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Possible ACO Overhaul Causes Concern

CMS has proposed an overhaul of the Accountable Care Organization (ACO) program, to take effect July 2019. The Medicare ACO program, called the Medicare Shared Savings Program (MSSP) would have a new name, Pathways to Success. It would require the 561 existing ACOs to switch to one of two tracks and would mandate that they take on downside risk within two years.


ACO advocates predicted the overhaul could cause massive departures from the program. (“ACO Advocates Issue Warning About Program Overhaul,” HFMA Compass, August 13, 2018)


CMS administrator Seema Verma noted in a press release: “Medicare cannot afford to support programs with weak incentives that do not deliver value. ACOs can be an important component of a system that increases the quality of care while decreasing costs; however, most Medicare ACOs do not currently face any financial consequences when costs go up, and this has to change.” (CMS Proposes “Pathways to Success,” an Overhaul of Medicare’s ACO Program, CMS.gov Newsroom)


Here are the components of the new ACO program:


Basic Track

  • Begins as a one-sided model for new participants
  • After two and a half years, transition to downside risk
  • Downside risk at its highest level would allow organizations to qualify for advanced alternative payment model (APM) track of MACRA
  • Existing ACOs in Track 1 of the MSSP would start downside risk within one and a half years of the July 19 start date


Enhanced Track

  • To be based on existing MSSP Track 3
  • ACOs from Track 3, 2 or 1+ would be barred from the upside-only phase of the Basic Track.


Both CMS and ACO advocates expect the revamped Medicare ACO program to result in fewer ACOs. CMS estimated that the number of Medicare ACOs could decline by a net 109 over the next 10 years. “The overall drop in expected participation is mainly due to the expectation that the program will be less likely to attract new ACO formation in future years,” CMS officials wrote in the rule. (“ACO Advocates Issue Warning About Program Overhaul,” HFMA Compass, August 13, 2018)


The National Association of ACOs warned that this will cause more than 70 percent of ACOs that responded to its recent poll to leave the program.


And hospital advocates were not optimistic that the new approach would draw in new hospital participants. For example, the American Hospital Association issued a written statement expressing its concern: “For hospitals and health systems, and other providers that want to come together to provide the highest-quality care for patients, the proposed rule would create barriers to entry in transitioning to value-based care.” The tightened time frame to downside risk would not leave enough time to form the “new and different contractual relationships” and strategies to align hospitals and other providers in risk-bearing models.”


Read the proposed rule here:


Read the CMS press release here:


Read AHA’s written statement here:


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