What Do CMS’s ACO Programs’ Results Really Mean? One Industry Observer’s View

On Sep. 17, the federal Centers for Medicare & Medicaid Services (CMS) announced that accountable care organizations (ACOs) participating in both the Pioneer ACO Program and the regular Medicare Shared Savings Program (MSSP) have so far generated more than $372 million in total program savings, while at the same time qualifying for shared savings payments of $445 million. The announcement came after CMS officials had studied the results of the efforts of the 23 Pioneer ACOs after two years of participation, and of the 220 MSSP ACOs, after one full year of participation.

What’s more, Pioneer ACOs showed improvements in 28 of the 33 quality measures involved in that program, and experienced average improvements of 14.8 percent across all quality measures, while MSSP ACOs improved on 30 of 33 quality measures in that program.

Those results were clearly positive for CMS officials, and many found them to be strong. Some industry observers, though, say it’s important to take a deeper dive and to look carefully at what’s transpiring in the ACO programs, before coming to any firm conclusions.  Among those is Tom Cassels, executive director, research and insights, at The Advisory Board Company (Washington, D.C.).

Tom Cassels

In a press release published the same day as the CMS announcement, Cassels said, “These results tell me that the ACOs with clarity of strategic purpose are winning. But,” he added, “the financial return required from providers to achieve these savings is not viable."

Also in that press release, Cassels made the following points:

• On Pioneer ACOs: The improved performance on beneficiary experience of care "meets my expectations," Cassels said. Many Pioneer ACOs have focused winning trust and engagement with their practices.
• On Medicare Shared Savings Program ACOs: According to Cassels, the strongest shared-savings program performers continue to be ACOs that have "shrunk to reliability." Or to put it more simply, Cassels notes that at these top ACOs, "high-performing physicians and practices are celebrated and low-performing participating practices drop out."
• On whether these programs will succeed: Almost one-third of Pioneer ACOs have left the program since it launched two years ago, and many Medicare Shared Savings Program ACOs have been concerned about the program's restrictions. However, Advisory Board experts say there's a deeper tension at play. "The acid test for me is not whether the ACO program survives," Cassels said. "But whether it's creating momentum for providers to organize and act differently, and if that will keep extending into the industry."

The next day, Cassels spoke with HCI Editor-in-Chief Mark Hagland about this important subject. Below are excerpts from their interview.

There have been naysayers and doubters all along. Do these results quash the naysaying, or do they only slightly dampen the naysaying?

The only important naysayers in my mind are Medicare beneficiaries who continue to choose wide-open, passive Medicare FFS versus these coordinated care programs. There will always be naysayers when there are big changes in Medicare. And FFS definitely creates winners and losers. And the ACO program creates a third category, which is organizations that are already low-cost, and are fighting against a benchmark that doesn’t reward them. So you have the conservative group, the transformational change agents, and then you have the high-value, low-upside coalition.

Let’s think about this from the perspective of Sharp HealthCare, one of the pioneers that moved out of the Pioneer program. They didn’t move out because the feasibility of delivering appropriate-cost, high-quality care was not part of their DNA or because that model was not desirable to enrollees. They moved out because the actual viability of the financial model of shared savings is not shared sustainable for them. What is sustainable is a robust Medicare Advantage program.

So they’re betting on Medicare Advantage as their vehicle?

Yes. It’s a better product than ACOs. There are limitations on what ACOs, whether Pioneer or MSSP, can do, how they can engage with beneficiaries—and really, the most important limitation is that beneficiaries don’t know that they’re making a choice. And it is very difficult to have a truly effective health benefit management program when beneficiaries aren’t a key part of the care team. And I haven’t come across a single ACO program that doesn’t yearn to get the beneficiaries more identifiable, to choose them, and …

Are the results announced yesterday about what you had expected?

