Slow Going on ACO Risk

Even as participation in ACOs grows, providers are hesitant to advance to models with more risk. CMS has now extended the least risky ACO track for three more years.

The Centers for Medicare & Medicaid Services can point to growing numbers of accountable care organizations as an indicator that healthcare providers are using ACOs to shift from volume- to value-based care.

In reality, though, there are many different flavors of ACO, bearing varying levels of risk. The great majority of providers remain in the least risky track, and CMS has now extended this track for another three years to give providers more time to adapt to at-risk contracting. Progression to higher-risk ACO models has been slow.

Over the past three years, CMS has operated a pair of ACO models: the Medicare Shared Savings Program and Pioneer ACO. MSSP lays out multiple pathways for providers to assume varying levels of risk in care delivery: Track 1 has upside risk only, with providers garnering a share of cost savings achieved above spending benchmarks; Track 2 has upside and downside risk, with a higher shared savings rate than Track 1; and Track 3, which is slated for rollout next year, mirrors Medicare's most ambitious ACO model to date, Pioneer ACO.

With double-sided risk and a high bar for banking shared savings, participation in Pioneer ACO has lagged far behind MSSP participation, according to CMS. As of January, the MSSP roster stood at 405 ACOs. Pioneer ACO has 19 participating organizations this year, well down from the original 32 entrants.

"I see them as a continuum," Melissa Jackson, senior associate director of policy at the American Hospital Association, says of Medicare's ACO models.

In March, CMS introduced a new flavor to the agency's Medicare ACO menu: Next Generation ACO. While Next Generation ACO entails the highest level of risk yet for healthcare providers who serve Medicare patients, it also contains several attractions for provider organizations, including expanded coverage of telemedicine-based services and direct rewards to beneficiaries to encourage them to seek healthcare services from ACO caregivers. "Next Generation is definitely more advanced," Jackson told me recently.

She says the vast majority of healthcare providers participating in MSSP are still on Track 1 because they need time to adapt to at-risk contracting and to make the investments necessary to achieve ACO success, such as building robust electronic medical record systems. She adds that the vagaries of local patient populations and local market dynamics can also create roadblocks to value-based care adoption.

The recently released Final Rule for MSSP that goes in effect Aug. 3 includes a second round of three-year Track 1 contracts, reflecting the importance of Track 1 as a learning tool, Jackson says. "We're happy that ACOs that choose to do so will have more time to experiment."

But provider progression to Track 2 has been halting.

According to data on the first performance year of MSSP, which ended Dec. 31, 2013, only five of the 220 participating ACOs opted to participate in Track 2, which has two-sided risk. In an acknowledgment that very few healthcare providers are ready to assume the relatively high level of risk required to participate in Next Generation ACO, CMS officials have forecast the number of inaugural participants in the new program at no more than 20.

Last week, a CMS spokesperson told me the new Final Rule for MSSP shows that the agency is committed to growing participation in MSSP, including Track 1, while simultaneously encouraging healthcare providers to participate in Medicare ACO models with two-sided risk.

"The Final Rule includes numerous provisions that will assist ACOs in Track 1 in improving care and reducing growth in Medicare expenditures. These include provisions that extend the time ACOs can remain in Track 1 while they develop their population health management capabilities, streamline data sharing with ACOs to facilitate care coordination, place even greater emphasis on primary care in our assignment methodology, and refine the rebasing methodology to ensure ACOs have a viable business model over the long-term," the spokesperson said. "CMS will now allow ACOs a second agreement in Track 1 for the express purpose of allowing ACOs to develop their population health management capabilities. In addition, the changes we made to Track 1 will help ACOs be successful in improving care for Medicare beneficiaries while reducing growth in program expenditures."

He says MSSP participation is trending upward and sustainable. "There are over 400 ACOs in the Medicare Shared Savings Program providing care to 7.3 million beneficiaries. With the changes announced [in the Final Rule], CMS expects continued robust participation in the program. The deadline for new ACOs to submit a Notice of Intent to apply for the program for 2016 was May 29, and CMS was pleased by the strong response, including strong interest among existing ACOs to renew their agreements for a second agreement period."

Harold Miller, head of the Pittsburgh-based Center for Healthcare Quality and Payment Reform, is urging Medicare to boost the number and reach of value-based payment models.

"The solution is for Medicare to offer multiple alternative payment models … but it needs to offer more models that are based on what physicians and hospitals say they need in order to improve care and reduce costs in ways that don't harm patients and don't give the providers excessive financial risk," he told me this week. "Although you might think it's impractical for CMS to offer a lot of different payment models, they're already doing it; they're just not doing it in enough areas, and the options they have defined are structured in ways that are unnecessarily problematic for providers. As a result, they're getting less participation and lower impact than they could."

Miller, who is skeptical of shared savings programs as a long-term model for value-based payments in the healthcare industry, says CMS needs to increase the accountable care contracting options available to providers.

&"The Affordable Care Act specifically authorized CMS to implement payment models other than shared savings as part of the ACO program, but all it has implemented so far is the shared savings approach, and it's done that in ways that cause severe problems for the ACOs."

Miller also calls on CMS to operate value-based payment models outside the hospital setting, particularly for physician practices.

"The CMS Bundled Payments for Care Improvement initiative has four different bundled payment model options, and within three of those options, providers can select which of 48 different procedure/diagnosis categories they want to receive the bundled payments for. That's 145 different payment models. However, none of the options can be used unless the patient was first hospitalized, so there's nothing available for all of the physicians who deliver services outside of the hospital and for patients who don't need to be hospitalized. There's actually a disincentive for providers to use non-hospital-based treatments for a patient's problem, since they lose the entire bundled payment if the patient doesn't go to the hospital."