CMS and NAACOS: The Battle of the Narratives Continues—During a Key Moment for ACOs

Sept. 18, 2020
The battle of narratives between CMS and NAACOS over the future prospects for ACOs participating in the Medicare ACO programs has never been more pitched—or more fraught with significance

As if things weren’t dramatic enough already in U.S. healthcare, a “battle of the narratives” has developed between senior officials at the Centers for Medicare & Medicaid Services (CMS), especially CMS Administrator Seema Verma, and the leaders of NAACOS— the National Association of ACOs—which have been locked in an ongoing war of words with each other for many months now.

There are a lot of moving parts to this, but two main elements: the release Tuesday of new data from CMS on the performance of the accountable care organizations participating in the Medicare Shared Savings Program and the Next Generation ACOs Program; and the release Thursday of a new NAACOS membership survey. The two phenomena have been framed in ways so contrasted to one another that they virtually sit at opposite ends of a conceptual spectrum; and therein lies the interest in this moment.

Let’s begin with CMS’s data release on Monday. As we reported on that day, “On Sep. 14, Seema Verma, Administrator of the federal Centers for Medicare & Medicaid Services (CMS), shared 2019 performance data from the accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP), in an article posted online in Health Affairs. In the article, ‘2019 Medicare Shared Savings Program ACO Performance: Lower Costs And Promising Results Under ‘Pathways to Success,’ Verma boasted of $1.9 billion in total net savings to Medicare during 2019, and praising the ACOs that have performed well under the Pathways to Success program requirements.”

“A critical feature of value-based care is organizations taking on downside financial risk and accountability for the cost and quality of care their patients receive,” Verma emphasized in her Health Affairs article. And she crowed over the fact that, “After six years of operating the Medicare Shared Savings Program, in December 2018 the Trump Administration redesigned the program, issuing the ‘Pathways to Success’ final rule. The rule established new participation options and incentives to put ACOs on a quicker path to taking on real risk. The new participation options adopted under Pathways to Success require accountability for spending increases, generally after two years for new ACOs, and close evaluation of the quality of care provided. They also provide an option for new “low-revenue” ACOs, which are generally run by physician practices rather than hospitals, to elect an additional year before taking on ‘downside’ risk for cost increases, since data showed that physician-led ACOs performed better than hospital-led ACOs. Under the Pathways to Success policies, there have been two application cycles, with ACOs joining or entering new agreement periods on July 1, 2019, and January 1, 2020. As a result of these two application cycles, the number of ACOs taking on downside financial risk has nearly doubled,” she noted.

And, she added, it is in that context that, “In 2019, 541 ACOs in the Medicare Shared Savings Program generated $1.19 billion in total net savings to Medicare, the largest annual savings for the program to date. This is also the third year in a row that the program has achieved net program savings. Consistent with prior years, ACOs with shared savings continued to reduce post-acute care spending, along with hospitalizations and emergency department visits.” Over 11.2 million fee-for-service Medicare recipients (individuals not involved in Medicare Advantage health plans) are currently cared for by MSSP-participating ACOs.

Verma was quick to praise ACOS participating under the Pathways to Success terms of participation. “The ACOs under Pathways to Success participation options performed better than legacy track ACOs, showing net per-beneficiary savings of $169 per beneficiary compared to $106 per beneficiary for legacy track ACOs,” she wrote. “While ACOs with more experience continued to achieve greater savings, new entrant ACOs under Pathways to Success achieved net per-beneficiary savings of $150. This is the first time ACOs new to the program had lower spending relative to their benchmarks in their first performance year. We look forward to gaining further program experience to evaluate program dynamics, benchmark incentives, and counterfactual program impacts.”

Verma further noted that “ACOs (both legacy track and those in the new participation options established under Pathways to Success) that took on “downside risk” or responsibility for additional costs under the program continued to outperform ACOs that did not, with net per beneficiary savings of $152 per beneficiary compared to $107 per beneficiary. These legacy track ACO trends informed our approach in Pathways to Success to encourage ACOs to take on downside risk sooner. And similarly, ACOs under the Pathways to Success policies that took on downside risk performed better than those that did not, achieving net per beneficiary savings of $193 per beneficiary compared to $142 per beneficiary for those that did not.” And went out of her way to praise physician-led ACOs, most of which were designated as “low-revenue” ACOs, in contrast to “high-revenue,” hospital-organized ACOs. “Overall, low-revenue ACOs had net per-beneficiary savings of $201 per beneficiary compared to $80 per beneficiary for high-revenue ACOs,” she noted. “This trend is the same for ACOs in the new Pathways to Success participation options, where low-revenue ACOs had net per-beneficiary savings of $189 while high-revenue ACOs had net per-beneficiary savings of $155.” She also noted that rural ACOs have improved their performance, particularly the rural ACOS participating under the Pathways to Success rules. Among ACOS participating under Pathways to Success, rural ACOs generated $158 net per-beneficiary savings compared to the $170 net per-beneficiary savings generated by their urban counterparts. That margin was far smaller than among the ACOs in the non-Pathways to Success group. There, urban ACOs generated $125 net per-beneficiary savings, while rural ACOs generated $64 net per-beneficiary savings.

Verma highlighted the fact that, “In 2019, 541 ACOs in the Medicare Shared Savings Program generated $1.19 billion in total net savings to Medicare, the largest annual savings for the program to date. This is also the third year in a row that the program has achieved net program savings. Consistent with prior years, ACOs with shared savings continued to reduce post-acute care spending, along with hospitalizations and emergency department visits.” Over 11.2 million fee-for-service Medicare recipients (individuals not involved in Medicare Advantage health plans) are currently cared for by MSSP-participating ACOs.

