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Transform Care June 15, 2015

ACO Buzz: MSSP Changes Will Help Keep More Providers in the Game

Partner, Health & Life Sciences, Oliver Wyman

Earlier this month, the Centers for Medicare & Medicaid Services (CMS) released a final rule outlining changes to the Medicare Shared Savings Program (MSSP) that had been preliminarily proposed earlier this year. Oliver Wyman’s Tomas Mikuckis explains why Accountable Care Organizations (ACOs) may be finding their decision calculus richer in options but increasingly complex:

As we had outlined in our earlier review, continued changes to the MSSP program would be critical to maintain the viability of the program, and based on the early guidance, it appeared that many of the changes were moving in the right direction. So how did things turn out?

The final rule reflects the balance between encouraging participation and encouraging improvement. Participation is encouraged by increasing the number of options in the MSSP program and by extending Track 1. An aggressive push to greater risk could have caused more ACOs to consider leaving the program: Based on first-year MSSP performance data, only a quarter of ACOs were receiving shared savings payments. At the same time, achieving better performance is encouraged by some of the more attractive changes that are only available to ACOs in the higher-risk tracks.

Overall, the final rule retains many of the changes initially proposed, with a few noteworthy modifications. The name of the game appears to be flexibility, with the MSSP program developing an increasing palate of options for providers to choose based on their appetites for performance and risk:

  • Track 1 extended: ACOs may now choose to continue in Track 1 for a second term. Unlike in the initial rule, there is no penalty for doing so, and ACOs can maintain a 50% shared savings rate. For providers, this is good news, as it allows those not yet ready for other tracks to stay in Track 1.
  • Track 3 added: A higher-risk, higher-reward Track 3 was added, with up to 75% risk share for ACOs choosing this track. While we anticipate that the uptake will initially be low, this addition is a clear signal of the direction in which CMS is taking the Medicare program and shows a further willingness to share upside for providers able to take more significant risk in managing the population. Unlike the other tracks, ACOs in Track 3 benefit from some additional features, including the ability to apply for a waiver from the three-day Skilled Nursing Facility (SNF) rule and to have prospective assignment of beneficiaries to the ACO.

Additionally, a number of the most critical adjustments to the program that we highlighted have been maintained. In general, all of these will likely be heralded as “good news” by providers:

  • Improved assignment algorithm: There were a number of challenges ACOs faced in the current assignment algorithm, in particular around the use of services provided by non-physician practitioners such as registered nurses. The final rule addresses many of these core issues, which creates significant value for ACOs and ensures they are benefiting from the full range of ancillary providers they are partnering with to provide care for their attributed members. For more advanced ACOs looking to get creative, this opens up the possibility of obtaining attribution through retail clinics or other models if they’re included in the ACO.
  • Data sharing: The final rule also streamlines some of the data sharing processes between CMS and ACOs to enable providers to more easily access patient data, including eliminating member letters, which had previously created substantial administrative burdens.
  • Simple renewal process: The renewal process will be streamlined, easing the ability for ACOs to stay in the program.
The final rule reflects the balance between encouraging participation and encouraging improvement. – Oliver Wyman’s Tomas Mikuckis

Some of the changes in the final rule, maintained from the original, may likely continue to be seen as negative by some ACOs:

  • 3-day SNF waiver: This was not adopted for the lower-risk tracks, which some ACOs have observed limits greater flexibility in how patient care is managed.
  • Attribution: Prospective attribution was only included for Track 3 as well, which most see as a better model of patient assignment.
  • Risk adjustment model: The risk adjustment model did not see any significant changes, which in the current construct ratchets down ACO opportunity year-over-year. For more advanced ACOs, this may be a key reason to consider the Next Generation ACO model instead.

In addition to these pros and cons, at least one big open question remains:

  • Benchmark model: The final rule opted for alternative benchmark models, re-weighting the three years equally and incorporating shared savings payments from benchmark years. While most ACOs will view this as an improvement, CMS indicated exploring a regional benchmark model later this year. From our perspective, changes in this methodology are critical to maintain long-term sustainability of MSSP and ensure that already high-performing ACOs are not penalized for their strong starting points.

Ultimately, benchmarking and target-setting methodology should reward a mix of both absolute performance and year-over-year improvement. The published rule makes us optimistic, with guidance that the proposed considerations around regional trends and future savings would make it into the final methodology. This will be a space to watch over the coming months.

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