You may have heard the expression:
‘The more things change, the more they stay the same.’ Jean-Baptiste Alphonse Karr
But what does this really mean?
One interpretation is ‘change is the only constant‘ or alternatively not much new here – just old ideas rediscovered? Yet if you frame the assertion to measure where we once were to where we are now or appear or to be going in the future, an answer is revealed if you link the question to the ‘deja vu’ phenomenon, i.e., ‘we have all be here before‘ courtesy of Crosby, Stills, Nash and Young.
Much recent ‘innovation‘ in health care delivery and financing (MACRA, APMs, etc.) seems poised to re-visit the provider risk assumption days that characterized the rapid growth of HMOs in the 80’s and 90’s. This period witnessed the variable download of clinical risk from partial to global capitation or percent of premium contracts to clinical entities including IPAs (independent practice associations), primary or multi-specialty medical groups or their ‘virtual’ cousins (medical groups without walls), all typically stitched together and administered by MSOs (management services organizations).
ACO 1.0: A Toe in the Water of Risk
When Accountable Care Organizations were first introduced as the ‘new, new shiny thing‘ (and ACO acronym) added to the long list of entrants in the managed competition space (IPAs, MSOs, PHOs, HMOs, PCMH, TPA, ASO, OWAs, etc.) following passage of the ACA they were characterized by this author as ‘HMO-lite’ or ‘too little too late’ initiatives since they often lacked the infrastructure, incentives, capital and authority to channel utilization and manage the costs associated with the ‘attributed‘ population for which they were ‘accountable’. While CMS offered two ACO model tracks in the Medicare Shared Savings Program (MSSP) one included gain sharing (upside) only, the other track included capped downside exposure for the ACOs performance, the vast majority (91%) of ACO participants elected upside gainsharing only.
To address and encourage participation from more experienced care management operators (typically Medicare Advantage participants) and other risk savvy medical groups, IPAs or physician networks entered the ACO market via the pathway then designed for more mature risk bearing entities via the Pioneer ACO program.
In the years that followed, a majority of the original cohort exited the Pioneer program due in part to the mechanisms to channel and proactively manage the assumed risk while enhanced when contrasted with the Medicare Shared Savings Program (MSSP) provisions still didn’t meet the needs of responsible risk management. Three (3) years in only a minority remained in the program as noted by CMS: ‘The Pioneer ACO Model began with 32 ACOs in 2012 and concluded December 31, 2016 with 8 ACOs participating,’
During the launch of the ACO program writ large, CMS has remained open to comments from industry participants and has continually tweaked the formula to better align with the policy commitment to pivot Medicare from a traditional fee-for-service chassis and series of incentives to one based on a value framework.
CMS Ups Ante Accelerating Rate of Risk Assumption by Providers
In January 2015, then Secretary of Health and Human Services (HHS), Sylvia Burwell outlined ‘Federal policy‘ and for the first time put a measurable stake in the ground to scale the pivot from fee-for-service to value based healthcare with concrete milestones and an associated timeline. The policy outlined seemingly scalable goals via linking 30% of traditional fee-for-service Medicare payments to quality or value through ‘alternative payment models‘ (APMs) including Patient Centered Medical Homes (PCMHs), ACOs or ‘bundled payment arrangements‘ (BPHCI) year end 2016, scaled up to 50% of payments year end 2018. For details see: ‘HHS Sets Specific Targets and Timelines for Alternative Payment Models and Value-Based Payment‘.
Now fast forward to 2017. First introduced in 2016 we’re approaching the start date of a ‘new and improved‘ ACO tagged the ‘next generation ACO model‘ now embracing an ‘all in population based payment‘ (AIPBP) option that ZERO’s out fee-for-service payments.
Between ACO operating results, significant provider community feedback via several Notice of Proposed Regulations‘ (NPRMs) and what some may say is simple commonsense, this latest iteration of the Next Generation ACO model is looking more and more like their predecessor risk bearing operators in the 80s and 90s.
As CMS notes:
Building upon experience from the Pioneer ACO Model and the Medicare Shared Savings Program (Shared Savings Program), the Next Generation ACO Model offers a new opportunity in accountable care—one that sets predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality standards of care.
The Next Generation ACO Model is an initiative for ACOs that are experienced in coordinating care for populations of patients. It will allow these provider groups to assume higher levels of financial risk and reward than are available under the current Pioneer Model and Shared Savings Program (MSSP). The goal of the Model is to test whether strong financial incentives for ACOs, coupled with tools to support better patient engagement and care management, can improve health outcomes and lower expenditures for Original Medicare fee-for-service (FFS) beneficiaries.
The Bottom Line
We (i.e., ACO industry operators, associated management companies’ including venture financiers, CMS and supplier stakeholders) are tweaking the ACO formula via a range of models that materially engage the provider AND payor communities as co-creators of a sustainable healthcare ecosystem embracing value and outcomes as the ‘dependent variable’.
With the uncertainty surrounding the future of the ACA and it’s likely ‘Trumpcare’ or ‘RyanCare’ replacement options, some argue ACOs are in an unspoken ‘safe harbor’ of sorts. Yet, much detail remains to be added before that picture is functionally revealed. Here at ACO Watch we’re proceeding on the assumption that ACOs or the accountable care industry collectively, are not likely to disappear anytime soon. So we’re posting some resources below:
For those pondering their 2018 ACO participation options, CMS‘s Center for Medicare and Medicaid Innovation (CMMI) issued an RFA (request for applications) and activated the application portal here.
Finally to complete the picture CMS is hosting a series of open forums to provide an overview into the Next Generation ACO model offering information on the required letter of intent and on-boarding process in general on these dates as follows:
- March 14 from 4 – 5 pm ET — Application Overview and Participating Provider Lists
- March 28 from 3 – 4 pm ET — Benefit Enhancements Overview
- April 11 from 4 – 5 pm ET — Overview of Population-Based Payments & All-Inclusive Population-Based Payments;and
- April 15 — Deep Dive: Completing Your Next Generation ACO Model Participant List
For the complete list of available CMS ACO resources, click here.
And finally for those who desire an overview of the ACO theater, check out the dated but informative: ‘Accountable Care Organization (ACO) 101: A Brief Course by Neil Kirschner, Ph.D. Director, Regulatory and Insurer Affairs, American College of Physicians (ACP).