Verma was quick to praise ACOS participating under the Pathways to Success terms of participation. “The ACOs under Pathways to Success participation options performed better than legacy track ACOs, showing net per-beneficiary savings of $169 per beneficiary compared to $106 per beneficiary for legacy track ACOs,” she wrote. “While ACOs with more experience continued to achieve greater savings, new entrant ACOs under Pathways to Success achieved net per-beneficiary savings of $150. This is the first time ACOs new to the program had lower spending relative to their benchmarks in their first performance year. We look forward to gaining further program experience to evaluate program dynamics, benchmark incentives, and counterfactual program impacts.”

Verma further noted that “ACOs (both legacy track and those in the new participation options established under Pathways to Success) that took on “downside risk” or responsibility for additional costs under the program continued to outperform ACOs that did not, with net per beneficiary savings of $152 per beneficiary compared to $107 per beneficiary. These legacy track ACO trends informed our approach in Pathways to Success to encourage ACOs to take on downside risk sooner. And similarly, ACOs under the Pathways to Success policies that took on downside risk performed better than those that did not, achieving net per beneficiary savings of $193 per beneficiary compared to $142 per beneficiary for those that did not.” And went out of her way to praise physician-led ACOs, most of which were designated as “low-revenue” ACOs, in contrast to “high-revenue,” hospital-organized ACOs. “Overall, low-revenue ACOs had net per-beneficiary savings of $201 per beneficiary compared to $80 per beneficiary for high-revenue ACOs,” she noted.

For Verma, the fact that physician groups have done so well under the Pathways to Success terms of engagement absolutely proves that her way has been validated, and even vindicated. But then came the publication on Thursday of a new survey by NAACOS. First, the association released a statement under the signature of NAACOS president and CEO Clif Gaus, Sc.D. that asserted that, “Unfortunately, ‘Pathways to Success’ has already shown to diminish ACO participation. To get program growth back on track, Congress needs to take a close look at the Value in Health Care Act, which makes several improvements to the Medicare ACO program and better incentivizes Advanced Alternative Payment Models.”

And then on Thursday, NAACOS released the results of a new study, one that provides ominous evidence of possible mass defections from the Medicare ACO programs. In the press release announcing the survey results, NAACOS stated that, “In news that threatens Medicare’s move to value-based payment models, more than 90 percent of respondents to a recent survey from the National Association of Accountable Care Organizations (NAACOS) said they are concerned they won’t meet thresholds to secure important incentive payments for participating in risk-based alternative payment models (APMs), which jump to unrealistic levels in 2021. That concern is validated by the survey’s data, which shows that 96 percent of the 216 ACO respondents would not meet the 2021 thresholds based on their performance in 2020.”

The press release went on to say that, “To help maintain Medicare’s momentum moving to value-based payment, NAACOS is calling on Congress to take swift action to address these thresholds and help stabilize incentives for participating in Advanced APMs, which are designed to make doctors and hospitals financially accountable for lowering patients’ medical spending and improving quality. That 5 percent bonus was part of 2015’s overwhelmingly bipartisan Medicare Access and CHIP Reauthorization Act (MACRA) as an incentive to move toward a system that rewards providers for reducing Medicare spending, yet maintaining high-quality care.”

“These bonuses are critical to Medicare’s value movement,” said Clif Gaus, Sc.D., NAACOS president and CEO, said in Thursday’s press release. “The current thresholds are a challenge for many ACOs. To increase them again in 2021 would put the incentive out of reach for nearly everybody. Congress intended to shift Medicare payment to a value-based approach, and we are seeing the benefits of that transformation through improved patient care and reduced costs. We need Congress to correct these thresholds to prevent the value movement from stalling.”

So we’ve reached yet another moment in a sequence of such moments in the past year and a half, in which the NAACOS leaders have directly challenged Seema Verma and her assertions that everything is going just great in the Medicare ACO programs, with NAACOS’s leaders predicting that the specific requirements in the APMs—in this case, the performance thresholds for incentive payments, are too difficult to achieve, and thus, could trigger mass defections from both the MSSP and Next Gen programs.

Is it possible for both Seema Verma and Clif Gaus to be correct at the same time? Technically, yes. One could call this another “glass half-full or glass half-empty?” moment. But there are deeper and broader elements of meaning here, because what Gaus and his fellow NAACOS leaders are pointing to in their statements and in the results of their member survey are warning signs that quite a large number of patient care organization leaders may soon leap—out of the MSSP and Next Gen programs. And, at a time when the industry has been hard-pressed by the impacts of the COVID-19 pandemic, is now really the time for CMS’s Verma to keep her foot on the gas pedal, when there may not be enough gas to keep the car moving forward?

That question has been at the forefront of this policy and payment debate for quite some time now, but it’s taken on added layers of meaning because of COVID. Things really are at rather something of an inflection point now; the question is, in which direction? And of course, this entire situation is further clouded by the reality of an intensely hard-fought national election campaign, in which control of both the White House and the U.S. Senate are hanging in the balance.

It’s virtually impossible to say exactly what will happen in the next four to six months with all of this; but the questions at issue here are supremely important, and the future of the federal value-based contracting enterprise is hanging in the balance; that much is clear. And this really is one of those “stay tuned” situations. We’ll all have to do just that in the coming several months—even as the underlying issues will inevitably evolve forward.

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