Last week, CMS published proposed changes to the Medicare Shared Savings Program (MSSP), including modifications to how accountable care organizations' cost benchmarks are re-calculated each year. If finalized in its current form, ACOs could see some big changes coming. Oliver Wyman’s Chief Medical Officer Bruce Hamory, with Engagement Manager Lucy Liu and our Provider team, offers a perspective on the implications, intended or otherwise:
1) Regional benchmark approach helps extend sustainability of the program and greater incentives for strong performers make it more fair overall
- The region-based model is a significant change to the program, and one that we believe will be valuable in ensuring the ongoing viability of the MSSP program. Rather than the current model, where ACOs must continually beat their prior year performance (which can become increasingly difficult if not unsustainable for top performers), the regional approach starts the transition to a county-level rate.
- The proposal calls for an ACO’s second- and third-year benchmarks to be re-calculated using not only the national FFS cost trend, but also regional FFS cost trends. Regions will be defined by counties, similar to Medicare Advantage and the Physician Group Practice demonstration sites. The second year re-basing will be 65%/35% national/regional; the third year will be 30%/70% regional.
- This means that the methodology sets the county rate using all beneficiaries in the county eligible for ACO assignment, so two ACOs operating in a given county would receive the same rate. For stronger performing ACOs, this creates larger incentives each year from beating the benchmark. If you’re great, your better odds compound each year. If you’re a low performer, and part of that is because you’re in a high growth region, your benchmarks become a little more forgiving. This further levels the playing field for external local factors that drive trend higher or lower, much of which is out of the immediate control of the ACOs.
2) Non-utilizers are finally taken out of the equation
- The proposed changes would set FFS benchmarks based on only beneficiaries eligible for ACO assignment, rather than all beneficiaries – effectively excluding the low- and non-utilizers who never see a PCP.
- As Niyum Gandhi, Chief Population Health Officer at Mount Sinai Health System, explained, “While a $10K patient might inflate to $11K, $0 always inflates to $0,” which was making the performance benchmarks highly stringent.
3) High-performing ACOs with large populations may be pressured
- Regional cost benchmarks will be based on all Medicare beneficiaries in the county, so all ACOs in that county have the same regional trend applied.
- CMS determined that since most ACOs’ assigned populations are far smaller than the overall FFS beneficiary population, this approach was preferred to customizing each regional benchmark by removing each ACO’s own beneficiaries. However, for a dominant ACO that makes up a large proportion of its region’s population, this methodology does not give the ACO due credit for its role in bringing down regional costs.
4) ACOs will start to behave more like MA providers
- Under the new rules, an ACO’s regional trend would be calculated using any counties where at least one beneficiary resides – and the median ACO spans 8 counties.
- Where your patients live starts to matter. If you get a patient from a county with higher cost trend, your benchmark trend will be more forgiving if more of your patients live in counties with high cost trend rather than lower cost trend. It might discourage ACOs from serving rural counties, where inflation tends to rise more slowly.