by Gregg A. Masters, MPH
The Center for Healthcare Quality and Payment Reform just released ‘How to Fix the Medicare Shared Savings Program‘ with lead author and long term managed health care industry veteran Harold D. Miller, its President and CEO. 
Some six (6) years into the Affordable Care Act (ACA) provisions specific to Accountable Care Organizations (ACOs) the results remain mixed at best, and like the serial tweaks made to the Medicare Advantage Program, now covering some 30% of Medicare beneficiaries, the underlying ACO structural characteristics and enabling health policy regulations remain ‘on the come‘ for this still nascent and evolving delivery system model.
For the many critics of ACOs as a form of an ‘HMO lite‘ in the fee-for-services Medicare market, with none of the channeling characteristics commonly associated with HMOs, this comes as no surprise.
In this just released report, Harold Miller weighs in on the fix he sees essential for the program to achieve it’s cost containment and quality improvement objectives. The executive summary is posted below and the full report is available here.
Executive summary:
Rather than generating savings as expected, the Medicare Shared Savings Program (MSSP) has created losses for the Medicare program for four years in a row.
Calculations by the Centers for Medicare and Medicaid Services (CMS) appear to show that ACOs with downside risk produce higher savings than the “upside-only” ACOs. However, Medicare actually spends more per beneficiary in the downside risk ACOs than in other ACOs, with no difference in quality. Moreover, ACOs that have moved to the downside risk tracks have saved less after doing so.
The risk adjustment and benchmarking formulas used by CMS can penalize ACOs that serve higher-need patients and patients living in rural areas. The greater savings attributed to downside risk ACOs may have more to do with differences in the types of patients they see than differences in the way they deliver care.
Concerns about the problems with the risk adjustment and benchmarking methodologies in the MSSP have made many ACOs unwilling to enter the downside risk tracks. Requiring all ACOs to move to downside risk could force successful ACOs to leave the program, thereby reducing Medicare savings and harming the quality of care for millions of beneficiaries.
There are other options for modifying the Medicare Shared Savings Program in order to increase Medicare savings, including dropping ACOs from the program if they fail to achieve savings after two consecutive years, reducing shared savings payments for ACOs that incur losses before achieving savings, reducing the shared savings rate below 50% for Track 1 ACOs, and/or enabling ACOs to take accountability for the specific types of services they can control rather than placing them at risk for
total Medicare spending.Neither shared savings nor shared risk payment models solve the fundamental problems in the fee-for-service payment system. As a result, it is unlikely the MSSP will ever result in significant savings or improvements in quality, and it has the potential to harm patients by rewarding providers that withhold necessary services.
Instead of continuing to modify the Medicare Shared Savings Program, CMS should focus on implementing Patient-Centered Alternative Payment Models that provide the resources physicians, hospitals, and other providers need to successfully address their patients’ healthcare needs while holding the providers accountable for those aspects of spending and quality they can control.
Twitter Dialogue on ACO Results Reported
Today on twitter there was a representative exchange from both sides of the ACO narrative which I’m posting below for context:
4-yr net loss to CMS thru ACO’s: $380,000,000 NB: CMS spends MORE per beneficiary on ACO’s that participated in downside-risk than “upside only” ACO’s. Full @PaymentReform report here: hc4.us/CHQPR @2healthguru @Farzad_MD @AledadeACO @fsgoldstein #hcldr
True! Yet innovation is not cheap + anything even moderately at scale in Medicare/Medicaid is definitely not cheap. Questions while innovating: What did we learn? How can we inform our future efforts? @policywonk1
I would argue that the evidence is already in b/c the trajectory we’re on is easy to see – and forecast. Just labeling newer efforts of ‘cost containment’ as ‘innovation’ is like rearranging (in this case expensive) deck chairs.
We’ve been singing from the same hymnal for quite a while Dan. As you know, the trajectory I often share is Josh Libresco’s testimony to @CADMHC. Embedded in ’12 Steps to the #TripleAim or Value Based Healthcare’. c @nickisnpdx #hcldr
But that may be the same hymnal in title only: HC Reformation I don’t think #FFS is “an addiction” that needs #ACO or #VBP rehab and the evidence that #FFS works reasonably well around the world is compelling. We don’t need single-payer, but we absolutely need single-pricing.
