CMS proposed rule delays ACO financial penalties another three years

The Centers for Medicare & Medicaid Services Monday proposed several changes to the Medicare Shared Savings Program (MSSP) that would give accountable care organizations (ACOs) that participate in the program an extra three years before they could face penalties for poor performance and offers a new model to entice providers to form ACOs.

The agency's 429-page proposed rule is meant to improve MSSP by placing a greater emphasis on primary care services and supporting transitions to performance-based risk arrangements, CMS announced. The goal of the ACO program is to encourage doctors, hospitals and other healthcare providers to keep patients healthy and coordinate care when they are sick in order to reduce healthcare costs and improve outcomes. ACOs can share savings with Medicare when they deliver care more efficiently and meet or exceed performance benchmarks for quality care.

MSSP currently includes 330 ACOs in 47 states and in its first year, 58 of the ACOs kept spending below their benchmarks by $705 million and earned shared savings payments of more than $315 million. Sixty ACOs also kept spending below their benchmark, but not enough to earn the shared savings.

Under the current structure of the program, ACOs face financial penalties after three years if they don't meet certain performance standards for quality of care. But the proposed rule would give new and existing ACOs an extra three years before they faced penalties. The extra time, however, means ACOs that avoid the penalties can keep no more than 40 percent of the money they save Medicare.

The proposed rule also would create a new risk model it calls "Track 3," which would offer greater savings for taking on greater risk. ACOs that participate in the new model could keep up to 75 percent of the money they save Medicare, but they would have to pay up to 15 percent for excessive spending.

The proposed changes came as welcome news to Premier healthcare alliance, as they remove "serious hurdles that are inhibiting provider success and participation," Blair Childs, senior vice president of public affairs, Premier Inc., said in a statement. Premier's PACT Population Health Collaborative is one of the largest ACO performance improvement collaboratives in the country.

But Childs said CMS must do more to improve the MSSP one-sided (shared savings only) risk model, as the proposed rule reduces shared savings payments from 50 percent to 40 percent in year four and knocks payments down an additional 10 percent each year to reach 20 percent in year six. "This will impede participation and inadequately recognizes the financial and transformational contributions made by participating providers," he said.

The National Association of ACOs (NAACO) expressed similar sentiments, stating it is pleased that CMS is looking at different benchmark models for a new two-sided track but wants to see changes to the one-sided track. "Most disappointing is that ACOs, who elect to stay in the program for three more years under the one-sided risk track, will have a reduced sharing formula of 40-60 instead of 50-50," the statement said.

Only 25 percent of ACOs currently in the one-sided program have achieved savings so far; going forward more than 90 percent of the ACOs that achieve savings will have them reduced substantially. "This combined effect will not sustain the one-sided program and result in sufficient success for ACOs to convert to two-sided," the statement said.

"We have argued that for any two-sided ACO program to succeed there must be a sustainable business model for the one-sided track first, "the statement continued. "Most providers will not opt for two-sided track without a positive experience in a one-sided program."

To learn more:
- here's the proposed rule (.pdf)
- read the CMS announcement
- check out the Premier statement
- read the NAACO statement (.pdf)