CMS pushes ACOs to take on more risk


Accountable care organizations (ACOs) are playing it too safe, according to the Centers for Medicare & Medicaid Services, which wants to change the rules and push more ACOs into taking on more financial risk – with a little flexibility added in.

Seema Verma CMS administrator

Seema Verma

“ACOs were designed to move Medicare away from fee for service by encouraging providers to find efficiencies and innovative ways to deliver high-quality care to their patients while reducing costs, giving them the flexibility they need to focus on health outcomes over process,” CMS Administrator Seema Verma said during an Aug. 9 press conference.

That’s not what is happening now, Ms. Verma said. Under the current program, physicians and other health care professionals can participate in an ACO that takes on upside risk only – that is, to share in any of the savings it is able to generate – for up to 6 years before having to take on downside risk to return payment to the government if the ACO fails to hit spending targets.

“This environment has created a perverse incentive leading to the shocking present day reality that, after 6 years, over 82% of shared saving program ACOs are in an upside-only track, meaning that these ACOs have no incentive at all to reduce health care cost while improving outcomes as they were intended,” she said. “The program has not lived up to the accountability part of their name.”

In the aggregate, ACOs that only take on upside risk generally are spending more money and not generating the savings that ACOs in a two-sided risk arrangement are, she added.

To get more health care professionals into two-sided risk arrangements, the CMS released a proposed rule Aug. 9 that caps ACO participation in an upside risk–only arrangement for 2 years before having to migrate to a two-sided risk arrangement. To sweeten the pot, the CMS proposes to allow more flexibility for innovation and encouraging patients to maintain their health.

“On top of [antikickback law] waivers they already receive, we are proposing to allow ACOs that are taking risk to give incentive payments in order to reward patients for taking steps to achieve good health, such as gift cards for patients who receive necessary primary and preventive care,” she said, adding that ACOs who take on downside risk also will be eligible to receive payments for providing telehealth services.

ACOs also will need to adopt the 2015 edition of certified EHR technology and the CMS also will be looking to streamline quality measures, according to the proposal.

The CMS is extending current ACO contracts for 6 months, with the new rules, if finalized, going into effect in the middle of 2019.

The proposal also simplifies the ACO program by offering two tracks, as detailed in a blog post penned by Administrator Verma that appeared Aug. 9 in Health Affairs.

The Basic track “would feature a glide path for taking risk,” she wrote. “It would begin with up to 2 years of upside-only risk and then gradually transition in years 3, 4, and 5 to increasing levels of performance risk, concluding in year 5 at a level of risk that meets the standard to qualify as an advanced alternative payment model [APM]” under the Quality Payment Program. Those entering the enhanced track, taking on two-sided risk immediately, would need to meet the standard of an APM immediately.

The proposal also calls for more transparency and would require providers to alert Medicare beneficiaries that services are being provided in the context of an ACO and to explain what that means for their care.

Spending benchmarks would continue to be calculated using both regional and national spending trends. Program integrity also will be enhanced “by holding ACOs in two-sided models accountable for losses even if they exit midway through a performance year, and by authorizing termination of ACOs with multiple years of poor financial performance,” Ms. Verma wrote.

The Pathways to Success proposed rule was slated to be published in the Federal Register on Aug. 17. Comments are being accepted at regulations.gov until Oct. 16.

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