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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 TakeIt 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
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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.

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