Medicare ACOs: Too Much Risk, Too Quickly?

More than a third of ACOs might leave if the proposed rule takes effect.

The comment period closed for the Centers for Medicare and Medicaid Services (CMS) Medicare Shared Savings Program (MSSP) proposed rule on Oct. 16. The MSSP has been a controversial program since its inception. The chief concern is that the financial “dis-incentives” will decrease the number of Accountable Care Organizations (ACOs). The proposed rule for MSSP intensifies the financial “dis-incentives,” causing even more concern about the number of ACOs.

What is the Medicare Shared Savings Program? It is a voluntary program that is supposed to encourage groups of doctors, hospitals, and other healthcare providers to come together as ACOs to give coordinated, high-quality care to their Medicare patients. Providers can choose among three distinctive tracks, depending on the amount of risk the providers want to bear. The purpose of the MSSP is to diversify risk – of both loss and gain – between the government and the ACOs. For example, Track 1 ACOs do not assume downside risk (shared losses) if they do not lower growth in Medicare expenditures.

CMS created the MSSP in hopes that doctors, hospitals, and other healthcare providers would want to participate, with the incentive of the chance to make more money, rather than remaining in the traditional Medicare relationship. The program turned out to be more successful than anticipated, with the majority of ACOs opting to become Track 1, or the least risky model (one-sided risk).

CMS’s new proposed rule, however, increases the risk placed on the ACOs. Needless to say, providers aren’t happy, and many ACOs in the program warn that they’ll drop out if CMS finalizes its proposal as is.

What are these proposed changes to the MSSP?

Restricting Track 1 Enrollment

ACOs currently have six years to shift to a risk-bearing model from a shared savings-only model (Track 1). The proposed rule would give existing ACOs one year and new ACOs two years to transfer to a risk-bearing model. This one change could cause mass exodus from the MSSP, as many providers are, by nature, risk-averse.

Morphing to Five-Year Agreement Periods

The proposed rule requires CMS and the ACOs to morph into using five-year agreement periods. I am on the fence regarding this change. It could strengthen ACOs’ incentives to reduce spending by breaking the link between ACOs’ performance in the first two years of each agreement period and their future benchmarks. However, this modification could worsen incentives during the first two years of each agreement period. I would love to hear your opinions.

Slashing Shared Savings Rates

The proposed rule purports to slash shared savings rates for upside-risk models from 50 percent to as low as 25 percent. Under the one-sided model years of the glide path, an ACO’s maximum shared savings rate would be 25 percent, based on quality performance, applicable to first-dollar shared savings after the ACO meets the minimum savings rate. The glide path concludes with a maximum 50 percent sharing rate, based on quality performance, and a maximum level of risk, which qualifies a provider as an Advanced APM for purposes of the Quality Payment Program.  

Other proposed changes include the following:

  • A bifurcated system for high- and low-revenue ACOs, which functionally would penalize certain ACOs for the size of their patient populations and volume of services.
  • A differential system for experienced versus inexperienced ACOs, which would allow experienced ACOs to choose from a more robust menu of participation options.
  • Dis-incentives to lower spending: ACOs have had little incentive to lower spending because of the link between the spending reductions they achieve and subsequent benchmarks. One could argue that it is astonishing that the MSSP has produced any savings at all. CMS proposes that the MSSP needs to be re-vamped.
  • A modified and more rigorous application review process to screen for good standing among ACOs seeking to renew or re-enter MSSP after termination or expiration of their previous agreement. ACOs in two-sided models would be held accountable for partial-year losses if either the ACO or CMS terminates the agreement during a performance year.

Will there be too much risk too quickly placed on the ACOs? Stay tuned for whether this proposed rule becomes finalized.

 

Comment on this article

Print Friendly, PDF & Email
Facebook
Twitter
LinkedIn
Email
Print

Knicole C. Emanuel Esq.

