Thoughtware

Article 08/15/2018

Redefining the “A” in Accountable Care Organizations

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On August 7, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a much-anticipated proposed rule called “Pathways to Success,” which makes significant changes to the Medicare Shared Savings Program (MSSP) and the way Accountable Care Organizations (ACO) participate.

CMS Administrator Seema Verma has stated the overhaul was based on a comprehensive analysis of the performance of ACOs that has shown increases in net spending for CMS, largely due to a majority of ACOs in the MSSP not taking on risk. The projected financial effect of the proposal would be Medicare savings of $2.2 billion over 10 years.

Many ACO clients’ three- to five-year strategic plans would be affected and the proposed changes may hasten the adoption of population health- and value-based reimbursement clinical and operational programs.

The proposal redesigns program participation options by removing the traditional three MSSP tracks and replacing them with two tracks requiring five-year agreement periods:

  1. BASIC track: Eligible ACOs start in a one-sided model that incrementally phases in risk over the course of five years.
  2. ENHANCED track: This is a two-sided model similar to MSSP Track 3 that offers additional incentives and flexibilities for taking on higher risk.

Under the BASIC track, first dollar savings would be capped at 25 percent versus the 50 percent offered in the current MSSP Track 1 ACO—down-side risk begins in year three of the glide path. Year five of the BASIC track would qualify as an Advanced Alternative Payment Model under the Medicare Access and CHIP Reauthorization Act of 2015.

Source: Proposed Rule: Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations--Pathways to Success

ACOs currently participating in the MSSP Track 1 upside-only model would be limited to one year without risk before being required to transition to the risk level in year three of the BASIC track.

Due to the timing issues of finalizing the redesign, CMS has proposed a six-month agreement extension for current ACOs that expire after 2018, along with a special one-time July 1, 2019, start date that will have a spring 2019 application period for the new participation options.

We’re digging into the detail of the proposed rule and are actively analyzing the ramifications of the redesign. Should you have questions on the implications or how your leadership should be considering the proposed changes, contact trusted BKD health reform advisors Eric RogersMark Blessing or Zach Remmich.