Head shot of John Malone
John Malone

On Dec. 21, the Centers for Medicare and Medicaid Services (CMS) announced its final rule overhauling the Medicare Shared Savings Program (MSSP) to fundamentally change the way ACOs share in savings and take on risk. The new program, called Pathways to Success, contains several significant changes that ACOs will need to address. These include moving from four MSSP tracks to just two, which include Basic and Enhanced, and moving from three-year participation periods to five-year periods. Pathways to Success is designed to advance five goals: accountability, competition, engagement, integrity, and quality.

Impact on Current ACOs

There are two major ways that the final rule affects current ACOs, including the timing for taking on downside risk and the amount of the shared savings percentage. There has been a significant reduction in the amount of time an accountable care organization (ACO) can remain in the program without taking on downside risk. The allowed period is decreasing, from up to six years to:

  • One year for existing one-sided ACOs
  • Three years for new “low-revenue” or physician-led ACOs
  • Two years for all other new ACOs
Head shot of Douglas Ardoin, MD, MBA
Douglas Ardoin, MD, MBA

The shared savings rate will be 40 percent for ACOs that are not assuming risk for healthcare costs and 50 percent for ACOs at Basic track levels of risk. The Basic track will qualify as an Advanced Alternative Payment Model (AAPM) under the Quality Payment Program (QPP) once it achieves the higher levels of risk. ACOs in the Enhanced track, which is based on the current program’s Track 3, will take on risk and qualify as an AAPM immediately. To more accurately evaluate ACO performance, CMS is incorporating regional spending factors in establishing an ACO’s target spending during all agreement periods.

ACOs with agreements that expired in December 2018 can extend their agreements for six months to transition to the new policies that begin in July. Annual agreement periods will resume on Jan. 1 beginning in 2020. ACOs have until Jan. 18 to apply to join the redesigned program.

Implications for Current and New ACOs

CMS is clearly prioritizing the shift to value-based care, as evidenced by the shorter glide paths to risk.  Quality is still a priority, but getting control of cost has taken on new urgency. The rule is projected to achieve $2.9 billion in savings over 10 years. The good news is Pathways to Success includes new opportunities for those ACOs taking on risk to experiment with innovation, such as participant incentives and home-based telehealth. Decision-making for new and current ACOs that are deciding how to move forward should focus on their basic capabilities to manage downside risk, including:

  • Data and analytics for quality and cost measurement
  • Care management processes across the continuum of care
  • Clinical redesign capabilities
  • Provider readiness and education

The Way Forward

It has been said many times over that “most don’t plan to fail; they just fail to plan.” During the next couple of years, many ACOs will suffer large financial losses due to ineffective preparation. Whether they’re new or existing, ACOs that are planning to contract with CMS in this new MSSP design should spend the bulk of 2019 studying their current resources and competencies that can lead them to success.

Understanding cost and quality performance, knowing the risk and nuances of your attributed population of beneficiaries, and clearly seeing the opportunities for improvement cannot be achieved without in-depth analysis. ACOs will need to make build or buy decisions, and they will need to be made to effectively and accurately assimilate the available information and develop the consultative expertise to achieve the best quality and cost results. Given the high-stakes nature of the new program design and requirements, ACOs are encouraged to seek partners that are deeply experienced in all aspects of value-based care and to learn from the early adopters who invested in population-management resources and experienced success.

John Malone is principal and Douglas Ardoin, MD, MBA, is managing principal for Lumina Health Partners.

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