Most ACOs would flee Medicare program if pushed to take on more risk

A doctor at a desk holding up his hand to say stop
It remains unclear whether the Centers for Medicare & Medicaid Services will make any sought-after changes. (Medioimages/Photodisc)

A huge chunk of organizations plan to leave the Medicare Shared Savings Program if they're forced to take on financial risk, which could slow the government's transition to value-based care. 

And it remains unclear whether the Centers for Medicare & Medicaid Services (CMS), which oversees the program, will make any sought-after changes. A recent letter from the agency, obtained by FierceHealthcare, offered a vague response to concerns about a possible drop in participation, even as another agency indicated it is reviewing proposed changes to the program.

A survey released by the National Association of Accountable Care Organizations (NAACOS) found that 71% of accountable care organizations (ACOs) in non-risk-based tracks that entered the Medicare Shared Savings Program in 2012 and 2013 will leave the program if they are forced to take on financial risk.

Free Daily Newsletter

Like this story? Subscribe to FierceHealthcare!

The healthcare sector remains in flux as policy, regulation, technology and trends shape the market. FierceHealthcare subscribers rely on our suite of newsletters as their must-read source for the latest news, analysis and data impacting their world. Sign up today to get healthcare news and updates delivered to your inbox and read on the go.

Organizations are allowed enter two successive non-risk-based three-year contracts before being forced to enter a financial-risk track, under which they could potentially lose money. NAACOS, which says some organizations are not yet prepared to take on risk, has been pleading for the Medicare agency to allow those ACOs to enter into a third Track 1 agreement period.

"The amount of organizations that could drop out is much worse than we originally expected," Allison Brennan, vice president of policy at NAACOS, told FierceHealthcare. "This would be detrimental to the healthcare sector's transition to value."

Courtesy of NAACOS

Eighty-two ACOs will face the predicament next year, totaling nearly 20% (PDF) of all organizations participating in the program in 2018. NAACOS' survey found that 66% of those organizations would remain in the program if allowed a third Track 1 contract. 

Responding to a request from the organization to permit ACOs to enter a third non-risk-based contract, CMS Administrator Seema Verma offered a vague response that did not directly address NAACOS' concerns.

"We share your interest in the long term success of the Medicare Shared Savings Program," Verma wrote in a letter obtained by FierceHealthcare. "Our results to date show that ACOs in performance-based risk tracks perform better than shared savings only ACOs."

Brennan said there is still time for the agency to act. Organizations typically need to notify the agency in May whether they plan to participate in the program the following year. However, Brennan added that the deadline has been pushed back indefinitely due to a new ACO management system, giving the group more time to appeal and the agency more time to decide whether to act. 

RELATED: ACO savings estimate misses mark by $2B, but risk-based tracks on the rise

Thrown in the mix is a recent report by Avalere Health that found that ACOs, as a whole, cost the government much more money than anticipated. The report found that the Congressional Budget Office's projections for the program in 2010 missed the mark by $2 billion, adding $384 million in costs instead of saving $1.7 billion. 

"Even though ACOs haven't met lofty expectations in the beginning, things are definitely moving in the right direction," Brennan said. "Forcing ACOs to take on risk prematurely is not the right direction."

In another twist, the Office of Management and Budget revealed on Tuesday that it was currently reviewing a CMS proposed rule on the Medicare Shared Savings Program, which will include regulatory changes to the program. Details on the regulatory changes are not available, and it is unclear if it will address NAACOS' dropout concerns. 

Brennan added that in addition to appeals to the Trump administration, they are having discussions with Congress to find a path forward, which she said has received some preliminary support from certain lawmakers.