Life Science Compliance Update

November 13, 2017

Accountable Care Organization Performance Results

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2016 was the fifth performance year for the Medicare Shared Savings Program (MSSP). 2016 brought $652 million in savings to Medicare via Accountable Care Organizations, according to the Health Care Transformation Task Force.

The Shared Savings Program offers providers and suppliers (e.g., physicians, hospitals, and others involved in patient care) an opportunity to create a new type of health care entity, an Accountable Care Organization (ACO). An ACO agrees to be held accountable for the quality, cost, and experience of care of an assigned Medicare fee-for-service (FFS) beneficiary population. The Shared Savings Program has different tracks that allow ACOs to select an arrangement that makes the most sense for their organization.

Roughly one-third of MSSP ACOs generated savings in 2016, according to CMS data. In terms of quality, 330 of the 428 ACOs subject to pay-for-performance measures earned an average quality score of 94 percent. Ninety-eight of the ACOs garnered a 100 percent quality score. Overall, the average performance score improved by more than 10 percent across five measures: screening for fall risk, depression screening and follow-up, high blood pressure screening and follow-up, hemoglobin checks for diabetic patients, and diabetes eye exams.

ACOs that have been in MSSP since 2012 and 2013 accounted for $503 million in gross savings. The newer the participants, the less money they saved: ACOs that entered in 2014 saved $94 million, 2015 entrants saved $50 million and the 100 ACOs that entered MSSP in 2016 saved only $6 million.

The 2012 and 2013 ACOs received $351 million in shared savings payments, leaving the remaining $151 million as savings for CMS. That’s in contrast to 2015, when CMS spent $217 million more in awarding bonuses to ACOs in both the MSSP and Pioneer ACO programs than what participants were projected to have saved.

“These results demonstrate the promise of new models of care delivery and financing for improving patient outcomes and reducing spending,” stated David Lansky, Health Care Transformation Task Force Chair. “This provides further evidence that we need more, not less, public and private sector investigation of alternatives to traditional fee-for-service medicine.”

MSSP ACOs in the program for at least three years also decreased costs by an average of $10.1 million per organization in 2015. In comparison, MSSP ACOs just starting the program only cut costs by an average of $5.4 million per organization.

The top ten ACOs with the highest shared savings in 2016 were:

  1. Palm Beach ACO (Palm Springs, Fla.): $30,540,508
    2. Advocate Physician Partners Accountable Care (Rolling Meadows, Ill.): $28,924,272
    3. Hackensack (N.J.) Alliance ACO: $22,835,022
    4. USMM Accountable Care Partners (Troy, Mich.): $21,195,787
    5. AMITA Health ACO (Arlington Heights, Ill.): $20,489,157
    6. Cleveland Clinic Medicare ACO: $19,914,592
    7. Millennium ACO (Fort Myers, Fla.): $18,530,680
    8. UT Southwestern Accountable Care Network (Dallas): $17,464,034
    9. Memorial Hermann ACO (Houston): $14,025,212
    10. Orange Accountable Care of South Florida (Miami Lakes, Fla.): $13,033,788

September 22, 2017

Accountable Care Organizations Under Magnifying Glass

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Calling into question whether value-based care will ever truly work, a recent report casts dark news for ACOs. As reported, nearly half of physicians participating in the Medicare Shared Savings Program (MSSP) ACO in 2015 did not know if they could receive shared savings or faced downside risk, according to a study. Even as there are flaws with fee-for-service, there are legitimate questions being raised about the feasibility of implementing value-based health projects, as evident in this latest MSSP study.

MSSP ACO Study

The survey was conducted between September 2014 and April 2015 and asked more than 1,400 doctors participating in Pioneer, MSSP, and Advance Payment Model ACOs about their programs' incentive structure and effectiveness, among other topics.

The survey found many doctors participating in each model were not aware how their respective incentive structures worked. Specifically:

  • 5 percent of Advance Payment participants did not know if they or their practice faced downside risk and 16.1 percent said they did face downside risk;
  • 5 percent of MSSP participants did not know if they or their practice faced downside risk and 20.6 percent said they did face downside risk; and
  • 7 percent of Pioneer participants said they did not know if they or their practice faced downside risk and 19.8 percent inaccurately said they did not face downside risk.

Additionally, the survey found that similar proportions of physicians did not know whether they were eligible for shared savings in their respective programs. Specifically:

  • 9 percent of Advance Payment physicians said they were not sure whether they or their practice were eligible for shared savings;
  • 5 percent of MSSP participants said they were not sure whether they or their practice were eligible for shared savings; and
  • 2 percent of Pioneer participants said they were not sure whether they or their practice were eligible for shared savings.

The survey also found that many doctors were unsure of which of their patients were attributable to an ACO. Specifically, 42.7 percent of MSSP, 21.4 percent of Advance Payment, and 34 percent of Pioneer physicians did not know which of their patients were attributable to an ACO.

Will Value-based Payment Actually Work?

This question is raised in a recent MedPage Today article on the subject. During a panel discussion, one member raised concerns about the current push to pay for the value of services rather than the volume of services under MACRA. Under MACRA, for example, the push could have unintended consequences for the healthcare system, with the influx of APMs resulting in "a thousand flowers blooming," borrowing an expression from former Chinese leader Mao Zedong. Such an approach -- having one model for a single aspect of one specialty -- might only increase fragmentation in the healthcare system.

Additionally, some have been critical of recent changes to MACRA that slow the “on ramp” for physicians to participate. They argue it creates an incentive not to get on board with value-based programs in Medicare. However, with so many physicians unaware of MACRA, and the complexity of the law, it seems reasonable that CMS would take a slower approach in the implementation of the law.

