The U.S. Centers for Medicare and Medicaid Services finalized its restructuring of the accountable care organization shared savings program and increased certain savings rates from their levels in the August proposed rule.
The rate changes allow participating accountable care organizations, or ACOs, to receive higher savings rates when they first enter into the program, a move praised by an ACO lobbying group. The agency, known as CMS, estimates that the finalized rule released Dec. 21 will save the Medicare program $2.9 billion over 10 years, $700 million more than it estimated in the proposed rule.
ACOs were established by the Patient Protection and Affordable Care Act in order to take a more holistic approach to the healthcare process. Instead of billing patients throughout different steps of treatment, an ACO brings together providers such as physicians and hospitals and charges patients according to the total amount of care given. The shared savings program allows ACOs to receive a percentage of savings for keeping Medicare costs down and requires them to make payments back to the agency should costs rise. Paying a percentage of costs back is what CMS refers to as assuming risk. ACOs are incentivized to assume more risk by receiving a higher percentage of savings for doing so.
Currently, 516 ACOs and 10.5 million Medicare beneficiaries participate in the program, according to CMS.
The largest change CMS is making is the restructuring of the shared savings program. Currently, provider groups can choose between three tracks, with risk and savings percentages increasing in each track.
The new structure will have two tracks: the basic track and the enhanced track. The basic track will have five different subsets to allow ACOs to gradually assume more and more risk.
The proposed rates for the basic track began with a 25% savings rate, increasing at each subset group to 50%. Under the finalized rule, the rates will start at 40% and increase to 50%.
Provider groups that enroll in the enhanced track will have a savings rate of 75%, which is the same rate proposed in August.
To enable provider groups to review the changes, CMS is giving them until July 1, 2019, to enroll in the new program. After 2019, the enrollment date will return to Jan. 1.
The National Association of Accountable Care Organizations, an association that represents ACO groups, praised CMS in a Dec. 21 statement for increasing the saving rates in the basic track. The move actually returned them to previous levels, according to the organization.
Another key change to the shared savings program is the amount of time ACOs can participate in the program without assuming risk. Under the current policy, ACOs can go as long as six years without assuming risk. CMS reduced this amount to two years for most ACOs and to three years for low-revenue or physician-led ACO groups.
When that acceleration was proposed in August, Clif Gaus, CEO of the National Association of Accountable Care Organizations, said forcing ACOs to assume more risk will discourage providers from joining the program and lead to ACOs dropping out.
However, in the finalized rule, the agency projected that only 36 ACOs will leave the program by 2026 because of the higher savings rates.
Glaus said in a Dec. 21 statement that allowing for low-revenue ACOs to not assume risk for three years was positive, but the CEO remained concerned about only allowing most ACOs to avoid risk for only two years.
Conflicting data about savings
CMS Administrator Seema Verma has said the shared savings program needs to force ACOs to assume more risk at a faster rate for the program to generate more savings.
Data released from the agency in August showed that the program saved $1.09 billion in 2017, with approximately 92% of the 472 ACOs not assuming risk. Even after savings were shared with provider groups, CMS saved a net total of $313.7 million in 2017.
The National Association of Accountable Care Organizations debated savings figures from CMS in a December report that found ACOs have saved a total of $2.66 billion and a net total of $660 million since 2013, the first full year of the program. However, CMS estimates that ACOs have saved a total of $1.6 billion and generated a net loss of $384 million since 2013, according to the report.
Such savings are dwarfed by Medicare spending on benefits, which was more than $700 billion in 2017, according to the nonpartisan Kaiser Family Foundation.