Announcing Next Gen ACO Results, CMS Administrator Verma Makes the Case for Moving ACOs to Two-Sided Risk

Aug. 27, 2018
During a webinar, CMS Administrator Seema Verma touted the results of the Next Gen ACO model as evidence that ACOs succeed under two-sided risk as CMS proposes major changes to MSSP ACO program.

During a webinar sponsored by the Accountable Care Learning Collaborative Monday morning, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma reiterated the agency’s focus on pushing healthcare providers in accountable care organizations (ACOs) to take on two-sided risk while also addressing CMS’s commitment to try to remove barriers to value-based care.

During the 30-minute webinar sponsored by ACLC, a Salt Lake City-based accountable care collaborative, Verma discussed the sweeping changes that CMS is proposing for the Medicare Shared Savings Program (MSSP), noting that “it is time to take the next step.” On August 9, CMS proposed a rule that included major changes to the existing MSSP ACO program, with the goal to push ACO organizations into two-sided risk models by shortening the duration of one-sided risk model contracts. Referred to as “Pathways to Success,” CMS’ proposal looks to redesign the program’s participation options by removing the traditional three tracks in the MSSP model and replacing them with two tracks that eligible ACOs would enter into for an agreement period of no less than five years: the BASIC track and the ENHANCED track.

Verma’s comments on Monday morning emphasized CMS’s firm stance on pushing healthcare providers to take on more risk, as well as CMS’s strategy of giving providers more flexibility—such as waivers around telehealth—as a reward to transitioning to value-based care.

To bolster CMS’s stance on moving ACOs to two-sided risk models, Verma announced, during the webinar, the results of a CMS evaluation report of the first performance year of the Centers for Medicare and Medicaid Innovation Center (CMMI) Next Generation ACO model. According to Verma, the evaluation showed “very promising results.” An at-a-glance document provided by CMS can be found here.

For the 2016 performance year, the Next Gen ACO Model generated net savings to Medicare of approximately $62 million while maintaining quality of care for beneficiaries, according to CMS. Overall, that represents a net reduction of 1.1 percent in Medicare spending within that program, Verma said. The Next Gen ACO model began in January 2016 with an initial cohort of 18 participants. It should be noted that 15 out of the 18 NGACOs had prior Medicare ACO experience

“What this really shows is that these Next Gen ACOs are taking the highest levels of risk and they’ve managed to maintain quality while still lowering cost,” Verma said during the webinar. “Much of the savings achieved by the Next Gen ACOs were largely due to reductions in hospital spending and spending in skilled nursing facilities, and that’s very consistent with what we’ve seen with how other two-sided ACOs have achieved savings. We’re excited about this; we think it’s a very strong start.”

Further, in a CMS press release, Verma stated, ““These results provide further evidence that ACOs succeed under two-sided risk. ACOs in the Next Generation Model are being held accountable with strong financial incentives and are provided with substantial flexibility and regulatory relief.  They are delivering value and providing quality care to patients and taxpayers even in their first performance year, and we believe that these results are achievable for other ACOs under similar incentives.”

According to CMS, the Next Generation ACO Model involves the highest levels of risk in any ACO initiative offered by CMS. In exchange, ACOs in the Next Generation Model have broader flexibility, including around the provision of telehealth and the ability to offer incentives to beneficiaries for taking steps to achieve and maintain good health. Nearly 1.5 million beneficiaries in fee-for-service Medicare are currently aligned to a Next Generation ACO, CMS stated.

“We’re going to continue to monitor this and we’re putting out the ‘next’ Next Gen by the end of 2020, and we’re starting to think about what that looks like,” Verma said. “I can tell you from a high level where we want to go with this which is we want to provide as much flexibility as possible to those who are taking two-sided risk, and we’re thinking about what kind of waivers these ACOs would like to see.”

More Flexibility for ACOs Taking on Downside Risk

When the “Pathways for Success” proposed rule was announced earlier this month, Administrator Verma was quite firm in terms of her insistence that it’s time to force the MSSP program forward, and she reiterated this perspective during the webinar on Monday. “We’ve been at this program for six years, and, in the MSSP program, we have 561 ACOs and, out of those, 460 ACOs, or 82 percent, are not taking on any risk for the increase in costs,” Verma said. CMS has noted that some Track 1 ACOs are generating losses (and therefore increasing Medicare spending) while having access to waivers of certain federal requirements in connection with their participation in the program. Meanwhile, the ACOs in two‑sided risk models “have shown significant savings to the Medicare program and are improving quality,” according to CMS.

“We’re trying to transition the structure to encourage providers to take on risk because we know that is going to deliver better outcomes,” she said.

Verma outlined that CMS’s strategy is to put pressure on ACOs to take on risk by focusing on accountability and competition—ACOs can only stay in an upside-only risk model for two years and, during that period, they are only sharing in 25 percent of the upside savings. At the same time, CMS is focused on improving quality and, for those providers who take on increasing levels of risk, CMS plans to reward those providers with increased flexibilities. CMS is proposing to allow physicians in ACOs that take on risk to receive payment for telehealth services provided to patients regardless of the patient’s location and to allow certain ACOs under performance-based risk to provide incentive payments to patients for taking steps to achieve good health.

