The Affordable Care Act of 2010 introduced a new era in healthcare payment reform, focused on shifting the environment of health care from fee-for-service (FFS) to value-based care. The Centers for Medicaid and Medicare Services (CMS) introduced the Accountable Care Organization (ACO) as an alternative payment model (APM) designed to encourage voluntary networks of physicians, specialists, surgeons, pharmacists and hospitals to collaborate to take on the responsibility for the total cost and quality of care for their assigned beneficiaries. In 2012, CMS initiated a multi-level, multi-year strategy for success, using ACOs and the Medicare Shared Savings Program (MSSP) as key components in Medicare value-based payment and sustainable healthcare reform. However, after six years of evaluating ACO performance, CMS has dramatically redesigned the MSSP, implementing the new “Pathways to Success” program to incentivize ACOs to assume greater financial and performance-based risk, to deliver high quality care and value, and to produce more significant savings.
Track 1 in the MSSP has been a “safe place” for ACOs to learn, however, most ACOs are reluctant to move into the riskier Track 1+, 2, and 3.
In 2018, 561 of 649 Medicare ACOs were part of the Medicare Shared Savings Program (MSSP) overseeing the care of 10.5 million Medicare beneficiaries. Of those, 82% (or 460 ACOs) participated in the “upside-only,” no risk Track 1 of the MSSP. In Track 1, when ACOs keep the cost of healthcare spending low and the quality of patient care high then they share in any savings achieved, but when falling short of benchmarks, they are not required to share in any losses. The Centers for Medicare and Medicaid Services (CMS) designed the MSSP with this no-risk option to give ACOs an on-ramp of sorts to figure out how to maneuver within the new climate of value-based care. Track 1 in the MSSP has been a “safe place” for ACOs to learn, however, most ACOs are reluctant to move into the riskier Track 1+, 2, and 3. What’s interesting is that the MSSP data from performance year 2016 (the most recent available), and all subsequent years, shows that upside-only payment models (Track 1 ACOs) consistently increased Medicare spending relative to their cost targets, while two-sided, or shared-risk payment models (Tracks 1+, 2, 3), decreased Medicare spending relative to targets. In light of the unexceptional six-year performance of Track 1 ACOs and the MSSP overall, CMS Administrator Seema Verma called for more accountability from ACOs regarding quality, cost savings, and overall value. She states in the August 2018 Health Affairs blog that “the time has come to put real ‘accountability’ in Accountable Care Organizations,” and she goes on to explain:
"Our health care spending is growing at an unsustainable rate. If we continue on our present path, by 2026 we will be spending one in every five dollars on health care. This will crowd out other public funding priorities like public safety, infrastructure, national defense, and education. It will also strain small businesses, preventing them from investing in growth or creating new jobs. And finally, it will lead to higher premiums, copays, and deductibles that will hit every American’s household budget."
Understanding that Medicare cannot afford to support programs with weak incentives and that do not create savings, CMS designed the proposed Pathways to Success program to reward providers with more flexibilities as they take on more financial risk. More specifically, the Pathways to Success redesign focuses on advancing change in five key areas: Accountability, Competition, Beneficiary Engagement, Quality, and Integrity.
(The following summary of changes implemented in the Pathways to Success redesign are compiled from the exceptional overview of proposed rules outlined in the August 2018 Health Affairs blog, “Pathways to Success: A New Start for Medicare’s Accountable Care Organizations,” written by CMS Administrator Seema Verma. For a more comprehensive look at the Pathways to Success program, including BASIC and ENHANCED Track comparisons, Glide Path options, benchmarking methodology, Skilled Nursing Facility (SNF) 3-Day Rule Waivers, etc., see the Final Rule CMS fact sheet, referenced at the end of this article.)
While ACOs and the healthcare industry prepare for the Pathways to Success agreement period to take affect July 1, 2019, they are reminded that its implementation is part of an evolving, long term process in CMS’s commitment to utilize ACOs to move the U.S. healthcare system towards value-based care.
Verma maintains that “streamlining the [MSSP] program, extending the length of agreements, and accelerating the transition to two-sided risk [will] result in reduced administrative burden and greater savings for patients and taxpayers.” While ACOs and the healthcare industry prepare for the Pathways to Success agreement period to take affect July 1, 2019, they are reminded that its implementation is part of an evolving, long term process in CMS’s commitment to utilize ACOs to move the U.S. healthcare system towards value-based care.
North Texas Clinically Integrated Network, Inc. (dba TXCIN) is a non-profit ACO that began in late 2014. A small group of health care, independent physicians aligned to initiate clinical integration and value-based contracting. Partnering with RevelationMD and its state-of-the art information platform, TXCIN has become one of the largest, independent networks of physicians in North Texas.
CMS.gov. “CMS Finalizes ‘Pathways to Success,’ an Overhaul of Medicare’s National ACO Program.” Press Release. December 21, 2018.
CMS.gov. “CMS Proposes ‘Pathways to Success,’ an Overhaul of Medicare’s ACO Program.” Press Release. August 9, 2018.
CMS.gov. “Final Rule Creates Pathways to Success for the Medicare Shared Savings Program.” Fact Sheet. December 21, 2018.
Verma, Seema. “Pathways to Success: A New Start for Medicare’s Accountable Care Organizations.” HealthAffairs.org. August 9, 2018.