ACO Participation Dipped After Pathways to Success, NAACOS Finds

The latest accountable care organization (ACO) participation numbers for the Medicare Shared Savings Program (MSSP) raise concerns for the National Association of ACOs (NAACOS).

In a recent Health Affairs blog post, the leading ACO group reported that, in 2019, the MSSP experienced a dip in ACO participation for the first time since the program launched in 2012. Additionally, fewer than half the number of new ACOs entered the program in 2019 compared to the average of all previous years.

“While not yet a reason to sound an alarm, the dip in participation in 2019 will be problematic for Medicare if it continues, and policymakers should pay close attention as we move forward,” NAACOS stated in a media advisory email.

“ACOs are the dominant alternative payment model that exists today, and if participation drops following CMS’s changes last year, it threatens years of work to transform our delivery and payment system to better reward value and quality,” the association continued.

Changes to MSSP rules and requirements are likely behind the reduction in ACO participation. In late 2018, CMS overhauled the program to encourage greater savings and care quality improvements. Most notably, the agency renamed the program “Pathways to Success” and reduced the amount of time ACOs have to assume downside financial risk.

CMS reported during the MSSP overhaul that ACOs facing financial penalties under downside risk arrangements performed better than the organizations not at risk for failing to hit CMS-set benchmarks, and therefore, more MSSP ACOs should be at risk.

The agency also pointed to evidence showing that the MSSP has not saved Medicare money as a reason for Pathways to Success implementation.

The data cited by CMS, however, is counterfactual and new ACO participation numbers be a cause for concern in the future, NAACOS stated in the blog post.

“CMS made these moves prior to performance data from 2017 and so-called ‘counterfactual’ data that compares Medicare spending to what spending would be like in the absence of ACOs,” the association’s leaders wrote. “Researchers at Harvard University, the Medicare Payment Advisory Commission, and the National Association of ACOs have all done such work. All showed ACOs are lowering Medicare spending by 1 percent to 2 percent, which translates into tens of billions of dollars of reduced Medicare spending when compounded annually.”

Instead of supporting this effect, CMS reduced the length of time ACOs have in upside risk-only tracks from six years to as little as two years and the agency cut the rates at which ACOs can share savings they produce with CMS, decreasing the maximum share rate, for example, from 50 percent to 40 percent for upside risk-only tracks.

“While there were a number of welcome program modifications such as a more gradual ramp up of risk, choice of how beneficiaries are assigned to an ACO, expanded use of beneficiary incentives and payment rule waivers, and longer agreement periods, many in the provider community worried participation would fall as a result of the net effect of the policies. Indeed, this may already be occurring,” NAACOS leaders stated.

The association’s own analysis of MSSP 2019 participation data from CMS not only showed a dip in overall and new ACO participation, but also a refusal of some ACOs to participate under Pathways to Success.

CMS offered existing MSSP ACOs an opportunity to transition to Pathways to Success before their current MSSP contracts expired. Over 330 ACOs were eligible to move to new program rules early, yet only five percent of the organizations agreed to do it, NAACOS found.

“This is a surprisingly low number given some of the benefits of operating under the program’s new rules,” the blog post stated.

Additionally, CMS reported that nearly one-half of ACOs starting the Pathways to Success program on July 1 assumed downside risk, a significant jump compared to the 29 percent of MSSP ACOs participating prior to Pathways to Success implementation.

But that number may be deceiving, NAACOS leaders said.

Of the ACOs joining the Shared Savings Program for the first time, only about one-quarter are taking on risk and some of those ACOs have previously participated in other Medicare ACO programs like the Next Generation model, which allows ACOs to take on higher levels of financial risk, the NAACOS analysis showed.

More concerning to NAACOS was the fact that 40 percent of the 203 ACOs whose contracts expired at the end of last year elected not to continue in the program under Pathways to Success rules, the blog post continued.

“This is higher than the roughly 30 percent churn rate we typically see in the Shared Savings Program,” NAACOS leaders explained.

The 2019 ACO participation numbers could be an anomaly considering the mid-year application cycle and the short period between the release of new program rules and application deadlines. However, the figures should encourage CMS to keep a closer eye on how new program rules impact ACO participation, the blog post stated.

“Keeping ACO programs voluntary requires creating a model that’s appealing enough to attract new ACOs and retain existing ACOs to accelerate the overall transition to value,” NAACO leaders wrote. “Faced with the possibility of paying millions of dollars for not hitting spending targets or sitting on the sidelines in the status quo of fee-for-service, many providers will opt for the latter. Meanwhile, the Shared Savings Program will not generate the same level of savings with fewer ACOs.”