American Hospital Association Recommends Revisions to Medicare ACO Models

The American Hospital Association (AHA) submitted a letter to the Centers for Medicare and Medicaid Services (CMS) on April 17, 2014, recommending modifications to the Medicare Shared Savings Program (MSSP) and the Pioneer ACO program to make both of these programs more attractive to hospitals and health systems.

The AHA letter begins by noting that hospitals and health systems are committed to accountable care. There has been widespread participation in the MSSP and the Pioneer ACO program; even more hospitals and health systems are testing their readiness for accountable care structures in commercial relationships with health plans.

Despite this high level of interest, the AHA expressed concerns about aspects of the design and structure of the Medicare ACO programs that it believes will limit participation in the Pioneer ACO program and the MSSP and will lead to unsustainable programs. The AHA finds support for its position in the initial results on the performance in those ACO Models, which showed nine of 32 Pioneer ACO participants withdrawing after the initial year and which showed that less than 30% of the MSSP participants received any share of savings with respect to the initial performance year.

With respect to the Pioneer ACO model, the AHA recommended the following modifications to encourage broader participation and to lead to operational viability:

•  Additional accountable care options should be developed. The AHA notes providers are at various stages of readiness for accountable care and offering options such as partial capitation for certain services, partial capitation for certain beneficiaries and full capitation, should all be considered and offered.
•  More flexibility in allowing Pioneer ACO participants to transition to population-based payments. The AHA recommends allowing Pioneer ACOs the ability to select different percentages of population-based percentages as opposed to fee-for-service payments depending on their preparation and experience. Certain participants may be ready for 80-85 percent population-based payments, while other ACOs should have the option for 10-15 percent population-based payments. The AHA also urges CMS not to require Pioneer ACOs to establish significant financial reserves, which are in addition to the significant investments required for Pioneer participation.

The AHA also noted a number of issues with the MSSP that it believes need to be addressed to encourage increased and sustained participation of hospitals and health systems in the MSSP. Generally, the recommendations suggest modifications to provide better information designed to allow more focused care coordination and to permit a greater ability to earn a share of savings and assume less risk. The AHA noted:

• A need for an improvement in the timeliness and accuracy of data shared with MSSP ACOs.
• The MSSP risk/reward equation tilts too heavily toward risk, without sufficient reward.
• The ability to remain in Track 1 (with only the ability to share in savings without any downside risk) should be extended to six years from the current three.
• The minimum savings rate which must be achieved before the ACO is paid a share of the savings should be no more than two percent irrespective of the number of attributed beneficiaries.
• The cost benchmarks should be adjusted for a broader range of policy changes that are not within an ACO’s control with respect to the efficiency of care.
• Methods, such as a voluntary sign-up process for a beneficiary to participate with an ACO, should be established to identify attributed beneficiaries prospectively to allow more focused care coordination.
• Beneficiary cost-sharing should be modified to encourage beneficiaries to receive care within the ACO network.
• Quality metrics and thresholds should be refined to notify ACOs of the metrics and thresholds at the beginning of the performance year, to align the metrics with reports already made to other programs and to allow additional savings to be earned instead of reducing the share of savings.

With two relatively new ACO programs, it is not surprising that there are a variety of recommendations proposed to help ensure continued hospital interest, increased participation over time and sustainability of the Pioneer ACO program and MSSP. Many have suggested from the start of the ACO programs that their structure created issues for their long-term success as a viable and sustained tool improving accountability. The AHA’s letter highlights a number of key points for consideration.

As CMS reviews the performance results under these programs, we hope CMS will keep an open mind and make adjustments to improve the ACO programs to address identified problems. Adjustments, such as those suggested by the AHA, can be productive in development of sustainable and valuable programs.