Medicare Shared Savings Program Stays Stable Despite More ACO Risk

Ken Terry

July 19, 2019

Despite the new requirement that accountable care organizations (ACOs) take on increased financial risk in the Medicare Shared Savings Program (MSSP), the number of ACOs in the program has remained fairly stable, recent data from the Centers for Medicare and Medicaid Services (CMS) shows.

In a July 17 post on the Health Affairs blog, CMS Administrator Seema Verma revealed that CMS has approved 206 ACO applications to join the redesigned MSSP, starting July 1, 2019, under the agency's new Pathways to Success initiative.

Of these ACOs, 41 are new to the MSSP, 25 are reentering the program, and 140 are renewing their previous contracts. The next opportunity for ACOs to join the MSSP under the new agreements will come in January 2020.

Including the ACOs that are in the middle of their contracts, the MSSP now encompasses 518 ACOs, down just slightly from the 561 ACOs in the program during 2018. Moreover, Verma pointed out, the number of fee-for-service Medicare beneficiaries covered by MSSP ACOs has risen from 10.5 million to 10.9 million.

As of last year, only 18% of the ACOs in the shared savings program took both upside and downside risk. Today, Verma said, 29% of the ACOs are taking two-sided risk.

ACOs participating in the MSSP under Pathways to Success have up to 2 years to take on two-sided risk (physician-led ACOs have an extra year). But 48% of the ACOs that signed 5-year contracts with the MSSP on July 1 have accepted two-sided risk, Verma noted.

If they exceed their cost target, they'll initially have to pay back CMS at least 2% of their MSSP revenue or 1% of their cost target, she said.

Moreover, nearly all of the ACOs that started new contracts on July 1 — 45% of the total — accepted higher levels of risk. If they go over budget, these ACOs are liable to pay back 8% of their program revenue or 4% of their cost target. If they save money, they're entitled to receive 50% of it.

The agreements also define the ACOs as advanced alternative payment models under CMS's Quality Payment Program. As a result, the physicians who belong to these organizations are exempt from the Merit-based Incentive Payment System (MIPS) and may qualify for additional incentive payments, Verma noted.

Another Point of View

The current participation rate in Pathways to Success puts CMS on track to generate projected savings of $2.9B in savings over 10 years, the CMS administrator noted. In the first 6 years of the program, she said, CMS "was not seeing program-wide savings related to cost targets." However, it did achieve $314 million in net savings in 2017 after paying the ACOs their share.

ACOs that took upside risk only "nominally increased Medicare spending relative to their cost targets," she said. Those that took risk and physician-led ACOs performed better, she added.

Critics forecast that many ACOs might drop out of the MSSP because of the financial risk involved in Pathways to Success, Verma recalled. "However, today's results show that American providers are ready for the value-based transformation and are willing to accept greater accountability in exchange for more flexibility."

The National Association of ACOs (NAACOS) had a somewhat different view of the numbers released by CMS. In a news release, NAACOS observed that only 40 new ACOs entered the program this year, "which is less than the more than 100 new ACOs the program averaged in its first seven years. With the 2019 class, the MSSP grew by 400,000 beneficiaries, while prior years have seen growth of more than a million beneficiaries each year."

When CMS announced its Pathways to Success initiative last year, NAACOs said, the ACO industry was concerned about the impact that "reduced shared savings opportunities and a faster pace to risk" would have on the MSSP.

"Returning ACOs should be congratulated for their commitment to value-based care," said Clif Gaus, ScD, president and chief executive officer of NAACOS, in the press release. "But NAACOS' concern last year dealt largely with the pipeline of new ACOs, which today's participation numbers call into question. This slowing growth will shrink the pool of future, risk-taking ACOs, which CMS should concern itself with."

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