New Pathways to Success for ACOs


In the eight years since the Affordable Care Act (the ACA) became law, there has been no shortage of developments related to the law and its implementing regulations. Some of these developments were planned by the ACA's architects; others represent more of a shift or redesign of the law's original intent and form. In early August 2018, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would amount to a redesign of one prominent feature of the ACA by revamping the Medicare Shared Savings Program. The redesigned program would be labeled "Pathways to Success," and would introduce several significant and wide-ranging changes applicable to Medicare's Accountable Care Organizations(ACOs). This initiative purports to advance five goals: Accountability, Competition, Engagement, Integrity, and Quality, and if finalized would institute changes worth the attention of ACOs and those who contract with them.

Among the several new models advanced for delivering health care throughout the country and within our state by the passage of the ACA are ACOs. These organizations embody one of the aims of the ACA in the shift away from a pure fee-for-service model by taking responsibility for the quality and total costs of care for an assigned population of Medicare patients (although traditional fee-for-service payments are not eliminated). ACOs are formed by health care providers, including physicians, hospitals, post-acute facilities, and most of them operate under the Shared Savings Program, a voluntary program established by the ACA and launched in 2012 that has three different tracks (effectively representing different tiers of risk-reward) that an ACO can choose from. According to CMS, this program promotes accountability, coordinates items and services for beneficiaries, and encourages health care providers' investment in services that are both high in quality and efficient by allowing the ACOs the regulatory relief needed to innovate and rewarding them with the savings they achieve.

However, as CMS noted in its announcement of the "Pathways to Success" proposed rule, ACOs--including those in the Shared Savings Program--may not be receiving strong enough incentives to truly innovate health care delivery pathways, nor do they tend to face real financial consequences if the cost of health care for their populations increases. Indeed, the Shared Savings Program has, rather than saved taxpayers' money, shown an increase in net spending, arguably due to the fact that 82 percent of the ACOs do not assume risk for cost increases. The Pathways to Success initiative seeks to change that perceived weakness of the program by redesigning the participation tracks available. Such alterations are intended to encourage more ACOs to move to options where they will both receive (a larger portion of) savings and be accountable for losses. Based on CMS' experience with the Shared Savings Program, these so-called "two-sided" models lead to significant savings for the Medicare program.

Among the significant changes proposed by the Pathways to Success is, first, a reduction in the time period that an ACO can remain in the Shared Savings Program without assuming the risk of increased costs to two years, or possibly less--a sharp decrease from the current six year period. This would greatly lessen the opportunity for ACOs to enjoy the advantages of savings earned from their innovations without the dangers of those innovations in fact failing to increase savings for Medicare. Also included as a proposed change is a requirement related to the adoption of the 2015 edition of Certified EHR Technology to promote interoperability. CMS also proposes policies to deter gaming of the program by, among other features, limiting more experienced ACOs to higher-risk participation options and labeling certain ACOs re-forming under new legal entities as "re-entering ACOs" so as to treat these ACO as more experienced rather than new ACOs.

The changes are not all burdensome to ACOs; as a voluntary program, the Shared Savings Program needs buy-in from participants, and one of the incentives CMS offers through the Pathways to Success is an increased flexibility for participants, including around telehealth. Additionally, CMS' proposal would attempt to increase beneficiary engagement through educating them about ACOs and also by allowing incentives to be paid to beneficiaries who take certain positive actions related to their health care. Pathways to Success also proposes broader access to the program's current SNF 3-day rule waiver for ACOs assuming greater risk. Changes to the program would also usher in more sensitivity to spending variations in local markets.

Taken together, these changes are anticipated to provide new mechanisms for greater coordination and interoperability, increase beneficiary engagement, and incentivize ACOs to assume greater levels of risk with the hope of greater flexibility and savings. Sensitive to the time needed to implement any final rules from CMS, CMS has in its proposed rule offered a six-month extension for the agreements of current ACOs and a mid-year start date in 2019. Comments on the proposed rule are due by October 16, 2018. The form the final rule takes bears close watching, as does the readiness with which ACOs respond to the various changes implemented.

Chris Thompson is an attorney at Burr & Forman LLP practicing in the firm's Health Care Industry Group.


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