Category: ACO

CMS Proposed Rule Change for ACO Payments

By Curtis Campbell, Class of 2019; Andrew F. Solinger, Attorney at Waller

The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would overhaul the Medicare Shared Savings Program, which was established by the Affordable Care Act (ACA). Currently, the vast majority of Medicare’s Accountable Care Organizations (ACOs) operate under the Medicare Shared Savings Program. The redesigned program is called “Pathways to Success” and was developed based on a comprehensive analysis of the performance of ACOs to date.

What is an “ACO”?

ACOs are groups of health care providers that agree to take responsibility for the total cost and quality of care for their patients. Under the Medicare Shared Savings Program, the ACOs get to keep a portion of the savings they achieve. CMS provides ACOs with Shared Savings Waivers to allow the savings to be applied in virtually any manner to further innovation.  Presently, there are 561 Shared Savings Program ACOs that serve over 10.5 million Medicare fee-for-service beneficiaries.

Results of the Medicare Shared Savings Program

Since the Medicare Shared Savings Program was established by the ACA, and launched in 2012, it has been faced with a mix bag of success:

  • Shared Savings Programs have shown increases in net spending for CMS and taxpayers because 82 percent of all ACOs in the program are not taking on risk for increases in cost.
  • ACOs that are not at risk for cost increases end up increasing Medicare spending in the aggregate.
  • ACOs participating in the two-sided, risk-sharing model in which eligible ACOs share in a larger portion of any savings, but are also required to take on losses if spending exceeds certain benchmarks, have proven successful in accounting for significant savings to the Medicare Program.

Pathways to Success

The proposed rule, Pathways to Success, would redesign the participation options available under the program to transition more to two-sided models. The projected proposal is estimated to lead to savings to Medicare of $2.2 billion over ten years.

Pathways to Success is designed to advance five goals:

  • (1) Accountability and (2) Competition: Currently, ACOs have up to six years without taking on risk for increases in cost. These ACOs receive a shared savings payment from CMS when they keep their costs down, but do not have to pay back taxpayers when costs are high. Under the proposed rule, ACOs can only remain in the program without taking risk for two years, instead of six.
  • (3) Beneficiary Engagement: CMS proposes to require that beneficiaries receive a notification at their first primary care visit of a performance year informing them that they are in an ACO and what it means for their care. To bolster beneficiary engagement, CMS proposes to allow certain ACOs to provide incentive payments to patients for taking steps to achieve good health.
  •  (4) Quality: CMS proposes allowing physicians in risk-sharing ACOs to receive payment for telehealth services provided to patients regardless of the patient’s location. This would expand the use of telehealth even in situations in which the beneficiary’s home is the originating site. In addition, the proposed rule promotes interoperability and patient control of their medical data by proposing a new requirement around ACOs adopting the 2015 edition of the Certified Electronic Health Records (EHR) technology.
  • (5) Integrity: CMS’s proposed rule would change the benchmark calculations to better account for regional adjustments by accurately reflecting the spending levels and growth rates in each ACO’s local market. The proposed ruled will also strengthen the monitoring of financial performance and permitting termination of ACOs with multiple years of poor financial performance.

In sum, Pathways to Success is aimed at mitigating losses, increasing program integrity, and promoting regulatory flexibility for ACOs. As CMS Administrator Seema Verma stated, “ACOs can be an important component of a system that increases the quality of care while decreasing costs.” With the proposed rule change, the program will hopefully achieve its original intent of decreasing net spending for CMS and taxpayers.

Pathways to Success: CMS proposes accelerated shift to provider risk in ACOs

By Clay Brewer, Class of 2020; Jesse C. Neil, Partner at Waller

In an effort to facilitate the American healthcare system’s transformation from volume-based to value-based payment, the Centers for Medicare and Medicaid Services (CMS) is requesting public comment regarding its newly proposed rule that would shift the amount of risk participants in Accountable Care Organizations (ACOs) assume under the Medicare Shared Savings Program (MSSP).

An ACO is a group of physicians, hospitals, and other healthcare providers that care for a group of beneficiaries under Medicare Parts A and B. The core principles of the system are to streamline care and reduce costs within a cohesive structure. Under the current MSSP framework, ACOs may join one of three tracks with each differing primarily on the amount of risk each ACO opts to assume. Currently, 561 of the 649 ACOs are members within one of the tracks, with eighty-two percent of the 561 being enrolled in Track 1. Under Track 1, the ACOs only experience “upside-risk,” which means the ACO members are eligible to receive any achieved savings but are not financially responsible if the ACO incurs a loss.[1] CMS Administrator Seema Verma, however, recently opined that “[t]he results show that ACOs that take on regular levels of risk show better results for cost and quality over time.”[2] As a result, CMS is requesting comment on a new proposed rule, entitled “Pathways to Success,” to shift more of the downside risk to providers with the goal of incentivizing more efficient care and across-the-board savings.

The proposed framework establishes two tracks: (1) BASIC and (2) ENHANCED. Each ACO would be permitted to choose the track that best fits its needs while also being able to enter into five-year agreements as opposed to three-year. This would enable the ACOs to adjust to the risk that will need to be assumed over time while also learning to manage the associated costs.

The BASIC approach will permit the ACOs to assume risk over a five-year period with the first two years being upside-only risk with a “glide path” into years three, four, and five with increasing risk assumption. One caveat to the glide path is that ACOs currently within an upside-only risk plan, such as Track 1, would be limited to one of the two years of upside-only risk under the BASIC track. However, after year five, this newly-assumed risk would qualify the ACO as an Advanced Alternative Payment Model (APM), permitting the ACO to receive additional incentive payments for meeting quality thresholds.

Under the ENHANCED approach, ACOs may enter the program immediately qualifying as an APM at a set risk amount for the entire five-year period as long as the risk is greater than year five of the BASIC approach. On the other hand, ACOs that have had no experience under a two-sided risk approach may enter into any of the BASIC’s glide paths or enroll into the ENHANCED model from the start.

Due to the differences that exist between low revenue (i.e., physician practices) and high revenue (i.e., hospitals) entities, those who qualify as low revenue would be eligible to reapply for another five-year BASIC program at the highest level of risk. High revenue entities would be required to move into the ENHANCED track and assume additional risk.

Although efficient care and lower costs are appealing to practically everyone, the timing of the announcement and a change in the economic model will have a material impact on hospitals and physicians that participate in the programs. There are few areas where public policy is so intertwined with the clinical, operational, and financial performance of healthcare providers. Some stakeholders may see a competitive advantage to an accelerated move to downside financial risk. For others, it could lead them to withdraw from participation in the program altogether. Regardless, it is a critical moment in the transition to a value-based system, and these programs will benefit immensely from thoughtful, practical feedback from the physicians, hospitals, payors, and even investors that are trying to lead the way.

 

[1] Tracks 2 and 3 consist of only eighteen percent of enrollees with varying degrees of two-sided risk. Track 3 becomes the ENHANCED approach in the proposed rule.

[2] Seema Verma, Pathways to Success: A New Start for Medicare’s Accountable Care Organizations. August 9, 2018.