CMS Plans to Transform MSSP to Encourage ACOs to Assume More Risk

August 10, 2018 - CMS recently proposed an overhaul of Medicare’s largest accountable care organization (ACO) program, transforming it from the Medicare Shared Savings Program (MSSP) to the Pathways to Success initiative.

The redesigned MSSP program would focus on accelerating the move of Medicare ACOs to downside financial risk arrangements that hold the organizations accountable for financial losses and promote competition.

The proposed changes come after several studies, including an internal analysis from CMS, found that upside-only MSSP ACOs increase Medicare spending on the program.

“After six years of experience, the time has come to put real ‘accountability’ in Accountable Care Organizations. Medicare cannot afford to support programs with weak incentives that do not deliver value,” stated CMS Administrator Seema Verma.  “ACOs can be an important component of a system that increases the quality of care while decreasing costs; however, most Medicare ACOs do not currently face any financial consequences when costs go up, and this has to change.”

To increase accountability and competition, two core tenets of the new initiative, Pathways to Success would require ACOs to take on downside financial risk after two years in the upside-only track.

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

The current iteration of the MSSP allows participating ACOs to remain in Track 1, the upside only risk track, for a total of six years, or two agreement periods. The majority of participating organizations have taken advantage of the upside-only rules, with 82 percent of all MSSP ACOs in Track 1 in 2018 despite the program launching in 2012.

For MSSP ACOs currently in Track 1, CMS also proposed to reduce their upside-only period in the Pathways to Success initiative. ACOs that have already participated in Track 1 would have one year to move to the downside financial risk track.

Medicare ACOs would also have one downside financial risk track instead of three counting the new Track 1+ pathway. The Pathways to Success initiative would have two total tracks, which are the upside-only Basic track and the downside financial risk Enhanced track.

The accelerated and consolidated financial risk arrangements in the new ACO initiative would also spur competition by discouraging providers from merging with and acquiring others, CMS stated.

“This opportunity for bonus payments if spending is low without any risk of losses if spending goes up – along with the provision of waivers – may be encouraging market consolidation. Such consolidation reduces choices for patients and can ultimately increase costs,” the federal agency stated.

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

In addition to promoting accountability and competition, the Pathways to Success initiative would also aim to improve beneficiary engagement, care quality, and program integrity. To advance the three tenets, CMS proposed the following:

• Require ACOs to notify beneficiaries at their first primary care visit during a performance year that they are in an ACO and explaining what the arrangements means for their care
• Allow certain risk-bearing ACOs to give incentive payments to patients
• Permit risk-bearing ACOs to receive payment for telehealth services regardless of a patient’s location
• Require ACOs to adopt the 2015 edition of certified EHR technology
• Incorporate regional spending into ACO targets starting during an organization’s first agreement period
• Terminate ACOs with multiple years of poor financial performance

The proposed changes to the MSSP would result in $2.2 billion in savings to Medicare over ten years, CMS reported.

The Health Care Transformation Task Force’s Executive Director commended CMS for innovating the MSSP and encouraging more ACOs to take on downside financial risk.

“The Health Care Transformation Task Force welcomes the release of Medicare’s Pathways to Success for Accountable Care Organizations (ACOs). This is an important step to promote value-based transformation and to push industry momentum forward,” Jeff Micklos stated.

“At first pass, the proposed rule presents novel ideas and careful thinking on how ACOs may better lower cost and improve patient outcomes. Our members look forward to sharing their feedback and collaborating with CMS on advancing this leading value-based payment program.”  

READ MORE: Exploring Two-Sided Financial Risk in Alternative Payment Models

However, other industry groups raised serious concerns about the sustainability of the Pathways to Success program. The National Association of ACOs (NAACOS) was one of those groups.

“It’s naïve to think that ACOs that aren’t ready can be forced to take on risk, given that the program is voluntary. The more likely outcome will be that many ACOs quit the program, divest their care coordination resources and return to payment models that emphasize volume over value,” the group’s President and CEO Clif Gaus said.

“This would be a significant setback for Medicare payment reform efforts and would undermine implementation of the overwhelmingly bipartisan Medicare Access and CHIP Reauthorization Act (MACRA), which is designed to move providers into alternative payment models such as ACOs.”

About 71 percent of current MSSP ACOs that must take on downside financial risk by 2019 said in a recent NAACOS survey that they were more likely to quit the program rather than be forced to assume additional risk.

The American Hospital Association (AHA) also criticized the proposed rule, arguing that the Pathways to Success initiative does not account for the different stages of MSSP ACOs.

“While we acknowledge CMS’s interest in encouraging providers to more quickly move toward accepting risk, drastically shortening the length of time in which ACOs can participate in an upside-only model ignores the reality that providers are starting at vastly different points and will have vastly different learning curves when moving toward value-based care,” the AHA’s Executive Vice President Tom Nickels stated.

“The proposed rule fails to account for the fact that building a successful ACO, let alone one that is able to take on financial risk, is no small task; it requires significant investments of time, effort and finances,” he added.

Establishing a gradual pathway to downside financial risk would be more appropriate, Nickels suggested.