Pathways to Success for Medicare ACOs: Balancing risk and reward

August 23rd, 2019 / By Gretchen Mills

In 2011 the first 32 Medicare ACOs were announced under the CMS Pioneer ACO program. Since then, CMS has made multiple modifications to the program.

Initially, most organizations chose to participate in the Medicare Shared Savings Program (MSSP) Track, one program with no downside risk. With the Pathways to Success program, CMS is now requiring that all participants take downside risk over a period of five years. There was speculation that this requirement would lead many organizations to drop out of the ACO program. The initial class of applicants to Pathways to Success as of July 1,2019 is lower than in previous years. However, there will be another round of applicants in six months in January 2020.

I had an opportunity to speak with someone familiar with the National Association of ACOs member database who observed some organizations switching from the MSSP ACO program to the Bundled Payments for Care Improvement (BPCI) program, essentially maintaining a presence in the Medicare value-based care programs while being more targeted in their approach.  I’ve also heard that the initial class of relatively experienced Pathways ACO applicants is accepting higher risk above that required by the Pathways program and based on a larger existing membership base.

There are two tracks under the Pathways program: The Basic, for new and less experienced ACOs and the Enhanced, for more experienced ACOs. CMS describes the two tracks as follows:

“(1) BASIC track, which would allow eligible ACOs to begin under a one-sided model and incrementally phase-in higher levels of risk that, at the highest level, would qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program, and

(2) ENHANCED track, based on the program’s existing downside risk sharing Track 3, which provides additional tools and flexibility for ACOs that take on the highest level of risk and potential reward.”

Here is the link to the CMS fact sheet with tables showing the risk levels assumed under each track.

CMS has made some significant improvements to the Pathways program, addressing long-standing and significant participant concerns.

First, it has adjusted its benchmark approach by setting organizational targets based on national and regional expenses as well as the individual organization’s performance.  This addresses the concern of high-performing ACOs, which were being rated based on their prior historic performance rather than compared to regional or national standards, making it more difficult for those high-performing organizations to earn bonuses under the MSSP program.

CMS reports, ”Use of factors based on regional FFS expenditures in establishing the benchmark starting in an ACO’s first agreement period will allow the benchmark to be a more accurate representation of the ACO’s costs in relation to its localized market (regional service area) and should strengthen the incentives of the program to drive meaningful change by ACOs. Further, allowing agreement periods of at least five years, as opposed to [the prior MSSP] three-year agreement periods, should provide greater predictability for benchmarks by reducing the frequency of benchmark rebasing, and therefore provide greater opportunity for ACOs to achieve savings against these benchmarks.”

Additionally, CMS is allowing Pathways ACOs to prospectively enroll beneficiaries into their ACO. This allows the ACO organization to proactively engage their enrollees with activities like health assessments such as a Medicare Advantage plan.

CMS says,” ACOs will have the flexibility to elect prospective assignment or preliminary prospective assignment with retrospective reconciliation prior to the start of each agreement period, and to change that selection for each subsequent performance year of the agreement period.”

CMS offers additional flexibility:

  1. Telehealth: Beginning January 1, 2020, eligible physicians and practitioners in applicable ACOs in performance-based risk tracks will receive payment for telehealth services furnished to prospectively assigned beneficiaries, even if the otherwise applicable geographic limitations are not met, including when the beneficiary’s home is the originating site.

  2. SNF 3-day waiver: ACOs in performance-based risk within the BASIC track’s glide path or under the ENHANCED track will be eligible to apply for a SNF 3-day rule waiver, regardless of their choice of prospective assignment or preliminary prospective assignment with retrospective reconciliation, to support ACO efforts to increase quality and decrease costs. We also amended the existing Skilled Nursing Facility (SNF) 3-day rule waiver to allow critical access hospitals and other small, rural hospitals operating under a swing bed agreement to be eligible to partner with eligible ACOs as SNF affiliates for purposes of the SNF 3-day rule waiver.

  3. Beneficiary Incentive program: Pathways ACOs approved to operate a beneficiary incentive program can provide an incentive payment of up to $20 to an assigned beneficiary for each qualifying primary care service that the beneficiary receives from certain ACO professionals.

  4. Supplementing claims-based assignment with an Opt-in methodology: CMS is developing policies for Pathways ACOs to elect an “opt-in” methodology. Under this approach, a beneficiary would be assigned to an ACO if the beneficiary “opted-in” to the ACO subsequent to being identified via CMS’ claims-based methodology. This addresses historic ACO participant concerns that many of their automatically enrolled beneficiaries were unaware of their ACO program enrollment.

  5. Finally, CMS is considering ways it can encourage coordination between ACOs and Medicare Part D prescription drug vendors.

While each organization has to weigh the pros and cons of participating in the Pathways ACO program, two things are clear: CMS is serious about requiring providers to assume downside risk in its value-based payment programs and is offering flexible options to make this approach more attractive to participants.

Gretchen Mills is manager of market strategy for populations and payment solutions at 3M Health Information Systems.