Significance of ACO Departures Downplayed by Industry Analysts

Feb. 26—Industry analysts downplayed the recent revelation that 74 Medicare accountable care organizations (ACOs) left the program at some point in 2018.

Although the Centers for Medicare & Medicaid Services (CMS) has not yet released a 2019 tally of current participants in the Medicare Shared Saving Program (MSSP), industry analysts who examined a data set recently concluded that 74 ACOs left during or at the end of 2018. The departure of 13 percent of ACOs left 487 remaining in the program.

But this week, industry advisers said they saw less significance in those departures.

“Frankly, I’m not sure that’s a high number,” Michael Leavitt, former secretary of the U.S. Department of Health and Human Services, said at the Fourteenth National Value-Based Payment and Pay for Performance Summit. “People may be acknowledging that ‘We’re not ready yet,’ and you want people to be pushing to be ready, but you don’t want them to do it before they’re ready.”

The departures came as CMS revamped the MSSP rules regarding payments and potential risk, with the new rules taking effect in July.

“We would have expected more ACOs to leave the program given the lower payouts in the A/B tracks and the fact that tracks C, D, and E have increasing maximum downside risk but no commensurate increase in upside shared savings for the ACO,” said Anthony Valdés, president of Collaborative Health Systems (CHS), which provides operational services for many ACOs.

Mark McClellan, MD, PhD, former administrator of CMS, said the overall dropout rate was not much different than in previous years and appeared to be composed of “organizations that did not seem ready [for more risk] or doing well so far.”

The departures also included 26 percent of ACOs that reached the end of their three-year contracts and needed to decide whether to renew at the end of 2018. Specifically, one-third of ACOs that launched in 2016 departed the program, according to a CHS analysis provided to HFMA.

“It’s possible that some of the dropped ACOs will renew on July 1 or join other ACOs,” Valdés said in comments to HFMA. “It is also very likely that more will drop and will not renew on July 1.”

Which ACOs Left?

Departing ACOs included some that were operated by federally qualified health centers (FQHCs), as well as some that were unable to achieve the minimum savings-rate requirements of the MSSP, according to the CHS analysis.

A greater share of departures were physician-led ACOs, although most such ACOs remained in the program, according to an analysis cited by McClellan, who is director of the Margolis Center for Health Policy at Duke University. There were higher departure rates among physician-led ACOs that did not qualify under the new rules for a low-revenue track, which allows more time to move to downside risk.

An earlier analysis by the National Association of ACOs found almost 20 percent of physician-led ACOs would be considered high-revenue under the revised rules. Some FQHCs and rural health clinics also would be categorized as high-revenue ACOs.

CMS “still has some issues to work out on providing good, viable alternatives for smaller physician-led organizations to succeed in these new models, which is certainly CMS’s intent,” McClellan said.

Leavitt said the “pathway to value is going to be a bit different for smaller physician groups than for it is large” groups.

However, Leavitt warned that part of the challenge for small practices is that they don’t see a route to taking on value-based payment. One way to address that challenge is to better collect and disseminate value-based payment approaches that work for smaller and physician-led models, such as the Accountable Care Learning Collaborative, of which he is co-chair.

“We’ve asked the community to come in and help us in an open-sourced way to identify those competencies and then to do case studies to help people,” Leavitt said.

Despite the departures, Valdés said physician interest in ACOs has not waned. He has been surprised that many independent providers have reached out looking for an ACO to join so they can qualify for bonuses and avoid penalties under Medicare’s separately overhauled physician payment system.

Many physician groups were unable to sign up before this month’s deadline to participate in the July 1 launch of ACOs under the revised MSSP rules.

“We expect more to join the program in 2020 when a complete year is available to them versus entering the program in a split year, as is the case with 2019, and [when]there is more time for physicians to fully understand the impact of the new rules,” Valdés said.

Racing the Clock

Leavitt warned that the value-based payment push led by ACOs is under increasing political and financial pressure to show that these approaches can control costs. Otherwise the prospect looms of a single-payer system or comprehensive price controls.

“We’re in a race to find an alternative that is not [the] government prescribing what care we can have, and if we can’t make it work there will be a point in time when the government takes over a lot of the payment rules, even more than they do now,” Leavitt said.

Pressure also will come from the increasing share of the economy that health care is projected to consume. The CMS actuary recently projected that healthcare expenditures will comprise 19.4 percent of GDP by 2027, up from 17.9 percent now.

McClellan said the public will need to be educated over the next two years on the lack of simple answers to the challenges facing the healthcare industry. For instance, he noted that almost all coverage provided by the Medicaid eligibility expansions authorized by the Affordable Care Act is through private Medicaid managed care plans, which increasingly use alternative payment models and address the social determinants of health.

“The states that are most successful are finding that what they can do to facilitate effective, efficient access to coverage isn’t just or mainly price regulation—it’s changing the way those organizations are paid, are rewarded, and how they pay the providers in them,” McClellan said.