WASHINGTON — Medicare’s accountable care organizations (ACOs) saved the program more than $1 billion last year, and now some members of Congress are pushing for changes that they say will boost ACOs’ staying power.
ACOs are groups of doctors, hospitals, and/or other healthcare providers that work together with a goal of providing better care at lower cost. The Centers for Medicare & Medicaid Services (CMS) began experimenting with them in 2012, debuting a model called the Pioneer ACO model — which is now defunct — as well as the Medicare Shared Savings Program (MSSP) and gradually adding several other models, including the NextGen ACO model. Payments to ACOs — including bonuses — are based on their ability to hit certain financial targets set by the program.
Last year, MSSPs served 11.2 million seniors and saved the program $1.2 billion after accounting for both shared savings bonuses dispensed by the program, as well as loss payments made by plans that lost money, according to a report that CMS released last week on MSSPs’ performance in 2019. ACOs who participate in MSSPs generally have both “upside risk” — the ability to share in any savings they produce — as well as “downside risk,” in which they have to pay back any money they lose for the program.
Patience is a Virtue
Getting to good results can be a long journey, Farzad Mostashari, MD, at Aledade, a Bethesda, Maryland company that advises physician-led ACOs, said in a phone interview. “In our first year, we didn’t get savings — we had two ACOs and neither made savings in the first year,” he added. “One of the things we learned was it takes time, and every single year, these practices get better, we get better, and patients get trained in what the expectations are and what primary care access means. Patience is pretty important in value-based care and the longer you do it, the better it gets.”
“In these models, you have to hit certain minimum savings before you earn your first dollars,” he continued. “If you’re hovering around 2-3% savings, if you miss by even a little bit — we’ve had ACOs miss hitting the threshold by just a couple hundred thousand dollars and getting nothing. Now we have so many way past that stage — at 5%, 6%, or 7% … so there isn’t uncertainty about whether we’ll get savings, the question is how much can we continue to improve, and going to higher levels of risk and reward.”
In a blog post for Health Affairs, CMS administrator Seema Verma noted that the 2019 results included the first 6 months of ACOs that participated in the “Pathways to Success” program, which decreased the amount of time ACOs had before they started taking downside risks. “The ACOs under Pathways to Success participation options performed better than legacy track ACOs, showing net per-beneficiary savings of $169 per beneficiary compared to $106 per beneficiary for legacy track ACOs,” Verma wrote. “While ACOs with more experience continued to achieve greater savings, new entrant ACOs under Pathways to Success achieved net per-beneficiary savings of $150. This is the first time ACOs new to the program had lower spending relative to their benchmarks in their first performance year.”
Help During the Pandemic
Because ACO revenue is based on value and outcomes, and not volume, ACOs had an easier time weathering the pandemic than more traditional practices, Verma noted. “The trauma of the pandemic has underscored the need for a resilient health care system where reimbursement is not tied to volume of services provided, but rather to value-based incentives to keep patients healthy,” she said. “The Shared Savings Program is one of the country’s largest initiatives on value-based care, equipping health care providers with a flexibility to innovate and focus on health outcomes that can help them respond to the pandemic.”
To help still further, CMS also has instituted policies for the ACOs in the shared savings program to ease the unexpected impact of COVID-19, “giving ACOs relief on quality reporting requirements and supporting providers in their journey to value-based care,” she said. “In addition, CMS has made further regulatory adjustments in response to COVID-19, including removing costs associated with episodes of care for treatment of COVID-19 that include an inpatient admission when determining financial benchmarks and performance year spending, using primary care telehealth visits to assign beneficiaries to ACOs, and providing relief to reduce burden with reporting quality measures.”
Mostashari, who formerly served as the National Coordinator for Health Information Technology, noted that the assumption that hospitals and health systems are usually the most powerful players in the healthcare marketplace doesn’t hold up under value-based care. In this case, “physician-led ACOs did twice as well as hospital-led ACOs,” he pointed out. The CMS report found that hospital-led ACOs saved an average of $80 per beneficiary compared with $201 for physician-led ACOs; Mostashari said his company’s ACOs saved an average of $300.
The reason for these disparities? “Physicians aren’t afraid of reducing hospitalizations — the most expensive thing in healthcare,” Mostashari said. “For hospitals, life begins with hospitalizations; they’re looking at what costs can be reduced downstream for them.”
Concerns About the Future
Although observers seem pleased with these results, there has been concern about changes being made to the targets ACOs have to hit before they achieve their payment bonuses. To earn the 5% bonus, clinicians must meet thresholds based on the percentage of their patients participating in the ACO. The thresholds, which were set by Congress, increase every 2 years and the 2021 threshold is currently at 75%, a number that the National Association of ACOs (NAACOS) calls “unrealistic.”
“The current thresholds are a challenge for many ACOs,” Clif Gaus, ScD, NAACOS president and CEO, said in a statement. “To increase them again in 2021 would put the incentive out of reach for nearly everybody … We need Congress to correct these thresholds to prevent the value movement from stalling.” A survey conducted by NAACOS of 216 respondents found that 96% would be unable to meet the 2021 thresholds.
Some members of Congress agree. “We encourage the House to take action to ensure that value-based care organizations continue to provide these vital services by modifying the Qualifying APM [Advanced Payment Model] Participant (QP) thresholds included in the Medicare Access and CHIP Reauthorization Act,” representatives Roger Marshall, MD (R-Kansas), Suzan DelBene (D-Wash.), and 27 other House members wrote to House Speaker Nancy Pelosi (D-Calif.) and House Minority Leader Kevin McCarthy (R-Calif.) on Monday. “It has become clear that COVID-19 will make it more challenging for many of these providers to meet the law’s current thresholds due to shifts in care. According to data recently released by CMS, on average, providers missed even the current QP threshold (50%) and are nowhere near the heightened threshold (75%) required by statute in 2021.”
Mostashari also agreed that the 2021 target was too much. “I think it makes sense for CMS, in light of what’s going on with COVID, to give people more time to hit those targets,” he said. “They ramp up pretty aggressively and even practices all in on value-based care might have trouble meeting those thresholds unless flexibility is provided.”
Joyce Frieden oversees MedPage Today’s Washington coverage, including stories about Congress, the White House, the Supreme Court, healthcare trade associations, and federal agencies. She has 35 years of experience covering health policy. Follow
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