Cutting Shared Savings Rate
Also, CMS is cutting the initial shared savings rate from 50% to 40% for one-sided ACO contracts. In the proposed rule issued August 2018, CMS said it planned to cut shared savings drastically, to 25%. The shared savings rate for ACOs in the later, “two-sided” years of the contract, will stay at 50% under this final rule.
This cut in savings for benefits-only contracts was made “to strengthen the on-ramp to the program while rewarding ACOs that take on greater risk with higher shared savings rates,” said CMS Administrator Seema Verna in a December 21 blog post.
“Today’s final rule drives towards greater savings and quality for Medicare’s ACO program,” Verna said in that December 21 blog. “The rule is projected to achieve $2.9 billion in savings over ten years.”
Will dropout rate rise?
Some caregiver organization representatives are projecting a high dropout rate and a slow evaporation of Medicare savings. The new rule has been criticized by the American Hospital Association (AHA), the National Association of ACOs (NAACOS), the American Medical Association (AMA), the Medical Group Management Association, and Premier, Inc., of Charlotte, North Carolina.
“If they don’t go back to 50 percent, we will see a long-term significant shrinkage in the ACO movement and a significant emanation of accountable care,” said NAACOS President and CEO Clif Gaus in a November interview with Healthcare Informatics. After the new rule came out, he said NAACOS would monitor the impacts of reducing the early savings and forcing ACOs to take on risk.
CMS seems to be willing to have health care organizations drop out of the MSSP system rather than continue on the one-sided model. Its internal estimates say about 100 ACOs will quit. In a May 2018 speech to AHA members, citing a March 2018 study, Seema Verna said the benefits-only tier costs money rather than saves.
What? No Savings!
That study, by a company called Avalere, said that the Congressional Budget Office (CBO) originally estimated in 2010 that the MSSP program would save Medicare $1.7 billion over the first four years. Instead, reimbursements under MSSP rose $384 million.
However, Verna seems to have ignored the most important conclusions by Avalere:
“While the MSSP overall was a net cost to CMS in 2016, there is evidence that individual ACO performance may improve as they gain years of experience with the program. Avalere found that MSSP ACOs in their fourth performance year produce net savings to the federal budget, totaling $152 million … These results suggest that CBO’s initial projections may not have taken into account the time it takes for ACOs to gain experience with the program and to start to produce consistent savings.”
