ACOs should brace for new shared savings changes
The accountable care organization (ACO) industry is asking CMS for more time to apply for the reformed Medicare Shared Savings Program, but the new changes are likely to roll out whether ACOs are ready or not, according to a new report from Leavitt Partners.
ACOs have a short timeline to apply for the new MSSP, which CMS dubbed Pathways to Success when it reformed the program at the end of 2018. Recently, the National Association for ACOs (NAACOS) asked CMS for more time for organizations to consider their options before they apply, as the changes to the program were substantial.
Namely, ACOs will see shared savings amounts decline under the new program. They will also likely to be forced to take on downside risk sooner than previously allowed. The MSSP previously allowed ACOs to take upside risk and share in any savings with CMS. The vast majority of ACOs currently participating in the MSSP don’t take any downside risk, and ACOs have shown they tend to achieve greater savings with more time in the program. Downside risk requires ACOs to pay losses or overspending beyond pre-determined benchmarks back to Medicare.
ACOs have until February 19 to apply for the new program.
Revenue designation
In the new Pathways program, ACOs will be characterized as high or low revenue, which will impact how much downside financial risk they must accept. CMS eliminated the previous track that allowed ACOs to participate in upside-only models and will determine which track ACOs should be classified into by their revenue and experience with accountable care. The two remaining tracks, Basic and Enhanced, will last for five years, instead of the previous three-year agreements.
The move underscores CMS’ push into value-based care, but could drive out ACOs from the voluntary program.
While ACOs applying to the new program won’t know how they will be classified until after they submit to apply, it is likely the majority of ACOs will receive a high-revenue classification and take on downside risk, Leavitt Partners predicted. In its analysis, Leavitt Partners predicted the revenue status for 550 out of 560 currently active ACOs and found 67 percent could potentially be considered high revenue.
“As ACOs consider entering the MSSP under the new Pathways rule, they must recognize the strong possibility that they will end up being designated high revenue under Pathways and be required to assume downside risk more quickly,” David Muhlestein, chief research officer for Leavitt Partners, said in a statement. “Careful analysis will allow ACO leaders to understand their situation and respond accordingly.”
Risk and uncertainties
Applying alone comes with some risk for ACOs that may be placed into a track with immediate downside risk, potentially leaving them on the hook financially. Based on 2017 MSSP results, ACOs with losses under a downside risk arrangement would have had to pay back 0.7 percent of their benchmark goal under the enhanced track and 0.5 percent under the basic track––about a $500,000 difference for the average ACO, Leavitt Partners found. For bigger ACOs, the losses could have been even greater.
“The revenue determination could therefore have significant impacts on experienced ACOs,” the report stated.
While ACOs in the basic track without experience likely won’t face immediate downside risk, the transition to such an arrangement is quicker at just two performance years.
With several uncertainties and more risk, ACOs are likely to either not participate in the new Pathways to Success program; apply for the program despite the uncertainty; or undertake their own careful analysis to determine their track before they apply, according to Leavitt Partners.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."