Design problems blamed for departures of Next Generation ACOs

The number of participants in the Next Generation ACO model has shrunk to 51 after seven accountable care organizations (ACOs) announced they’ll drop out of the program—the largest departure of providers since the model was introduced.

The seven exiting ACOs are:

·         Accountable Care Coalition of Chesapeake in Houston

·         Allina Health System in Minneapolis

·         Fairview Health Services in Minneapolis

·         KentuckyOne in Louisville, Kentucky

·         Lifeprint ACO in Delaware

·         MemorialCare in California

·         Sharp ACO in California

Some of the ACOs announced their departures in brief statements. KentuckyOne gave the most detailed information, telling its Medicare patients while access to its doctors and networks wouldn’t change, leaving Next Gen ACO would result in some benefits no longer being covered. These include the $25 reward for scheduling an annual wellness exam, post-discharge home visits, telehealth visits and waiving the requirement for skilled nursing facility care to be covered only after a three-day inpatient hospital stay.

For providers in KentuckyOne and the other ACOs, it may also mean they won’t qualify as under the Advanced Alternative Payment Model track of the Quality Payment Program.

“As a result, providers will report quality performance through the Merit-based Incentive Payment System (MIPS) for a performance-based adjustment to their Medicare payment,” KentuckyOne said.

Next Generation ACO began in 2016 as the higher-risk, higher-reward cousin of the Medicare Shared Savings Program, with organizations able to take on up to 100 percent risk. Participation grew from 18 ACOs in its first year to 44 in 2017 and, initially, 58 for this year.

Only results for 2016 participation have been published by CMS. In that first year, all participants scored 100 percent across 33 quality measures and 11 of the 18 ACOs earned shared savings with $58 million in bonuses being paid.

The other seven lost a total of $20 million, with two of the biggest losses being reported by two of the departing organizations: Lifeprint ACO owed more than $6.1 million while MemorialCare owed more than $5.2 million.

Despite those 2016 losses, MemorialCare Medical Foundation CEO Mark Schafer, MD, said its ACO was “one of the top performers in utilization nationwide,” but it didn’t believe it could be successful in “achieving the program’s goals with the current design.”

“We appreciate the dialogue we have had with CMMI (Centers for Medicare and Medicaid Innovation) about enhancements, but understandably it will take some time for improvements to be implemented,” Schafer said in a statement to HealthExec. “We are proud of the work we have done and the opportunity to use our vast medical management and care coordination infrastructure to help FFS Medicare patients. We continue to remain committed to improving health care in our communities, to bending the cost curve and to population health initiatives that are the essence of all ACOs.”

Allison Brennan, vice president for the National Association of ACOs (NAACOS), said the group is “disappointed” over the departures. As for what drove ACOs to head for the exit, changes made by CMS as well as the typical struggles for ACOs taking on downside risk may be to blame. 

“Some of these ACOs are leaving because of the challenges they faced earning savings and in response to concerns about Innovation Center policy and methodology changes, such as recent changes to risk adjustment,” Brennan said in an email to HealthExec. “These departures also illustrate the broader challenges of assuming and managing risk, which continue to be a significant hurdle for ACOs. NAACOS advocates for fair methodologies and program structure that allows ACO performance to reflect the true efforts of these ACOs. In order for ACOs to have predictability and stability, we urge the Innovation Center to not implement unpredictable unilateral changes during the agreement period."