SummaryNew analysis from Avalere finds that more accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) have assumed downside risk as the program matures, with the greatest growth over the past 3 years.
In the MSSP’s early years, most ACOs participated in upside-risk models, in which CMS paid ACO bonuses for good financial performance but ACOs that performed poorly did not have to absorb any of the financial losses.
The MSSP is Medicare’s largest alternative payment model (APM) and is part of a broader government effort to shift healthcare payments away from a fee-for-service model toward a value-driven payment and delivery approach. From 2012 to 2017, fewer than 10% of ACOs in the MSSP assumed downside risk each year. However, in recent years, there has been a notable increase in the number of downside-risk ACOs. Today, 37% of ACOs in the program are in downside-risk arrangements.
The increase in downside-risk ACOs is due to a variety of factors, including ACO experience, new downside-risk track options, and a recent overhaul of the program. In December 2016, the Centers for Medicare & Medicaid Services (CMS) announced a new downside-risk model with less financial risk: the Track 1+ model. Fifty-five ACOs joined the Track 1+ model in 2018, doubling the number of downside-risk ACOs. In December 2018, CMS overhauled the MSSP via the Pathways to Success final rule, which required ACOs to more quickly transition to downside risk. In July 2019, the start of the Pathways to Success changes, the percentage of downside-risk ACOs increased from 19% to 29%.
In recent years, CMS and the Center for Medicare & Medicaid Innovation (CMMI) have modified and created new APMs that require providers to accept downside risk immediately or after a shorter transition period than earlier APM approaches. The quicker transition to risk is a policy-driven effort to reduce Medicare costs by requiring providers and APM participants to share financial risk with CMS. However, a previous Avalere analysis found that risk appears to be a less important factor than experience in predicting MSSP ACO success. It remains undetermined if downside risk will create the appropriate incentives to reduce Medicare costs. As the growth in downside-risk ACOs continue, future results will provide insight into whether risk is a meaningful factor in ACO success.
Avalere used the Medicare Shared Savings Program Accountable Care Organizations Performance Year 1 Results, 2014, 2015, 2016, 2017, and 2018 Shared Savings Program (SSP) Accountable Care Organizations PUF, and Performance Year 2019, 2019 (as of July 1, 2019), and 2020 Medicare Shared Savings Program Accountable Care Organizations files.
To receive Avalere updates, connect with us.
Find out the top 2020 healthcare trends to watch.
produces measurable results. Let's work together.