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Our Take: CMS announces NextGen ACO results — and they are impressive

Jan 18, 2021
CMS announced partial results for Performance Year 4 (2019) of its Next Generation (NextGen) ACO program.

The results are for 37 of the 41 NextGen ACOs that participated in the program during that period. The remaining four NextGen ACOs deferred financial settlement, which was conducted last summer. CMS said it expects to release full results for the fourth performance year this spring.

Overall, the 37 ACOs earned $461.9 million in shared savings, or about $374 per beneficiary. All but two of them earned shared savings. Net savings to Medicare after bonuses was about $226 million, or $183 per beneficiary.

Comparatively, in Performance Year 3 (2018), 51 NextGen ACOs earned $220.9 million in shared savings, or approximately $158 per beneficiary.

Program evaluation reports, which are released after the raw CMS data files, use sophisticated statistical models to assess the impact of ACOs and tend to show less savings than CMS’ calculations.

Top performers in earned shared savings include UT Southwestern ACO Network ($50.6 million), UnityPoint Accountable Care ($50.0 million), and Indiana University Health ($29.6 million).

The two ACOs with shared losses were HCP California (-$9.9 million) and CoxHealth Accountable Care (-$1.1 million).

The NextGen program was set to end in December, but CMS extended it through the end of 2021.

Our Take:
Announced in March 2015, the NextGen ACO program was hailed as an improvement to the Pioneer ACO program and was designed for existing or new ACOs that were able to take on significantly higher risk than previously available. With greater risk came greater reward: The model allowed for greater shared savings and tested the assumption that, with more financial upside, it would attract providers experienced in managing risk.

CMS said when announcing the new model that it “sets predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality standards of care.”

While it’s easy to forget, by then the Pioneer ACO program had fizzled, largely because the rewards weren’t aligned with the risk. The Pioneer ACO program began on Jan. 1, 2012, with 32 participating organizations and ended Dec. 31, 2016, with only nine remaining. Of the nine, seven went on to the NextGen program and two went on to the Medicare Shared Savings Program (MSSP), which had less upside but didn’t require taking on as much risk. Of the seven that transitioned into the NextGen program, only Atrius Health and Montefiore ACO were still in the program in 2019.

What happened to the 23 Pioneer program dropouts? Well, 57% either converted to the MSSP program or signed up for the NextGen program in 2016. By 2019, three were still standing: Heritage California ACO, Park Nicollet Next Generation ACO, and Steward Integrated Care Network.

We went back and looked at these ACOs as a measure of sustainability. Only 16% of ACOs that had once been Pioneers are still committed to NextGen, and only 6% have been consistently at the ACO game since the beginning, over a seven-year period.

To be fair, a similar analysis of the MSSP program might show different results. But it is telling that of the 541 participating MSSP ACOs in 2019, only 205 signed up for the Pathways to Success (PTS) program, the successor to MSSP, which — you guessed it — offers higher rewards but demands more risk.

That doesn’t mean the PTS program hasn’t been effective in achieving savings. Writing in a Health Affairs blog post last September, CMS Administrator Seema Verma noted that ACOs in the new PTS tracks generated net per-beneficiary savings of $169 compared with net per-beneficiary savings of $106 for those in the MSSP legacy tracks.

Verma pointed out that even new ACOs that joined the MSSP through one of the PTS tracks in July achieved, on average, net per-beneficiary savings of $150, which she said is “the first time ACOs new to the program had lower spending relative to their benchmarks in their first performance year.”

The future of any of the Medicare ACO programs is uncertain, but in the meantime, Congress did address value-based payment incentives by including a provision in a year-end spending and COVID-relief bill that freezes thresholds needed to require a bonus on Medicare payments. This should have a positive impact on ACO participation going forward.

But, in a year where our health care system has been upended by COVID-19, it’s hard to see — at least for the immediate future — just how many ACOs will survive.

What else you need to know
Bon Secours Mercy Health has launched its own group purchasing organization (GPO), Advantus Health Partners. According to a press statement, the Cincinnati-based health system’s new GPO will offer services and solutions in the areas of distributions and logistics, inventory management, clinical integration, and other integrated supply chain solutions to the health facilities it partners with, including community hospitals, academic medical centers, regional integrated delivery networks, national health systems, critical access hospitals, ambulatory surgery centers, and physician clinics.

CVS Health is partnering with Cancer Treatment Centers of America (CTCA) to provide better access to chemotherapy at home for CTCA patients through its Coram infusion care unit. The goal is lower the risk of exposure to COVID-19 for immunocompromised patients who would otherwise have to receive their chemotherapy in the inpatient or hospital outpatient setting, CVS said in a news release. Patients who are clinically eligible and fully insured will begin treatment in a traditional setting and, if the treatments are tolerated, they can transition to receiving their infusions at home. The companies are starting with a pilot program in Atlanta and will expand the service to other markets “over the next few months.”

Synairgen has started a Phase III trial of an inhaled treatment for COVID-19. The Southampton, U.K.-based biotechnology firm is conducting the trial in partnership with Parexel Biotech to evaluate whether an inhaled formulation of interferon beta-1a can elicit an effective antiviral response in patients hospitalized with COVID-19 who require supplemental oxygen. The trial is expected to expand to about 20 countries, including the U.S., Synairgen said. The treatment is also being tested in a midstage trial in nonhospitalized patients with COVID-19 who are at risk for developing serious symptoms.

CMS approved a waiver to allow Tennessee to convert its Medicaid program into a system of block grants for 10 years. It’s the agency’s first approval of a block grant for Medicaid. Tennessee will receive a lump sum of federal funding and can increase or decrease funding for its Medicaid program based on enrollment. The state can keep as much as 55% of the savings generated each year when spending falls below the funding cap and quality targets are met; the state can use that money for other state health programs. Under its new Medicaid program, called TennCare III, the state will have the authority to negotiate directly with drugmakers, and it can create a closed formulary that does not require federal approval — meaning it can decline coverage of a drug if it deems the price to be too high.

CommonSpirit Health and Essentia Health signed a letter of intent for 14 hospitals currently operating under the CHI brand in North Dakota and Minnesota, along with the associated clinics and living communities, to join Essentia Health, the companies announced on Jan. 8. Once due diligence has concluded, the CHI facilities, including Alexius Medical Center in Bismarck, N.D., could become part of Essentia Health this summer. In separate news, Ascension signed an agreement to sell seven hospitals, 21 physician clinics, and its patient transport services to Wausau, Wis.-based Aspirus Health. The transaction is subject to customary closing conditions, including canonical requirements. Financial terms were not disclosed.

Billionaire Mark Cuban has launched a generic drug company. The Mark Cuban Cost Plus Drug Company “is dedicated to producing low-cost versions of high-cost generic drugs,” the website states, adding, “We pledge to provide radical transparency in how we price our drugs.” The new company’s first product will be albendazole, an antiparasitic used to treat hookworm infections. The drug has a current list price of approximately $225 per tablet, according to the site. The company said its cost to manufacture and distribute the drug is about $13 per tablet.

What we’re reading
To Overcome Vaccine Hesitancy, We Need a Better Patient Experience. Harvard Business Review, 1.15.21

Building a Better Clinician Value-Based Payment Program in Medicare. JAMA, 1.12.21

The Future of Drug-Pricing Transparency. NEJM, 1.13.21 (subscription required)

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