Draft Medicare ACO rules would allow more time with less risk
Skip to main content
Sister Publication Links
  • Modern Healthcare Metrics
MDHC_Logotype_white
Subscribe
  • Subscribe
  • Register
  • Login
  • News
    • This Week's News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • 668,000 will lose food stamp benefits under new work rules
      States focus on healthcare costs to address coverage problems
      Value-based pay still struggles to improve costs, quality
      Quorum Health considering buyout offer from KKR
    • Lacking specialist access drives health disparities
      Genetic Counseling
      Addressing barriers
 to expanding 
genetic counseling
      2,200 University of Chicago nurses ratify contract
      UPMC's operating income continues to spiral downward
    • Silver-loading, CSR elimination lowered premiums for some rural enrollees
      Centene to sell Illinois plan to CVS Health
      Blue Cross of Idaho unveils souped-up short-term health plans
      Health insurers' debt obligations have soared in the last decade
    • States focus on healthcare costs to address coverage problems
      Hospitals sue HHS over negotiated price disclosure rule
      Michigan governor: Legislature should help pause Medicaid work rules
      Dr. Stephen Hahn, FDA Commissioner
      Week Ahead: Committee likely to vote on nominee for FDA commissioner
    • Smallest hospitals saw biggest earnings gains last month
      Sutter Health postpones financial filing
      doctor helping patient stock image Sandoz
      Sponsored Content Provided By Sandoz
      As hospital executives look to reduce costs, biosimilars offer a compelling option
      Health systems issuing bonds at feverish pace
    • astronaut
      Astronauts developed bloodstream issues in space
      Sponsored Content Provided By ABM Healthcare
      Protecting and Maintaining Medical Devices
      human hand robotic hand stock image
      Sponsored Content Provided By Deloitte
      The Health System of the Future: How Digital Health Technology is Transforming Care
      EHR
      EHR vendors most in-use throughout Medicare incentive program
    • MRIs of dense breasts find more cancer but also false alarms
      Flu season takes off quickly in Deep South states
      Uber driver says South Carolina hospital dumped patient on him
      1 in 3 adults age 45 and older reported being lonely in a 2018 AARP survey
      Data Points: Loneliness and its impact on health
    • Mayo Clinic taps Dr. John Halamka to lead its Google partnership
      Jay Shannon out as CEO of Cook County Health
      Cleveland Clinic names Dr. James Merlino as chief clinical transformation officer
      Former Cone Health CEO Dennis Barry dies
    • Midwest
    • Northeast
    • South
    • West
  • Special Features
    • Best Practices
    • InDepth Special Reports
    • Innovations
    • Arkansas Children’s was a founding partner in Solutions for Patient Safety.
      Children's hospitals collaborate rather than compete on patient safety
      Peer recovery specialists at St. Barnabas Medical Center work with nurse Brenna Zarra.
      Peer recovery helping patients with addiction seek treatment
      UNC Health Care trains staff to treat dementia patients
      Doctor running
      Plain language alerts help Piedmont Healthcare patients, staff avoid confusion
    • Linda Kenney
      Patient advocate recalls two medical errors that nearly killed her
      Man in hospital bed
      Minnesota looks to evolve its patient-safety reporting system
      Dr. Don Berwick
      Despite progress, we’re still waiting for a truly safer healthcare system
      Aurora Aguilar
      Culture of silence contributes to lack of progress on patient safety
    • Randy Oostra, CEO of ProMedica
      HCR ManorCare deal laid foundation for ProMedica’s growth
      Advanced ICU Care
      Telemedicine helps rural hospitals meet intensivist shortage
      Paging Dr. Robot: Artificial intelligence moves into care
      A child being screened for vision problems using a smartphone.
      App screens kids for eye problems before they can talk
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • ProMedica doubles down on social needs data analysis
      Amazon taps first pharmacy for Alexa Rx management
      Trump administration unveils new price transparency rules
      A child being screened for vision problems using a smartphone.
      App screens kids for eye problems before they can talk
    • Home health to pare down therapy services, up telehealth offerings
      Amazon launches medical transcription service
      Hospitals' uncompensated care continues to rise
      Supply chain tweaks could help average hospital hire up to 165 more nurses
    • Advanced ICU Care
      Telemedicine helps rural hospitals meet intensivist shortage
      Peer recovery specialists at St. Barnabas Medical Center work with nurse Brenna Zarra.
      Peer recovery helping patients with addiction seek treatment
      UNC Health Care trains staff to treat dementia patients
      UPS to kick off drone delivery service with hospital campuses
    • Value-based pay still struggles to improve costs, quality
      Hospitals sue HHS over negotiated price disclosure rule
      Bundled payments get a boost in two states with employee programs
      CMS wants primary-care docs to take on financial risk
  • Data/Lists
    • Rankings/Lists
    • Data Points
    • Modern Healthcare Metrics
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Randy Oostra, CEO of ProMedica
      HCR ManorCare deal laid foundation for ProMedica’s growth
      Steve Strongwater
      How Atrius Health stayed independent by not shying away from risk
      Why moving the VA to a new EHR was a pivotal decision
      Why AdventHealth's rebrand was more than a name change
    • Terry Shaw
      A diverse and inclusive culture should empower others
      Paving the path to diversity and inclusion
      The next step in healthcare evolution
      Breaking Bias: A road map to boost women and minorities into healthcare leadership
    • David Dill and Keith Myers
      Healthcare partnerships are a proven path to better care, healthier communities
      Health systems need to devote more resources to caring for the caregivers
      Fawn Lopez and Bernard Tyson
      In remembrance and gratitude for a life well-lived
      Chip Kahn and Alan Morgan
      Rural healthcare needs innovation, policy changes to survive
    • Hospital with money
      Letters: Let providers set their prices,
 and then publish them all
      Letters: Ambulatory surgery centers aren't getting a break on regulation
      Letters: Rising Medicaid spending isn't a windfall for providers
      Letters: The complexity of prior authorization runs deep
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Nominate
    • Award Programs
    • Previous Award Programs
    • Other Award Programs
    • Nominations Open - Top 25 Minority Leaders
      Nominations Open - Health Care Hall of Fame
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Top 25 Minority Leaders
    • Top 25 Women Leaders
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • Kronos webinar logo lockup
      Sponsored Content Provided By Kronos
      Webinar: The Future of Work in Healthcare
    • Leadership Symposium
    • Healthcare Transformation Summit
    • Critical Connections: Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Workplace of the Future Conference
    • Strategic Marketing Conference
    • Health Care Hall of Fame Gala
    • Top 25 Women Leaders Gala
    • Best Places to Work Awards Gala
    • Top 25 Minority Leaders Gala (2020)
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Providers
December 01, 2014 12:00 AM

