October 2, 2019

CMS Administrator Seema Verma in a blog post published Monday in Health Affairs announced that accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) generated $739.4 million in net savings in 2018.

Just updated: How the Medicare ACO models stack up

About MSSP

MSSP encourages ACOs to cut health care costs and improve care coordination by enabling participating ACOs to receive bonus payments if they maintain high-quality care while decreasing Medicare spending compared with their individual benchmarks.

CMS in December 2018 issued a final rule, called "Pathways to Success," to reduce to two years the amount of time ACOs can stay in MSSP without assuming risk. The rule replaced MSSP's original three participation tracks with two new tracks under MSSP's Pathways to Success model:

  • The BASIC Track, which moves participants to a two-sided risk model after two years; and
  • The ENHANCED Track, which requires participants to take on downside risk in year one.

Both tracks have five-year contract terms and require participants to take on downside risk, effectively eliminating CMS' upside-only Track 1 option. CMS is providing two application cycles for the Pathways to Success model in 2019, which is the model's first performance year. The agency offered a special one-time new ACO agreement period that began July 1, allowing existing ACOs with expiring contracts the opportunity the renew their agreements under the new MSSP tracks. Participants selected from the second application track are scheduled to begin Jan. 1, 2020.

ACOs participating in MSSP generated millions in net savings in 2018, CMS data shows

Verma in the blog post wrote that CMS data showed the 548 ACOs that participated in MSSP last year generated $739.4 million in total net savings.

Verma wrote that ACOs that had assumed downside risk in 2018 generated higher savings than those that did not. Specifically, the data revealed ACOs that assumed downside risk reported an average reduction in spending of $96 per beneficiary, compared with an average reduction of $68 per beneficiary among ACOs that did not assume downside risk.

Verma noted that the percentage of ACOs in MSSP assuming downside risk has increased from 19% in 2018 to 29% as of July 1. She wrote, "This trend is one of the reasons that the greater accountability for ACOs included in Pathways to Success, along with greater flexibility for them to innovate, will lead to better, more efficient care for Medicare beneficiaries."

In addition, Verma wrote that physician-led ACOs, which are classified as low-revenue ACOs because they offer mostly outpatient services, "continued to perform better than ACOs led by hospital systems," which are classified as high-revenue ACOs because they provide both inpatient and outpatient services. According to Verma, CMS data showed an average reduction in spending of $180 per beneficiary relative to targets among physician-led ACOs, compared with an average reduction in spending of $27 per beneficiary relative to targets among hospital-led ACOs.

Lawmakers plan to introduce legislation to address ACOs' concerns

Clif Gaus, president of the National Association of ACOs (NAACOS), said the data showed ACOs performed well before CMS issued the Pathways to Success final rule, and questioned the need for transitioning to the new Pathways to Success model. He said, "We should work to find ways to encourage ACO participation, which as evidenced by these results helps improve our health care system and the future of Medicare."

An aide for Rep. Peter Welch (D-Vt.) said Welch plans to introduce a bill to address concerns ACOs have with CMS' Pathways to Success final rule. According to the aide, Welch is working with the NAACOS, the American Medical Association, and the American Medical Group Association on the bill.

The bill is expected to address unnecessary obstacles ACOs believe the final rule creates and establish a new pathway for ACOs to assume risks.

In addition, the bill is expected to:

  • Increase shared savings rates from 25% to 50%;
  • Eliminate rules penalizing ACOs for reducing costs in areas with few providers; and
  • Eliminate high-revenue and low-revenue designations (King, FierceHealthcare, 9/30; Verma, Health Affairs Blog, 9/30; Firth, MedPage Today, 9/27; Diamond, "Pulse," Politico, 10/1).

Just updated: How the Medicare ACO models stack up

Hospitals, health systems, and physician groups across the country continue to evaluate the menu of Medicare ACO options. Whether applying for the first time, graduating to downside risk, or tracking CMS's evolving approach to ACOs, leaders need to understand the key details of each model.

Download this infographic to learn how the different Medicare ACO models stack up.

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