ACO: Now ACOs are considered “low revenue" if their historical Medicare Part A and B fee-for-service (FFS) revenues are less than 35% of the total historical expenditures for their assigned Medicare beneficiaries. 
  • High-revenue ACOs currently participating in MSSP Track 1+ will be allowed an exception to renew for one agreement period in Level E of the BASIC track.
  • New, low-revenue ACOs, not experienced with performance-based Medicare ACO initiatives, will be allowed to remain in Level B (one-sided risk) for an additional performance year. 
  • The final rule retains the proposed 3% cap on benchmark increases for risk scores. However, ACOs’ benchmarks will be fully adjusted for changes in the relative risk score when there is a decrease from the baseline year to the performance year instead of applying a 3% reduction cap as originally proposed.
  • The final rule still uses a maximum regional cost blending percentage of 50%, but finalizes a more gradual phase-in of the maximum blending percentage from the proposed rule for ACOs with historical expenditures above their regional service areas.
  • ACOs participating in the July to December 2019 performance period and selecting prospective assignment will be assigned beneficiaries based on October 2017 to September 2018 experience data.

Champagne, Mills and Karcher conclude that “CMS introduced the MSSP with the goal of transitioning ACOs to becoming risk-bearing entities and improving the quality of care provided to Medicare FFS beneficiaries. With the MSSP final rule, CMS has reaffirmed its commitment to these goals while offering greater shared savings potential to ACOs participating in the BASIC track and making the BASIC track available to a broader set of ACOs. The effect of these rule changes on specific ACOs will vary significantly depending on an ACO’s size, region, cost and quality performance, and structure.”


Fitch, Laurin and Berrios remind us that “one of the hallmarks of the new MSSP rule is faster movement to downside risk. Under the current regulations, accountable care organizations (ACOs) can stay in an upside-only track for up to six years. The new rule requires some ACOs in the Basic Track to begin assuming some downside risk in year 3.”  They stat that “under the new rule, there will be a more urgent need for ACOs to reduce population costs,” and that “two major tactics are typically implemented by health plans and ACOs to reduce population costs” are demand management and supply management.


Their report “focuses on supply management and, in particular, data mining tactics that identify medically unnecessary services.” They advocate "several data mining tactics we have seen successful ACOs adopt to effectively guide strategies to reduce medically unnecessary services and in turn reduce the ACO’s total population costs." including:

  • "For MSSP participants, the monthly Claim and Claim Line Feed (CCLF) data files provided by CMS should be routinely grouped and summarized into an actuarial cost model in order to evaluate cost drivers, identify potential targets for utilization reduction initiatives, track outcomes expected from key initiatives, and track overall costs compared to the ACO’s PMPY expenditure benchmark set by CMS."
  • "After identifying potential services to target from the actuarial cost model, organizations need to evaluate whether the utilization and spend in a service category represents efficient or inefficient care with very little or very large opportunity for improvement."
  • "ACOs must be able to target inefficient physician performance, which requires credible provider profiling. As with the benchmarking exercise described previously, physician profiling requires credible risk adjustment."
  • "ACO should also consider data mining to identify leakage of services to providers outside of the ACO." 

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