89 ACOs will join Medicare Shared Savings Program in January

The following information was recently published by Modern Healthcare.

One of Medicare’s largest attempts to overhaul how hospitals and doctors are paid will expand in January even as federal officials acknowledge the need to modify the program to sustain the interest.

The Medicare Shared Savings Program—a broad test of accountable care launched in 2012 under the health reform law—will add another 89 organizations in January. The additions will bring the total number of organizations in the program to 405 and help boost the number of Medicare enrollees who get care from doctors in ACOs to 7.2 million from 4.9 million.

Sean Cavanaugh, director of the CMS’ Center for Medicare, said in an interview that he viewed the growth as a sign of healthcare providers’ interest in new incentives for quality and efficiency. ACOs already in the program have also added more doctors. “We’re very excited,” he said.

But the program has met with some criticism from hospitals and doctors who say its rules have limited their efforts to manage the cost and quality of care, the two measures used to determine financial incentives.

The Shared Savings Program ties the financial incentives to the organization’s performance on quality targets. ACOs that succeed keep a share of their savings. After the first three years, they must also pay penalties if they fail to save money. Under an optional track, participants assume the risk of penalties in the first three years in exchange for a larger potential bonus. Only five of the current participants chose that option, and none of the 89 starting in January did so.

More than 200 organizations will decide soon whether to continue in the Shared Savings Program as their initial contracts expire at the end of 2015.

In an effort to prevent organizations from making an exit, the CMS and its Innovation Center recently introduced and proposed changes to Medicare’s accountable care initiatives with the hope of maintaining its rapid early expansion.

Earlier this month, the CMS proposed new rules that would allow ACOs to avoid the risk of penalties for up to six years instead of three years.

The CMS also asked ACOs how best to change the formula used to calculate how much ACOs save Medicare and what amount they may keep. And in October, the CMS proposed a new vehicle to help ACOs with capital investments to begin in 2016.

Cavanaugh said he hopes proposed changes will help “solidify growth” of the program, which officials would like to see as a permanent feature under Medicare. “We’re in this for the long haul,” he said. “This is not a quick hit to get some savings and run.”

Early ACOs have reported quality improvement, which benefits Medicare enrollees, Cavanaugh said. And greater savings will come in time as new ACOs gain experience with quality improvement and cost-control initiatives that will deliver results.

The first Medicare ACOs have produced uneven results so far. ACOs that began in 2012 and 2013 outscored other providers on 17 of 22 measures of quality. Of those 220 ACOs, however, just 1 out of 4 slowed the cost of care enough to earn bonuses. Medicare saved $417 million and the ACOs shared another $300 million. Quality performance among ACOs that earned incentive payouts was mixed.

But the sustained growth may come at the expense of the program’s goals: greater accountability. The longer period under one-sided risk could allow some participants to take advantage of the program to consolidate markets without delivering savings, experts warn.

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