Value Based Payment

ACO Advocates Warn on Program Overhaul

August 14, 2018 2:04 pm

Departures due to the proposed overhaul could surpass 70 percent of the ACOs operating in Medicare, a leading advocate said.

Aug. 13—A proposed overhaul of Medicare’s primary accountable care organization (ACO) program could cause massive departures, advocates for the entities warned soon after it was issued.

Beginning in July 2019, the new Medicare Shared Savings Program (MSSP), called Pathways to Success (PS), would require the 561 existing ACOs to switch into one of two tracks—and would mandate that they take on downside risk within two years, according to the long-anticipated proposed rule.

“ACOs can be an important component of a system that increases the quality of care while decreasing costs; however, most Medicare ACOs do not currently face any financial consequences when costs go up, and this has to change,” Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), said in a release.

The new ACO program would replace the existing MSSP tracks with two five-year tracks: Basic and Enhanced. The Basic Track would start as a one-sided model for new participants and after two and a half years would begin to phase in downside risk that, at the highest level, would allow participating organizations to qualify for the advanced alternative payment model (APM) track of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). ACOs that already have been in Track 1 of the MSSP would have to start taking on downside risk within one and a-half years of the July 2019 start date.

The Enhanced Track would be based on the existing MSSP Track 3 and provide “additional tools and flexibility for ACOs,” according to a CMS fact sheet. ACOs from Track 3, Track 2, or Track 1+ would be barred from the upside-only phase of the Basic Track.

Reduced ACOs

Both CMS and ACO advocates expect the revamped Medicare ACO program to result in fewer ACOs. CMS estimated that the number of Medicare ACOs could decline by a net 109 over the next 10 years.

“The overall drop in expected participation is mainly due to the expectation that the program will be less likely to attract new ACO formation in future years,” with upside-only years dropping from six to two, CMS officials wrote in the rule.

Requiring ACOs to move to downside financial risk in 2019 would cause more than 70 percent of ACOs that responded to a May 2018 poll to leave the program, according to the survey by the National Association of ACOs (NAACOS).

“Given the proposals put forth today, 70 percent could be an underestimate, with even more ACOs leaving the program,” Clif Gaus, president and CEO of NAACOS, said in a statement.

However, CMS officials expected the new ACO program to prevent departures among some existing ACOs, especially those required to transition to downside risk after finishing their two three-year periods of upside-only risk. Additionally, some higher-cost ACOs could be induced to stay by proposed changes to allow higher regional benchmarks than under current rules.

Officials also were optimistic that rural hospitals can increase their ACO participation due to provisions such as one that blends the national and regional trend in benchmark calculations

“Such changes could help provide a stronger business case for ACOs built around rural hospitals that may have otherwise been concerned about serving a higher-risk population in their region or driving the local trends against which they would be compared,” CMS officials wrote.

But hospital advocates were not optimistic that the new approach would draw in new hospital participants.

“For hospitals and health systems, and other providers that want to come together to provide the highest-quality care for patients, the proposed rule would create barriers to entry in transitioning to value-based care,” Tom Nickels, executive vice president of the American Hospital Association, said in a written statement.

The tightened time frame to downside risk would not leave enough time to form the “new and different contractual relationships” and strategies to align hospitals and other providers in risk-bearing models, he said.

Similarly, Blair Childs, senior vice president of public affairs for Premier, said the investment and change required to move to two-sided risk are far greater than CMS appreciates.

“Forcing providers to accept risk too quickly will deter participation,” Childs said. 

Physician Practice Participation

CMS officials said the new ACO approach could induce participation by independent physicians. They cited a provision that limits downside risk exposure to a percentage of ACO provider revenue.

Some practice advocates were more supportive of the proposed changes than were hospital proponents.

“We know that many of today’s ACOs have experience in upside risk only,” Valinda Rutledge, vice president of federal affairs for America’s Physician Groups, said in an emailed statement. “The proposed rule acknowledges this and provides for a transition period instead of forcing groups into downside risk right away.”

AMGA (formerly the American Medical Group Association) praised the ACO overhaul for allowing “more flexibility in choosing prospective beneficiary assignment, which AMGA has long supported.”

Other changes that drew AMGA support were proposals to lengthen ACO agreement periods from three years to five and improve risk adjustment for continuously enrolled beneficiaries.

It’s unclear how many of the 10.5 million Medicare beneficiaries treated by MSSP ACOs would be covered under the revamped ACO program.

“Although the proposed elimination of Track 1 is expected to ultimately reduce the overall number of ACOs participating in the program, this proposed change might also create opportunities for more effective ACOs to step in and serve the beneficiaries who were previously assigned to other ACOs that leave the program,” CMS officials wrote.

Comments are due on the proposed rule by Oct. 16.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


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