Medicare ACOs Increase by 18 Percent in 2018
Industry observers have different views on the significance of the program’s 9 percent drop-out rate.
Jan. 16—Medicare increased its number of accountable care organizations (ACOs) by 18 percent in 2018, even as a participation cliff looms for many.
Medicare Shared Savings Program ACOs increased from 480 in 2017 to 561 for 2018, according to a recently issued Centers for Medicare & Medicaid Services (CMS) fact sheet. The number of Medicare fee-for-service enrollees included in those ACOs increased by 1.5 million to a total of 10.5 million.
Participation has steadily increased since the MSSP launched in 2012 with 114 ACOs covering 2 million enrollees.
Notable 2018 changes included a drop in the share of ACOs in Track 1, which involves upside-only risk, from 91 percent of all MSSP ACOs in 2017 to 82 percent in 2018.
The most popular two-sided risk model is the new Track 1+, which includes 55 ACOs, or 10 percent of the total. Eight ACOs have enrolled in Track 2 and 68 in Track 3.
The largest group of MSSP ACOs, 324, is composed of hospitals, physicians, and “other facilities.” Physicians are the sole operators of 171 and federally qualified health centers of 66.
ACO advocates saw good news in the participation totals, which don’t include the latest Next Generation ACO participants. And the migration to two-sided risk reflected the intention of participating ACOs as signaled in member surveys by the National Association of ACOs (NAACOS).
“MSSP Track 1+ has been well received and is an excellent runway to more significant downside risk,” said Clif Gaus, CEO of NAACOS. “This is occurring voluntarily as Track 1 ACOs gain experience and comfort with the complex benchmarking process.”
Premier, a hospital advisory company, credited the 2018 increase to implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which listed all MSSP ACOs except for Track 1 as qualifying advanced alternative payment models (APMs). Physicians in MACRA’s APM track can earn a 5 percent bonus on their total Part B payments and don’t have to abide by the complex quality-reporting requirements to which non-APM physicians are subjected.
Specifically, the newest ACO, Track 1+, which aimed to provide an entry to risk for cautious providers while allowing them to qualify for MACRA’s APM track, was seen as helping the latest totals.
“Track 1+’s growth also demonstrates that healthcare providers are willing to begin to take on more risk and to qualify as an” APM, said Joe Damore, vice president of population health management for Premier.
The popularity of Track 1+ in 2018, its first year, shows “the importance of tying risk to financial resources of the ACO participants and of letting ACOs move to risk when they are ready,” said Bob Kocher, MD, a partner at venture capital firm Venrock.
Kocher also noted that among the 55 Track 1+ ACOs, only 25 were starting a new contract. Thirty were “only able to move to risk because CMS allowed them to do so mid-contract,” he said.
Another development that stood out to Kocher was the relatively low turnover in ACOs. Among the 480 ACOs in 2017, only 43—or 9 percent—dropped out of the program.
That retention is key to improving ACOs’ results, since research has consistently shown that qualifying for shared savings is strongly associated with time in the program. The longer ACOs have been in the MSSP, the more likely they are to get bonus payments.
“Improvement over time indicates the importance of patience as organizations figure out how to change how care is delivered, and also reiterates the need for policies that encourage not just payment reform but delivery reform,” said David Muhlestein, PhD, vice president of research for Leavitt Partners, who has analyzed Medicare ACO results.
Others were more concerned about the number of organizations dropping out.
“I think it's important to pay attention to the churn rates, which have been significant each year as organizations find savings harder to achieve and their costs for managing the ACO more than they anticipated,” said Paul Keckley, managing editor of The Keckley Report and a healthcare researcher.
Muhlestein’s research also found that quality scores did not correlate with financial performance, and length in the program did not correlate with higher quality scores.
Similar to other researchers, Muhlestein also found that smaller ACOs performed better than larger ACOs.
Another trend that may bode well for the program’s results is the growth of physician-only ACOs, which increased from 134 in 2016 to 171 for 2018.
Kocher said independent primary care ACOs tend to perform better. Forty-five percent of 134 physician-led ACOs generated shared savings in 2016, compared with 23 percent of 226 hospital-led ACOs, according to the latest ACO performance results.
However, the majority of Medicare enrollees served by ACOs continue to be in ones comprised of integrated health systems, noted Norberto Correa, senior director of Change Healthcare Consulting. Hospital participants in Medicare MSSP ACOs reached 1,517 in 2018, as well as 421 critical access hospitals.
“ACOs will continue to grow and attract integrated systems with capable infrastructure to support ACO requirements,” Correa said.
The continued growth in ACOs comes as many participants face big decisions in 2018.
“Our biggest concern and point of advocacy is that more than 110 current [Track 1 ACOs] will term out on their one-sided contracts in 2018, and unless the administration modifies the rules to allow a [Track 1] third contract term, they will be forced to [take on] two-sided [risk] or drop from the program,” Gaus said. “This will impact over 2 million beneficiaries.”
Track 1 remained by far the most popular model among renewing ACOs. Out of the 65 ACOs that started in 2015 and were renewing their contracts for 2018, 57 stayed in Track 1, while only three chose the riskiest Track 3 and five went to Track 1+, Kocher noted. The total number of renewing organizations was a drop from 79 in 2017.
“This probably reflects the uncertainty that surrounded the program in June and July when these decisions were made and harkens to the need for predictability in the MSSP for long-term success, especially in the risk tracks,” Kocher said.
Other potential problems emerged in the latest CMS data on ACO results, which showed the shared savings rates declining among those that had been successful. Keckley said that trend indicated that the upside in savings for ACOs might not last over the long term.
NAACOS issued a series of recommendations in October to help MSSP ACOs achieve the long-term sustainability necessary to enhance care coordination for Medicare beneficiaries, reduce healthcare costs, and improve quality in the Medicare program.
Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare