Number of MSSP ACOs Taking Downside Risk Doubles, CMS Reports

January 14, 2020 - The number of accountable care organizations (ACOs) in the overhauled Medicare Shared Savings Program (MSSP) assuming downside financial risk doubled from 93 ACOS at the start of 2019 to 192 at the state of 2020, CMS recently reported.

CMS Administrator Seema Verma touted the increasing number of ACOs taking on downside risk in a new blog post in Health Affairs. In the post, she said the growing number of risk-based MSSP ACOs will “translate to lower costs and higher value for Medicare beneficiaries and taxpayers.”

“CMS greatly appreciates the hard work and creative thinking from health care providers on the front lines who are participating in the program and redesigning their care delivery around value instead of volume,” Administrator Verma continued.

Getting more ACOs to assume downside risk was the main motivator behind the recent MSSP overhaul.

Announced in 2018, the overhaul renamed Medicare’s flagship ACO model “Pathways to Success” and revamped rules to put ACOs on a quicker path to taking on “real risk.” Specifically, the overhaul reduced the amount of time MSSP ACOs can stay in an upside-only risk track from six to two years for most organizations.

The changes to the program received criticism from ACO advocates, many of whom expressed concerns that forcing ACOs to take on downside risk sooner would slash participation rates in the voluntary program.

Those concerns may have been valid. Participation in the MSSP following the overhaul dipped from 561 ACOs in 2018 to 518 ACOs in 2019. Although, 2019 participation rates only contained one 12-month performance year and two six-month performance years.

The MSSP ACO participation rate remains stable, with 517 ACOs partaking in 2020, according to Administrator Verma’s report in Health Affairs. She reported that CMS approved 53 applications for new ACOs and 100 applications for renewing ACOs, which will bring the total number of Medicare beneficiaries served by providers in ACOs up to 11.2 million from 10.4 million from 2019 to 2020.

The attrition rate in 2020 is slightly higher compared to previous performance years. About 16 percent of ACOs chose to voluntarily terminate the program in 2019. The average annual attrition rate since the program launched in 2012 was 11 percent.

However, CMS Administrator Verma pointed out that “not all health care providers that terminated actually left the program—over 40 percent of ACO participants that terminated from an ACO after January 1, 2019, will be participating as part of a different ACO in 2020.”

The latest MSSP participation rate may also not be such a bad thing for the program, she added.

“The participation rates for January of this year put CMS on track to generate the $2.9 billion in savings over ten years that was projected by CMS’s Office of the Actuary when the Pathways to Success policies were finalized,” she wrote.

CMS believes that more risk-based ACOs will help the large program save money.

In October 2019, CMS reported that MSSP ACOs generated $1.7 billion in total savings in 2018. Of that, Medicare netted approximately $739 million after accounting for shared savings and losses payment that year.

However, CMS found that ACOs assuming downside risk during the performance period produced greater savings than their peers in non-risk-based tracks. Risk-based ACOs saved an average of $96 per beneficiary compared to their benchmarks, while ACOs not taking risk saved just $68 per beneficiary, the federal agency reported last year.

But many disagree with CMS’ interpretation of MSSP participation and savings data, including the National Association of ACOs (NACCOS).

“NAACOS feared that changes CMS made under Pathways would throw off the careful balance of risk and reward for too many ACOs. Sadly, those fears may be coming true,” Clif Gaus, ScD, stated in a press release published Friday. “To date, there have been few attractive alternative payment models besides ACOs, so harming participation in the Medicare Shared Savings Program hurts Medicare’s priority of changing how it pays for care. Congress should take a closer look at this program to ensure more damage isn’t done."

In its own separate analysis prepared by analytic firm Dobson DaVanzo & Associates, NAACOS found that MSSP ACOs have been more successful than CMS has estimated. The association reported that the ACOS saved approximately $3.52 billion from 2013 to 2017, netting Medicare about $755 million during the period.

“If interest in ACOs dwindles, then doctors and hospitals will fall back into a fragmented, fee-for-service system, and any momentum to transform our health system will be lost,” Gaus stressed.