When asked by the webinar host, Mark McClellan, M.D., director of the Duke-Margolis Center for Health Policy and co-chairman of the Accountable Care Learning Collaborative, about provider feedback on the proposed changes to the MSSP ACO program, Verma responded, “I think many people recognize that it’s time to take that next step and it’s time to evolve the program; it’s been six years. We also understand that there may be providers that are not ready. But, our focus is to work with providers that are serious about making the investments and providing better care for lower cost.”

And, she noted, “I think the experience that we’re seeing is that there are some providers that don’t take a few years to transition, and have come into the program right away, taking full risk, so we know that this is possible. After six years, there is a lot of experience out there and we can learn from one another as far as best practices.”

As part of CMS’s recent “Pathways to Success” proposal, CMS has proposed taking many principles from the Next Generation ACO Model and adopting them more broadly for ACOs in the MSSP program.

During the webinar, Verma noted, “From a conceptual perspective, the more risk a provider is willing to take, the more flexible CMS wants to be. We think that way we can have providers focusing on outcomes, not the process. Rather than providers wasting time having to comply with all of our regulations, we want them instead to be focusing on patients and giving high quality care.”

Accelerating the Transition to Value-Based Care

During the webinar, Verma reiterated CMS’s commitment to accelerating the value-based transformation of America’s healthcare system, a top priority of Secretary of Health and Human Services Alex Azar.

“Our healthcare spending rate continues to grow faster than our overall economy, and actuaries project that by 2026, we’ll be spending one in every five dollars on healthcare. This trajectory is not sustainable. We look at the transition to value as trying to address some of those issues, and trying to slow down the rate of growth,” Verma said.

She continued, “Generally, as we think about value-based, and I think that means different things to different people, but from our perspective, it means paying for outcomes and paying for results, not just paying because people do things, but actually paying on a sense of what they achieve, what outcomes they have achieved and also holding providers accountable for providing cost-effective care. And we’re looking at value not only from the individual provider level, but also at a broad level, even looking at how we deal with state and the Medicaid programs, and how we’re looking at drug pricing; I think there are opportunities for value-based [models] across the entire system.”

As noted above, Verma has been firm in her insistence that it’s time to force the MSSP program forward, however, in her remarks this morning, she acknowledged that the vast majority of Medicare providers are still in a fee-for-service system and there will need to be “varying levels of risk” and a focus on providing flexibilities to move providers toward value-based care and payment models.

“If we look at where we are today, we’re about roughly one-third of individuals in the Medicare program are in a Medicare Advantage plan. We’ve got an even smaller proportion, around 11 percent, that are in some type of value-based agreement, but even there the level of risk that providers are taking is relatively small,” she said.

She continued, “If I look at where we want to go, moving forward, it’s encouraging participation in Medicare Advantage, and encouraging providers to be in some type of a value-based payment arrangement. That being said, we want to make sure that there are a variety of ways for providers to be in value-based agreements. We recognize that not every provider is going to want to take two-sided risk, or full risk, and there’s going to be varying levels of risk that providers are going to feel comfortable with. It might be appropriate for providers to take risk for a particular episode of care and some providers are going to do that over longitudinal care. I think we recognize that there is still going to be some type of fee-for-service system, so we’re looking at how we can take some of the existing policies that we have there, taking MIPS [the Merit-based Incentive Payment System], for example, and try to improve that program so that it better identifies those providers that are delivering high-value care.”

Verma also said CMS is working to address barriers to transitioning to value-based care. “I think interoperability is a big focus because we feel that we are able to deliver better coordinated care if we have a health system that is truly interoperable. We’ve done a lot of work around burden reduction, with our Patients over Paperwork initiative, and that also includes Meaningful Measures, which is about looking at the type of quality measures that we’re asking providers to report,” she said, noting that CMS also is evaluating Stark Law regulations.

CMS also is focused on supporting innovation, she said, noting payment reform around devices and telehealth. “We recently announced a proposal around remote communication technology, so we can start to have Medicare pay for some of those things,” she said. “Another thing we’ve done is unleashing a lot of the data that we have internally with CMS. We’re looking at not only releasing the Medicare Advantage data, but we’re thinking about releasing all of the Medicaid data that we’re collecting from 50 states because I think having more data out there will allow innovators to think about better ways of delivering cost effective, high quality care.”

Moving forward, CMS also intends to focus on supporting healthcare providers and ACOs with getting access to and sharing data. In the recent ACO proposal, CMS plans to require ACOs to move to 2015 certified electronic health records (EHRs) systems technology. “That’s essentially sharing information in an API (application programming interface) format, and we think that’s important to promote interoperability. At large, we’re looking at CMS putting a lot of its data into an API format; the Blue Button 2.0 initiative, that was all about putting data in an API format. We have almost 700 app developers that are using our data, and the idea there is to allow our patients to understand their data. We have heard the concerns from ACOs and other providers, and we’re also looking at ways to work directly with ACOs to improve their ability to access data from CMS,” Verma said.

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