Accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) would have earned an additional net payments of $886 million in 2015 if they had assumed greater financial risk, according to a recent analysis from Washington, D.C.-based consulting firm Avalere.
Most MSSP ACOs participate in Track 1, under which they do not bear downside financial risk, meaning they are not responsible for repaying “shared losses” back to the Medicare program. MSSP ACOs participating in Tracks 2 or 3, while eligible for greater shared savings payments, also are responsible for repaying a portion of shared losses back to CMS. Thus, in these tracks, there is greater risk but also greater reward. In 2017, 486 MSSP ACOs are participating in Track 1, six are participating and Track 2, and 36 are participating in Track 3.
In an effort to increase the portion of Medicare payments tied to the quality and value of care, new incentives from the Centers for Medicare & Medicaid Services (CMS) have been put in place to encourage ACOs to bear more financial risk. In particular, under MACRA’s Quality Payment Program, ACOs that assume downside risk are classified as advanced alternative payment models (A-APMs), which will qualify them to earn a lump-sum bonus payment equal to 5 percent of their Part B expenditures.
As such, the Avalere research revealed that had MSSP ACOs assumed greater financial risk under the program, and had qualified for the 5 percent bonus payment now available under the Quality Payment Program, they would have earned an additional net payments of $886 million in 2015, the last year for which data for federal ACOs is available.
Using ACO performance data under the MSSP in 2015, Avalere researchers simulated how Track 1 (non-risk bearing) ACOs would have performed if they had assumed risk under the Track 2 ACO model (two-sided risk) and were eligible for a 5 percent AAPM bonus payment. Avalere’s analysis found that most ACOs would have financially benefited from bearing risk—79 percent (307) of Track 1 ACOs would have financially benefited versus 21 percent (82 ACOs) that would have generated net losses overall.
Overall, ACOs would have seen a $1.1 billion increase in payments from the 5 percent AAPM bonus and a $178 million increase from the greater percentage of shared savings and lower minimum savings rate for risk-bearing Track 2 ACOs. Although some ACOs would have had to repay CMS in shared losses for spending above their benchmark, about one third of these ACOs would have offset their losses by the AAPM bonus payment provided under the Quality Payment Program, the researchers found.
In 2015, according to publicly-released CMS data, MSSP ACOs generated total savings of $429 million, though just 119 of the 392 ACO organizations (30 percent) earned shared savings by holding spending far enough below their financial benchmarks and meeting quality standards. No Track 2 ACOs owed CMS losses. Further, 83 ACOs had healthcare costs lower than their benchmark, but did not qualify for shared savings, as they did not meet the minimum savings.
“CMS’ new value-based payment incentives really tip the scales for doctors to assume greater financial risk,” said Josh Seidman, senior vice president at Avalere, said in a statement. “For those physicians who were dipping their toes in the water with low-risk ACO models, the incentives now make it advantageous for a majority of them to move more aggressively into greater accountability for population health.”
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