CMS: Number of ACOs taking on financial risk doubles in 'Pathways to Success' program

Medicare spending costs money
The number of ACOs taking on financial risk doubled under a new CMS program called "Pathways to Success." (Getty/zimmytws)

The number of accountable care organizations taking on financial risk has doubled in a new program, according to data from the Trump administration.

CMS Administrator Seema Verma wrote in a blog post Friday in the journal Health Affairs about the progress for the new “Pathways to Success” program. Verma also reported that next-generation ACOs, which take on a high amount of financial risk, generated more than $184 million in savings for Medicare in 2018.

Verma said that 192 ACOs are starting 2020 by taking on downside financial risk, which means they must pay back CMS if they do not meet savings targets. That is double the 93 ACOs taking on risk at the start of 2019.

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“This will translate to lower costs and higher value for Medicare beneficiaries and taxpayers,” she wrote.

Verma was also enthusiastic that the number of physician-led ACOs grew to 270 as of Jan. 1, a 27% increase from a year ago. “Forming an ACO can provide independent physician practices with an alternative to joining a large hospital system,” she wrote.

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The “Pathways to Success” Program launched on July 1 and had a second start date of Jan. 1. The program requires ACOs to take on financial risk at a faster rate compared to the Medicare Shared Savings Program, which launched the ACO program as part of the Affordable Care Act.

Under MSSP, an ACO could be in the program for six years and not have to take on financial risk. The ACOs would only have to take on upside risk, where they get a portion of any savings that they generated.

In “Pathways to Success,” a new ACO must take on downside risk after three years of participation.

“For the Jan. 1 start date, CMS approved 53 applications for new ACOs and 100 applications for renewing ACOs,” Verma wrote of “Pathways to Success.”

For the July start date, CMS approved a total of 206 ACOs. Of that 206, there were 41 new ACOs and 25 ACOs that were re-entering after a period of time where they didn’t participate as an ACO.

But the ACO industry is worried about the lack of new ACOs. The National Association of ACOs said that from 2012 to 2018, the program averaged 107 new ACOs annually. 

This year just 35 shared savings program ACOs will enter into their first contract with CMS, the association said in a release. 

NAACOs and other health provider groups have warned CMS about forcing ACOs to take on risk before they are ready.

"If interest in ACOs dwindles, then doctors and hospitals will fall back into a fragmented, fee-for-service system," said NAACOs President and CEO Clif Glaus, in a statement.

RELATED: Study finds 33% of ACOs took on major risk in 2018 as new program starts

Verma wrote on Friday that the number of Medicare beneficiaries served by an ACO is now 11.2 million, up from 10.4 million at the start of last year.

She added that 16% of ACOs chose to voluntarily terminate in 2019. That is higher than the 11% average annual attrition rate for the program.

Verma also gave an update for the Next Generation ACO Model, which requires ACOs to take on a high degree of downside financial risk but get a greater share of savings.

The Next-Gen ACOs generated more than $184 million in savings for Medicare for 2018. For the 2017 performance year, Next-Gen ACOs generated $337 million in gross savings and $165 million after paying back CMS.

But CMS released a performance report that doesn’t give the program, which ends after this year, a good grade. The report found that there was a “statistically significant” reduction in spending for next-generation ACOs relative to “what was occurring with usual patterns of care outside the model.”

But after factoring in the savings payments CMS made to ACOs, the model “did not lead to a statistically significant difference in spending over the first two performance years.”

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