CMS Finalizes Pathways to Success, Escalating Risk Transfer to ACOs
Editor’s note: Kristin Oberfeld, Associate Principal, Sg2 Consulting, contributed to this post.
The release of the Pathways to Success proposed rule to overhaul the Medicare Shared Savings Program (MSSP) in August 2018 provided further indication that the Centers for Medicare & Medicaid Services (CMS) intends to continue its push toward value-based care by increasing the financial risk transfer to providers. After much speculation regarding the final rule, it was released on Dec. 21, 2018, largely intact from the CMS proposal, with a few notable changes.
What’s changed? Here are four key updates:
- Track options. The existing Tracks 1, 1+ and 2 are being retired and replaced by a new glide path: Basic. This track essentially transitions from a configuration similar to Track 1 to that of Track 1+ over a 5-year time period. One of the most notable changes made from the proposed to the final rule is an increase in the upside sharing rate from 25 percent to 40 percent during the early years of the glide path. Why is this important? The ability to directly share in more of the savings is critical to overall program engagement because it allows for increased capital for infrastructure investments and/or additional funds flow available for physician alignment. Track 3 has been renamed Enhanced and holds the highest levels of risk and reward in the MSSP, also with a 5-year agreement period.
- Beneficiary attribution. As was proposed, CMS has finalized the ability for Accountable Care Organizations (ACOs) to annually select either prospective or preliminary prospective with retrospective reconciliation beneficiary attribution. Historically, there has been a great deal of pushback over the different attribution methodologies, primarily from organizations that have not known their actual attributed population until after a performance year ends. This change gives ACOs flexibility to make a selection, giving consideration to implications such as whether or not telehealth waivers and beneficiary incentives can be used, among others.
- Benchmark calculation. The process of establishing an ACO’s benchmark has been revised to incorporate regional expenditure trends with an increasing reliance on national trends as an ACO’s penetration in the region increases. Historically, ACOs were compared to their own historical experience in their first agreement period. This change attempts to address some of the shortcomings of the existing benchmarking process while making the benchmark more competitive from the beginning.
- Benefits for low-revenue ACOs. Today, ACOs are allowed up to two 3-year agreement periods in Track 1 with no downside risk. Depending on an ACO’s historical experience, CMS originally proposed allowing a minimum of one year and a maximum of two years without downside risk (excluding the 6-month period from July 1-Dec. 31, 2019). In the final rule, CMS has increased the amount of time allowed without downside risk by one year for those organizations that are considered both new and low-revenue ACOs. This provision is intended to promote competition and support smaller, independent physicians in pursuing ACO participation. Additionally, low-revenue ACOs continue to be allowed two 5-year agreements in the Basic track. This is extremely important to hospitals and health systems as they consider their existing ACO strategy for the future and/or develop a new ACO. Understanding the incentives for independent physician-led ACOs versus higher-revenue ACOs can have dramatic implications for ACO structure, funds flow and ultimately, success.
Clearly, CMS feels strongly that increasing the amount of risk that ACOs take on and expediting the timeline for when they must do so will lead to improved results. CMS intends to monitor the results of the revised program and compare it to other programs that they view as successful, namely Medicare Advantage. From our perspective, MSSP is no longer simply a “learning ground” – the stakes are higher and attention must be paid to making the necessary changes and investments in order to succeed. For the vast majority (82 percent) of ACOs that participate in the MSSP Track 1 with no downside risk, the push to succeed in bringing down costs and improving quality will have much higher stakes as the MSSP evolves.
So, how do you succeed? The most successful ACOs have experienced reduced spending coming from several areas: primarily post-acute care, hospital inpatient and outpatient services. Notable declines typically occur in evaluation and management services, emergency department (ED) utilization, hospital admissions and readmissions, as well as with a general substitution of lower cost services for higher cost services. You’ve heard all of this before, but it isn’t always easy to achieve.
These changes should drive an increased focus on ambulatory strategy, post-acute, virtual and behavioral health strategy as well as physician alignment and care model redesign. Over the long term, developing a care model and delivery system that ensures patients receive the right care, at the right time, and at the right site will help organizations across their broader value-based care strategy.
KEY ACTION STEP: If you are an existing ACO considering entering the new program; or if you are considering starting a new ACO, the non-binding notice of intent to apply (NOIA) period opened on Jan. 2 and will close on Jan. 18, 2019 for a July 1, 2019 start date.
Want to know more? Additional details can be found here.