Though not entirely unexpected, the announcement last Thursday evening (August 9) by Administrator Seema Verma and her fellow senior officials at the federal Centers for Medicare and Medicaid Services (CMS) nonetheless created quite a stir within patient care leaders in U.S. healthcare. As Managing Editor Rajiv Leventhal reported that evening, “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.”
Leventhal went on to note that this new proposal, named “Pathways to Success,” which had been anticipated for 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.”
Right now, Leventhal pointed out, “[T]he 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.” And that is in this context: “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.”
In other words, Verma and her fellow CMS officials are banking on the proposition that they can compel/force hospital, medical group, and health system leaders to move quite quickly from upside risk to upside/downside risk, and not simply drop out of the MSSP program.
So, just how risky (pardon the embedded pun) is that gamble on the part of Verma and CMS? Well, the proposal has elicited quite a range of responses from the industry in the past few days. But, as Leventhal reported on Friday, one very major player in this landscape, NAACOS—the Washington, D.C.-based National Association of ACOs—is pretty much hopping mad, calling the proposal “misguided,” and noting that the changes, if finalized, “will upend the ACO movement by creating havoc with a significant overhaul introducing many untested and troubling policies.” In the policy world, that’s about as close as one gets to tweeting in all capital letters.
As Leventhal wrote on Friday, “Much of the discussion following the rule’s release will likely center around the BASIC track, which essentially limits ACOs to stay in “upside-only” risk models for just two years, compared to the existing allowance of six years. What’s more, those ACOs in an MSSP Track 1 upside-only model would only be able to get 25 percent of any savings they take in, compared to 50 percent, which is the current max.” What’s more, he noted, “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.”
NAACOS issues forceful comments
In its Friday press release condemning the “Pathways to Success” proposal, NAACOS stated that “The downside financial risk for patient care would be on top of the significant financial investments ACOs already make, according to [NAACOS president and CEO Clif] Gaus, jeopardizing years of effort and investment to improve care coordination and slow cost growth.” And the press release quotes Gaus as stating that “CMS discusses creating stability for ACOs by moving to five-year agreements, but they are pulling the rug out from ACOs by redoing the program in a short timeframe with untested and troubling polices.”
Indeed, NAACOS notes in its press release that “CMS predicts fewer ACOs participating in the future, beginning with the 2019 performance year.” And it adds that “NAACOS repeatedly has voiced concerns about forcing ACOs to take downside financial risk before they are ready, advocating instead that ACOs that demonstrate certain cost and quality achievements may remain in the one-sided model. A NAACOS survey earlier this year of ACOs required to move to an ACO model with downside financial risk in 2019 showed that more than 70 percent of responding ACOs are likely to leave the program if forced to assume financial risk. Given the proposals put forth today, 70 percent could be an underestimate, with even more ACOs leaving the program.”
Nor was NAACOS alone in its strong condemnation of the proposal. The Chicago-based American Hospital Association (AHA) also released a statement on Friday, with the nation’s largest hospital association attributing its statement to executive vice president Tom Nickels. Nickels was quoted as stating that, “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.”
Indeed, Nickels said in the statement, “The proposed rule fails to account for the fact that building a successful ACO, let alone one that is able to take on financial risk, is no small task; it requires significant investments of time, effort and finances. Hospitals and health systems must build upon their current infrastructure, which entails forming new and different contractual relationships and incentivizes successful strategies. While some have already taken significant steps toward achieving such alignment, others are not as far down this path. A more gradual pathway is critical for hospitals and health systems that are interested in participating in risk-bearing models – particularly those that are exploring such models for the first time.”
Seema Verma stands firm
In her telephonic press conference on Thursday evening at the time of the release, and covered by our Associate Editor Heather Landi, Administrator Verma was quite firm in terms of her insistence that it’s time to force the MSSP program forward. Asked whether she and her fellow CMS officials want to improve the MSSP program, or whether they would consider simply eliminating it, Verma stated that “We’ve taken a lot of time to study the implications of the program, and how it’s performing. We have some concerns about the impact on consolidation in the market; we’ve heard that from a lot of providers that having the ACOs is creating more consolidation and larger health care systems and reducing the number of individual providers, so we have some concerns about that.”
What’s more, she told the press, “What we’ve learned from reviewing the six years of data from the program is that there are successes, and there are successes when providers are willing to take on two sided risk, and when they are willing to be responsible for achieving sharing as well as losses, they actually save dollars while also improving quality. We’re trying to build upon the successes but also address the shortcomings of the program. And, those shortcomings are, allowing providers to continue without taking on any risk. And when we have that situation what we’re seeing is that we’re actually losing dollars, losing money. And we feel that given where the Medicare program is, we need to always focus on delivering value for patients and fort taxpayers. When we developed this program, we wanted to move the entire program towards providers taking more risk because we know that works. We want to work with ACOs that are serious about participating in the program and investing in the type of changes that are going to deliver value to patients.”
