Medicare Patients Could See Benefits Under Proposed ACO Rules

August 13, 2018 Updated: December 26, 2018

WASHINGTON—The average person probably hasn’t heard of an Accountable Care Organization, or ACO as it’s called in the health care world, but that could change if the Centers for Medicare and Medicaid Services (CMS) changes how ACOs are governed.

ACOs are groups of health care providers, such as hospitals or physicians in private practices, that work together to meet certain health care savings and quality care goals for Medicare patients.

Under a program called the Medicare Shared Savings Program (MSSP), they are given incentives to both provide better care and to save money, and if they do, they share in the savings with Medicare.

The Congressional Budget Office (CBO) estimated that the program would save the government $4.9 billion by the end of fiscal year 2019. But CMS says that the 649 ACOs that are currently part of the program are costing the agency hundreds of millions of dollars. Some of the ACOs are not meeting their benchmarks for savings, and most are not sharing in the cost when they overspend. As a result, Medicare is picking up the majority of the difference. In 2016, the agency paid $231 million above what was benchmarked.

“Medicare cannot afford to support programs with weak incentives that do not drive towards savings,” CMS Administrator Seema Verma said in a statement. “ACOs can be an important component of the move to a value-based system, but after six years of experience, the program must evolve to deliver value. The time has come to put real ‘accountability’ in Accountable Care Organizations.”

The agency has come up with a number of proposals to reform the program, called Pathways to Success, that, among other things, involves getting Medicare patients involved in the program.

An estimated 10.5 million Medicare recipients see a health care provider who is part of an ACO, but most don’t know it because there is little incentive, and no requirement, for health care providers to tell them.

As part of CMS’s plan, ACO health care providers would be required to disclose that they’re in an ACO and to give patients incentives to choose certain services.

“CMS proposes to require that each ACO provide a standardized written notice to its Medicare beneficiaries, informing them at their first primary care visit of a performance year that they are in an ACO and what that means for their care,” Verma writes.

Patients who see a health care provider in what is called a two-sided track—in which an ACO shares in both savings and risks with Medicare—could receive up to $20 from their provider per qualifying primary care service.

CMS is also seeking public input on a rule that would require Medicare patients to opt in, instead of being assigned, to an ACO.

Pathways to Success Highlights

ACOs were established in 2012 as a way to save taxpayers money while getting a wide range of health care providers to work together to coordinate a patient’s health care for improved care. ACOs are given certain spending benchmarks, and depending on which track they are in, they can share in savings with Medicare if they go below the benchmark, or also take on the risk if they go over. Those that choose to take on more risk also get a greater percentage of the savings if they are below the benchmark.

But under the current regulations, ACOs can stay in what is called the upside-only track, or Track 1, that allows ACOs to only share in Medicare’s savings, for their first six years in the program. About 82 percent, or 460 of the 561 ACOs, are in this track. To save taxpayers money, Pathways to Success would change that timeframe to two years. It also provides carrots to those in the upside-only track to transition more quickly to a two-sided track.

Providers join ACOs voluntarily. The National Association of ACOs (NAACO) warns that there will be an “exodus” of ACOs from the program if CMS implements the changes. Earlier this year, it took a survey of 35 ACOs that started with the program in 2012 or 2013 and are in the upside-only track. Of those, about 25 said they would leave the program if Pathways to Success were implemented.

“It’s naive to think that ACOs that aren’t ready can be forced to take on risk, given that the program is voluntary,” NAACOS President and CEO Clif Gaus said in a statement. “The more likely outcome will be that many ACOs quit the program, divest their care coordination resources and return to payment models that emphasize volume over value.”

He argues that ACOs already take on significant investments to coordinate patients’ care and that the rules change could jeopardize years of progress. NAACO proposes creating more realistic benchmarks and letting ACOs that are achieving or going below their benchmarks be allowed to stay in the upside-only track.

Jeff Micklos, executive director at Health Care Transformation Task Force, a consortium of patients, health insurance companies, and health care providers, said he also expects some attrition but dosen’t necessarily see that as a bad thing.

“Or maybe some new ACOs may decide not to come online, and that’s one of those balancing acts where, we certainly want to promote value, but we also need organizations that are moving forward, and making their way toward value. So maybe you need better-performing ACOs rather than more ACOs,” he said.

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