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Through the Eyes of One ACO: Deciding on Next Generation ACO

Travis Broome is vice president of policy at Aledade, a new company helping doctors stay independent and thrive in the transition to value-based care. Joining Aledade early on, Travis helped Aledade grow from 2 accountable care organizations (ACOs) to 20 ACOs. From business development with both practices and payers, to early population health analytics, to serving as executive director for the Aledade Louisiana ACO, he has touched every part of Aledade as it has grown. Today, he is a thought leader on accountable care and is responsible for strategy development, policy analysis and economic modeling. Prior to Aledade, Travis was a regional director at CMS. He earned his MPH and MBA from the University of Alabama at Birmingham.
The other main consideration for us was looking at how our ACO compared against market trends and national averages. In our case, we are 5% more efficient than the local market, but almost 5% higher compared to the national average. This comes out in our favor, but only modestly with only an estimated 0.25% positive effect on our benchmark.
Now, consider the primary alternative to Next Generation: the Medicare Shared Savings Program (MSSP). MSSP does not reward regional efficiency in the first 3 years; however, regional efficiency is rewarded in the following 6 years. Market-based benchmarking is very important for long-term sustainability of the ACO program since it enables ACOs to generate savings as long as they improve relative to their market so they do not have to keep “beating themselves.” Practically, the differing approaches for creating benchmarks between Next Generation and MSSP leads an ACO that is regionally efficient and playing the long game to prefer MSSP. A regionally efficient ACO looking to be rewarded right away would prefer Next Generation. A regionally inefficient ACO would prefer Next Generation’s lesser focus on regional efficiency. For Aledade, we view population health as the core of a long game so prefer MSSP’s long-term treatment of regional efficiency.
On balance, the MSSP program comes out significantly better for the work we are doing since the MSSP program uses a multi-year benchmark and rewards regional efficiency over the long term. Even if we did overcome the anticipated headwind in hospital costs, our projected discount (ie, the money CMS get as its portion of the savings) is 2.10% and we usually project 5% savings so the 100% shared savings rate so commonly cited as the shared savings rate becomes a 58% effective shared savings rate in our projections. This is lower than both of the 2-sided risk tracks in MSSP. While it is undoubtedly true the the flexibility of partial capitation and the affiliate model in Next Generation make it more likely to achieve savings and to generate some savings revenue more quickly than in MSSP, it is equally true that higher savings will rapidly increase the effective shared savings thresholds in future years. Since our desire is to be rewarded for our regional efficiency and not be gambling on the uncertainty of a singular benchmark year, we will be sticking with MSSP for 2017.
We hope that CMS will continue to refine the Next Generation ACO model so that it rewards long-term improvement relative to regional competitors and takes into better consideration variability in setting savings benchmarks. We also hope that other payers offer ACOs similar contact options so that incentives can be more fully aligned and simplified.
Taking on risk is a huge commitment by a physician-led ACO, whether it is a full risk such as Next Generation ACO or less risk such as Track 2 of the MSSP. A temporary, 5% bump in fee-for-service payment is not the answer. We need better benchmarks and lower risk. Risk that is tied to the finances of the ACO as we have advocated for represents the best way to move ACOs to 2-sided risk.

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