Choppy Waters Ahead: Are CMS Officials Unnecessarily Alienating ACO Leaders Now?

July 22, 2019
Are Seema Verma and her fellow senior federal healthcare officials, in their determination to force providers into downside risk faster, causing more ACOs to drop out of the MSSP? The current participation trend is worrisome

Once again on last Thursday, July 19, we were witnesses to the ongoing debate over how well ACOs (accountable care organizations) participating in the MSSP (Medicare Shared Savings Program) program are doing. And it was and is a debate of interest and of importance. How full is that glass? It absolutely depends on one’s perspective—and perhaps also, one’s interests and incentives.

It all began when Seema Verma, Administrator of CMS (the Centers for Medicare & Medicare Services) announced, in the Health Affairs Blog, the new numbers for MSSP ACO participation. As Administrator Verma wrote, ““To create multiple opportunities for providers to learn about the new participation options available under Pathways to Success in the first performance year, CMS is providing two application cycles in 2019,” Administrator Verma wrote on Wednesday. “Today, I am pleased to announce ACO participation data under Pathways to Success for the July 1, 2019 start date. CMS approved a total of 206 ACO applications for this start date, increasing the total number of Medicare fee-for-service beneficiaries who receive care from health care providers in ACOs from 10.5 million to 10.9 million. Forty-one of the 206 ACOs (20 percent) are entirely new; 25 (12 percent) are re-entering after a period of time when they did not participate as an ACO; and the remaining 140 (68 percent) are renewing their agreements. (Eighteen of these 140 ACOs chose to renew early, before their current agreement period ended.)”

What’s more, Verma wrote, “I am especially encouraged to see that an increasing fraction of ACOs are taking on real accountability. Forty-eight percent of ACOs starting on July 1, 2019 are taking on risk for spending increases above their cost target; If they exceed this target, they will be on the hook to pay back to CMS up to at least 2 percent of their revenue or 1 percent of their cost target, and as noted below most of these ACOs will put at risk significantly greater amounts. These ACOs are willing to face consequences if costs increase, in exchange for higher levels of shared savings and greater regulatory flexibility. As of July 1, 2019, 29 percent of Shared Savings Program ACOs are taking on risk for spending increases, which is a 10 percentage point increase in the number of risk-based ACOs in the program. This is projected to lead to more savings for beneficiaries and taxpayers, and provide stronger incentives for ACOs to coordinate care and improve quality for patients.”

But NAACOs, the National Association of ACOs, was quick to disagree, at least in part. In a statement posted to its website, and under the subhead, “Slowed Growth Follows Numerous Program Changes,” NAACOs stated that “The National Association of Accountable Care Organizations (NAACOS) today congratulated new ACOs that joined the Medicare Shared Savings Program (MSSP) effective July 1. Roughly 40 new ACOs entered the program, 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.” NAACOS noted that the MSSP had 124 new participants in 2018 and 99 new participants in 2017. Counting new and returning participants, a total of 518 ACOs are currently in the program. That's 43 fewer than the 561 participants MSSP had last year.

NAACOS’ press release statement quoted Clif Gaus, Sc.D., NAACOs president and CEO, as stating that "Returning ACOs should be congratulated for their commitment to value-based care. 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."

And therein lies the rub. Yes, CMS did manage to bring in 41 totally new ACOs into the MSSP; but as NAACOs pointed out, the new-entrant counts in 2018 and 2017 were 124 and 99, respectively. So honestly, 41 is a pretty poor showing overall. What’s more, as NAACOS’ statement noted, only 400,000 new beneficiaries were encompassed by the entry of the 41 new entrants, versus more than one million in previous years. So what’s going on here?

Well, in part, what we saw last week was the direct result of what happened back in January. As I wrote on January 14, “The announcement on Wednesday, January 10 by senior officials at the federal Centers for Medicare & Medicaid Services (CMS) that the agency will require participants in the Medicare Shared Savings Program (MSSP) will be required to submit applications to the new Pathways to Success part of the Medicare Shared Savings Program (MSSP) by February 19, has roiled accountable care organization (ACO) leaders nationwide.”

And, as I wrote back then, “On that same day, the Washington, D.C.-based National Association of ACOs (NAACOS) published a press release criticizing CMS for the timeframe involved, following the issuance of the final rule on December 19. In its Wednesday press release, NAACOS stated that ‘The Centers for Medicare & Medicaid Services (CMS) late Wednesday announced applications to participate in the new Pathways to Success accountable care organization (ACO) program will be due February 19, two months after the agency published a nearly 267-page rule overhauling the Medicare Shared Savings Program. In response, the National Association of ACOs (NAACOS) is calling on CMS to give ACOs till later in March to understand the complex changes and determine participation options with affiliated doctors, hospitals, and other providers before committing to high-stakes decisions.’ And the association quoted its president and CEO, Clif Gaus, Sc.D., as stating that ‘ACOs barely have time to understand the new rules, and organizing an application is very complicated and for some it is now a high-risk decision. There are too many difficult decisions to rush.’”

Indeed, in that January 14 article, I quoted Jennifer Moore, NAACOS board member and chief operating officer at MaineHealth ACO in Portland, Maine, who contributed a statement to NAACOS’s January 10 press release, in which she said that "Setting an application deadline two months after publishing the final rule does not give ACOs that have expiring agreements the necessary time to vet the decision internally or the time to process the many elements of the application. Given the significant changes,” she added then, “ACOs need to engage actuaries to understand how we would fare in downside risk. Such an analysis takes time. Without that time, we would have to enter an upside track out of the gate. Further,” she stated, “our ACO has more than 125 tax IDs that need to sign new agreements. On top of that, we must secure a letter of credit (banks indicate that is a six-to-eight week process), evaluate the new waivers, and vet provider and supplier lists,” Moore continued. “I am hopeful that CMS will reconsider this aggressive timeline and balance the need to get started with the understanding that the application process takes planning time."

Then, a couple of days later, I interviewed Ms. Moore, who told me this, per the deadlines: “For context, since we were a 2012 start date, beginning in 2017, we started to process with our board the decision as to whether we were going to stay in the program. Under the older rules, we would have had to go into downside risk. And we have nine hospital organizations involved, out of ten hospital organizations. So we spent months considering this. But then they put out the proposed rule in August, and that kind of blew everything up. And then they dropped the final rule the day before everyone was going on holiday. And then we had to quickly scramble even around the notice to apply.”

“So,” Moore told me, “we’ve bifurcated our process, to create a new corporation for the smallest practices, the onesie-twosie practices. They can’t afford to write checks; they struggle even paying our dues. So when the final rule dropped on the 18th, we had to file for a new corporate status, file for a new tax ID for those docs, and use Milliman to help us understand what was in the rule. So actually, we will probably have to change our strategy. We saw that in the final rule, we realized we could implement the original strategy that we had developed. We have 125 onesie-twosie practices, so we can’t wait to learn our actuarial results are; we may have to scramble and split our network.”

As I’ve noted in previous commentaries, CMS Administrator Seema Verma has become increasingly vehement in her pronouncements on trying to push participating ACOs faster into downside risk. But the risk to the program is that more ACOs will bail, based both on the broader challenges of taking on downside risk when their leaders may not feel prepared to do so, and also on what happened on December 19, when CMS demanded that currently participating ACOs re-up by February 19, a demand that was seen as unreasonable by many, and indeed, impossible, by some.

So, really: Administrator Verma and her fellow senior officials at CMS are going to need to figure out how to better manage these processes, or they’ll risk losing more ACOs, and ending up with poor participation and a flagging program going into the future. Who can say what’s next for the MSSP? But the waters are looking choppier by the day now.

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