CMS finalizes changes to the ACO program

CMS has finalized changes to the Medicare Shared Savings Program (MSSP) that “dramatically redesigns and sets a new direction” for Medicare accountable care organizations (ACOs). The final rule, as outlined in the proposed rule announced in August, will force ACOs to take on more risk at a quicker pace.

The rule has been met with some backlash from industry stakeholders, as well as predictions that forcing ACOs to take on downside risk will result in a mass exodus from the voluntary program. However, the final rule somewhat softens some of the original proposals, including givings ACOs an extra year of transition time to ease into taking on downside risk.

The overhaul of the program, dubbed Pathways to Success, eliminates previous tracks and implements two tracks, basic or enhanced. The new agreement period will begin on July 1, 2019.

“Pathways to Success is a bold step towards quality healthcare at a lower cost through competition and beneficiary engagement,” CMS Administrator Seema Verma said in a statement. “The rule strikes a balance between encouraging participation in the ACO program and advancing the transition to value, ultimately protecting taxpayers and patients. Medicare can no longer afford to support programs with weak incentives that do not deliver value. As we structure new payment arrangements, the impact on the overall market will be top of mind.”  

Prior to the redesign, the shared savings program included three tracks, with the vast majority of ACOs participating in Track 1, which allows organizations to share in upside savings without taking on risk. Under the new terms, ACOs would be able to participate in upside-only shared savings for the first two years of the program before they would start taking on downside risk, which would require the organizations to pay back losses if costs are higher than the designated threshold.

The final rule also boosted the shared savings rate for ACOs in the Track 1 glide path from the proposed rule, from 25 percent to 40 percent in the first two years of the program. It also kept the shared savings rate for two-sided risk ACOs at 50 percent.

“We are very pleased CMS returned shared savings rates for many ACOs back to the historic precedent of 50 percent for some and 40 percent for others, increased the proposed one-sided risk term for certain low-revenues ACOs to three years, and made steps forward in needed risk adjustment policies," Clif Gaus, chief executive of the National Association of Accountable Care Organizations (NAACOS), said in a statement Friday.

HHS Secretary Alex Azar has previously stated he believes ACOs should be taking on more risk and acknowledged the changes could result in fewer ACOs.

“So be it,” he said in a speech with the American Heart Association in September.

ACOs have been proven to be cost savers, but they tend to do better, with higher savings, over time. From 2013 to 2016, ACOs have saved Medicare $2.7 billion and netted more than $660 million to the Medicare Trust Fund, according to the National Association of ACOs (NAACOs).

See the final rule here.