Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Value-Based Care News

Next Generation Model Methodology May Boost MSSP ACO Success

A new study claims that more MSSP ACOs could earn shared savings if CMS uses some of the Next Generation model’s benchmark methodology.

- CMS should use a modified Next Generation model benchmark methodology to calculate healthcare cost thresholds to ensure all accountable care organizations (ACOs) in the Medicare Shared Savings Program (MSSP) have an equal opportunity to earn shared savings, the authors of a study in The American Journal of Accountable Care contend.

Using a modified Next Generation model benchmark methodology may help MSSP ACOs earn shared savings, a new study argues

Along with historical spending information, MSSP healthcare cost benchmarks should account for regional and national spending trends like in the Next Generation ACO model. However, researchers found that the regional and national adjustments should be capped at 3.5 percent in the MSSP to give ACOs a fair chance to succeed.

“We also show, when adjusting benchmarks using the adjustment methods in the Next Generation ACO model, that the relationship between benchmark and saving is weakened; however, a benchmark is still an important determinant of saving,” researchers wrote. “We tested different levels of regional efficiency and national efficiency adjustments and determined that a combined adjustment cap of 3.5 percent best removes the positive relationship between benchmark and ACO performance.”

“Although the Next Generation ACO benchmark adjustment is effective at reducing the correlation between prior poor performance and an ACO’s savings, the adjustment should be larger to completely remove the positive relationship,” researchers added.

A major challenge with earning shared savings through the MSSP, the study explained, is that historical healthcare spending benchmarks can make it more difficult to realize savings over time. MSSP cost thresholds are determined using healthcare spending trends from three years prior to the performance period as well as several adjustments for patient risk and the national growth rate in Medicare spending. MSSP ACOs earn shared savings if they reduce their healthcare costs within a certain percentage, ranging from two to 3.9 percent, of the established spending threshold.

CMS recalculates benchmarks every three years of MSSP participation, researchers noted. But once healthcare spending decreases through the program, benchmarks are also reduced. ACOs may find it challenging to continuously lower healthcare costs.

The emphasis on historical healthcare spending also causes ACOs in high spending areas and ACOs that had higher spending relative to other ACOs in the region to be more likely to earn shared savings since their benchmarks are much higher, the study explained.

“As a result, providers who have achieved cost efficiency may be discouraged from entering or continuing to participate in an ACO payment model due to its reliance on historical performance,” wrote researchers.

CMS developed the Next Generation model to rectify these issues with MSSP benchmarks. Through the Next Generation ACO program, benchmarks are adjusted for regional and national spending trends. The methodology gives ACOs that are more cost efficient relative to other ACOs in their region a better discount.

Using Medicare spending and MSSP ACO performance data from 2012 to 2014, researchers examined how incorporating Next Generation benchmark methodologies into the MSSP could improve the MSSP ACO model.

Researchers adjusted MSSP healthcare spending benchmarks to account for regional and national efficiency, but the adjustments still created a positive relationship between the original benchmarks and the recalculated outcomes. The original correlation between the original benchmark and the savings rate was 0.14, but adjusting for regional and national spending only reduced the correlation to 0.13 and 0.10 respectively. In other words, the MSSP still favored historically high-cost ACOs.

To reduce the positive relationship, researchers varied the discount adjustments for regional and national spending efficiency. For example, by implementing a one percent cap for regional adjustments and a 0.5 percent cap for national adjustment, the ACO benchmark increased by $1,000 and the savings rate rose by 0.52 percent. The increases led to a $19.17 boost in earned savings per capita.

While a 0.52 percent increase in the savings rate may not appear large, researchers pointed out that the average savings rate for MSSP ACOs in 2012 to 2014 was 0.54 percent and the average shared savings per capita was $79.80.

The study stated, however, that a combined national and regional discount cap of 3.5 percent would completely remove the correlation between healthcare spending benchmarks and ACO performance. A 3.5 percent cap would give all MSSP ACOs an equal chance to earn shared savings under the model without historical benchmarks making it more difficult to reduce costs.

Altering the MSSP benchmark methodology may help the 81 MSSP ACOs who lowered healthcare costs below their financial thresholds in the most recent performance year, but did not qualify for shared savings. CMS recently announced that MSSP ACOs generated $429 million in total healthcare savings in 2015, but only 119 out of 392 participants earned shared savings.

“Accountable Care Organization initiatives in Medicare continue to grow and achieve positive results in providing better care and health outcomes while spending taxpayer dollars more wisely,” said Patrick Conway, MD, CMS Principal Deputy Administrator and Chief Medical Officer. “CMS continues to work and partner with providers across the country to improve the way health care is delivered in the United States.”

Dig Deeper:

Understanding the Value-Based Reimbursement Model Landscape

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