This summer just gets better and better. As I was preparing to take a deep dive into the Advanced APM section of the fee schedule and QPP NPRM that Diana, Dugan and I were recently unpacking, out of the blue comes another 600-page NPRM. This summer of proposed rules reminds me of a song I often listened to as a young man. As a southpaw, I must admit that I am a bit partial to the version by a certain lefty who chose to play a right-handed guitar with his left hand…a truly remarkable feat!
There must be some kind of way out of here
The shot across the bow was delivered in several ways. A colleague of mine passed along a blog post from Seema Verma, the Administrator for CMS. Seems like everyone blogs these days, but if you have a chance you should read her post. The upshot is this, most of the Accountable Care Organizations (ACOs) in play today result in greater expenditures for Medicare, not fewer. That’s worth repeating, since ACOs were birthed by the Affordable Care Act and launched in 2012, the vast majority end up costing Medicare more than expected.
Said the joker to the thief
Don’t get me wrong here, Ms. Verma is certainly not a joker nor a thief, but this is the next line in the song. So, pretend I am talking to myself or use your imagination. Since nephrologists love numbers, let’s take a closer look. Per the post referenced above, 561 (86%) of the 649 existing Medicare ACOs this year are in the Medicare Shared Savings Program (MSSP). An astounding 10.5 million people are in one of these programs. For those keeping score at home, that’s almost 30% of the nation’s Medicare fee-for-service population. The remaining 88 Medicare ACOs are either NextGen ACOs or ESCOs. I can tell you that today there are 37 ESCOs, so I gather there are 51 NextGens left standing.
The real news for those of you in an ACO comes from this fact: 460 or 82% of the 561 MSSP ACOs mentioned above are upside only. That is to say, the participants do not take downside risk. They share in savings when they occur, but they are not exposed to losses. This is not surprising given our aversion to risk, but when you do the math, the upside only ACOs in aggregate generated a loss of around $49 million for Medicare in 2016. As Ms. Verma points out, the upside-only ACOs have been losing money since the program started. In order for Medicare to come out ahead financially, well, let’s just say it is likely to take a very long time. But more on that later.
There’s too much confusion
One of the things that creates confusion within the ACO world is the fact that there are so many flavors available today. I spend a lot of time in this space, and I have a hard time keeping them straight. I am sure the average nephrologist struggles as well. Sort of reminds me of that scene from Forrest Gump where Bubba recounts the multitude of ways one might prepare shrimp. There’s the Pioneer ACO, the NextGen ACO, the track 1 MSSP ACO, track 2 MSSP ACO, track 3 MSSP ACO, the track 1+ ACO, the CEC model…that’s about it.
I can’t get no relief
Each of these ACOs have their own set of rules, but as Ms. Verma points out, “The results show that ACOs that take on greater levels of risk show better results for cost and quality over time.” When the MSSP program first emerged, the basic idea was you could ease into downside risk. In fact, in most programs you could stick with the shared savings side of the program and avoid downside risk for up to 6 years. This NPRM intends to change that, in large part due to the fact that providers exposed to downside risk have proven time and again they are more likely to generate shared savings.
So let’s stop talking falsely now
Another interesting fact emerges on this topic regarding which ACOs are saving money for Medicare and which ones are generating losses. As it turns out there’s a difference between physician-led ACOs and hospital-based ACOs. Within the calculus in this proposed rule and clarified in the blog post we are referencing today, there’s a distinction between upside-only ACOs which are physician led (188 ACOs) and upside-only ACOs which are hospital based (222 ACOs). In 2016 the financial results for these 2 buckets diverge. The physician-led ACOs generated $182 million in savings for Medicare, whereas the hospital-based ACOs cost Medicare $231 million more than expected. The math gurus in the audience will note the net effect is the $49 million loss referenced earlier. Oh, and the 22 track 2 & 3 MSSP ACOs which took downside risk in 2016? They saved Medicare $33 million.
The hour’s getting late
Out of this emerges the clever “Pathways to Success” moniker. CMS boldly predicts this approach will save Medicare an estimated $2.2 billion (yes billion with a “B”) over the next decade. Believe me when I say there are a number of changes in this proposed rule. But the big change is one I eluded to earlier. They intend to reduce the number of years an ACO can avoid downside risk, moving from the current 6 years to a maximum of 2 years. If this comes to fruition, it will be interesting to see how many ACOs continue to participate in what to date has been a voluntary program.
Outside in the cold distance
As usual, there are many details within this NPRM, some good for the practice of nephrology, others perhaps not. Among the favorable aspects would be a proposed update to the current ESCO/ACO attribution hierarchy. There are also some rather detailed discussions around risk scoring, which may or may not impact the ESCO framework. While the focus of attention here appears to be upside-only ACOs, those of you in an ESCO may see an impact as well.
A wildcat did growl
As Acumen blog readers know, 1,000 words are too few to address the nuance within a 600-page NPRM. But those of you who are in an ACO would be well served by paying close attention to the changes suggested in this NPRM. If I were in an ACO, I’d make sure I understood the specifics regarding the impact of exiting, should the growl become a roar.
Two riders were approaching
I don’t know if Ms. Verma or Secretary Azar ride, but figuratively speaking, this line may be fitting as things have certainly become very interesting over the past several months. Secretary Azar has made it clear he intends to advance the value-based care agenda. And with his recent appointment of CMMI director Adam Boehler to become the Senior Advisor for Value Based Transformation and Innovation, the Secretary clearly means business. These riders are definitely pushing the value-based care agenda.
And the wind began to howl
From an inauspicious start via the Affordable Care Act, the Medicare ACO program has grown very large over the past few years. A number of nephrologists across the country participate in one of the ACO’s many flavors. My read of the tea leaves suggests the current CMS leadership intends to accelerate the transformation to value-based care and, with Pathways to Success, they appear to have their foot on the accelerator. As nephrologists, we need to pay very close attention to this development. If you are in an ACO today or considering joining one in near future, remaining vigilant from the Watchtower will almost certainly prove to be an advantage!
What are your thoughts about Pathways to Success? Drop us a note and join the conversation.
Terry Ketchersid, MD, MBA, practiced nephrology for 15 years before spending the past seven years at Acumen focused on the Health IT needs of nephrologists. He currently holds the position of Chief Medical Officer for the Integrated Care Group at Fresenius Medical Care North America where he leverages his passion for Health IT to problem solve the coordination of care for the complex patient population served by the enterprise.
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