By Seema Verma, Administrator
Centers for Medicare and Medicaid Services, Blog, December 21, 2018
Today the Trump Administration announced our overhaul of the program for Accountable Care Organizations, or “ACOs,” in Medicare. ACOs serve a large number of Medicare beneficiaries – over 10.4 million individuals in Fee-for-Service Medicare (of the 38 million total Fee-for-Service beneficiaries) receive care from providers participating in a Medicare ACO. Before getting into the specifics of our new policy, let’s take a step back and put today’s announcement in a broader context.
The Trump Administration has put a high priority on accelerating a value-based transformation of America’s healthcare system – which is the move from paying for the volume of services to paying for outcomes and health. CMS is hard at work to move to a value-based system, not just because we want to, but because the American healthcare system is on an unsustainable trajectory, with one in five dollars spent in our economy projected to be spent on healthcare by 2026. Therefore, it is incumbent on our agency to not just pay for healthcare services as they are billed but rather to ensure that patients are getting value for the care that is provided. To this end, we are developing and testing new payment models to transform our payment system, and today’s changes to Medicare’s ACO program are a critical component of that transformation.
ACOs are groups of healthcare providers that take responsibility for the total cost and quality of care for their patients. In exchange for this, ACOs are able to receive a portion of the savings that they achieve as long as they meet quality standards. The program for ACOs in Medicare has been in operation for six years, and from these years of experience, CMS has gleaned key insights about what works and what doesn’t within the program.
CMS issues waivers to ACOs of specific fraud and abuse laws in order to provide the regulatory relief needed to innovate, including waivers of provisions of the Stark Law and the Federal Anti-Kickback Statute. In exchange for this flexibility, today’s rule ensures that ACOs have strong incentives to provide high-quality care and generate savings. Most Medicare ACOs do not currently face financial consequences when costs increase, but a review of the data on ACO performance shows that overtime those ACOs that take accountability for costs perform better than those that do not.
Today’s final rule drives towards greater savings and quality for Medicare’s ACO program. The rule is projected to achieve $2.9 billion in savings over ten years. The final policy is responsive to feedback about the need for incentives to bring healthcare providers into the ACO program, while ensuring the transition to value protects taxpayers and includes patients.
One key element of today’s rule is a reduction in the amount of time that an ACO can remain in the program without taking accountability for healthcare spending. The allowed period of time is decreasing from six years to, at most, three years for new “low-revenue” or physician-led ACOs, two years for all other new ACOs, and one year for existing one-sided ACOs. We are setting the shared savings rate at 40 percent for ACOs not assuming risk for healthcare costs and 50 percent for ACOs at all levels of risk, to strengthen the on-ramp to the program while rewarding ACOs that take on greater risk with higher shared savings rates.
Smaller, physician-led or “low revenue” ACOs – many of which are in rural areas – have shown greater success in controlling costs than hospital-led ACOs, which is an example of why CMS is focused on promoting competition in healthcare marketplaces and ensuring that patients have choices of where to obtain care. We have heard that establishing a physician-led ACO can provide practices with a means of remaining independent from consolidated hospital systems. Today’s rule bolsters the option for physicians to form ACOs while ensuring that all ACOs are generating savings for patients and taxpayers.
Today’s rule also increases flexibility for certain performance-based risk ACOs to encourage innovation and expand access to high-quality services that are convenient for patients, including telehealth services provided at a patient’s place of residence. This is part of our holistic review of policies aimed at driving innovation and efficiency and to ensure regulations are not hindering the development of new ways of delivering care.
In all that we do at CMS, we aim to put patients first and ensure that they have the information they need to make decisions about their care. To this end, today’s rule requires ACOs to provide beneficiaries in an ACO with a written notice in person or electronically through email or a patient portal that they are participating in this new approach to care delivery, and it must also explain what participating in an ACO means for their care.
Pathways to Success also allows risk-based ACOs to offer new incentive payments to beneficiaries for taking steps to achieve good health such as obtaining primary care services and necessary follow-up care. This way patients are aligned with providers on the drive to value.
Finally, to ensure rigorous financial benchmarking for ACOs, we are incorporating regional spending factors in establishing an ACO’s target spending during all agreement periods, providing a more accurate point of comparison for evaluating ACO performance. Our changes to the benchmarking process for ACOs also promote greater alignment between the ACO program and Medicare Advantage.
