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Our Take: MSSP generated net savings of $1.2 billion for Medicare in 2019

Sep 21, 2020

Accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) generated $2.65 billion in savings for Medicare in 2019, the National Association of ACOs (NAACOS) said in a news release last Monday.

After taking into consideration the shared savings bonuses Medicare paid out to participating ACOs and the shared loss payments it collected from them, the net savings to Medicare totaled $1.2 billion — the highest of any year so far in the MSSP.

In all, 541 ACOs participated in the MSSP in 2019. Of those, 205 participated in the revised model called Pathways to Success (PTS), which had an initial application cycle in July 2019 and another application cycle in January 2020. The remaining ACOs continued in the MSSP’s original, or “legacy,” tracks.

According to Clif Gaus, the CEO of NAACOS, only 5% of eligible ACOs chose to enter the new PTS model early.

“Unfortunately, ‘Pathways to Success’ has already shown to diminish ACO participation,” Gaus said. New ACO participation in MSSP peaked at 141 in 2018, according to NAACOS; just 35 new ACOs joined in 2020.

The PTS revisions were intended to encourage ACOs to take on downside risk sooner than the original model, and the numbers released by CMS demonstrate that is what occurred: 19% of ACOs in the MSSP were in a track with downside risk in 2018, and the percentage increased to 29% in 2019. By Jan. 1, 2020, the percentage had increased to 37%.

According to a blog post CMS Administrator Seema Verma wrote for Health Affairs, 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.”

In general, ACOs identified as “low revenue” — typically led by physician groups — outperformed those identified as “high revenue,” which are usually led by hospitals, Verma noted in the blog post. Specifically, among all ACOs in the MSSP, low-revenue ACOs generated on average net per-beneficiary savings of $201 compared with net per-beneficiary savings of $80 for high-revenue ACOs. Limiting the results to ACOs participating in the PTS tracks, the net per-beneficiary savings were $189 versus $155 for low-revenue and high-revenue ACOs respectively, according to Verma.

Dr. Farzad Mostashari, CEO of Aledade, a company that works with physicians to help them join and operate ACOs, said the results provide further evidence that physician-led ACOs can successfully generate savings through value-based care.

“Once again, physician-led ACOs outperformed hospital ACOs,” Dr. Mostashari tweeted. “What we need now is to help more practices participate in these models of care.”

But Charlotte, N.C.-based health care improvement company Premier disagreed with CMS’ perspective on the low-revenue versus high-revenue ACOs.

“While CMS cites better performance of “low-revenue” or physician-led ACOs, our experience has not shown that to be the case,” Premier said in a statement. “We believe it is important to maintain a level competitive playing field for all ACOs. Model designs that discourage inclusion of hospitals undermine the objective of ACOs, which is to coordinate care across all providers to improve care, as well as potentially jeopardize access to needed patient care.”

Verma also called attention to the fact that ACOs in rural areas have improved their performance under policies in the new PTS model. Among MSSP ACOs overall, urban ACOs generated net per-beneficiary savings of $125 compared with net per-beneficiary savings of $64 for those in rural areas. When looking at only the ACOs that participated in the PTS tracks, however, the difference in net per-beneficiary savings between urban and rural ACOs was considerably less: $170 versus $158, respectively.

Moreover, ACOs that took on two-sided risk under either the original MSSP tracks or the PTS tracks saved more per beneficiary when compared with those that stayed in tracks with only upside risk ($152 versus $107).

Almost all ACOs met the quality performance standard in 2019, and about 92% of eligible ACOs earned quality improvement reward points. The greatest improvements were in the patient safety and care coordination quality domain.

In separate news, CMS released information last week regarding proposed payment changes for Medicare Advantage (MA) plans, noting that the timing was about three months earlier than usual to give MA organizations and Part D sponsors more time to estimate 2022 plan costs in light of the pandemic.

Among the proposed changes and in accordance with the 21st Century Cures Act, CMS plans to use only encounter data to calculate risk scores in MA plans and Part D in 2022, instead of supplementing encounter data with diagnoses from patient records as it has for the last few years. For 2021, 75% of the data CMS used for risk adjustment was encounter data; the agency has been gradually increasing the proportion since 2016. CMS will also add payments for more conditions, including mental health, substance abuse disorder, and chronic kidney disease.

In addition, Healthcare Dive reported that the Center for Medicare and Medicaid Innovation (CMMI) said at last week’s AHIP virtual conference it is getting ready to launch a new model that will allow insurers to assume risk for patients enrolled in both Medicare and Medicaid. CMMI also plans to roll out a model centered on geographic direct contracting in the months ahead.

Our Take: While the MSSP results for 2019 are encouraging, the coronavirus has clearly thrown a wrinkle into the current performance year. CMS has taken steps to ease the impact of COVID-19 on ACOs, such as eliminating shared losses for as long as the public health emergency lasts.

