WASHINGTON — The Centers for Medicare & Medicaid Services (CMS) gave several early Christmas presents to accountable care organization (ACO) watchers on Friday, releasing a final rule for ACOs in the Medicare Shared Savings Program and issuing a report finding that so-called Next Generation ACOs saved money for Medicare.
ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated care to their Medicare patients. There are several different ACO models, and in the Medicare Shared Savings Program (MSSP) model, ACOs can share in any savings generated over a certain target benchmark — but after a few years, they also have to pay back any losses. They also must report outcomes data for the patients in the ACO.
Another model, the Next Generation, or Next Gen, ACO, is similar to the MSSP but has higher levels of financial risk and reward. Next Gen ACOs also get certain additional benefits — for example, they are permitted to have non-physician providers visit patients at home following a hospital discharge.
In August, CMS issued a draft rule demanding that MSSP participants take more financial risk more quickly — instead of being able to stay in an “upside only” model for 6 years, they would have a maximum of 2 years as “upside only,” after which they would have to pay back any losses they incur in the Medicare program. The final rule issued on Friday keeps that provision, with one exception — certain low-revenue ACOs, which are usually physician-led, will have an extra year to transition to two-sided risk.
The rule also expands the use of telehealth in MSSPs to allow certain MSSP participants to implement home-based telehealth visits for patients, rather than having them go to a medical office for a telehealth visit.
The ACO report issued by CMS found that Next Gen model ACOs generated $337 million in gross savings last year, including discounts to Medicare. After accounting for shared savings paid to ACOs and shared losses paid back to the government, the Next Generation program saved Medicare at least $165 million in 2017.
A total of 44 Next Gen ACOs participated in the program; they served 1.2 million Medicare patients. About 44% of Medicare providers — including physicians and others who can bill Medicare, such as nurse practitioners and physician assistants — are in a physician practice that is part of an ACO, according to David Muhlestein of Leavitt Partners, a healthcare advisory company based in Salt Lake City.
The MSSP rule, known as “Pathways to Success,” “is a bold step towards quality healthcare at a lower cost through competition and beneficiary engagement,” said CMS Administrator Seema Verma 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.”
The National Association of ACOs (NAACOS), a trade group here for accountable care organizations, had mixed comments on the rule. “We appreciate CMS’ effort in the final rule to provide greater stability to the Medicare Shared Savings Program with five-year agreement periods,” said NAACOS president Clif Gaus, in a statement. In addition, “we are very pleased CMS returned shared savings rates for many ACOs back to the historic precedent of 50% for some and 40% for others, increased the proposed one-sided risk term for certain low-revenues ACOs to 3 years, and made steps forward in needed risk adjustment policies.”
But Gaus said the group wishes CMS had gone further. “We will continue to advocate on certain provisions that CMS opted not to change in the final rule, such as the retention of a 2-year period in the no-risk model for many ACOs and the distinction between high and low revenue ACOs,” he said. “These polices 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.”
Dan Mendelson, founder of Avalere, a healthcare consulting firm here, disagreed with the idea that a 2-year transition was unreasonable. “My feeling is that CMS is appropriately raising the bar because these providers are further along the curve than they once were,” he said in a phone interview. “There are now a whole range of available methods to help providers take risk, and it makes sense that the expectations are going to be accelerated. Frankly, it helps the providers too, when they start taking financial responsibility, they start to excel… We have evidence this will accelerate their performance.”
Although some physicians complain that having to think about financial risk and outcomes data takes them away from their practice of medicine, “when health systems are working well, doctors who just want to practice medicine can do that,” Mendelson said. “The fact is we work in a system that conveys expectations on providers, and we can’t get the outcomes we want without providers being brought into these methods.”
In fact, ACOs can end up giving physicians more time to do the work they like to do because the ACO incorporates a whole team behind the physician, he added. “Think about the care of diabetes — the physician visit is an important part, but just one part of the patient’s overall care. There is also medication management, making sure the patients are educated [about their disease], and nurse call centers reaching out to make sure patients are doing well. Doctors won’t and can’t do all those things. So we’re talking about enabling physicians to achieve better outcomes in the context of these risk-bearing systems.”