New rules requiring ACOs to take on financial risk at a faster rate could threaten future participation in the program
Oct. 9, 2020 (ACP) – Although accountable care organizations (ACO) save money, recent changes to program rules that require ACOs to take on more risk earlier in the process may be getting in the way of program uptake, the American College of Physicians warns.
Medicare's flagship Accountable Care Organization (ACO) program, the Medicare Shared Savings Program (MSSP), had a record-setting year in 2019. The largest of any Medicare Alternative Payment Model (APM), it served 11.2 million seniors and collectively saved Medicare a gross $2.6 billion last year ($1.2 billion in net savings after accounting for shared savings and losses), according to data recently released from the Centers for Medicare & Medicaid Services (CMS). This compares to $739 million in net savings in 2018 and $314 million in 2017.
An ACO is a formally organized group of physicians, hospitals and other health service professionals that have joined forces to provide a broad set of health care services to their Medicare patients via contracts with payers. Such value-based reimbursements are based on hitting quality and spending benchmarks that strive for better outcomes with the fewest unnecessary services. If ACOs succeed in delivering a high quality of care while containing costs, they share in those savings with Medicare. ACOs are also required to take on more financial risk over time as an incentive to generate savings.
In 2019, five hundred forty-one ACOs in this program generated $1.19 billion in total net savings to Medicare. This is the largest annual savings for the program to date and the third year in a row that the program has achieved net program savings, said Suzanne Joy, ACP senior associate of regulatory affairs. “ACOs are really starting to show savings on a mass scale,” she said. “It took a few years for upfront investments in better care coordination and preventive care to result in downstream savings, as is fairly typical, but now the MSSP is proving that it's a model that has staying power.”
How New ‘Pathways to Success' Rules Changed the Game
Under previous MSSP rules, “legacy” ACOs could be in the program for up to six years under one-sided risk, but the redesigned “Pathways to Success” Program now requires most ACOs to take on financial risk at a faster rate – in two years rather than six. Last year was the first year under new “Pathways to Success” rules and just 5% of eligible ACOs took CMS's offer to enter the redesigned program, according to the National Association of ACOs. Most chose to carry out their contracts under the old rules. Stakeholders, including ACP, fear that when those older contracts are up, many ACOs may drop out of the program altogether in lieu of entering into new contracts under the new rules.
According to the 2019 performance data, ACOs under Pathways to Success rules performed better than legacy ACOs, showing net per-beneficiary savings of $169 per beneficiary compared with $106 per beneficiary for legacy ACOs. This doesn't tell the whole story though, Joy said. “The MSSP is by far the biggest APM in the game right now, but there was a huge drop-off in the number of new ACOs joining when the new Pathways to Success rules started in mid-2019, and I don't think that's a coincidence,” she said. In 2019 and 2020, 41 and 35 new ACOs joined the MSSP, respectively, compared with an average of 107 during the previous seven years.
“ACP has always supported moving to value-based reimbursement, and we believe financial risk can be an important piece of that. The difference is we think offering more reward in exchange for taking on risk is a sufficient incentive for those ACOs that are ready, and we do not think ACOs who aren't should be prematurely forced into risk or told to leave the program,” Joy said. “Two years is simply not enough time, especially for smaller or rural ACOs with fewer resources, which could leave huge swaths of patients without access to innovative delivery system models and the benefits that come along with that.”
“We're worried that the current timeline under new rules is going to drive ACOs out of the program, which at the end of the day hurts gross savings for the program even if per-capita savings is technically higher,” Joy added. “Why force ACOs out if they are achieving savings? Individual ACO savings might not be as high this way, but keeping more ACOs engaged in the program saves more in the long-run.”
The COVID-19 Factor
The COVID-19 pandemic has highlighted just how important these APMs can be for a practice's survival. “Fee-for-service (FFS) is not sustainable because if anything goes wrong to disrupt the normal service pattern, the practice is in trouble almost instantly,” Joy said. “A silver lining of the pandemic is that we are seeing an uptick in interest from physicians in FFS alternatives. We hope CMS and other payers will rise to the occasion and develop a more diverse offering of APMs that offer physician practices more predictable, stable payment options.”
CMS decided to forego a 2021 application cycle due to the COVID-19 pandemic. MSSP ACOs whose first or second participation agreements are set to expire Dec. 31, 2020, may elect to extend their agreement period for an optional fourth performance year for 2021. “There are currently 134 Track 1 ACOs in the MSSP plus an additional 20 in Track 1+ whose contracts are set to expire at the end of this year. When the time comes, whether they decide to sign new agreements under these new rules will be really telling for the future of the program,” Joy said.