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CMS Proposal Is a Start for Making Risk More Appealing to ACOs

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.
Creating Flexibility in the MSSP
The first flexibility CMS proposes is to allow ACOs to choose to move faster through the steps of the Basic glide path by accepting more performance-based risk through an annual election, or to skip parts of Basic and move on to Enhanced by voluntarily terminating their current agreement and renewing for the next year in Enhanced. CMS proposes various protections to prevent using this flexibility to slow down the progression toward risk, while still allowing ACOs to move to risk faster, and the agency rewards these choices with greater sharing rates.

Second, CMS would allow ACOs to choose between prospective and retrospective attribution. Currently, the attribution methodology is aligned with tracks forcing ACOs with a strong preference for one methodology over the other into certain tracks and corresponding levels of risk. By allowing ACOs to choose their preferred methodology, CMS ensures the greatest level of ACO participation.

Finally, CMS is expanding the skilled nursing facility 3-day waiver from prospective attribution to be available for both retrospective and prospective attribution.

Refining the Benchmark
We have been known to say “it is all about the benchmark,” and this is doubly true when performance-based risk is involved. No ACO should think of risk as a single thing. There are 3 types of risk an ACO must consider: medical risk, insurance risk and regulatory risk.

Medical risk is changes in costs driven by the delivery of healthcare services, such as how well diabetic patients are managed. Insurance risk is changes in costs that are not driven by the delivery of healthcare services, such as changes in the prevalence of diabetes in a population. Regulatory risk is the risk of changing the rules and/or rules that stack the deck. The benchmark methodology is crucial to determining how much medical and insurance risk an ACO is taking, and whether ACOs are appropriately rewarded for actually reducing costs. The original MSSP benchmarking methodology did 3 things that made taking performance-based risk
unappealing to ACOs.

First, in order to be welcoming to all ACOs, regardless of past performance, the original rule did not consider the value ACO participants were delivering prior to becoming an ACO. Poor performers were rewarded for making modest improvements, while high performers struggled to be rewarded at all. Second, in reaction to how risk adjustment has led to overspending on Medicare Advantage (MA), CMS transferred nearly all insurance risk to ACOs by placing a cap on risk scores. ACOs take on more insurance risk than MA plans do where risk adjustment matches the population. Finally, through its use of national inflation to establish performance benchmarks, the original ACO statute imposed regulatory risk on the ACO for any variation in its local market compared with national changes without any consideration as to the ACO’s ability to control that variation. For example, in 1 of Aledade’s ACOs, a new rehab hospital opened in our first performance year. Unsurprisingly, our rehab hospital costs went up significantly, amounting to an increase of nearly a percentage point in total cost of care in the local area. There is a large body of literature demonstrating that Medicare costs and cost growth varies tremendously by region.

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