A risky future? Two-thirds of ACOs want rules to change

Most members say they are 'unlikely' to shoulder more financial risk

Most ACOs are threatening to effectively drop out of the Medicare shared-savings programs unless CMS removes the threat of penalties in the second round of three-year contracts, InsideHealthPolicy reports.

Where the Medicare ACOs are, 2014 edition

In the first round of three-year contracts, participating ACOs were allowed to share in program savings without being placed at risk of potential losses. However, the rules require that ACOs be at risk for losses if spending exceeds certain benchmarks in the second round, under what CMS calls a "two-sided risk model." In exchange, they qualify for larger bonuses if they succeed. After three years, all ACOs must agree to the riskier contracts.

However, many members of the health care industry are now pushing back against the two-sided risk measure. According to a recent survey from the National Association of ACOs:

  • About 67% of program participants say they are unlikely to adopt a two-sided risk model in the next round of contracts;
  • 46% of its members are "very unlikely" to accept two-sided risk in the next round; and
  • 21% are "somewhat unlikely" to take on greater risk.

CMS: Just one in four shared-savings ACOs earned bonus pay

Their refusal to take on the two-sided risk model in the next round of contracts is equivalent to threatening to withdraw from the program, unless CMS agrees to give the organizations a break, according to one ACO analyst. Meanwhile, just 19% of ACOs say they are "somewhat likely" to agree to the two-sided risk measure, and only 14% say they are "very likely." 

Experts: ACOs have a lot of leverage

At the annual meeting of the National Association of ACOs last week, CMS Principal Deputy Administrator Jon Blum told Clif Gaus, the organization's president, that the agency is seriously considering the transition to riskier contracts.

While the Affordable Care Act contains many reforms, the ACO program is seen as key to achieving the ACA's aim of redesigning health care delivery, and the agency has touted the program's participation rate, its savings, and its results on quality of care. As a result, members carry a lot of leverage because the administration does not want to see the program fail, lobbyists and consultants note (Wilkerson, InsideHealthPolicy, 4/28 [subscription required]).

The Advisory Board's take

Chas RoadesChas Roades, Chief Research Officer

The context of this particular poll is limited, but the provider sentiment seen in the results is yet another indicator of the challenge ACOs face when trying to reconcile the competing incentives of fee-for-service and care transformation.

Providers need to see a clear pathway for transitioning to risk and away from volume-based care before they can abandon their fee-for-service traditions. But more accountable, patient-centered care is the key to improving quality, reducing costs and building a care model that is financially sustainable over time.

Learn more

We've developed a deep library of resources to help organizations make careful decisions about the transition toward risk-based payment. Here are five places to get started:


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