CMS ACOs Must Change

The Medicare Shared Savings Program (MSSP) is not achieving its intended results. As the first of several Accountable Care Organization (ACO) models implemented by CMS, the MSSP has the most participants and the most data for analysis. In fact, there are currently 561 MSSP ACOs delivering care to 10.5 million lives.  Some of these ACOs have existed since 2012, and results through 2016 are now available.

So have the “triple aim” goals of improving patient care, improving population health, and reducing costs been achieved? Let’s look at the data.

MSSP Quality Metric Results

Most individual ACOs have improved most of their quality measures over the first four years of the MSSP program. This is a good trend that shows most ACOs are making some improvements within their organization. But does an ACO model deliver higher quality than the traditional fee-for-service model? Comparisons between the two models are very difficult to conduct. This makes it hard to answer the question as to whether the two “triple aim” goals of improving patient care and population health are being achieved.

Does the MSSP reduce cost?

This leaves one question left to address: Does the MSSP achieve the goal of saving money for the Medicare program, and healthcare in general?

It doesn’t appear so.

First, we have to understand that there are two primary contract options offered by CMS to a group of providers who want to become an ACO; they can take one-sided risk or two-sided risk. One-sided contracts mean the ACO may collect extra payments if they save CMS some money. That’s where the “shared saving” term comes from. Importantly, one-sided contracts don’t require the group of providers to pay money back to CMS if they spend more money than agreed to in the contract. Two-sided risk means the providers actually have to pay some money back to CMS if they spend too much (their reward for accepting two-sided risk is the opportunity to get a bigger share of savings, should they achieve that goal).

Knowing that, here are some important top-line financial results:

  • ACOs in two-sided risk models have shown significant savings to the Medicare program
    • Only 18% of provider groups have chosen the two-sided model
  • ACOs in one-sided risk models have actually increased Medicare spending relative to their contracted spending goals
    • Unfortunately, 82% of providers have chosen one-sided risk contracts

The ACO model may even have a negative impact on overall healthcare spending. There is data to show that one-sided ACO contracts may be encouraging too much consolidation between providers in the marketplace. This consolidation reduces competition as well as choice for Medicare beneficiaries. There is plenty of data that shows less competition leads to higher premiums and higher overall healthcare spending.

“Medicare cannot afford to continue with models that are not producing desired results”

The quote you just read comes from a proposed rule recently published by CMS. The document is called “Pathways to Success”, and proposes policies that are designed to increase savings for the Trust Funds that finance Medicare, reduce gaming that some ACOs use to avoid penalties, and promote free-market principles. Here are some of the policies that may be put in place to achieve those goals:

  • Encourage ACOs to choose the two-sided risk model
  • Offer contract options that phase-in the transition from one-sided risk to two-sided risk, making the move less intimidating to providers
  • Screen current ACOs to ensure they are in good standing before signing a new contract
  • Ensure well-established ACOs don’t simply dissolve and re-establish themselves in an effort to avoid the requirement to transition to two-sided risk
  • Make the spending targets (called “benchmarks”) fairer to the providers as well as CMS
  • Encourage smaller groups of providers to join and remain in the MSSP program

The future of the MSSP ACO is at stake

It’s good that CMS is willing to step back and evaluate the benefits a program like the MSSP. It is reasonable to compare current results  to initial goals in an effort to assess a program’s viability.

Perhaps the most telling quote from the Pathways to Success proposed rule is this: CMS will monitor to see “whether the (MSSP) program provides beneficiaries with the value and choice demonstrated by other Medicare options such as Medicare Advantage.” This would seem to indicate that CMS may use the successful Medicare Advantage program as a benchmark to evaluate the benefits attained by the MSSP. Given the negative impact on competition and spending attached to the one-sided design of the program, the MSSP would have to show significant upside in direct savings to make the value equation work in its favor.

Given its track record since 2012, it seems that this result will be very difficult to achieve.

And if it doesn’t…?

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