Effective October 15, a new Final Rule issued by the Centers for Medicare & Medicaid Services (CMS) will allow the Medicare Shared Savings Program (MSSP) to adjust calendar year (CY) 2023 benchmark and expenditure calculations to mitigate the impact of certain “significant, anomalous, and highly suspect” (SAHS) billing activity. The Final Rule demonstrates CMS’ willingness to act quickly to prevent MSSP accountable care organizations (ACOs) from being harmed as a result of pervasive and fraudulent claims activity.
Identified Suspect Billing Activity
CMS detected a significant increase in billing for certain urinary catheters by a select group of Medicare suppliers starting in early 2023. According to CMS, from CY 2016 to CY 2022, billing for urinary catheters represented less than 0.1% of total fee-for-service (FFS) spending every year but increased to nearly 1% in CY 2023. Several ACOs had also identified the abnormal billing for urinary catheters and alerted CMS of the potential negative impact of this SAHS billing on MSSP shared savings and losses calculations.
Specifically, the increased claim volumes had the potential to distort ACO expenditure and revenue calculations, which are used to calculate shared savings that could be earned by ACOs or losses that ACOS may be required to repay to CMS. In addition, such adjustments could impact whether an ACO is considered a high- or low-revenue ACO (and, therefore, whether it can participate in the ACO Primary Care (PC) Flex Model and receive advance investment payments), and the amount of an ACO’s repayment mechanism.
CMS’ Response
Recognizing the anomaly was due to inappropriate billing beyond the ACOs’ control, CMS issued the Final Rule to prevent inaccurate and inequitable payments to, or recoupments from, MSSP ACOs. CMS will retroactively exclude all Medicare FFS payment amounts on durable medical equipment (DME) claims from certain expenditure and revenue calculations for CY 2023 for the following HCPCS codes:
- A4352 (Intermittent urinary catheter; Coude (curved) tip, with or without coating (Teflon, silicone, silicone elastomeric, or hydrophilic, etc.), each)
- A4353 (Intermittent urinary catheter, with insertion supplies)
Importantly, the Final Rule is limited to what CMS considers a “narrowly crafted” definition of “SAHS billing.” CMS generally defines “SAHS billing” to mean billing that represents a “significant claims increase either in volume or dollars” and that “represents a deviation from historical utilization trends that is unexpected and is not clearly attributable to reasonably explained changes in policy or the supply or demand for covered items or services.” CMS expressly rejected commenter requests for similar adjustments for other codes and services that it did not consider to be impacted by SAHS billing (e.g., A4351).
Related Proposals
Earlier this year, CMS introduced policies in the CY 2025 Physician Fee Schedule proposed rule that, if finalized, may further address SAHS billing. First, CMS proposed to address instances of SAHS billing activity for performance year (PY) 2024 and future years prior to financial reconciliation. Second, CMS proposed to provide relief to ACOs affected by fraud or other improper payments that would not necessarily be considered “SAHS billing” by allowing them to request a reopening of their completed financial reconciliation results so that inaccuracies can be evaluated.
Takeaways
Before implementing the Final Rule, CMS had a mechanism to reopen and revise shared savings/losses determinations in the case of “fraud or similar fault,” but did not have a way to address SAHS billing activity, which must be addressed before CMS conducts final reconciliation. The Final Rule makes available a new process to ensure such billing activity does not negatively impact the accuracy of shared savings/losses, recognizing that ACOs have no direct means of controlling costs, in part, because they do not process claims and cannot cause claim denials (unlike Medicare Advantage plans).
The Final Rule demonstrates that ACOs play an important role in supporting Medicare program integrity efforts and that CMS may consider ACO concerns regarding the impact of SAHS billing activity on shared savings/losses if necessary to ensure equitable outcomes and garner continued interest in MSSP participation. Ultimately, these new approaches addressing SAHS billing should be mutually beneficial to CMS and ACOs and allow the nearly 500 participating ACOs to realize more accurate financial outcomes for PY 2023.
If you have questions regarding the Final Rule, the related proposed rule, or their impact on your organization, please contact the authors.