MSSP Redesign Means ‘Pathways to Success’ for ACOs

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.

Call for Accountability

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."

Pathways to Success

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.)

Accountability and Competition

  1. The Pathways to Success program will shorten the amount of time permitted in upside-only risk tracks to allow a maximum of two years, or one year for ACOs identified as having previously participated in the MSSP under upside-risk only.
  2. In addition, Pathways to Success will simplify the MSSP by consolidating the number of tracks down to two—BASIC and ENHANCED tracks—and it will allow providers to pick the track that works best for them. Also, ACO participation will expand from three years to five years.
  3. The BASIC track is a five-year plan, with a “Glide Path” offering an incremental approach for qualifying ACOs to transition to higher levels of risk and potential reward. The first two years are upside-risk only, and then ACOs will gradually transition in years 3, 4, and 5 to increasing levels of risk that meet the standard to qualify as an Advanced Alternative Payment Model (AAPM) under MACRA, where clinicians can qualify to receive incentive payments at that level. Current upside-only ACOs will only be given one year more of no-risk option.
  4. The ENHANCED track is the highest risk track, with the same level of risk for all five years, and it allows providers to qualify as an AAPM immediately.
  5. Low revenue ACOs (which are typically composed principally of physician practices) have generally shown greater savings than high revenue ACOs, so low revenue ACOs can renew for a second 5-year agreement period under the highest level of risk in the BASIC track. High revenue ACOs (which are typically hospital-based, providing both inpatient and outpatient services) are required to move to the ENHANCED track to take on additional risk, without the option to renew in the BASIC track.

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.

Beneficiary Engagement

  1. ACOs must provide standardized written notice to its Medicare beneficiaries at the first primary care visit.
  2. Certain ACOs are allowed to pay beneficiaries up to $20 for each qualifying primary care service that the beneficiary receives to achieve and maintain good health.


  1. Pathways to Success allows physicians and other practitioners that are in risk-based ACOs to receive payment for expanded telehealth services, allowing for high quality services at a lower cost.
  2. In addition, Pathways to Success advances broader CMS initiatives to increase the quality of patient care by:
  1. Requiring a specified percentage of eligible clinicians in an ACO to adopt the 2015 Certified EHR Technology (CEHRT) as part of the MyHealthData initiative promoting interoperability of medical data and patient control of their data, which allows ACOs to coordinate care across multiple providers.
  2. Streamlining quality measures for ACOs to report as part of the broader Meaningful Measures initiative, which ensures that measures have a meaningful impact on patient care.


  1. Pathways to Success will incorporate regional spending (county-level) into ACO benchmarks starting in their first agreement period (similar to Medicare Advantage programs).
  2. Also, improvements in methodology for risk adjustment will more accurately account for changes in ACO participants’ health status.
  3. CMS will factor in national spending growth rates in addition to regional growth rates, when calculating and updating benchmarks, so ACOs will not be penalized if they reduce the market growth rate when the ACO constitutes a large fraction of their local market.
  4. ACOs in two-sided models will be held accountable for losses even if they exit mid-way through a performance year.
  5. Finally, ACOs with multiple poor financial performance years will be terminated from the program.

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.

References: “CMS Finalizes ‘Pathways to Success,’ an Overhaul of Medicare’s National ACO Program.” Press Release. December 21, 2018. “CMS Proposes ‘Pathways to Success,’ an Overhaul of Medicare’s ACO Program.” Press Release. August 9, 2018. “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.” August 9, 2018.


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