New CMS Proposal Overhauls ACO Program

When the folks at CMS manage to stand up what every Congress and the Administration has thrown their way, that really is a kind of success. When the Affordable Care Act (ACA) was finally passed, the effective date for many provisions had already passed. Standing up the Medicare Shared Savings Program (MSSP) and the other ACO demonstration models was a heroic effort, but the programs themselves weren’t perfect, nor could they be.

Well, there is a new sheriff in town, and she is skeptical about shared savings, so she is culling the herd. As we expected, those ACOs that have dallied in risk-free Track 1 will be shown the door if they don’t step up, and the agency predicts 109 will exit (there are currently 561 MSSP participants). This Administrator believes these outfits can drive consolidation of providers and actually increase costs for the program. So new entrants will have only a two-year runway to downside risk, and returning ACOs (including reformed entities with >50% of the same players) get one year, which kicks in after a grace period for the latter half of 2018. But there is an exception for “low revenue” ACOs to have a much smaller risk profile. The lower dollar ACOs are typically provider based, and they are more likely to yield savings, but they are not as well capitalized as ACOs built around hospitals or healthcare systems.

There are several other significant changes here, including opportunities to select and changes attribution models annual and also to have annual risk adjustment. The movement to regional benchmarks will be faster. On the benefit side, CMS plans to broaden use of the three-day skilled nursing facility waiver and expand telehealth.

When the ACO movement began, I had the opportunity to ask Mark McClellan, arguably one of the fathers of the model, if he thought this might be the answer to some of the larger healthcare problems in the U.S. He said no, but it is a step in the direction of better quality and efficiency. I’m beginning to think it may be a transitional step. If we consider all of the Medicare ACOs, including the demos, I see the distribution shaking out at both ends. This move will pick off the ACOs that do not have the required sophistication or organization. On other tail, I see those successful ACOs moving towards the direct contracting model or becoming Medicare Advantage plans. The MSSP just might be the farm team for the Medicare program of the future.




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