trending Market Intelligence /marketintelligence/en/news-insights/trending/XJ-o30b-RpoECs7TXcmYnw2 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

US provider groups criticize proposed changes to ACO shared savings program

Blog

COVID-19 Impact & Recovery: Healthcare Outlook for H2 2021

Video

Climate Credit Analytics: Linking climate scenarios to financial impacts

Blog

Global M&A Infographic Q1 2021

Blog

Q1 2021 Global Capital Markets Activity: SPAC IPOs, Issuance in Consumer Discretionary Sector Surge


US provider groups criticize proposed changes to ACO shared savings program

A new proposed rule change for the accountable care organization shared savings program is already receiving criticism from healthcare provider associations, with one even claiming the changes would create havoc and cause ACOs to quit the program.

The National Association of ACOs, a nonprofit organization that represents the groups of healthcare providers, came out strongly against the proposed rule hours after it was announced by the U.S. Centers for Medicare and Medicaid Services.

The organization called the proposal "misguided" in an Aug. 8 press release and said it would "upend the ACO movement by creating havoc with a significant overhaul introducing many untested and troubling policies."

CMS' proposed rule would dramatically change the structure of the shared savings program by eliminating the low and zero risk tracks ACOs can choose. The changes would also require ACOs to assume more risk in a shorter amount of time.

The agency estimates Medicare savings would total $2.2 billion over ten years under the proposed rule.

ACOs were established by the Affordable Care Act in order to take a more holistic approach to the healthcare process. Instead of billing a patient throughout different steps of treatment, an ACO would bring together providers like physicians and hospitals and charge patients according to the total amount of care given.

There are currently 561 ACOs and over 10.5 million beneficiaries participating in the ACO shared savings program, according to CMS.

The first group of ACOs was created in 2012 and 2013. The shared savings program allows ACOs to receive a percentage of their Medicare savings back by voluntarily participating.

Part of the system requires ACOs to assume upside risk by having to make payments back to Medicare for rising costs. The program was structured so that ACOs that took more risk would receive a higher percentage of savings. Under the current system, ACOs could avoid assuming risk for up to six years. This time frame would be limited to two years under the new rule.

Changes to the current three-track system

ACOs make a three-year commitment and are organized according to three tracks: Track I is zero risk; Track II is low risk and Track III is the highest risk. Currently, there are 561 ACOs participating in the program and 82% are enrolled in the zero-risk track.

The agency's proposed rule would eliminate Tracks I and II and rename Track III to the ENHANCED track, which is a five-year commitment with ACOs assuming the most risk immediately.

The proposal would also create a BASIC track that allows ACOs to continue to save money for keeping costs low and avoid having to make payments for rising Medicare costs for two years. After the first two years, ACOs would assume more risk incrementally over the next three years.

Clif Gaus, president and CEO of NAACOS, said these changes might reduce participation.

"It's naïve to think that ACOs that aren't ready can be forced to take on risk, given the program is voluntary," Gaus said in a statement. "The more likely outcome will be that many ACOs will quit the program."

NAACOS pointed to a survey it conducted and released in May to support this statement. The survey collected answers from 43% of the original 82 ACOs that were still in the Track I program. Of those, 71% said they were likely to leave as a result of having to assume more risk.

CMS estimates that 109 ACOs would leave the program by 2026 under the new rule.

Enrollment Periods

In order to provide time for ACOs to enroll in the new system if it is finalized, CMS has moved the next enrollment date from Jan. 1, 2019, to July 1, 2019. After the first year, the annual enrollment date will move back to the beginning of each year.

For participants whose enrollment period would end Dec. 31, CMS is allowing a six-month extension beginning Jan. 1, 2019. All savings and payments will be prorated, according to CMS.

Tom Nickels, executive vice president of the American Hospital Association, a national organization of healthcare providers, also questioned the proposal by CMS to have ACOs assume more risk.

"The proposed rule fails to account for the fact that building a successful ACO, let alone one that is able to take on financial risk, is no small task; it requires significant investments of time, effort and finances," Nickels said in a press release.