WASHINGTON — Accountable care organizations (ACOs) expressed concern over new Trump administration regulations that reduced the amount of time they can remain in upside-only models.
Last month, the Centers for Medicare & Medicaid Services (CMS) finalized a new rule that forces ACOs onto a two-sided risk track after a maximum of 2 or 3 years instead of 6 years.
Roughly 12% of doctor-led ACOs and about 22% of health centers in the Medicare Shared Savings Program (MSSP) will have to move onto a two-sided risk track more quickly than in previous years as a result of the new CMS rule, according to a new report from the National Association of ACOs (NAACOS).
The new MSSP design has two tracks: “basic” and “enhanced.” These replace the former MSSP track categories (tracks 1-3 and track 1-plus).
Those on the basic track remain part of the default payment pathway, the Merit-based Incentive Payment System, while those on the enhanced track are on the advanced alternative payment model pathway, and are eligible for certain bonuses. On the enhanced track, practices are eligible for up to 75% of shared rewards, but must also manage the first dollar losses from 40% t0 75%.
Within the basic track, there are five-lettered levels (A-E) that incrementally increase in risk, with levels A and B serving as upside-only tracks, while levels C, D, and E are two-sided.
In Tuesday’s report, NAACOS sought to prove its argument that in shortening the runway to two-sided risk models, the final MSSP rule from CMS is shifting greater responsibilities, and potentially greater losses, onto certain ACOs that may not be ready.
According to CMS, certain ACOs have more control over their costs than others. But in order to decide which ACOs should take on risk, CMS came up with its own formula for high and low revenue ACOs rather than allowing ACOs to self-report whether they are affiliated with a hospital, explained a NAACOS spokesperson. Most hospital-affiliated or health system ACOs would typically be seen by CMS as high revenue, according to NAACOS.
An ACO would be deemed high revenue by CMS if the ACO’s total fee-for-service (FFS) Medicare revenue for all its participating providers is >35% of its total FFS spending for all the beneficiaries assigned to that ACO. If the ACO’s total FFS Medicare revenue for all participating providers is <35% of spending for all assigned beneficiaries, it would be considered a low-revenue ACO. Note that the formula for determining these ratios includes only the revenue and spending in Medicare Parts A and B.
New ACOs in the high-revenue group are allowed to remain in the basic track for one 5-year agreement, while those in the low-revenue group are offered two 5-year cycles on the lower-risk track, according to the NAACOS spokesperson.
In its analysis, NAACOS used 2016 claims data, and based its projections on an ACO’s 2016 configuration.
The results showed that most hospital-affiliated ACOs would be deemed high revenue. In addition, about 12% of physician-led groups would be categorized by CMS as high revenue “even though we would expect most providers in this category to be low revenue,” the report noted. Also, about 22% of health centers (both federally qualified health centers and rural health centers) would be deemed high revenue under the new CMS rule.
“It’s worth noting this is historic data and the high-low revenue designation would be reset each year,” NAACOS explained in its summary document.
NAACOS said it is concerned that the new rule creates unnecessary complications for certain ACOs, particularly physician-led ACOs and health centers. The group is also concerned that ACOs who want to include specialists in their model might hesitate to do so, because having specialists increases an ACO’s chances of being categorized as high revenue.
Prior to its report and the CMS final rule, NAACOS issued a statement asking CMS not to finalize the distinction between high- and low-revenue ACOs. The group also pushed back on the idea that high-revenue ACOs, or any other type, be forced into higher levels of risk.
“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,” Clif Gaus, ScD, CEO of NAACOS, said last month in a statement.
In the current report, NAACOS restated its opposition to the “arbitrary distinction” between high- and low-revenue ACOs and “CMS’s assertion that high-revenue ACOs are able to assume high levels of risk in shorter amounts of time.”
Mollie Gelburd, JD, associate director of government affairs for the Medical Group Management Association, said her members agree that ACOs should be allowed to “advance at their own pace.”
She also seconded NAACOS criticism of the high- and low-revenue mechanism for determining risk, adding that CMS is “equating the control over revenue spending to having control over [patients’] care.”
If an ACO delivers higher cost services, infusion drugs for example, they will have more costs to attribute to their providers, but that doesn’t necessarily make them a high-revenue ACO, Gelburd explained. “If CMS is looking to redesign the program, there’s other ways to generate saving besides this overemphasis on risk.”
Just as ACOs already have “inherent incentives” to take on risk when they’re ready to, Gelburd noted, they will also “self-police” based on success or failure. “If they’re losing money, they won’t stay in the program,” she explained.
Another option could be for CMS to drop those ACOs that fail to achieve savings after several years.
‘A Good Idea’
Farzad Mostashari, MD, CEO and co-founder of Aledade, a firm that helps independent practices transition to value-based models, disagreed.
Mostashari explained that “CMS set up the ‘low revenue’ designation based on actuarial analysis showing that these ACOs generated virtually all of the savings in one-sided ACO arrangements. That’s the rationale for allowing them to stay in one-sided or lower downside risk arrangements for longer periods.”
He said the cutoff that maximized the difference in performance between high and low performance was for ACO participants receiving 10% of total FFS payments made for ACO-assigned beneficiaries. “CMS raised that threshold in the proposed rule to 25%, and then further to 35% in the final rule,” he added.
“We believe that the current designation is a good idea, and that the 35% cutoff is skewed — if anything — towards allowing too many hospital ACOs to use the low-revenue designation,” Mostashari told MedPage Today via email. “While there may be some ‘physician-affiliated ACOs’ with a large proportion of specialist docs and relatively few primary care providers that may exceed this threshold, we would be surprised if that comprises a substantial number of active ACOs.”