The continuing evolution of the Medicare Shared Savings Program
The following is a guest post from CEO and Founder Dr. Farzad Mostashari and Health Policy Lead Travis Broome, Aledade, Inc.
A new administration has taken office, and like clockwork, we once again are debating the future of healthcare and Medicare.
This would have happened regardless of who won the election last November. Yet this year, the Medicare debate will be different as steps have been taken over the years, thanks to both political parties, to truly make Medicare sustainable. Specifically, the transformation of Medicare from a fee-for-service system in which doctors are paid for doing more “stuff” to a value-based one in which they are paid for better health outcomes.
A key part of this transformation is the Medicare Shared Savings Program (MSSP) in which accountable care organizations (ACOs) can care for Medicare beneficiaries, be paid for it, and if they save Medicare money, keep part of the savings. CMS recently announced that in 2017, 480 ACOs are enrolled in the program and they cover over 9 million Medicare beneficiaries, or about 23% of all beneficiaries in original Medicare. In just four years, the MSSP has grown to be half the size of Medicare Advantage.
This staggering growth does not happen without a concentrated, multi-stakeholder effort. The National Association of Accountable Care Organizations estimates that starting up an ACO costs on average $1.6 million, indicating that more than three-quarters of a billion dollars in private investment has been made in the MSSP ACOs. And, the government has been active in improving the program. Notably, CMS created a sustainable future for ACOs by transitioning over time to regional benchmarks to judge success. Then in 2015, Congress updated the entire Medicare payment program and put its stamp on the transition to value in its bipartisan MACRA legislation, a law whose success is very much tied to the success of the MSSP.
Despite this progress, more investment and more fine-tuning will be required if we are to strengthen the MSSP and use it to help power the transformation of Medicare to a value-based system.
First, CMS needs to tailor the risk for MSSP ACOs so that it is enough to motivate, but not sink a small practice. It’s critical that the risk small practices take on bears some relationship to the financial resources of the ACO and its members. If it’s too much so that a bad year that happens because of an external event – such as an epidemic or disaster – can sink even the most well-intentioned practice, then no one will enter into an ACO arrangement.
In MACRA’s Track 1+, CMS began to address this issue by capping downside at 8% of Medicare Part A and Part B revenue received by the members of the ACO. By connecting risk to the revenue ACO members receive from Medicare, CMS finally can determine what level of risk an ACO is actually taking and identify whether an ACO is in compliance for more than nominal financial risk. It’s an important change that opens the door for ACOs of all sizes and make-ups to continue their progression of taking more and more accountability of their patients. However, there are still improvements to be made in allowing ACOs to choose when to move into risk rather than having to wait till the end of three-year contract periods, and in providing greater rewards to motivate them to do so.
Second, we need an accurate way to measure whether or not an MSSP ACO creates value. The best way to do that is through a difference-in-difference approach. In this, the key question asked is: Did a Medicare beneficiary get better care at lower cost in the ACO than if that same Medicare beneficiary had not been in the ACO? To get closer to this difference-in-difference approach, CMS needs to move away from national inflation updates and artificial risk-scoring methodologies to regional inflation updates and direct risk scoring.
Third, CMS should continue to seek to simplify the program. For example, while we appreciate the work that was done in Track 1+, it is quite possible all of the same benefits could have been accomplished by adding just a few lines of changes to Track 2 without the need to create a whole new track. This would have been both simpler and created a better business case for physicians to move towards risk.
Finally, CMS should create a path and a roadmap for transitioning from MSSP to capitated payments under Medicare Advantage. The Next Generation ACO model developed by the Innovation Center provides a model for how different segments of medical costs could be capitated over time, with CMS continuing to process claims and providing stop-loss reinsurance. The key missing piece in the Next Generation ACO framework is a transition of the benchmark from purely historical to risk-adjusted Medicare Advantage premiums.
The MSSP wouldn’t be where it is today without the private investment and innovation that has occurred, and without the willingness of CMS to evolve the program as the ACO/CMS partnership matures. If CMS continues to improve upon the program, the investments will be made, and ultimately, Medicare will be strengthened for the benefit of us all.