In December of 2014, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule governing the agency’s Accountable Care Organization (ACO) program, including the Medicare Shared Savings initiative.
Providing the first official guidance in three years, the rule aims to reduce administrative burden for participating organizations, and address several other issues that have plagued the ACO program since its inception.
What the changes cover
Perhaps the most important change is the greater flexibility CMS introduces into the program, with the double goal of attracting new participants and incentivizing them to stay in the program once they establish an ACO. Participants leaving the program has proven to be a problem dogging the initiative because a number of organizations have struggled to share savings and have even lost money through participation, causing them to cease being in the program.
A primary way CMS offers increased flexibility is through the creation of a new two-sided risk model called Track 3, which allows ACO participants to assume more downside risk in exchange for greater shared savings — as much as 75 percent based on quality performance measures. CMS also removed the requirement for Track 1 participants to automatically shift to Track 2 in the second year of the program, allowing organizations remain at their current risk level without penalty.
The ultimate benefit of these expanded track options is it gives organizations more choice in how they design and participate in ACOs. For example, if an organization wants to dip its toe in the ACO waters and is still trying to ramp up resources to support the effort, then joining and remaining in Track 1 may be a good idea. Conversely, if an organization already has the infrastructure in place and is willing to assume more risk to maximize shared savings, then maybe Track 3 makes the most sense.
Note that ACOs choosing to take advantage of this option will not see as much shared savings as those that embrace more risk. In fact, the potential savings drops by approximately 10 percent if an ACO elects to remain in Track 1. That said, letting participating organizations stay within Track 1 for a longer period of time incentivizes them to join and stay in the program without threat of progressing and accepting higher levels of risk before they are truly ready.
In addition to offering greater flexibility, the proposed rule also addresses some patient attribution concerns, with CMS now providing ACOs with more certainty. Patient attribution churn from year to year can average 24 percent across the program. CMS is seeking comment on a patient attestation process applicable for organizations assuming two-sided risk. Attribution is proposed to have a different twist for Track 3. Organizations in Track 3 will have their beneficiaries prospectively assigned at the beginning of the performance year, rather than prospective assignment adjusted by retrospective reconciliation in Tracks 1 and 2. Attribution changes stand to improve the patient attribution process and provide additional clarity and transparency for participating organizations, which will hopefully encourage them to assume greater risk.
What still needs changing
While the CMS recommendations move the ACO program forward, there are still some areas that require attention.
One major area that the rule does not deal with is CMS’s benchmarking methodology, which is currently based on a historical data. As more organizations refine their ACO models and develop their own benchmarking processes that more accurately reflect their local experiences, it is becoming clear that the CMS methodology falls short. Although the agency recognizes this as an issue, it provides no concrete guidance on how to address it. In order to continually strive for improvement, benchmarking must be assessed and enhanced in the future.
What the new rule means for you
In the coming months, organizations should spend time familiarizing themselves with the proposed changes, if they have not done so already.
Also, hospitals, communities, health systems and large medical groups that have not yet embraced the ACO concept should take this time to review their internal goals and strategies and decide whether pursuing an ACO model has merit for them — not just because of the potential shared savings, but because the industry is inexorably moving in this direction, and organizations should be learning about how they are going to prepare for and deliver outcomes-based care. The reality is that despite its flaws, the Medicare Shared Savings program can serve as a way to build competency in accountable care, functioning as a learning lab for organizations to figure out how to become value-driven.
While deciding whether to pursue an ACO, forward-thinking organizations will want to strategize about the level of risk with which they feel comfortable. This may involve incorporating risk discussions into strategic planning efforts, so that the entity makes a thoughtful and informed choice on the amount of risk it is willing to accept. Senior leaders can then determine whether the organization has the necessary resources — staff and technology in particular — to support the selected strategy going forward.
In addition, the comment period for the proposed rule is currently open and concludes in February. Organizations that are truly dedicated to furthering a value-based care environment should form their own opinions around what’s working and what needs to be evaluated and submit their responses. To continually improve the process, input from those organizations actually pursuing these initiatives is invaluable.
No time like the present
There’s no doubt it will be interesting to see how the final requirements differ from the suggested changes from the comment period. Regardless of the end state, however, it is clear that CMS is committed to moving organizations away from fee-for-service and toward value-based care, and the ACO program is here to stay.
As CMS refocuses its attention on the ACO program and offers new regulations to guide the creation and long-term implementation of these models, hospitals, health systems and medical groups should seize the opportunity to revisit their ACO plans, taking the next step toward value-based care and the new healthcare paradigm.
Keegan Bailey is the vice president of collaborative care strategy at Mirth, LLC. Follow him on Twitter.