The Point of Value-Based Pricing

Raised in a recent athenahealth article by Paul Levy, the former CEO of Beth Israel Deaconess Medical Center from 2002-2011 and author of “Goal Play! Leadership Lessons from the Soccer Field,” a key element of President Obama's healthcare policy was a push for "value-based pricing," using the authority of the Centers for Medicare and Medicaid Services to experiment with pricing incentives to reduce overuse in clinical care. Private insurers were likewise encouraged to pursue this direction.

The status quo in the U.S. for years has been “fee-for-service" pricing, in which doctors and hospitals were paid for piecework. Believing that the persistent rise in healthcare costs in the United States was driven by overuse resulting from this financial incentive, some policy analysts decided that doctors and hospitals should be given a countervailing financial incentive to reduce certain kinds of diagnostic tests and to avoid medically unnecessary procedures.

The predominant form of value-based pricing to emerge from this policy assumption was the so-called “global payment." Medicare or private insurers would give each health system (now called an accountable care organization or ACO) an annual number of dollars per year per patient, based on the risk profile of that system's population. If the health system could treat the patient for less money, it would keep the surplus. If its spending exceeded that budget, it would suffer a loss.

In essence, the plan consisted of CMS and private insurers trying to transfer the actuarial risk of patient care to providers, counting on the new financial incentive to change behavior.

Good Intentions but Rough Outcomes

Levy’s analysis continues by pointing out if the premise of global payments is that doctors are economically rational creatures who will respond to financial incentives, then the financial incentives have to be substantial, immediate, and transparent to be effective. Under a global payment regime, however, the incentives are minor, delayed, and fuzzy. Even those doctors who might want to be good corporate citizens will find themselves inexorably pushed to play “X," and thereby will undermine the hoped-for results.

Thus global payment regimes are hoisted on the petard of their own underlying assumption: The rationality of the participants. In the case of CMS, the global payment plan was doomed for other reasons. For one thing, early versions had no downside: While there was the potential to garner surpluses, health systems were protected against losses. Further, under federal law, Medicare patients are mobile: They have no obligation to stick with one health system if they feel they can get more of what they want from another.

July 20, 2017

Accountable Care Organizations: Risk and Reward

Risk

In January 2015, HHS set the target of funneling 50% of Medicare payments through alternative payment models and tying 90% of fee-for-service payments to quality or value by the end of 2018. MACRA is part of that shift by changing the way Medicare pays physicians. Now, as reported by Modern Healthcare, the prospect of rewards from value-based care arrangements like ACOs is luring a “small but growing” number of ACOs into risker contracts with Medicare. However, as the article stresses, this is still a minority number of ACOs, with the vast majority in “upside-only” models where they share in savings but do not risk money if costs rise. It is also not clear that all ACOs taking on risk are prepared to be in such a structure.

ACO Models and MACRA

Under MACRA, the article points out that providers can avoid MIPS requirements if they have significant enough investments in eligible alternative payment models. However, most providers are not ready for this stage yet and CMS estimates around 10% of physicians in 2017 will qualify under MACRA as participating in an “advanced” APM.

Some of the existing Medicare models qualify as advanced APMs, but those participating in the ACO experiments are in models that do not qualify. The article notes that in 2017, only 42 of 480 ACOs in the Medicare Shared Savings Program qualify, for example. Other models are forthcoming, which should rise that number.

Investment Risk

Ultimately, the article describes, the upfront investment in infrastructure is risky enough for many ACOs, even without taking on downside risk. The average cost to participate in the Medicare Shared Savings Program was $1.62 million for 144 ACOs surveyed in the spring of 2016 by the National Association of ACOs. Forty-three percent said they'd “definitely or likely” quit the program if the CMS required them to assume risk for losses, although 84% said they would be willing in the next six years.

Revenue Loss?

According to a recent RAND survey, there are a number of scenarios under which a percentage of physicians increase their participation in advanced APMs, with the rest in the MIPS track. To project how much Medicare would spend on physician services under MACRA, the RAND researchers drew up three scenarios of physician participation in Advanced APMs. In each scenario, the percentage of physicians in these models increased from 8.5% in 2015 to 40% in 2030, with the rest in MIPS.

However, the scenarios differed by the relative riskiness — the potential upside and downside — of the advanced APMs chosen. In the lowest-risk scenario, physicians choose advanced APMs with financial risk similar to that for a CPCP medical home. In the highest-risk scenario, all the advanced APMs resembled Next Generation ACOs. The medium-risk scenario resembled a collection of medical home, Next Generation ACO, and MSSP Track 2 models. Generally speaking, the riskier the Advanced APM, the more money physicians stand to lose if they pump up the volume of services, according to the RAND study.

Results Still Questionable

CMS has promoted the cost savings of APMs, but reports from 2017 have raised doubts. Citing data from a number of APMs, a report found, for example, in 2014 CMS said the 20 ACOs in its Pioneer program, and the 333 in the Medicare Shared Savings Program, saved a total of $411 million. However, after paying bonuses to the strong performers, the ACO program reported a net loss of $2.6 million. And the fact that only nine health systems remain in Pioneer ACO program is telling, as many jumped ship over penalties tied to benchmarks deemed too high.

Even with this information, more recent research found that forty-seven percent of respondents said they don’t know which of MACRA’s two payment tracks they will fall under, indicating that most are still trying to figure out the ins and outs of the program, suggesting providers are still looking into possible ACO options that may best fit their practices.

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