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Value-Based Care News

ACO Financial Risk Rules for Pathways to Success Raise Concerns

NAACOS, AHA, and other industry groups wonder whether new ACO financial risk rules for Pathways to Success will deter program participation and value-based care.

Accountable care organizations (ACOs) and Pathways to Success

Source: Thinkstock

By Jacqueline LaPointe

- Leading healthcare industry groups are concerned that the overhaul of the Medicare Shared Savings Program (MSSP) will impede the transition to value-based care.

On December 21, 2018, CMS finalized changes to the largest Medicare accountable care organization (ACO) program, which currently manages 561 organizations. The rule will rename the MSSP to Pathways to Success and notably shorten the amount of time ACOs have to assume downside financial risk. Other major changes to the MSSP detailed in the final rule on Pathways to Success include:

  • Reducing the number of program tracks to two – Basic and Enhanced
  • Allowing a maximum of three years of participation in an upside-only risk track depending on the composition and revenue levels of the ACO
  • Decreasing the shared savings rates for upside-only ACOs from 50 to 40 percent
  • Classifying ACOs as either high- or low-revenue and requiring high-revenue ACOs to assume downside financial risk faster than their low-revenue counterparts
  • Granting telehealth and other Medicare reimbursement requirement waivers to downside risk ACOs
  • Expanding agreement periods to at least five years

CMS intends for the changes to save nearly $3 billion over ten years and put the “accountability” back in the term ACO.

“Pathways to Success is a bold step towards quality healthcare at a lower cost through competition and beneficiary engagement,” CMS Administrator Seema Verma stated in a press release. “The rule strikes a balance between encouraging participation in the ACO program and advancing the transition to value, ultimately protecting taxpayers and patients. Medicare can no longer afford to support programs with weak incentives that do not deliver value. As we structure new payment arrangements, the impact on the overall market will be top of mind.”

But the National Association of ACOs (NAACOS) voiced disappointment that CMS finalized the shortened timeline for downside financial risk assumption.

READ MORE: For Ongoing ACO Shared Savings, Look Outside Inpatient, Primary Care

“We will continue to advocate on certain provisions that CMS opted not to change in the final rule, such as the retention of a two-year period in the no-risk model for many ACOs and the distinction between high and low revenue ACOs,” the association’s Chief Executive Clif Gaus stated.

“These policies may present challenges to providers who want to participate in this important, yet voluntary, Medicare program. NAACOS believes there needs to be movement toward greater risk, and that movement requires an appropriate and reasonable glide path to encourage participation and success.”

Gaus, however, did commend CMS for allowing certain low-revenue ACOs to remain in an upside-only track for three years. The head of NAACOs was also pleased CMS chose not to reduce the shared savings rates for upside-only ACOs to as low as 25 percent as proposed.

The largest hospital group representing almost 5,000 hospitals and other providers also expressed concerns that the quicker path to downside financial risk will impede the value-based care transition.

“Today’s final rule will not be helpful in the move toward value-based care. None of the actions taken today will better empower ACOs to maximize their contribution to patient care and are not pathways for improving the value of the program for patients,” the American Hospital Association’s (AHA) Executive Vice President of Government Relations and Public Policy Tom Nickels stated.

READ MORE: Key Issues Impacting Two-Sided Risk Accountable Care Organizations

AHA remains opposed to “CMS drastically shortening the length of time in which ACOs can participate in an upside-only model,” Nickels added. “Hospitals and health systems have asked for a more gradual pathway because building a successful ACO that is able to take on financial risk requires significant investments in time, effort and finances.”

Furthermore, the hospital group reiterated concerns that the shared savings rates are not adequate for rewarding ACOs for high-quality, lower-cost care.

“While CMS made some improvements to its shared savings rate policies from the proposed rule, they still are not sufficient to appropriately reward ACOs for improving quality and reducing costs. We are particularly concerned about the impact of these and other policies on high-revenue ACOs,” Nickels explained.

Overall, AHA believes that the Pathways to Success will result in a significant reduction in program participation.

“That would be unfortunate, as we seek to transform care to better serve our patients and communities,” Nickels emphasized.

READ MORE: Accountable Care Organizations Grow, But Face New Challenges

The American Medical Group Association (AMGA) also raised concerns that Pathways to Success will not encourage continued participation and attract new ACOs.

“With these policies, CMS is showing its commitment to shifting the MSSP as quickly as possible to a risk-based program,” said AMGA President and CEO Jerry Penso, MD, MBA. “While AMGA is a strong supporter of this goal, the program needs to provide additional incentives to ensure the reformed ACO program is successful in moving providers to risk.”

Penso specifically criticized the shared savings rate. CMS proposed a rate of 25 percent for upside-only ACOs. The federal agency revised the proposal to include a rate of 40 percent.

However, the rate is still below the 50 percent shared savings rates for ACOs previously participating in upside-only tracks in the MSSP.

“CMS is asking ACOs to very quickly move into a risk-based model, which is a policy that AMGA supports,” he stated. “But, once an ACO is two-sided and more of its revenue is put at risk each year, its possible upside is locked into place at the rate that previously was for upside-only models. We believe this is a missed opportunity to drive providers to the Medicare Shared Savings Program.”

The Trump Administration is pushing providers to take accountability for the care they deliver. And the MSSP overhaul reflects the administration’s efforts.

However, industry groups are pointing out that the changes to the largest Medicare ACO program may have the opposite effect. The final rule may spur ACOs to leave the program rather than assume higher levels of financial risk.


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