Some accountable care organization (ACO) groups are worried that a dip in participation this year could be the start of a worrisome trend due to major changes made to the program by the Trump administration.
The Centers for Medicare & Medicaid Services (CMS) announced Wednesday that 518 ACOs are part of the program as of July 1, a decline from 561 ACOs that participated in 2018. The new data have the National Association of ACOs (NAACOS) worried about whether the decline is an anomaly or the start of a trend thanks to major changes to the Medicare Shared Savings Program (MSSP).
CMS Administrator Seema Verma wrote in a blog post on Health Affairs Wednesday that CMS approved 206 ACOs to start July 1 and that 41 of them are new to the program. The number of new entrants is below the normal rate of more than 100 ACOs that have signed up each year since the program started seven years ago.
These are the first participation data since a revamp of the MSSP that forces new ACOs to take on risk at a faster rate. CMS offered two application cycles for 2019: one for programs to start July 1 and another to start Jan. 1.
An incoming ACO must take on downside risk and pay back the government if they miss savings targets after three years of participation in the new program called “Pathways to Success.” Previously, a new ACO could wait six years before taking on downside risk.
NAACOS, the industry’s top lobbying group, told FierceHealthcare that the new participation numbers are a “cautionary situation.”
“We are hopeful that this anomaly is a result of the quick turnaround of the final regulation being issued in the end of December and the application deadlines earlier this year,” said Allison Brennan, senior vice president for government affairs at NAACOS.
In addition to the low number of ACOs signing up, the churn rate of ACOs leaving the program has ramped up in 2019. About 40% of ACOs who had contracts at the end of 2018 decided to not apply to participate in the new program, which is higher than the usual churn rate of 30%.
The group has taken a cautious approach to “Pathways to Success.” While NAACOS approves of some changes such as a five-year contract with CMS instead of three years, it worries about pushing ACOs to take on risk before they are ready.
“What ends up happening is we don’t push them into risk, we push them out of the program altogether,” Brennan said.
But CMS has been eager to make that push, arguing that ACOs have been able to stick around in the program for too long without taking on risk.
“Most Medicare ACOs were not facing financial consequences when costs increased,” Verma wrote in Health Affairs on the first six years of the program. “But data on ACO performance … for the first six performance years showed that, over time, those ACOs taking accountability for cost increases, or ‘risk,’ performed better than those that did not.”
Verma added that so far 48% of ACOs starting July 1 are taking on some form of risk.
Other groups were not worried about the drop in participation.
“The drop in the number of ACO applicants was anticipated by CMS because of the changes made to the program requiring a greater commitment to two-sided risk,” according to the Health Care Transformation Task Force, a group that counts ACOs and other providers among its members. “Also, last year’s number was high as some organizations signed up under the old program because updates to the program were anticipated.”
Verma also brushed off concerns from industry stakeholders in her blog post that ACOs may not enroll in the new program.
“The participation rates for July 1, 2019 are in line with what the agency projected when Pathways to Success was launched, putting CMS on track to generate the $2.9 billion in savings over ten years that were projected,” she wrote.