No risk, no reward: ACOs would've made $966M more in downside risk model

If accountable care organizations (ACOs) had moved from the upside-only Track 1 of the Medicare Shared Savings Program (MSSP) and assumed downside risk, they would’ve earned an additional $966 million if they qualified for the 5 percent bonus for Advanced Alternative Payment Models (AAPMs). Without that bonus, however, the financial benefits would disappear.

The analysis from Avalere Health used MSSP performance data from 2016, when 410 ACOs participated in the non-risk-bearing Track 1. The 5 percent bonus payment wasn’t available yet, as the AAPM payment track included in the Quality Payment Program opened the following year, and risk-bearing options in MSSP were limited to Tracks 2 and 3, which had only 22 participants.

Still, the results of Avalere’s analysis illustrated how assuming downside risk can be beneficial to many providers.

“The Medicare bonus payment will enable more providers to gain financially when taking on downside risk,” Josh Seidman, senior vice president at Avalere, said in a statement. “As they take on more risk, Medicare beneficiaries should see their providers doing more to keep their patients healthy.”

Under their simulation, 372 of 410 Track 1 ACOs—91 percent of all participants—would’ve financially benefited from taking on downside risk, with an aggregate net payment increase of $966 million. This is up from the $886 million increase Avalere projected based on 2015 performance data.

However, the financial benefits can almost entirely be attributed to the 5 percent AAPM bonus. The total bonus would’ve amounted to $1.2 billion in payments to ACOs, while organizations would’ve received only $30 million in shared savings.

If the AAPM bonus wasn’t available, almost all ACOs would lose by taking on downside risk. Only 22—5 percent of all participants—would’ve achieved net positive earnings.

The availability of the bonus seems to be enough to entice more providers into considering risk-bearing models, judging by the 60 percent of American Medical Group Association members reporting they’ll be ready to assume risk within two years. Additionally, the number of ACOs taking on downside risk in both MSSP and the more advanced Next Generation ACO model has increased for 2018.