Our Take: CMS finalizes ‘Pathways to Success’ for MSSP ACOs
Jan 07, 2019
At the end of 2018, CMS announced it had finalized rule changes for Medicare Shared Savings Program (MSSP) ACOs, in a new program called Pathways to Success.
CMS streamlined MSSP, which previously had four tracks, and is now offering just two participation options: Basic, which begins with one-sided risk and phases in higher levels of risk, and Enhanced, which is strictly two-sided risk.
Key changes include:
- Longer participation agreements (increased from three years to a minimum of five years)
- Up to 40 percent shared savings for ACOs that opt for one-sided risk, depending on quality performance
- Up to 50 percent shared savings for ACOs that take on downside risk, based on quality performance
- Less time allowed for one-sided risk (decreased from six years to two years for most new ACOs and three years for physician-led and rural ACOs)
- Expanded coverage for telehealth services, including those received in the home
- Allows ACOs to choose prospective beneficiary assignment on a yearly basis
- Allows ACOs to offer incentives to beneficiaries to improve their health outcomes (only for ACOs taking on downside risk)
CMS also updated the benchmarking methodology for Pathways to Success, which includes adjustments for ACO historical experience and regional performance data.
“Medicare can no longer afford to support programs with weak incentives that do not deliver value,” CMS Administrator Seema Verma stated in a press release. “The rule strikes a balance between encouraging participation in the ACO program and advancing the transition to value, ultimately protecting taxpayers and patients.”
Our Take: It appears that CMS does listen to public comments. For example, the agency allowed for a more gradual ramp-up of risk, choice of assignment methodology, five-year agreement periods, and more coverage for telehealth services—all of which were lobbied for by the National Association of ACOs, a trade group that advocates on behalf of ACOs.
CMS also compromised on the amount of shared savings for ACOs with one-sided risk. Initially, the agency proposed a maximum of 25 percent shared savings.
Further, CMS acknowledged that rural ACOs and some physician-led ACOs need more time before taking on downside risk, allowing new-starts an extra year to get there.
Yet even with those compromises, the new rules may result in as many as a third of ACOs exiting the program. A rule of thumb we’ve heard at conferences over the years is a five-year breakeven for nascent ACOs. With a two- or three-year timeframe to downside risk, some providers will lose their shirts under the new program—and it will discourage new providers from joining.
Depending upon whose numbers you use, MSSP ACOs had gross savings of $1.6 billion to $2.7 billion from 2013 to 2016. Let’s meet in the middle and call it $2.2 billion in savings over four years. In FY 2018, Medicare spent about $583 billion, so let’s say the program saved Medicare about 1 percent annually.
That may not sound like much, but it is a reduction, not an increase, in spending. That should count for something.
What’s more important—and what often gets overlooked in the conversation about ACOs—is that an ACO is as much a governing philosophy as it is a system for organizing the delivery of and payment for health care services. Every ACO has The Triple Aim at its heart: improving the patient experience, improving the health of populations and reducing the cost of care.
We would argue, then, that successful ACOs are changing the minds of providers who want to do better under a different model, where fiscal responsibility and quality are equally important. That’s what many (though not all) managed care organizations in the 1990s failed to see.
We’ll continue to track the ACO space here and for our clients. It’s fascinating to watch these ongoing developments unfold.
What else you need to know
Bristol-Myers Squibb Co. (BMS) is acquiring Celgene Corp. in a deal valued at $74 billion. In a press release, BMS said the terms of the agreement call for Celgene shareholders to receive one share of BMS stock and $50.00 cash for each share of Celgene. The combined company vaults into the top 10 largest pharmaceutical companies worldwide. It will have a substantial pipeline with a focus on oncology, inflammatory and immunologic diseases and cardiovascular disease, as well as nine products that generate more than $1 billion each in annual sales. The boards of both companies have approved the transaction. More here.
A federal judge has sided with hospitals in the war over 340B cuts, blocking the Trump administration’s attempt to reduce payments to hospitals for the drug discount program. U.S. District Judge Rudolph Contreras said Health and Human Services (HHS) had sidestepped congressional authority by requiring $1.6 billion in cuts. The American Hospital Association and other groups sued HHS over the issue, and in fact lost an appeal in July 2018, when a D.C. Circuit Court ruled that the group lacked standing. Since the 340B cut started in January 2018, an estimated $1.6 billion has been shifted from 340B hospitals. HHS is expected to appeal the decision. Read the judge’s opinion here.
Walgreens Boots Alliance (WBA) announced a new collaboration with Verily, Alphabet’s life science unit, to improve outcomes for patients with chronic conditions “while also lowering the cost of care.” Walgreens said it will be the “first-choice retail pharmacy development and commercialization partner to Verily” and that collaboration’s first effort will be to deploy a medication adherence pilot, leveraging Verily technology. Walgreens is also partnering with Onduo, Verily’s joint venture with Sanofi, to launch a virtual diabetes management solution for Walgreens employees and family members with type 2 diabetes through the retail chain’s health plan. “Working with Verily, we’ll look at how we can best support integrated and value-based care to meet our patients’ needs, as well as opportunities to address other chronic conditions over time,” said Stefano Pessina, WBA’s chief executive officer. More here.
Adventist Health System has completed its rebranding initiative, ushering in the AdventHealth name at 47 hospitals and 1,200 locations across nine states. As part of the rebrand, AdventHealth launched a new consumer website and an “internal culture and service initiative” called The Whole Care Experience for its 60,000 employees. “The name change is not the result of a merger or acquisition, and the health system’s mission of Extending the Healing Ministry of Christ, affiliation with the Seventh-day Adventist Church, ownership and business structure remain the same,” the company said. More here.
OhioHealth is partnering with ChenMed to open three geriatric-based primary care centers in underserved areas outlying Columbus, Ohio. OhioHealth said the centers will primarily serve moderate- to low-income seniors, including dual-eligible patients. The three centers will be staffed by ChenMed and OhioHealth Physician Group providers. ChenMed is a physician-led primary care provider that offers services in seven states. More here.
What we’re reading
The Burgeoning Role Of Venture Capital In Health Care. Health Affairs 1.2.19
Medicaid Expansion Gains Momentum: Postelection Prospects and Potential Implications. JAMA Viewpoint 1.3.19
This Bottle of Pills Costs $20 in One State and $130 in Another. Bloomberg 1.4.19