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Rapidly Depleting Medicare Assets Call for Better ACO Participation Incentives, Groups Say

Analysis  |  By Alexandra Wilson Pecci  
   February 28, 2022

The American Medical Association, the National Association of Accountable Care Organizations (NAACO), and others are urging Congress to better incentivize participation in alternate payment models.

Keeping Medicare financially afloat is behind a new push to better incentivize providers to participate in value-based payment arrangements and alternative payment models (APM).

The American Medical Association, NAACO, and other organizations are urging Congress to do what it can to speed up adoption of these payment models, not only because they lower spending and improve quality of care and patient satisfaction, but because they could help with another imperative: Prolong the solvency of the Medicare trust fund.

The latest Medicare Trustees' Report to Congress says that Medicare program assets will be depleted by 2026, the groups noted in a letter to the U.S. Senate Committee on Finance Subcommittee on Fiscal Responsibility and Economic Growth.

This news should "sound the alarm to Congress" that it's time to update laws to encourage new providers to enter APMs and keep ones that are already participating.

Specifically, the groups are pushing for the bipartisan Value in Health Care Act (H.R. 4587), which would:

  • Increase shared savings rates for ACOs to restore them to the levels when the Medicare Shared Savings Program (MSSP) was launched
  • Modify risk adjustment
  • Remove the high and low revenue ACO distinction
  • Remove ACO beneficiaries from the regional benchmark
  • Extend the Advanced APM bonus that Congress created in the Medicare Access and CHIP Reauthorization Act of 2015 for an additional six years

Although APMs save money, the organizations writing to Congress say they're not doing so fast enough to counter increased spending.

Here's their reasoning:

  • Since 2012, ACOs have saved Medicare $13.3 billion in gross savings and $4.7 billion in net saving.
  • Data shows that ACOs are lowering Medicare spending annually by 1%–2%.
  • Since Medicare Parts A and B cost $636 billion in 2018, a 2% reduction in spending would save nearly $200 billion when compounded over a decade, assuming Medicare spending will grow at 4.5% per year without ACOs.
  • The estimated overall impact of ACOs, including "spillover effects" on Medicare spending outside of the ACO program, lowered spending by $1.8–$4.2 billion in just 2016.
  • In the first three years of the MSSP, ACOs improved their performance on 82% of the individual quality measures compared to their baseline. After the first three years, 98% of ACOs met or exceeded quality standards.

Despite these savings, participation has stalled:

  • There are currently more than 30 million traditional Medicare patients still in unmanaged, uncoordinated care, the letter said. That's compared to the just 11 million Medicare patients who receive care from a healthcare provider in a Shared Savings Program ACO as of January, finds new CMS data.
  • The same CMS data shows only modest year-over-year growth in ACO participation: Just 66 new ACOs joined the program and 140 existing ACOs renewed their participation.

Alexandra Wilson Pecci is an editor for HealthLeaders.

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