Final rule puts ACOs on accelarated track to two-sided risk

CMS ramped up risk-sharing for accountable care organizations (ACO) in a final rule published December 31, 2018. The final rule makes significant changes to the Medicare Shared Savings Program (MSSP) and will reduce the amount of time ACOs can stay in one-sided risk models. The final rule’s accelerated risk-sharing models go into effect February 14.

Currently, ACOs can choose between three financial models. In 2018, 82% of ACOs entered and chose to maximize the allowed time under Track 1, a one-sided, shared savings-only model, according to CMS’ data. Under Track 1, ACOs receive a share of any savings under their benchmark but do not have to pay back a share of any spending over their benchmark. Participation in Tracks 2 and 3, two-sided risk models that progressively increase the amount of financial risk ACOs take on, has declined or remained relatively modest. Track 1+, a time-limited Innovation Center model that began on January 1, 2018, was based on Track 1 but incorporated more limited downside risk. CMS believes that Track 1+ showed that offering a lower-risk, two-sided model is an effective method to increase the rate at which ACOs take on greater performance-based risk.

In addition, while ACOs in two-sided risk models have successfully reduced Medicare spending while advancing the quality of care provided, one-sided risk ACOs increased Medicare spending relative to their benchmarks.

The final rule addresses these issues by limiting the amount of time ACOs can remain in one-sided risk models and revising how it shares savings with ACOs that do not take on financial risk. New physician-led, or low-revenue, ACOs will be allowed to remain in a one-sided risk model for three years, down from six. All other ACOs will be permitted only one year before they must share financial risk. Rural, physician-led ACOs have been more successful at controlling costs than hospital-led ACOs, Seema Verma, administrator of CMS, said in a December 21, 2018, blog post. By permitting physician-led ACOs to remain in one-sided risk models longer, CMS believes it will foster competition, allow more physician practices to remain independent, and ensure that all ACOs generate savings, she added.