Financial risk is set to become an even bigger topic in 2019 in the value-based care sphere, perhaps most notably for Medicare accountable care organizations. These ACOs are being overhauled through the Centers for Medicare and Medicaid Services’ Pathways to Success initiative, which will speed up the timeline for participants in the Medicare Shared Savings Program to take on risk for the cost of care.

Expect increased risk to drive more focus on the quality and cost of care, which opens opportunities for drug and medical device manufacturers to engage with providers on improving health outcomes. Therapies with proven efficacy could be prescribed more, particularly those that help keep patients from costly medical events like being admitted or readmitted to the hospital.

Under Pathways to Success, the ACO contract period is extended from three years to five years. This initiative begins in January 2020. Prior to that, ACOs can participate in a six-month introductory period to help adjust to the new system. Participants can choose from two participation tracks:

 

  • The Basic track requires most participants to bear risk after two years, and the level of risk-sharing increases over time. ACOs are eligible to bear risk immediately under the Basic track, if they choose to do so. Shared savings rates for Basic ACOs will be 40 percent for shared savings only ACOs and 50 percent for those bearing risk.
  • The Enhanced track requires participants to bear risk immediately. The Enhanced track is considered an Advanced Alternative Payment Model. Shared savings rates for Enhanced ACOs will be 75 percent.

 

While the MSSP ACO changes are logical steps in the industry’s pursuit of fee-for-value, they will likely test the limits of how far providers are willing to be pushed to reign in healthcare costs. Some ACO advocacy groups have pushed back against the MSSP changes, especially the accelerated timeframe for bearing risk. Most Basic ACOs will transition to the Enhanced track after one contract period, which may cause additional friction between CMS and ACO groups. However, CMS will allot ACOs deemed “low-revenue”—or those with less than 35 percent of their revenue generated from Medicare payments—extra time before accepting risk under Pathways to Success. This should benefit rural providers and physician-led ACOs.

The increased interest in risk-bearing arrangements as a method of cost-containment has not been limited to Medicare. Health systems and provider groups have also signed onto risk initiatives for commercial patients, which include ACOs. Recently, Blue Cross and Blue Shield of North Carolina announced a shared risk accountable care model with five of the state’s largest integrated delivery networks. State Medicaid programs are also investing in ACO programs for beneficiaries. Some states, including Massachusetts, have required participating providers to bear risk for patient costs.

Though risk has long-been discussed as a necessity to move to fee-for-value, it appears that theory will be tested beginning in 2019. Though early reports indicated a mass-exodus from the Medicare Shared Savings Program if forced to bear risk, 90 percent of ACOs eligible to renew in January 2019 chose to do so. That may be a sign of risk acceptance among seasoned ACOs. This coupled with increased interest in commercial and Medicaid risk initiatives could, in Seema Verma’s words, “put the accountable in accountable care.”

Sarah Wilson is a principal analyst with DRG. For more information about ACOs, follow Sarah on Twitter @SarahWilsonDRG.

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