CMS proposes Medicare ACO revamp to force risk

Tony Abraham@TonyAbraham

Aug. 10, 2018

Dive Brief:

• CMS is proposing an overhaul of the Medicare Shared Savings Program (MSSP) that would force Accountable Care Organizations to take on financial risk sooner. While ACOs currently have six years to shift to a risk-bearing model, the proposed rule would give existing ACOs one year to shift and new ACOs two years. 
• Currently, 82% of Medicare ACOs are in the upside-only MSSP track, meaning they share in savings but avoid sharing in losses. With this proposal, CMS anticipates 109 of the current 649 participants to drop out of the program by 2028. 
• Critics, however, feel those numbers might be higher. A recent survey from the National Association of ACOs (NAACOS) showed 71.4% of ACOs would rather drop out than assume more financial risk. The association said at the time that it does "not support forcing ACOs to assume risk if they are not ready." 

Dive Insight:

After six years of allowing ACOs to participate in MSSP without taking on downside risk, CMS is getting serious about cutting the cord. CMS Administrator Seema Verma said the agency expects the changes to result in $2.24 billion in savings for the Medicare program over the next 10 years. CMS is calling the initiative "Pathways to Success." 

Providers have long been reticent to take on risk in payment models, including dropping out of programs once that requirement is triggered. Many policy experts agree, however, that the potential for financial penalty is needed if there is to be real change.

ACOs, created in 2012 as a cornerstone of the Affordable Care Act, were expected to save Medicare nearly $5 billion by 2019, according to the Congressional Budget Office. A recent analysis from Avalere showed that ACOs have actually increased government spending. That analysis, published in March, found that between 2013 and 2016, the MSSP increased federal spending by $384 million rather than produce the $1.7 billion in savings it was expected to over that time period. 

"It's time for the program to evolve. It's time for ACOs to start taking upside and downside risk," Verma said on a call with reporters. "What the data tells us is that ACOs taking two-sided risk are delivering better results." 

In addition to forcing ACOs to take on downside risk sooner, the proposed rule would provide incentives for telehealth, require ACOs to adopt the 2015 Edition of EHR technology and encourage ACOs to inform their beneficiaries that they are indeed an ACO and explain how that might impact their care. 

Medicare ACOs currently enroll more than 10 million beneficiaries. Interestingly, in an effort to "bolster engagement," CMS is proposing to "allow certain two-sided ACOs to provide an incentive payment of up to $20 to each assigned beneficiary for each qualifying primary care service that the beneficiary receives." Verma said this incentive could come in the form of gift cards. 

Importantly, CMS is proposing to phase out its no-risk model by 2020. 

Critics of the proposed rule say it is too extreme and will force more ACOs out of MSSP than CMS might be anticipating. In a statement released shortly after the proposal, American Hospital Association Executive Vice President Tom Nickels said the rule would "create barriers to entry in transitioning to value-based care." 

"While we acknowledge CMS's interest in encouraging providers to more quickly move toward accepting risk, drastically shortening the length of time in which ACOs can participate in an upside-only model ignores the reality that providers are starting at vastly different points and will have vastly different learning curves when moving toward value-based care," Nickels said.

According to the statement, AHA advocates for a happy medium between quality of care, Medicare savings and support for ACOs. 

The proposed rule does have its fair share of supporters, even receiving a stamp of approval from former CMS administrator Andy Slavitt. 

The Health Care Transformation Task Force, made up of a mix of industry players, applauded the proposed rule, calling it an "important step to promote value-based transformation and to push industry momentum forward." 

Tim Gronniger, former deputy chief of staff at CMS and current SVP of development & strategy at Caravan Health, said the rule would have "significant impacts on the market" and shows "CMS is committing to a future where ACOs play a large role in the future of the Medicare program." Caravan CEO Lynn Barr added that its members are prepared for the rule, if finalized. 

Rita Numerof, president of healthcare consulting firm Numerof & Associates, told Healthcare Dive she applauds CMS' proposal, but added that the complexity of the rule's delivery does it no justice.

"CMS has the power to shift performance by setting direction and expectations," Numerof said. "But it shouldn't dictate the specifics of how and where care is delivered. 600 pages of guidance to explain changes in rules is yet another example of how administrative bureaucracy unintentionally distracts from the business of delivering care to those who need it."

https://www.healthcaredive.com/news/cms-proposes-medicare-aco-revamp-to-force-risk/529835/