For more than 20 years, Knicole has maintained a health care litigation practice, concentrating on Medicare and Medicaid litigation, health care regulatory compliance, administrative law and regulatory law. Knicole has tried over 2,000 administrative cases in over 30 states and has appeared before multiple states’ medical boards. She has successfully obtained federal injunctions in numerous states, which allowed health care providers to remain in business despite the state or federal laws allegations of health care fraud, abhorrent billings, and data mining. Across the country, Knicole frequently lectures on health care law, the impact of the Affordable Care Act and regulatory compliance for providers, including physicians, home health and hospice, dentists, chiropractors, hospitals and durable medical equipment providers. Knicole is partner at Nelson Mullins and a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

Mastering the Two-Midnight Rule: Keys to Navigating Short-Stay Admissions with Confidence

Mastering the Two-Midnight Rule: Keys to Navigating Short-Stay Admissions with Confidence

The CMS Two-Midnight Rule and short-stay audits are here to stay, impacting inpatient and outpatient admissions, ASC procedures, and Medicare Parts C & D. New for 2024, the Two-Midnight Rule applies to Medicare Advantage patients, requiring differentiation between Medicare plans affecting Case Managers, Utilization Review, and operational processes and knowledge of a vital distinction between these patients that influences post-discharge medical reviews and compliance risk. Join Michael G. Calahan for a comprehensive webcast covering federal laws for all admission processes. Gain the knowledge needed to navigate audits effectively and optimize patient access points, personnel, and compliance strategies. Learn Two-Midnight Rule essentials, Medicare Advantage implications, and compliance best practices. Discover operational insights for short-stay admissions, outpatient observation, and the ever-changing Inpatient-Only Listing.

Print Friendly, PDF & Email
September 19, 2023
Secondary Diagnosis Coding: A Deep Dive into Guidelines and Best Practices

Secondary Diagnosis Coding: A Deep Dive into Guidelines and Best Practices

Explore comprehensive guidelines and best practices for secondary diagnosis coding in our illuminating webcast. Delve into the intricacies of accurately assigning secondary diagnosis codes to ensure precise medical documentation. Learn how to navigate complex scenarios and adhere to coding regulations while enhancing coding proficiency. Our expert-led webcast covers essential insights, including documentation requirements, sequencing strategies, and industry updates. Elevate your coding skills and stay current with the latest coding advancements so you can determine the correct DRG assignment to optimize reimbursement, support medical decision-making, and maintain compliance.

Print Friendly, PDF & Email
September 20, 2023
Principal Diagnosis Coding: Mastering Selection and Sequencing

Principal Diagnosis Coding: Mastering Selection and Sequencing

Enhance your inpatient coding precision and revenue with Principal Diagnosis Coding: Mastering Selection and Sequencing. Join our expert-led webcast to conquer the challenges of principal diagnosis selection and sequencing. We’ll decode the intricacies of ICD-10-CM guidelines, equipping you with a clear grasp of the rules and the official UHDDS principal diagnosis definition. Uncover the crucial role of coding conventions, master the sequencing of related conditions, and confidently tackle cases with equally valid principal diagnoses.

Print Friendly, PDF & Email
September 14, 2023
2024 IPPS Summit: Final Rule Update with Expert Insights and Analysis

2024 IPPS Summit: Final Rule Update with Expert Insights and Analysis

Only ICD10monitor delivers what you need: updates on must-know changes associated with the FY24 Inpatient Prospective Payment System (IPPS) Final Rule, including new ICD-10-CM/PCS codes, plus insights, analysis and answers to questions from the country’s most respected subject matter experts.

Print Friendly, PDF & Email
2024 IPPS Summit Day 3: MS-DRG Shifts and NTAPs

2024 IPPS Summit Day 3: MS-DRG Shifts and NTAPs

This third session in our 2024 IPPS Summit will feature a review of FY24 changes to the MS-DRG methodology and new technology add-on payments (NTAPs), presented by senior healthcare consultant Laurie Johnson, with bonus insights and analysis from two acclaimed subject matter experts

Print Friendly, PDF & Email
August 17, 2023

Trending News