Lawmakers Urge CMS to Modify Final Medicare ACO Regulation

A bipartisan group of nine lawmakers today sent a letter to the Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma asking for two key changes to the agency’s recently proposed rule that would reform the Medicare Shared Savings Program (MSSP).

Specifically, the lawmakers asked that CMS reconsider proposals to cut the time new accountable care organizations (ACOs) have in shared savings-only models from six years to two and to decrease the shared savings rate from 50 percent to as low as 25 percent.

Lawmakers on the list include Reps. Diane Black (R-Tenn.), Peter Welch (D-Vt.), Suzan DelBene (D-Wash.), Gene Green (D-Texas), David Roe, M.D. (R-Tenn.), Greg Gianforte (R-Mont.), Tom Reed (R-N.Y.), Brad Wenstrup, M.D. (R-Ohio), and Roger Marshall, M.D. (R-Kans.).

In August, CMS proposed sweeping changes to the MSSP, by far the largest federal ACO model, with 561 participants. At the center of the proposed rule, called “Pathways to Success,” is a core belief that ACOs (accountable care organizations) ought to move more quickly into two-sided risk payment models so that Medicare isn’t on the hook for money if the ACO outspends its financial benchmarks.

Specifically, CMS is proposing to shorten the glide path for new ACOs to assume financial risk, reducing time in a one-sided risk model from the current six years to two years. This proposal, coupled with CMS’ recommendations to cut potential shared savings in half—from 50 percent to 25 percent for one-sided risk ACOs—will certainly deter new entrants to the MSSP ACO program. So far, the proposed rule has been met with varying degrees of scrutiny.

In the letter, the nine lawmakers said they share CMS’s goal to ensure the ACOs under the voluntary MSSP continue to generate savings for the Medicare program and move healthcare providers toward risk and value-based models.

The lawmakers also noted that as the healthcare industry moves forward in implementation of the Medicare Access and CHIP Reauthorization Act (MACRA), “it is imperative that MSSP ACO participation remain a workable option because MACRA’s fundamental structure is premised on the ability to participate under an Advanced Alternative Payment Model track, which primarily includes ACO models.”

The lawmakers also praise a number of improvements in CMS’ recent proposal to the MSSP program, including opportunities for reduced regulatory burden, increased beneficiary engagement and greater predictability and stability through longer agreement periods.

However, the lawmakers expressed concern with CMS’ proposal to shorten the glide path for new ACOs to assume financial risk from six years to t wo years, and to cut shared savings rate from 50 to 25 percent, specifically noting that the proposals will “have the unintended impact of impeding new ACO entry.”

“To ensure that ACOs have a sufficient business case to participate in this voluntary program, we urge CMS to modify these proposals in the final rule.

In the letter, the lawmakers also cited 2017 data from the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) that found that ACOs achieved high quality, and in particular, noted progress on important measures, such as reduced hospital admissions and screening beneficiaries for risk of falling and depression. “By CMS estimates, in 2017, 472 MSSP ACOs caring for 9 million beneficiaries participated in the MSSP, generating gross savings of $1.1 billion and an estimated net savings of $314 billion. This is consistent with independent research: a new actuarial study found that ACOs saved $1.8 billion from 2013 through 2015 and reduced Medicare spending by $540 million.”

Further, the lawmakers wrote, “peer-reviewed studies by Harvard University researchers have found that the MSSP saved more than $200 million in 2013 and 2014 and $144.6 million in 2015 after accounting for shared savings bonuses earned by ACOs.”

The lawmakers’ concerns mirror concerns expressed by nine stakeholder groups in a similar letter sent last month. The National Association of ACOs (NAACOS) and eight other healthcare stakeholder groups expressed concerns about CMS’ proposals to reduce the time new ACOs have in shared savings-only models from six to two years and to decrease the shared savings rate from 50 percent to 25 percent. The letter urges CMS to instead allow more time for ACOs in a shared-savings only model and to apply a shared savings rate of at least the current 50 percent to ensure a viable business model.

Those stakeholder groups wrote, “The MSSP remains a voluntary program, and it’s essential to have the right balance of risk and reward to continue program growth and success. Program changes that deter new entrants would shut off a pipeline of beginner ACOs that should be encouraged to embark on the journey to value, which is a long-standing bipartisan goal of the Administration and Congress and important aspect of the Quality Payment Program.”

Clif Gaus, president and CEO of NAACOS, noted about the lawmakers’ letter, “These lawmakers understand that CMS’s proposed push to risk offers too little time and not enough opportunity for ACOs to recoup investments and threatens to cut off a pipeline of providers hoping to start the transition to value-based care,”. “NAACOS supports the move to risk, but the move needs to carefully balance incentives so not to endanger the bipartisan goal of lower-cost, higher-quality care, which ACOs have proven to help achieve.”

“Overcoming the fragmentation and volume orientation of the fee-for-service program can best be achieved by moving more providers toward greater accountability for the quality and total cost of care, as ACOs are designed to do,” Blair Childs, senior vice president of public affairs of Premier Inc., said in a statement. “Premier applauds congressional efforts to ensure that the Medicare Shared Savings Program supports providers that are making extensive investments in coordinated care models, and are working in good faith to move toward two-sided risk. This is an effort that takes time, and we should be looking to accelerate, not discourage, these efforts, particularly since they are solving many of healthcare’s biggest cost, quality and population health challenges.”

It remains to be seen how CMS will respond to the pushback from NAACOS and others of late, though up to this point CMS has taken a firm stance that upside risk-only ACOs have not been effective. Thus, the federal agency seems to be fine with these ACOs leaving the MSSP if they are unwilling to take on more risk.