Additionally, ACOs whose agreement periods expire at the end of 2020 can extend their agreement for one year instead of having to switch to a newer risk-based agreement, and ACOs in the PTS BASIC Track can stay at their current level of participation for the next performance year.

We’ll have to wait and see how much those and other CMS efforts will help ACOs weather the pandemic.

“The [2019] results clearly show that ACOs are helping improve our health system at a time when it’s needed more than ever,” said Clif Gaus, the CEO of NAACOS. “When we emerge from the ongoing pandemic, we’ll need alternatives to fragmented fee-for-service and better cost-control strategies, which ACOs provide. There should be no debate that we need to foster the growth of more ACOs so their benefits are delivered to more seniors.”

Gaus noted that the proposed Value in Health Care Act would “get [MSSP] program growth back on track” by raising ACOs’ shared savings rates to 50%–55%, depending on which PTS track they’re in. The legislation would also extend the 5% incentive payment for participation in certain alternative payment models and lower the thresholds for participation.

What else you need to know

Gilead said it will spend $21 billion to acquire Immunomedics, a price that stunned industry analysts. That figure represents a 108% premium to the closing price for Immunomedics’ shares on Sept. 11. Under a definitive agreement that the two companies signed and both boards unanimously approved, Gilead will fund the acquisition through approximately $15 billion cash and newly issued debt of about $6 billion. Among the Immunomedics assets Gilead will obtain is Trodelvy (sacituzumab govitecan-hziy), a first-in-class, Trop-2-directed antibody-drug conjugate the FDA approved in April on an accelerated basis to treat metastatic triple-negative breast cancer. The drug is also being evaluated as a potential treatment for bladder cancer, non-small cell lung cancer, and other solid tumor types. The transaction is expected to close in the fourth quarter.

Cigna’s health services segment will be branded as Evernorth starting in the third quarter. Tim Wentworth will serve as CEO of the newly branded subsidiary, which will be the parent company of pharmacy benefit manager Express Scripts, specialty pharmacy Accredo, medical benefits manager eviCore, and Cigna’s other health service product lines, Cigna said in a news release. Evernorth’s health services will be offered to other payers, government organizations, and employers, even if they do not have Cigna medical insurance. Existing products such as Embarc Benefit Protection (which assists with access to expensive gene therapies), inMynd (a mental health platform), and Healthy Ways to Work (a return-to-work program developed to address pandemic-related challenges) will be offered under the Evernorth umbrella, along with new products, including a fertility program called FamilyPath.

Hackensack Meridian Health, RWJBarnabas Health, and Horizon Blue Cross Blue Shield New Jersey are launching a joint venture called Braven Health that will offer Medicare Advantage plans in eight New Jersey counties for the 2021 plan year. Currently, Braven Health is jointly owned and operated by Horizon and Hackensack Meridian Health; the two companies are working with RWJBarnabas Health to join Braven Health, a move that is subject to state regulatory authorities’ approval. A “practitioner council” comprising physicians from various specialties will advise Braven Health’s board of directors and CEO Luisa Charbonneau. Braven Health plans will use Horizon’s Medicare Advantage provider network.

CareFIrst Blue Cross Blue Shield and MedStar Health are collaborating on a value-based care initiative, with the goal of saving $400 million in the next seven years. Columbia, Md.-based CareFirst is the largest not-for-profit health insurance company in the mid-Atlantic region, and Baltimore-based MedStar Health is the region’s largest not-for-profit health care provider, according to a joint press statement. MedStar also operates one of the largest home health agencies in the region, according to Home Health Care News. The initiative will focus on preventive care, improved coordination of care among primary care physicians and specialists, and enhanced technology integration, including clinical data sharing. The partnership will also seek to address disparities in health care.

Humana has created two new value-based payment programs for members of select Medicare Advantage plans. One is a coronary artery bypass grafting episode-based model designed to provide coordinated care for certain plan members who undergo heart bypass surgery. The other is a total shoulder specialist rewards program with two goals: to improve health outcomes for certain plan members who undergo shoulder replacement surgery, and reduce costs by encouraging independent surgeons to choose ambulatory surgical centers as the site of care when clinically appropriate. Humana noted in a press release that it also offers value-based programs for spinal fusion procedures and total hip and knee joint replacement surgeries, as well as a maternity episode-based model and an oncology model of care.

The Centers for Disease Control and Prevention (CDC) reversed a recent, widely criticized change in its COVID-19 testing guidance for asymptomatic people. A change made late last month on the CDC’s website indicated that people without symptoms do not necessarily need to be tested, even if they have had close contact with someone confirmed to be infected with SARS-CoV-2. Substantial backlash led the agency to update the guidance yet again on Friday. The site now says that asymptomatic people who have had close contact (i.e., within 6 feet) for at least 15 minutes with someone confirmed to be infected with the virus do “need a test.”

What we’re reading
What values and priorities mean for health reform. NEJM, 9.16.20 (registration required)
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