Varying responses—some positive
Not all associations involved in ACO development have responded as negatively as NAACOS and the AHA have. Indeed, the Los Angeles-based America’s Physician Groups, or APG, released a statement attributed to Valinda Rutledge, its vice president, federal affairs, which said, “Overall, APG considers the proposed rule a very balanced approach to various stakeholders’ concerns as well as a positive step forward in the movement from volume to value. It also acknowledges what we already know—two-sided, physician-led Accountable Care Organizations (ACOs) not only provide superior quality care at a lower cost, they provide significant savings to the Medicare program—and more importantly, the American taxpayer.”
Further, APG’s Rutledge said, “In this proposed rule, a smooth pathway is provided for physician groups seeking to move into risk, which allows them to tap into other Medicare quality programs including the Quality Payment Program (QPP) and the incentive payments it provides. Moreover, it allows physicians engaged in two-sided models access to additional tools to better coordinate care and provide the type of services patients need, and in the most appropriate setting, including the patient’s home.”
And, Rutledge added, “We know that many of today’s ACOs have experience in upside risk only. The proposed rule acknowledges this and provides for a transition period instead of forcing groups into downside risk right away. We believe that no group should be forced into risk; however, when groups decide to accept the opportunity for shared savings, we also believe that they then should take on the responsibility of saving money for our healthcare system and the people and communities they serve.”
Where do we go from here?
There are many ways in which one could look at this situation; indeed, the landscape of reaction to the “Pathways to Success” proposal is practically a policy-focused Rorschach inkblot test, with those who believe that ACO development needs to be compelled forward towards acceleration, cheering Verma’s announcement, and those who believe that the success of the ACO phenomenon depends on a gradual ramp-up, criticizing it. But the real question is this: what practical effect will the announcement, and the proposal, have, on the ACO movement?
The reality is that Seema Verma and her fellow senior CMS officials are taking a huge risk in trying to push provider organizations very forcefully into downside risk, at a time when early ACO development work has revealed just how difficult that proposition really is. Among the major challenges that have been experienced by pioneering organizations: the ability to obtain, analyze, and use timely clinical and claims data to manage care and to vastly improve clinical, operational, and financial performance; the ability to align incentives between individual physicians, both primary care physicians and specialists, and patient care organizations, within ACO contracts; the core challenge of engaging patients in participating in actively improving their own health status; and the intensive fundamental IT and data analytics development needed to turbocharge all of this.
All of this is daunting even to the most advanced provider organizations. This past week, at our Health IT Summit in Boston, I had the privilege and pleasure of interviewing onstage Barbara Spivak, M.D., the president and CEO of the Mt. Auburn Cambridge Independent Practice Association, or MACIPA. Dr. Spivak noted that one of the very major challenges in succeeding in the MSSP program involves the effort and complexity involved in physician documentation around its quality measures. “One of key factors in physician burnout, particularly in primary care, is the documentation required for all of the quality metrics,” she told me. What’s more, she noted, even though MACIPA is a small organization, its physicians are still held accountable for hundreds of quality metrics that differ across various health plans; the only successful way of resolving that challenge is to narrow the broad range of measures demanded by the various payers in the various programs, down to a small number of more generalized measures. Dr. Spivak also cited an example of a potential future problem around CMS’s proposed fall risk documentation measure. Originally, she explained, physicians had to simply ask at-risk patients if they had two or more falls in the past six months and if they were injured. But a new CMS proposal may make things more complicated than that, Spivak noted. If the proposal passes, starting in 2019, physicians will have to ask these patients many more questions, including finding out details about stairs in the patients’ home as well as their vision. Our onstage interview took place on Wednesday morning, and the “Pathways to Success” proposal was announced Thursday evening. It will be interesting to see how physician leaders like Dr. Spivak react to it, given everything they already face.
So the key question is this: will provider organization leaders, and most especially the leaders of physician groups, respond with enthusiasm to this new CMS proposal, or will they recoil from it, and begin to flee the MSSP program? One of the most difficult challenges for CMS officials lies in how to most precisely calibrate their pressing down on the levers of reimbursement in order to compel providers forward. If they push down too lightly, the pace of change will be sluggish; but if they push down too hard, it could send provider organizations fleeing. Seema Verma and her fellow CMS officials have taken a calculated risk with this new move, and, from the reactions so far, they could face an uphill battle in their quest to push physician groups and hospitals forward faster without causing them to jump ship altogether and flee the MSSP program. Only time will tell; but the economic imperatives facing the administration are clear, as the Medicare actuaries predict a 70-percent increase in overall U.S. healthcare spending over next several years. But for an administration that is ostensibly committed both to healthcare system solutions that are as free market-based as possible, and also committed to doing everything possible to curb accelerating healthcare system costs, the built-in contradictions are already forcing awkward policy and payment moves. Without question, CMS, and all of us, are clearly already in uncharted territory. And only time will tell how skillful the agency’s navigation across that territory will have proven; so—stay tuned.