A Sampling of ACO Leadership on the Center for Healthcare Quality and Payment Reform Report and Associated Remedies
Our Nation’s move from volume to value based care will not occur in one day. Transformation of our complex, misaligned and disjointed healthcare system will take the hard/smart work, dedication, risk and financial support from key stakeholders, including the largest being CMS. Transition to risk based/value based care is not an option, it is a necessity not only to save but successfully advance the US Health Care system. It is easier to point out problems, than to roll up our collective sleeves and develop innovative and outside the box solutions. – Alex Foxman, MD, FACP, CMO, President and Co-Founder National ACO, LLC
The state of Florida is a great example of ACOs having success. I believe this is true because we already have a vibrant managed care market. Medicare Advantage makes a lot of people money but has not proved it has saved any. It has only served to risk adjust a population for higher revenues. ACOs, as originally designed, may only be ‘transitional’ but they are an important step toward shifting from volume to value payment models. We should expect the models will continue to evolve. This shift is a jog not a sprint. The goal and focus should be on the “shift” not which model and flavor is the stepping stone along the way. – Nicole Bradberry, CEO and Chair of Board, Florida Association of ACOs
ACOs in Florida reduced expense by $365,809,069, earned shared savings payments of $178,447,886 with a net benefit to the Medicare trust fund of $187,361,183. MSSP is working in Florida! We’re concerned that the success of the MSSP is being evaluated based aggregate ACO performance which includes ACOs who are not putting forth adequate effort. I know of at least 7 ACOs that have 2 or less employees. That’s not enough effort to make ANY business model work! Unfortunately their results are tabulated with others and cause the program to be inaccurately evaluated. We look forward to the required transition to downside risk as it will require those without much commitment to drop out. If you drop the minimum effort ACOs, we expect the aggregate ACO results will look different. This is PY 2016 data… – David Klebonis, Chief Operating Officer, Palm Beach Accountable Care Organization & Chief Operating Officer, South Florida Accountable Care Organization
One definition of literal fantasy requires only that we accept a single non-reality, after which the rest of the story becomes quite plausible. If that be the case, Mr. Miller has written a Best Seller. His entire analysis assumes that the CMS “Shared Savings” formulas reflect reality, when those of us that have really crunched the numbers know this is far from the truth.
Intentionally or not, CMS has built significant savings for the Trust Fund into the benchmark methodologies for both MSSP and NextGen. These range from the actuarial fallacies inherent in continuous attribution, successful ACO market share effects on the “Benchmark”, National Efficiency ratios that divert Benchmark dollars from high attribution areas to low attribution areas, risk score caps, automatic “discounts” and much, much more.
Still, it seems that our Florida ACOs consistently overcome the increasing headwinds and succeed. Additionally, CMS recognizes the problems in their own Benchmarking models and has tweaked these year after year, including the latest Proposed Rule submitted by MSSP to OMB earlier this month. I fear Mr. Miller is whistling past the graveyard on this one.
For a glimpse into a few of the methodology problems, see ‘Regional Benchmarking or Regional Bonus? Sustainability in the Medicare Shared Savings Program‘. – Richard J. Lucibella, CEO, Accountable Care Options
A Continued Search for Answers and Business Models
Weigh In
acowatch.me 
ACOs in Florida reduced expense by $365,809,069, earned shared savings payments of $178,447,886 with a net benefit to the Medicare trust fund of $187,361,183. MSSP is working in Florida! We’re concerned that the success of the MSSP is being evaluated based aggregate ACO performance which includes ACOs who are not putting forth adequate effort. I know of at least 7 ACOs that have 2 or less employees. That’s not enough effort to make ANY business model work! Unfortunately their results are tabulated with others and cause the program to be inaccurately evaluated. We look forward to the required transition to downside risk as it will require those without much commitment to drop out. If you drop the minimum effort ACOs, we expect the aggregate ACO results will look different.
This is PY 2016 data…