The report yesterday is a very narrow picture of results, and largely from the perspective of CMS. If you are organizing a group of clinically integrated physicians to deliver a truly different service to beneficiaries, only two beneficiaries matter. One, are more beneficiaries choosing you this year than last year, and are the beneficiaries that chose us last year choosing to re-up? The actual income results released yesterday, taken in the context of the total Medicare revenue for these organizations, these are small numbers, and none of the providers expected them to do any better. What they’re really focused on is whether beneficiaries are enrolling and re-enrolling.

And we don’t know that, yet, right?

That’s correct. What I’d like to know is how many beneficiaries served within ACOs know that they are served and can communicate why they value this new model. And I have seen no national reports on that; in the limited research that we have done, I’d say it’s 60/40, that 60 percent of beneficiaries don’t even know yet that they’ve been attributed.

And that’s the real transformational change—the concept of Medicare as an administrative payment model that covers costs—from the beneficiaries’ perspective—that needs to turn into a vehicle for me to help subsidize my choice of a care partner. And I haven’t seen the results yet except among those organizations that have flipped from an ACO product to a Medicare advantage.

Are you saying that Medicare Advantage is a superior program overall?

Speaking from the perspective of someone who purchases Medicare Advantage programs for my parents who are in their 80s, and someone who is an active shopper for benefits and clinical expertise, it is absolutely a product that I can put my arms around and make an educated judgment and feel good about choosing. I cannot say the same about wide-open fee-for-service. And we will know that financing transformation to the Medicare program is succeeding if it becomes inevitable that people aging into Medicare or existing beneficiaries are opting to choose something rather than to passively use the billing services that Medicare provides. That fundamentally to me, whether it is a Medicare Advantage plan as currently constituted, or some of the models taking place today, that would be an excellent outcome, as long s the regulatory agencies could make sure that folks selling Medicare Advantage coverage and delivering care are doing so not only in responsible ways, but in desirable ways, for the beneficiaries that the program supports.

Are yesterday’s results about what you expected?

There were very few surprises in the report yesterday. I am surprised that a small number of the physician-only ACOs saved money, earned savings, but will not receive payment, because they did not report quality measures. That is surprising to me, because those are dollars left on the table. I think that I would have been surprised if there had been a significant difference between the initial cohort of ACOs and the second and third cohorts, in terms of relative share of total payout. It was actually pretty even across the three. And that makes sense, since they are all playing by the same rules, which is, they still don’t know who their patients are, they still can’t make changes in the benefits offered to them, and they’re still in the initial stages of transformation. So I think there were very few surprises. One surprise was the response from the policy community, to say that even two to three years into this experience, that these results can provide a thumbs-up or thumbs-down on ACOs. This is not an incremental effort; this is turning around the Titanic. So the small wins in the program, whether for a short-term pilot or an interim step between straight FFS and provider-led Medicare Advantage, that is an early win. I think focusing more on the early wins and less on whether this tells us about the long-term success of the programs.

What would you say to providers thinking about getting into one of these programs?

I would say that you should be putting most of your effort into are cultural change with you clinically integrated physician group, and into increasing beneficiary understanding of what you can do in this model and what you can be for them moving forward. And I would also say that as with any contracts or negotiation around the financial model, or caring for Medicare beneficiaries, that you should always have an exit strategy, which is to say, what is the next product that is going to be more feasible and viable in the long term, than the first wave of transition from FFS. But I do give member organizations considering participation those thoughts.

Clearly, you can’t do this without strong, well-leveraged IT, though, correct?

My feeling on the infrastructure around ACOs is that tools come second; the first order of business is determining and being able to design and communicate the way you want to deliver care and collaborate with partner clinicians. Only once you’ve done that can you build tools that actually support this new care model and engagement model with consumers and clinicians. I think it is dangerous business to invest in technology first and transformation second, and very problematic for CIOs to have to build in systems backwards into processes.

You can’t wait, though, either?

If you haven’t determined the service you’re going to provide in the MSSP or Pioneer program, you have already made an error. So the IT infrastructure necessary to support the care model feasible in any ACO contract, again, needs to be present at the creation, but still is supporting the care model, not creating it.