In late August the Centers for Medicare and Medicaid Services (CMS) released the 2014 results for the Medicare Shared Savings Program (MSSP) of accountable care organizations (ACOs).
A variety of analyses have come out ranging from somewhat critical to more optimistic to more mixed and everywhere in between.
A few important observations are that ACOs that have been in the program longer are doing better than those that are more recent entrants; a majority of ACOs are still not qualifying for bonus payments; quality scores have some real impact on ACO's savings; and it's unclear whether the net effect of the program is saving Medicare money. This broad analysis is relevant to understanding the current status of how accountable care is developing, but its true importance lies in what direction it gives to the MSSP ACO program in order to remain viable. Here are three keys that I believe CMS must address to maintain the viability of the Medicare ACO program.
- Move to a regional focus. CMS has been particularly adamant, to date, when it discusses ACOs to reiterate that it is a national program and has set national standards and expectations. The problem is that health care is a local industry with substantive differences between markets. CMS must maintain its vision of collectively improving the entire system while acknowledging individual markets with localized benchmarks and adaptations that will facilitate the local development of ACOs. CMS already uses Medicare Administrative Contractors (MACs) with regional responsibilities and a similar model could be used to manage MSSPs and customize them given the needs of the region.
- Recognize structural differences between providers becoming ACOs. ACOs are often viewed as a somewhat homogenous group of provider organizations that are collectively seeking to manage the health care needs for a defined population. The reality is that while ACOs have similar goals, they differ markedly when it comes to how they are organized and managed. Providers running ACOs run from small, newly-formed independent physician associations (IPAs) operating exclusively in outpatient clinics with minimal collective oversight to integrated delivery networks (IDNs) that have existed for decades, own and run hospitals, clinics and post-acute care facilities, and have strong centralized leadership. Not only are the newly-formed IPAs starting form a different place than the established IDNs but they are also striving for different goals – they each need their own roadmap forward. CMS has created the Health Care Payment Learning and Action Network (LAN) to help evaluate and identify more of how to structure an ACO and manage populations, which is a good start. But, without explicit recognition regarding the variety of organizations that are participating and creating customized solutions for a variety of organization types, accountable care will be slow to be adopted and many organizations will fail. At Leavitt Partners, we have identified important differences among the providers becoming ACOs but much work remains to be done to learn how different organizations should make the transition toward accountable care.
- Shift the conversation from payment reform to delivery reform. CMS, by its nature, is primarily a health insurance payer that focuses on reimbursing for rendered services. Because CMS is in the business of paying for health care and not delivering health care, it makes sense that CMS focus on reimbursement and payment changes. Looking at the history of the MSSP includes a laundry list of payment issues including attribution, benchmarking, rebasing, risk sharing, and a litany of other payment-related concerns. While these are all important, focusing exclusively on the payment methodologies masks the real goal of accountable care, which is to provide better care at a lower cost for patients. To achieve this objective ACOs need to deliver care differently, not just get paid differently. While payment reform is helpful to encourage changes in how care is delivered, it is neither necessary to make those changes nor sufficient – all MSSP ACO providers are being paid differently but most have failed to see meaningful improvement in the total cost of care. While CMS has limited policy and payment levers to pull to incent providers to behave differently, it has full power to shift its conversation from changing health care payments to changing health care delivery through changes to payments. CMS exists for the benefit of its beneficiaries and from a patient's perspective how care is delivered is ultimately what matters most.
Throughout the healthcare system there is considerable interest in the broader movement toward accountable care whether it be through publicly funded models or private arrangements. And while Medicare represents a minority of total lives covered under accountable care contracts, it is the largest and most visible backer of the model. The success of the MSSP will not dictate the long-term future of accountable care in America, but it will influence short-term adoption and expansion of public and private ACO models. Each of these three issues can be directly addressed by CMS – the ball is in their court to see how they respond.
David Muhlestein is Senior Director of Research and Development at Leavitt Partners. He directs the study of accountable care organizations through the LP Center for Accountable Care Intelligence and leads the firm's quantitative evaluation of health care markets. He is an expert in using policy analysis, predictive modeling and applied analytics to understand the evolving health care landscape. Dr. Muhlestein earned his doctorate in health services management and policy, JD, MHA and MS from The Ohio State University and a BA from Brigham Young University.
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