Accountable Care Organizations: A Promise of Value or Wastefulness?

ACOs across the states are the flag-bearers of the transformation to value-based care. They toil hard each day to make care more affordable, accessible, and efficient. They are constantly placed under the scrutiny of federal agencies and private payers and are looked upon with aspiration by most patients. 

However, with CMS firmly putting its foot down and clearing the clouds regarding its strategy to focus on two-way risk-sharing models, many questions have popped up regarding the future of upside-only ACO models.

What is the buzz all about?

CMS has been advocating for its cause rigorously since the past few months. CMS believes that upside-only ACO models have done little to justify what ‘accountability’ stands for, an opinion that has opened the floodgates for never-ending discussions regarding the very need for such a model.

On August 24, 2018, CMS released a detailed analysis of the performance of Next Generation ACOs for the year 2016. They followed it by releasing the MSSP ACO performance data for P.Y. 2017 on August 30, 2018. Additionally, CMS released the final ruling to MSSP contract ACOs as the “Pathways to Success.” All three reports have received a mixed response from every segment. While the stance of CMS is to move away from the upside-only risk model completely, many key healthcare stakeholders are of the other opinion regarding the success of such ACOs.

Highlights from the latest MSSP Performance Report 

Collectively, 472 MSSP ACOs achieved $314 million in net savings in 2017. About 82% of these ACOs follow an upside-only risk-model. They also earned a mean quality score of 90.5 percent under pay-for-performance measurement system. Out of these, 60% of the MSSP ACOs saved money, up by 4% from 2016.

On the other hand, Next Generation Accountable Care Organizations (NGACO) saved $62 million in its first year of existence, and a major chunk of savings was associated with hospital and SNF-related costs. Out of the 28 active NGACOs, 15 had a prior Medicare ACO experience. “These early results are promising. We look forward to observing results in the second performance year to observe whether this trend continues for these ACOs and is replicated in subsequent NGACO cohorts,” CMS noted.

What does the CMS say?

CMS is of the opinion that ACOs now have enough experience since the model has been in place for the last 6 years. It is also argued that upside-only risk-models have little incentives for reducing costs and improve care quality and that there is a need to move away from one-sided risk-models. “These results (NGACOs’ 2016 performance evaluation) provide further evidence that ACOs succeed under two-sided risk,” CMS said in a press release.

The federal agency is aggressively promoting the cause of two-sided risk-sharing models. It maintains that upside-only risk-sharing models have not been very successful in saving money. However, the data reveals that MSSP ACOs have, in fact, generated a whopping $1.1 billion in gross savings last year.

CMS fears that since our healthcare spendings are exceeding the overall economic growth of the nation, we need to revamp our entire system. Next Generation ACOs, it believes, is the legitimate advancement in the structuring of ACOs, something which is desperately needed today. “Next Generation ACOs are taking the highest levels of risk and they’ve managed to maintain quality while still lowering cost,” said CMS secretory Seema Verma.

What are the counter-arguments?

National Association of ACOs (NAACOS), among many other stakeholders, has been vocal in putting a counter-argument regarding the performance of upside-only risk-sharing ACOs. It believes that MSSP ACOs are doing great and any changes in the current system could create a feeling of havoc across the system. They are of the view that the hard work of past years is finally paying off and the recent results are a testimony of it.

One interesting trend that MSSP ACOs are witnessing is that the older they get, the more savings they earn. While ACOs started in 2016 and 2017 lost $34 million each, those formed in 2015, 2014, and 2012-13 (when the program first started) earned $5 million, $173 million, and $205 million respectively. Many prominent healthcare leaders believe that it is still a relatively new concept, and we should not rush towards high-risk models. A few even say that neglecting upside-only risk-sharing MSSP ACOs all of a sudden can put the overall success of the program in jeopardy.

CMS also plans to reduce the share of such ACOs in shared savings exactly by half— from 50% to 25%. Many healthcare leaders argue that these changes will make organizations opt-out of the program. A recent survey conducted by NAACOS concluded that 71% of the oldest MSSP ACOs would leave the program if asked to assume greater risk. CMS itself estimates that approximately 100 ACOs would leave the program in the next decade.

Unless the ACOs are really confident about generating shared-savings, chances are all but bleak that they would want to assume greater risk. Therefore, most organizations want to evaluate their performance by staying in upside-only risk-models for a longer duration.

The road ahead

Undeniably, two-way risk-sharing models save more Medicare money, or as CMS put it, “generate savings for patients and taxpayers.” However, given that the MSSP ACO program is all but a voluntary one, forcing organizations to assume greater risks may not go down too well with many organizations. Still, care quality, costs, and provider satisfaction are key areas that require the attention of both CMS and ACOs. although, it will be fascinating what the future of ACOs hold with Pathways to Success in place now. 

Much has been said about the future of MSSP ACOs— the good, the bad, and the ugly. The months to come will see a lot of macro-level advancements and changes in how ACOs work. The only thing that will matter in the years to come is how well are ACOs able to keep the interests of providers and patients intact, how efficiently they put the patient data to use, and how skillfully they leverage innovative technologies to ensure streamlined care delivery across the continuum.

To know more about how you can increase your shared-savings and optimize care quality with a unified healthcare data platform, get a demo.

For more updates, subscribe.

To explore the ins and outs of the Medicare market and get a regional-level and individual ACO-level analysis, download Innovaccer’s one-of-a-kind “State-of-the-Union” report.