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Jun 20, 2014

MedPAC Advises CMS to Make Critical Changes to its Medicare ACO Programs

Published

Jun 20, 2014

On June 16, MedPAC issued a letter to CMS, advising the agency to make critical changes to its two accountable care organization (ACO) programs—the Pioneer demonstration and Medicare Shared Savings Program (MSSP).

The letter addressed five specific issues.

To support Medicare ACOs in the near-term, CMS should:

  1. Update its beneficiary and spending benchmark methodologies to make MSSP more similar to the Pioneer program (e.g., using prospective methodologies to assign beneficiaries and determine benchmarks).  Additionally, CMS should eliminate the second stage attribution to specialists and not rebase benchmarks for efficient ACOs in the second agreement period.
  2. Shift quality measure focus from process measures to a small, targeted set of population-based outcomes measures.  

To ensure long-term, sustainable success of Medicare ACOs, CMS should:

  1. Ensure ACOs move to two-sided risk models as they gain experience.  Before this becomes mandatory, however, CMS should make spending benchmarks more equitable across ACO participants and support their beneficiary engagement efforts.  
  2. Provide ACOs with regulatory flexibility such as eliminating the SNF three-day inpatient stay requirement and facilitating the creation of ACO preferred networks.  
  3. Provide ACOs, especially those in two-sided risk models, with more freedom and tools to engage beneficiaries.

Relatedly, on June 17, Brookings released an Issue Brief outlining their concerns with the Medicare ACO programs.  The majority of the issues addressed echo MedPAC’s concerns, though they provided a few additional suggestions such as: 1) creating a “pre-qualification” stage so ACOs know their financial benchmark before participating, 2) allowing ACOs to exclude patients who opt-out of data sharing, 3) allowing beneficiaries to enroll in an ACO, and 4) adding more risk “tracks” in MSSP to allow ACOs with varying experience and goals to advance to different levels of risk.

As the first three-year cycle of Medicare ACOs ends in 2015 and CMS prepares for the next phase of ACOs, it is important that the agency revise critical components of its ACO programs.  This is especially important given growing evidence of program challenges.  Nine Pioneer ACOs left the program last year, only 25 percent of MSSP ACOs in the first two cohorts qualified for shared savings based on preliminary results, and a recent study found significant beneficiary leakage and turnover in Medicare ACOs.  

HHS is expected to release a proposed rule to potentially address these issues with the MSSP before the end of June.  That rule will apply to ACOs who join or renew starting Jan. 1, 2016.  

View MedPAC’s letter to CMS.

View Brookings’ Issue Brief.

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