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January 15, 2020

CMS: Fewer ACOs signed up for MSSP—but more are taking on downside risk

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    CMS Administrator Seema Verma in a blog post published Friday in Health Affairs announced that a new report shows that fewer ACOs are participating in the Medicare Shared Savings Program (MSSP), though more participants are assuming two-sided risk, and Medicare net spending increased among Next Generation ACO participants during the model's first two performance years.

    Infographic: How the Medicare ACO models stack up


    CMS' Center for Medicare and Medicaid Innovation oversees several programs testing various ACO models, including MSSP and the Next Generation ACO model. 

    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.

    But in 2019, CMS launched a revamped version at the program that aimed to accelerate the time it takes ACOs to assume downside risk. CMS 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 offered a special one-time new ACO agreement period that began July 1, 2019, allowing existing ACOs with expiring contracts the opportunity the renew their agreements under the new MSSP tracks. The next start date under the newly revamped program was Jan. 1.

    The Next Generation ACO model, meanwhile, is Medicare's highest-risk ACO program. The program, which launched in 2016, uses a combination of fee-for-service and capitated payments. It has four payment systems and two risk tracks for its participants, including one with almost full risk.

    Medicare beneficiaries voluntarily sign up to participate in Next Generation ACOs. In exchange, the beneficiaries pay reduced or no copayments for certain services, such as primary care visits. There were about 1.7 million Medicare beneficiaries aligned to a Next Generation ACO during the program's first two performance years, which spanned 2016 and 2017. The model currently is in its fifth and final performance year, Modern Healthcare reports.

    ACO enrollment in MSSP declines

    Verma in the blog post wrote that 53 new ACOs joined MSSP for the redesigned program's Jan. 1 start date, which marks a slowdown from previous years. For instance, 66 new ACOs had joined MSSP in 2018 and 99 had joined the program in 2017, according to Modern Healthcare. In total, there currently are 517 ACOs participating in MSSP, down from 518 in 2019 and 561 in 2018.

    Verma wrote that, although 16% of participating ACOs voluntarily left MSSP in 2019, more than 40% of the providers who had been included in an ACO that left the program after Jan. 1, 2019, are part of a different ACO that is participating in the program this year. Verma wrote that "[t]he participation rates for January of this year put CMS on track to generate the $2.9 billion in savings over ten years that was projected by CMS' Office of the Actuary when the Pathways to Success policies were finalized."

    Clif Gaus, president and CEO of the National Association of ACOs, in a release said fewer ACOs are participating in MSSP because of the changes CMS made to overhaul the program and require ACOs to take on downside financial risks sooner. The declining participation threatens progress on value-based care, Gaus said. "If interest in ACOs dwindles, then doctors and hospitals will fall back into a fragmented, fee-for-service system, and any momentum to transform our health system will be lost," he said.

    More MSSP ACOs take on downside risk

    However, Verma in the blog post also noted that more ACOs are taking on downside financial risk. According to Modern Healthcare, 63% of the 517 ACOs currently participating in MSSP are in tracks that do not require them to take on financial risk sharing—down from 82.6% of participating ACOs in 2018. The remaining 37% of ACOs participating in MSSP this year are in tracks that require them to take on two-sided risk, Modern Healthcare reports.

    David Muhlestein, chief research officer at Leavitt Partners, said the increase in the number of ACOs participating in risk-sharing tracks suggests participants who have stayed in the program are willing to take on downside risk, whereas the ACOs that dropped out of the program likely did not plan on assuming downside risk. As such, he said, "Just looking at the (lack of growth)" in the MSSP program "doesn't tell the whole story about what's going on with the ACOs."

    Next Generation ACO model did not generate Medicare savings

    In addition, Verma in the blog post wrote that a new report found the Next Generation ACO model did not generate savings for Medicare during the program's first two performance years.

    For the report, which was commissioned by CMS, researchers from NORC at the University of Chicago evaluated how ACOs participating in the Next Generation ACO model performed in 2016 and 2017. The researchers evaluated the ACOs using a different benchmark than the one CMS currently uses for the Next Generation ACO model. The researchers also examined how ACOs participating in the Next Generation ACO model performed when compared with those participating in MSSP.

    The researchers found that Medicare spending increased among ACOs participating in the Next Generation model during the program's first two performance years. According to the researchers, the Next Generation model was associated with a $93.9 million increase in net Medicare spending over 2016 and 2017.

    The researchers found Medicare did not see savings during the Next Generation model's first two years because Medicare had to pay more under the program than it recouped. However, the researchers found that, before accounting for the payments Medicare had to make to ACOs under the program, gross Medicare spending had decreased by $123.18 million over the model's first two performance years.

    Verma in the blog post wrote that separate data shows ACOs participating in the Next Generation model in 2018 reduced spending by about 11%, but CMS had to payout about $285 million in shared savings to ACOs that reached the model's targets. In comparison, CMS received about $64 million as shared losses under the program.

    Verma wrote that the findings show the importance of evaluating value-based payment models based on net spending. "If shared savings payouts were not considered, the Next Generation ACO model would appear to have decreased spending across performance years one and two; the net values provide the full story," she wrote.

    But Muhlestein said the findings are "a bit misleading" because the researchers used a different benchmark than CMS used under the program. He said, "People know their benchmark and they are working around their benchmark. You can't just change the targets halfway through performance years" (Castellucci, Modern Healthcare, 1/10; Castellucci, Modern Healthcare, 1/10; Pointe, RevCycleIntelligence, 1/13; Verma, Health Affairs Blog, 1/10).

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