In connection with the program redesign announced today, and to ensure providers have time to review and assess the new options, CMS is offering an ACO application cycle for a special one-time new agreement period start date of July 1, 2019. We are encouraged that 90 percent of eligible ACOs with participation agreements expiring on December 31, 2018 elected to extend their agreements for six months, so now they will have the option to renew their agreement under the new policies and continue to participate in the program uninterrupted.
As you can see, the Trump Administration is absolutely committed to the value-based transformation of America’s healthcare system. Today’s final rule for Medicare’s ACOs accelerates that transformation while promoting patient engagement and ensuring high-quality care. This is a positive step forward for our healthcare system, one that we hope to continue building on in the future.
CMS Blog:
https://www.cms.gov…
Rule: Medicare Shared Savings Program; Accountable Care Organizations Pathways to Success and Extreme and Uncontrollable Circumstances Policies for Performance Year 2017 (957 pages):
https://www.federalregister.gov…
Fact sheet:
https://www.cms.gov…
Comment:
By Don McCanne, M.D.
When the government releases on a Friday an important, complex, thousand page document, especially just before the start of a busy holiday week, you can be fairly confident that they do not want it to be at the top of a news cycle. So what is this that CMS released on such a day as today?
They released the final Rule, “Medicare Shared Savings Program; Accountable Care Organizations Pathways to Success and Extreme and Uncontrollable Circumstances Policies for Performance Year 2017.” In typical bureaucratic fashion it includes not only the rule changes for the Medicare Shared Savings Programs and for Accountable Care Organizations, but it also includes considerable information overload by discussing “Extreme and Uncontrollable Circumstances Policies” through events such as hurricanes and California’s wildfires, just to ensure that hardly anyone will read the entire 957 pages.
So what is it they are doing with Medicare that they would prefer be consigned to obscurity as they implement the changes? In answering this question, I am going to take liberties in my interpretation in order to provide a more accurate perspective.
- The ACO rule applies to the traditional Medicare fee-for-service program and not the already privatized Medicare Advantage program.
- Medicare ACOs are groups of healthcare providers that take responsibility for the total cost and quality of care for their patients. Thus, much like the private Medicare Advantage plans, Medicare ACOs are serving an insurance function by assuming the risk of the costs of health care that will be delivered.
- CMS will share limited risk with the ACOs in that they will share the savings (i.e., unspent funds left over after providing the care – funds which might be better categorized as “profits”).
- CMS contends that “ACO performance shows that over time those ACOs that take accountability for costs perform better than those that do not,” and thus they have decided by this Rule to force provider groups into ACOs. Numerous CMS citations of greater Medicare savings with ACOs suggests that their primary criterion for “better performance” is spending less, apparently ignoring potential motivation for pecuniary gain.
- CMS will provide waivers of provisions of the Stark Law (designed to prevent conflict-of-interest self-referrals) and the Federal Anti-Kickback Statute, placing unprincipled business interests below the higher ethical plane of optimal patient service and value.
- Seema Verma writes, “the Trump Administration is absolutely committed to the value-based transformation of America’s healthcare system.” With this Rule, they are moving forward with the dubious “value-based” models of MACRA and its alternative payment models even though there is considerable evidence that they are a major source of dissatisfaction and burnout of health care professionals – the opposite of what you should expect in a high-performance health care delivery system.
- They push the old saw about delivering innovation in health care as if the goal of innovation were to improve patient care as opposed to the usual goal of improving the business model.
- The ACO model, as originally designed, assigned patients to ACOs for accountability purposes only, without telling the patients of their assignment. The new Rule now requires that the patient be notified, thus largely formally duplicating the managed care/HMO/Medicare Advantage model of privatized health care financing, but with government funds.
- CMS “also allows risk-based ACOs to offer new incentive payments to beneficiaries for taking steps to achieve good health such as obtaining primary care services and necessary follow-up care.” Buying patients? What kind of ethical trap door does this open? Since this is Medicare money, should taxpayer funds really be used for such activities that have a great potential for nefarious conversion?
- Finally, “Our changes to the benchmarking process for ACOs also promote greater alignment between the ACO program and Medicare Advantage.”
Alignment between the ACO program and Medicare Advantage! This is the final Rule, so the ACO program is already indelibly privatized!
It is now urgent that we dump our entire health care financing system and replace it by enacting and implementing a Single Payer Medicare for All program. Or would you rather put up with another generation of insurer/managed care intermediaries that have made ours the most expensive and one of the least efficient health care financing systems in the world?
Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.