ACOs Want Risk Adjustment, Benchmark Tweaks

Medicare ACOs generated $843 million in savings in 2016 and demonstrated strong quality scores. ACO advocates believe those numbers could improve if CMS provides some flexibility on financial benchmarks and risk.  

With four years of returns in the books, Medicare’s accountable care initiative has demonstrated savings for the federal government and improved care quality for beneficiaries, advocates say.

However, the Centers for Medicare & Medicaid Services’ reluctance to tweak financial benchmarks, or adjust risk scores upward for aging beneficiaries holds ACOs to a different standard than other Medicare programs, according to the National Association of Accountable Care Organizations.

“With risk adjustment, unlike the approach CMS takes for other initiatives, including Medicare Advantage, risk scores for beneficiaries who are assigned to the ACO over a number of years are never allowed to increase. They can only go down,” says Allison Brennan, NAACOs vice president of policy.

“That holds ACOs to a much higher standard and is unfairly penalizing them for beneficiary risk scores for an aging population that often has multiple chronic conditions,” Brennan says. “It is unrealistic to expect those risk scores to never increase, and that affects the abilities of ACOs to meet their financial benchmarks.”

In addition, Brennan says ACOs are often the victims of their own success. Their efforts to reduce costs and improve care mean they set the bar higher for themselves every year, which makes identifying new savings all the more difficult.

“As ACOs continue with the program they feel more prepared to tackle additional issues which will allow them to have continued success,” she says. “However, we need to see changes with financial benchmarks for the long-term because if they keep getting progressively harder and harder there won’t be opportunities for ACOs to out-perform their previous performance.”  

Despite those hurdles, ACOs in the Medicare Shared Savings Program, the Next Generation Model, the Pioneer ACO program and the Comprehensive End Stage Renal Disease Care Model are collectively delivering on the savings, Brennan says.

CMS’ new Performance Year 2016 report on ACOs that found that the average generated savings per beneficiary per year has increased from $84.61 in combined 2012/2013 to $133.53 in 2016. Medicare ACO initiatives generated $836 million in gross savings and $71.4 million in net savings for the federal government.

In addition:

• 73% of Innovation Center ACOs earned shared savings totaling nearly $146 million. Specifically, Pioneer ACOs earned $37 million, Next Generation ACOs $58 million and CEC ACOs $51 million.
• 31% of MSSP ACOs earned shared savings with payments totaling $700 million.
• 25% of MSSP ACOs generated savings for Medicare but did not meet the threshold needed to share those savings.
• Only 18% of MSSP two-sided risk ACOs were responsible for repaying losses.
• 41% of physician-only MSSP ACOs earned shared savings compared to 23% of ACOs with hospitals.\

On quality metrics:

• Average MSSP performance improved 15% across the 25 measures used consecutively across program years.
• The MSSP ACOs subject to pay-for-performance measures earned an average quality score of 95% and 98 ACOs who were subject to pay-for-reporting earned a quality score of 100%.
• Innovation Center ACOs all demonstrated very high quality, Pioneer ACOs had an average quality score of 93% and Next Generation and CEC model ACOs all had 100% in their initial pay-for-reporting years.

Brennan says “there is no one-size-fits-all approach for ACO success, but that generally speaking, ACOs that focus on improved care coordination and providing beneficiaries with the right care in the right setting tend to be more successful.”

“According to CMS’ internal analysis MSSP ACOs generating shared savings had a significant decline in inpatient and hospital expenditures and utilization and decreased home health, skilled nursing and imaging expenditures,” she says. “That’s what they were seeing in the 2016 results. It’s nice that they pointed out those takeaways in their presentation.”

Experience is proving invaluable, too. CMS data show that 42% of MSSP ACO early adopters (2012) earned shared savings in 2016, compared with 18% of MSSP ACOs that started ACOs in 2016.

“We view the future for ACOs in a positive light but we need to make sure that CMS and the administration continue to improve policies to enable ACO success,” Brennan says. “This is a long-term game. Population health and accountable care initiatives don’t always yield instant results. But, these are investments that ACOs are making that are showing benefits in the long-term.”