NAACOS-Commissioned Report: ACOs and APMs Could Save CMS $270 Million Over Next Decade
The nationwide association dedicated to promoting the interests of the accountable care organizations (ACOs) operating across the U.S. healthcare system has sponsored research that validates the association’s contention that legislation recently introduced into Congress around ACOs and other alternative payment models (APMs), will save the Medicare program hundreds of millions of dollars a year.
The Washington, D.C.-based NAACOS (National Association of ACOs) announced on Aug. 18 the publication of a new analysis showing that ACOs and APMs could save the Centers for Medicare & Medicaid Services (CMS), which runs the Medicare program, $270 million over the next decade. As explained in the press release posted to its website on Tuesday, “At the request of NAACOS, the Moran Company used statistical modeling to replicate how the Congressional Budget Office (CBO) might “score” the Value in Health Care Act (H.R. 7791). The analysis found that the legislation could increase participation in ACOs, which have shown to lower Medicare spending, thereby creating more financial savings for Medicare than ACO and APM incentives in the bill, such as increased shared savings rates.”
The press release noted that, “At the request of NAACOS, the Moran Company used statistical modeling to replicate how the Congressional Budget Office (CBO) might ‘score’ the Value in Health Care Act (H.R. 7791). The analysis found that the legislation could increase participation in ACOs, which have shown to lower Medicare spending, thereby creating more financial savings for Medicare than ACO and APM incentives in the bill, such as increased shared savings rates.” It quoted the Moran Company’s report as stating that, "In its most recent final rule, CMS estimated that APM incentive payments for the 2020 performance year would total between $535 million and $685 million. While these payments are significant, we believe that they play a material role in driving participation in the sorts of ACOs likely to realize some of the higher levels of savings that CBO initially expected from the MSSP."
The bill, called the Value Act for short, strengthens the Medicare Shared Savings Program (MSSP) by updating the program to recognize and reward ACOs. Specifically, the bill increases shared savings rates, updates risk adjustment rules, eliminates the artificial distinction between "high" and "low" revenue ACOs, addresses ACOs' "rural glitch," and restarts the ACO Investment Model. The bill also reinforces the shift to value-based care by extending the 5 percent Advanced APM bonus for an additional six years, modifying the threshold to achieve that 5 percent bonus, and authorizing a study of the overlap of various Medicare APMs.
In the report, entitled “Value in Health Care Act: Improvement to Medicare’s ACOs and APMs: Fiscal Implications,” the Moran Company notes, among other things, the following:
> Our review of CBO’s score of the MSSP provisions of the ACA, along with various assessments of the savings achieved by ACOs to date, suggests that the savings that CBO envisioned as possible have not been fully realized thus far.
> The provisions of the Value Act could serve to make ACO participation more attractive to various provider groups, expanding the number of providers that join—and remain part of—ACOs in the future.
> If the Act is successful in expanding provider participation in ACOs, some of the shortfall between the current savings that have been achieved by ACOs and CBO’s prior projections could be realized—providing savings that could exceed the cost of increasing shared savings payment rates and other provisions of the Act that serve to increase payments to ACOs.
> At the same time, CMS has already taken steps to close some of the gap between current and projected performance in managing care and reducing cost, reducing the pool of savings available.
> Balancing all of these factors, our net assessment is that the legislation will result in $270 million in savings over the 2020-2029 scoring window.
> We caution, however, that to the extent that CBO believes that savings attributable to ACOs would be achieved without legislation, it could assign costs to some of the provisions of the bill that would offset these savings.
Looking at the Value in Health Care Act, the Moran Company report states that, “Based on the legislative text we have reviewed, we understand that the bill would require a number of improvements aimed at making ACO participation more attractive. These changes include:
> Increased Shared Savings Rates for Certain ACOs of five to ten percentage points relative to the current rates under CMS regulations.
> Increased Cap on Risk Adjustments. Current CMS regulations cap potential payment adjustments at 3%. The legislation would increase the cap on positive adjustments to no less than 5 percent, with negative adjustments of 0 percent to 5 percent.
> Removing Barriers to ACO Participation. The bill would eliminate distinctions in requirements between low revenue and high revenue ACOs, applying the regulations applicable for low revenue ACOs to all ACOs—while allowing less stringent requirements to be used if the Secretary decides the is appropriate. The bill would also allow participating ACOs to avoid shared losses or two-sided risk before the ACO has participated for at least 3 years in Medicare ACO programs.
> Making Changes to Benchmarks Used to Measure ACO Performance. The CMS decision to include ACO beneficiaries in the calculations of regional benchmarks used to measure ACO performance could, in the view of some stakeholders, dilute the value of performance incentives for some ACOs—particularly those in rural areas.
> Continuing Bonus Payments for Participants in Advanced Alternative Payment Models (APMs). Under current law, participants in advanced APMs receive a 5% bonus through 2024. In 2026, participants in Advanced APMs that meet certain requirements receive annual payment updates of 0.75%. The legislation would extend the 5% bonus until payment year 2030.
> Addressing Overlap in Value-Based Care Programs. The legislation would also require CMS to address potential confusion about overlapping APMs and create provisions to distribute savings for overlapping programs when CMS is testing temporary programs.
> Other changes designed to encourage participation. The bill would also make amendments to current statutory requirements to give CMS flexibility to set phase in timelines and other thresholds in ways designed to encourage participation in ACOs and APMs.
