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Medicare ACOs loath to assume risky contracts given short deadline to decide

Experienced accountable care organizations are leaning toward less risky contracts in the recently revamped Medicare Shared Savings Program given the short deadline to apply, but have no plans to exit the program.

About one-third of Medicare ACOs have until Feb. 19 to decide if they want to renew their contracts in light of changes made to the program. And although leaders of current ACOs say they won’t be leaving, the short deadline is pushing them to select contracts with less downside risk.

“It’s a big deal to make that kind of decision in a month-and-a-half and over the holiday,” said Don Calcagno, president of Advocate Physician Partners, the clinically integrated network in Illinois that’s part of Advocate Aurora Health. Advocate’s ACO is currently in Track 1+, the MSSP’s introductory downside risk contract, and Calcagno said Advocate will likely stick with the equivalent of that track in the revised program given the short time the board has to decide on how well it could do in other contracts with more downside risk.

The CMS finalized the overhaul of the MSSP program—called Pathways to Success—on Dec. 21, giving ACOs about two months to make their decisions. And there are a lot of changes for ACOs to consider by Feb. 19. The new MSSP program, which takes effect July 1, requires ACOs to take on downside risk more quickly.

The agency made the decision in response to risk-averse ACOs that were costing Medicare millions. The vast majority of ACOs—82%—are currently in Track 1, the program’s upside contract in which ACOs aren’t on the hook for financial losses but the CMS must give out savings based on performance.

The short deadline prompted the National Association of ACOs, the American Medical Association and other stakeholder organizations to write a letter to CMS Administrator Seema Verma asking for a March 29 extension to the deadline.

A CMS spokesman said in an email that while the agency “can’t” extend the deadline, it’s offering two application cycles: one that begins in July and another that starts in January. Usually, the CMS only runs one application cycle each year in January. The spokesman added that the agency recently hosted two webinars to help ACOs understand the changes to the program and prepare for the Feb. 19 application process.

Under the redesigned program, ACOs can choose to participate in one of two tracks: basic or enhanced. The basic track, which has a five-year performance period, only allows incumbent ACOs to be in a one-sided risk contract if they have no prior experience with downside risk and the option only lasts for one year. In subsequent years of the basic track, ACOs will be forced to enter contracts with “progressively higher risk,” according to the CMS. The enhanced track is based on Track 3 of the MSSP, which is the most advanced track with the most downside risk. The agency expects all ACOs to graduate to the enhanced track.

Medicare Shared Savings Program participation

Advocate’s ACO is the second-largest Medicare ACO in the country in terms of covered lives, according to Leavitt Partners. About 5,000 physicians along with 120,000 beneficiaries are part of the ACO.

Calcagno said the ACO is still weighing whether it will apply for the enhanced track or Level E of the basic track, which closely reflects Track 1+ in terms of shared losses that ACOs are on the hook for. Advocate’s decision is coming down to time and money.

In the enhanced contract, the shared-loss rate is as high as 75% versus the Level E contract, where the shared loss rate is 30%. Calcagno said that difference could mean Advocate losing more than $230 million versus $60 million. Given the short time frame, he said Advocate will likely pick Level E.

“Looking at those numbers, that’s a big decision, and to be given a short window of time that’s not very tenable,” Calcagno said.

At consultancy Aledade, four of its six ACOs up for contract renewal this month need to decide if they are going to take on downside risk. Although Aledade will be pushing the physicians to agree to two-sided risk contracts, it’s a hard decision given the lack of data available to ACOs with the current deadline, said Travis Broome, vice president of policy and ACO administration at Aledade.

ACOs rely on cost and performance data to understand how they will perform in risk-based contracts, but the ACOs up for the contract renewal won’t have vital 2018 performance data they need for several more months, Broome said.

“Our goal as a company is for all of our ACOs, when they get to the second contract, to be able to go to risk but with the shortened deadline—that makes it less of a sure thing to try to make sure that’s maintained,” Broome said.

For some ACOs, contract renewal decisions have been easier. For example, the Physician Organization of Michigan ACO has been preparing to transition to downside risk for two years, said Dr. Timothy Peterson, executive director of the ACO.

The ACO, which has 4,500 providers and 80,000 beneficiaries, has been in Track 1 of MSSP since 2013 and was preparing to move to Track 1+ this year. Peterson said the ACO plans to apply to Level E of the basic track since it closely resembles Track 1+.

“We needed to make the transition to two-sided risk anyway and we had done a lot of homework on the tracks,” he said. “We would’ve been ready to go in January, and Medicare pushing the deadline to July just delays the transition for us.”

DATA: Largest accountable care organizations: 2019