The Centers for Medicare & Medicaid Services (CMS) is proposing a new direction for ACOs (accountable care organizations) in the Medicare Shared Savings Program (MSSP), with the goal to push these organizations into two-sided risk models.
Referred to as “Pathways to Success,” CMS’ proposal, which has been expected for a few months, looks to redesign the program’s participation options by removing the traditional three tracks in the MSSP model and replacing them with two tracks that eligible ACOs would enter into for an agreement period of no less than five years: the BASIC track, which would allow eligible ACOs to begin under a one-sided model and incrementally phase-in higher levels of risk; and the ENHANCED track, which is based on the program’s existing Track 3, providing additional tools and flexibility for ACOs that take on the highest level of risk and potential rewards. At the highest level, BASIC ACOs would qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program.
Currently, the MSSP model includes three tracks and is structured to allow ACOs to gain experience with the program before transitioning to performance-based risk. The vast majority of Shared Savings Program ACOs have chosen to enter and maximize the allowed time under Track 1, which is an “upside-only” risk model. MSSP Tracks 2 and 3 involve downside risk, but participation in these tracks has been limited thus far.
When ACOs are in a one-sided risk model, they do not share losses with the government when they overspend past their benchmarks, but they do share in the gains. As such, in these one-sided risk models, CMS is on the hook for any losses all on its own.
Broadly, CMS is now essentially proposing that the contract agreements of upside-only ACOs be two years, rather than allowing six years (two, three-year agreements) like the government has previously permitted. Overall, there are 561 MSSP ACOs out of 649 total Medicare ACOs, with 82 percent of those 561 MSSP ACOs taking on upside risk only.
While ACO contracts normally renew at the start of the year in January, CMS is giving ACOs whose contracts expire this December a one-time-only six-month extension, until July 2019, so they can apply for a new agreement beginning on July 1, 2019, if they so choose. Moving forward, CMS would resume the usual annual application cycle for the performance year starting on January 1, 2020 and subsequent years.
As the federal agency continues to steer ACOs away from upside-only models, CMS noted that some Track 1 ACOs are generating losses (and therefore increasing Medicare spending) while having access to waivers of certain federal requirements in connection with their participation in the program. These ACOs may be encouraging consolidation in the market place, reducing competition and choice for Medicare FFS beneficiaries, according to agency officials.
CMS Administrator Seema Verma previously has criticized upside-only ACOs, remarking that they have not generated enough results to date. And today, she hammered this point home on a press call. “[Upside-only] ACOs have no incentive, at all, to reduce healthcare costs while improving outcomes, as they were intended. Thus, the program has not lived up to the accountability part of their name,” Verma asserted.
Meanwhile, the ACOs in two‑sided risk models “have shown significant savings to the Medicare program and are improving quality,” CMS said in today’s announcement. As such, Verma said today that requiring ACOs to take on downside risk more quickly, matched with increased risk and flexibility, would reframe the Medicare Shared Savings Program to deliver value to the 10 million patients currently in ACOs, and taxpayers. “We project these changes will result in $2.24 billion in savings to Medicare program over next 10 years,” she stated.
How will Upside-Only ACOs Respond?
Indeed, as it stands today, MSSP Track 1 remains by far the most popular option for ACOs. Recently, the National Association of ACOs (NAACOS) surveyed Track 1 ACOs that were entering their third agreement period and found that 71 percent of ACO respondents indicated they are likely to leave the MSSP as a result of having to assume risk.
In CMS’ proposed rule, the agency internally estimates that more than 100 ACOs will drop out of the program over the next 10 years. CMS said in the rule that “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 as the number of risk-free years available to new ACOs would be reduced from six years (two, three-year agreement periods in current Track 1) to two years in the BASIC track, which also has reduced attractiveness with a lower 25 percent maximum sharing rate during the two risk-free years.”
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