If the Centers for Medicare and Medicaid Services (CMS) goes through with proposed new rules for Accountable Care Organizations (ACO), 70% of ACOs which would be forced onto riskier programs in January 2019 say they’ll quit the program.
The proposed new CMS rule would fundamentally change the terms under which Accountable Care Organizations are reimbursed.
CMS said on August 17, 2018, “Referred to as ‘Pathways to Success,’ this proposed new direction for the Shared Savings Program would redesign the participation options available under the program to encourage Accountable Care Organizations (ACOs) to transition to two-sided models (in which they may share in savings and are accountable for repaying shared losses), increase savings for the Trust Funds and mitigate losses, reduce gaming opportunity and increase program integrity, and promote regulatory flexibility and free-market principles.”
CMS would reduce the time in which an ACO can remain in the shared-savings-only side from a maximum of six years (two three-year contracts) to two years. It would slash the benefit of savings-only ACOs 50% and would also cut benefits for those in the least risky of the four current risk tracks.
Of 561 ACOs currently operating, 460 are in Track 1 in 2018. Of these 460, 82 are nearing the end of their second three-year term in as savings-only ACOs. These 82 would have to move in January to a tier which accepts risk. The 70% figure on who would leave came from an NAACOs survey of them this past spring.
ACO advocates foresee see big trouble in the proposed rule.
The National Association of Accountable Care Organizations (NAACO) said it “has repeatedly expressed concerns to CMS about pushing ACOs into risk before they are ready, and we have advocated to allow more time in a one-sided model (savings-only) for ACOs that meet certain cost and quality requirements.”
The proposed rule is complex; the PDF explanation is 607 dense pages.
NAACOs has posted a brief guide to the key points, along with criticisms, and also a 19-page analysis, in case you need details but don’t want to wade through 607 pages.
Savings Disputed
CMS is squeezing ACOs because it’s not seeing savings.
ACOs in the savings-only track “are actually increasing Medicare spending, and the presence of these ‘upside-only’ tracks may be encouraging consolidation in the marketplace, reducing competition and choice for our beneficiaries,” CMS Administrator Seema Verma was quoted as saying at the American Hospital Association’s Annual Membership Meeting May 7, 2018.
In sharp contrast, a study commissioned by NAACOs says ACOs saved Medicare nearly twice as much as CMS estimates. The study says CMS’ numbers are “based on a benchmarking methodology [which] systematically understates the actual savings generated by MSSP ACOs.”
That study, “Estimates of Savings by Medicare Shared Savings Program Accountable Care Organizations,” by the firm Dobson DaVanzo & Associates, LLC, Vienna, Virginia, says ACOs participating in the Medicare Shared Savings Program reduced spending by 1.1% to 1.2% per beneficiary in 2013-2015, while Medicare spending increased 2.9% per capita in that period. It used a method comparing ACO-using Medicare beneficiaries to beneficiaries not using an ACO.
CMS now also seems to disagree with its own administrator. Its own data for 2017, released August 30, says that Shared Savings Program ACOs, in the aggregate, saved the program a net $313.7 million in 2017, after deducting $780 million for the bonus payments to ACOs. CMS published the data in 472 lines of raw tables, as if it wanted to make the public work to understand it.
A new study disagrees with both CMS and NAACOs, splitting the savings argument another way entirely.
That study, “Medicare Spending after 3 Years of the Medicare Shared Savings Program,” by J. Michael McWilliams, M.D., Ph.D., Laura A. Hatfield, Ph.D., Bruce E. Landon, M.D., M.B.A., Pasha Hamed, M.A., and Michael E. Chernew, Ph.D., published Sept. 5, 2018 in the New England Journal of Medicine, concludes:
“… [P]articipation in shared-savings contracts by physician groups was associated with savings for Medicare that grew over the study period, whereas hospital-integrated ACOs did not produce savings (on average) during the same period.”
That study agreed with Dobson DaVanzo that CMS’ methods for calculating savings aren’t valid, and that:
- Smaller, more narrowly focused ACOs are more likely to achieve savings.
- Spending reductions grew consistently over the study years among physician-group ACOs but not among hospital-integrated ACOs.
- Shared-savings-only contracts, with no shared risk loss, may save Medicare money.
