August 10, 2018

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High Performing Systems Can Continue to Thrive in Medicare’s ACO Program under CMS’s New Proposal 

The CMS proposed ACO rule allows Medicare Shared Savings Program ACOs to continue to ease into taking on risk in their early years. Allowing these nascent organizations time to learn the ropes of value-based payment is critical to saving money and improving quality as the programs mature. Despite CMS’s claim that upside-only ACOs are costing the government money, this proposed rule ultimately endorses accountable care organizations as a driver of Medicare’s future.  

Track 1 by another name – CMS adopts a phased-in approach to risk. Despite significant rhetoric suggesting imminent action early this spring, CMS proposes a transition to risk that is both delayed and gentle when it begins. The proposed rule would create a new BASIC track to replace Tracks 1, 1+, and 2. The BASIC track would allow new ACOs to begin their operation on very similar terms to the existing Track 1, without the risk of making payments to the government. For new ACOs, this would be permitted for up to two and a half years – similar to the current length of an initial agreement period. After the no-risk beginning, the ACO would move along the glidepath into a two-sided risk arrangement with gentler terms than the already reasonable current Track 1+.  

Existing ACOs, including 2017 and 2018 starts, can complete their agreement period and continue at least one additional year without bearing risk under the new BASIC track – beginning a gradual transition to a Track 1+-like track in 2022. 

New, lower-risk options. The BASIC track, with a five-year transition, culminates in year five with a risk profile similar to Medicare’s current low-risk option, Track 1+. Years 1 and 2 (for new ACO participants) are no risk, while years 3 and 4 have risk capped at 1 and 2 percent of total benchmark spending, respectively, compared to 4 percent under today’s Track 1+ model (and 15 percent in the track 3 model). Combined with risk-sharing offerings available from Caravan Health, this transition will be very feasible for many health systems. 

Other important changes. The proposed rule, at 600+ pages, will take some time to understand fully. Among potential highlights:
  • CMS proposes to move to 5-year benchmark periods to provide greater stability 
  • New options to encourage beneficiaries to stay in the ACO for primary care services 
  • Reduced reporting burden for the Advancing Care Information/Promoting Interoperability requirements of MIPS 
These changes are all proposals and may be modified before finalization. We hope that CMS will streamline and simplify the framework when the rule is finalized. 
 
The chart below, adapted from the proposed rule, shows the potential shared savings and shared losses proposed by CMS.
 
BASIC (Replaces Tracks 1, 1+, and 2) ENHANCED
(Replaces Track 3)
  Level A and Level B
(one-sided model available up to 2 ½ years)
Level C 
(risk/reward)
Level D 
(risk/reward)
Level E
(risk/reward)
Shared Savings  1st dollar savings up to 25%; not to exceed 10% of updated benchmark 1st dollar savings up to 30%, not to exceed 10% of updated benchmark 1st dollar savings up to 40%, not to exceed 10% of updated benchmark 1st dollar savings up to 50%, not to exceed 10% of updated benchmark No change from Track 3. 1st dollar savings up to 75%, not to exceed 20% of updated benchmark
Shared Losses  None
Same as Track 1
1st dollar losses not to exceed 1% of updated benchmark
Lower risk than Track 1+
1st dollar losses not to exceed 2% of updated benchmark
Lower risk than Track 1+
1st dollar losses not to exceed 4% of updated benchmark, subject to QPP rulemaking 1st dollar losses not to exceed 15% of updated benchmark
Same as Track 3
 

Caravan Health recently hosted a webinar to discuss the proposed rule and its implications for your organization.


Watch the webinar here

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