ACOs Enrolled in MSSP Assume Downside Risk as the Program Matures
ACOs participating in MSSP have gradually assumed downside risk as the program progresses, seeing the greatest growth over the past three years.
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By - More accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) have assumed downside risk as the program progresses, according to a new Avalere analysis.
Most ACOs participated in upside-risk models in MSSP’s in early years, where CMS paid ACO bonuses for good financial performance. Poor performance did not see any financial loss. But in the past three years, MSSP has seen its greatest growth in ACOs taking on downside risk.
The MSSP is Medicare’s largest alternative payment model (APM) that will further efforts to shift the healthcare industry towards value-based payment systems. From 2012 to 2017, fewer than 10 percent of ACOs assumed downside risk each year.
But in recent years, there has been a significant increase in downside-risk ACOs. Thirty-seven percent of ACOs in the program are in downside risk arrangements currently.
Upside risk allows participants to share in healthcare savings if their services make care delivery more efficient. But in downside risk arrangements, providers can also lose healthcare revenue if their services exceed agreed-upon financial and clinical thresholds. Organizations may also be required to refund their payers if they go over a set budget for a certain group of services.
Upside risk models are clearly a safer option, but downside risk arrangements offer more potential for cost savings for providers and are key part of the road to true value-based care, most experts agree. A push from CMS, ACO experience, new downside-risk track options, and a recent overhaul of the program have led to a surge in the number of ACOs assuming downside risk.
CMS announced a new downside-risk model in 2016 called the Track 1+ model, the analysis highlighted. Fifty-five ACOs participated in the model in 2018, which doubled the number of downside-risk ACOs. That same year, CMS overhauled the MSSP through the Pathways to Success final rule, which required ACOs to quickly transition to downside risk.
Last May, CMS reported that MSSP increased net spending for Medicare and taxpayers primarily because most ACOs have not taken on risk for increases in costs.
Although transitioning to downside risk is expected to save Medicare $2.9 billion over the next ten years, bearing downside financial risk was the top indicator that an MSSP ACO would exit the program.
“This raises the concern that the new MSSP rule — which would allow an ACO only one to three years (less than two years in most cases) before moving to downside risk, substantially less than the current six years—could cause successful ACOs to drop out of the program,” wrote William K. Bleser, research associate at the Duke-Margolis Center for Health Policy and lead author of the study.
Most recently in July 2019, the percentage of downside-risk ACOs increased from 19 percent to 29 percent.
The Avalere report emphasized that it is “undetermined” whether downside risk will create the appropriate incentives to reduce Medicare costs. As the growth in downside-risk ACOs continues, future results will provide insight into whether risk is a meaningful factor in ACO success.
But CMS and CMMI have continued to modify and create new APMs that force providers to accept downside risk. Organizations still expect the transition to reduce Medicare costs by requiring providers and APM participants to share financial risk with CMS.