Draft Medicare ACO rules would allow more time with less risk

Melanie Evans
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    (This story was updated at 6 p.m. EST)

    The CMS is planning major changes to the financial incentives for Medicare accountable care organizations in a revamp aimed at preventing hospitals and medical groups from dropping out of the initiative.

    A proposed rule issued late Monday (PDF)would alter the structure of the Medicare Shared Savings Program, an attempt launched in 2012 under the Patient Protection and Affordable Care Act to reduce U.S. health spending with new incentives that seek to improve the quality and efficiency of healthcare.

    Those incentives have been a battleground between policymakers and the healthcare industry since the program's start. Policymakers have sought more substantial incentives—penalties as well as rewards—as a means to hasten changes to the way healthcare is delivered. Hospital officials and physicians have called for less financial risk so they can build the infrastructure and expertise they need to succeed.

    The rules adopted in 2011 require accountable care organizations to face penalties after the first three years unless they volunteer to assume downside financial risk earlier in exchange for bigger bonuses if they do well.

    The industry appears to have scored a victory in the proposed rules, which acknowledge widespread concern among the participants and experts that some organizations may need more time before penalties take effect. The switch after three years “may be too steep” for organizations that lack experience and infrastructure to achieve quality and cost-saving targets and organizations may exit as a result. Even those that perform well but “not yet ready” to accept the risk of penalties may depart without another option, the agency said.

    Medicare, under the revised structure, would no longer require organizations to face penalties after the third year, but they could forgo penalties only if they meet certain criteria. ACOs that fail to slow spending in their first two years would be excluded. All ACOs must assume the risk of penalties after six years if they want to remain in the program.

    In order to make it more appealing for ACOs to jump into the riskier track, the CMS would reduce the potential bonuses after the third year in the safer track to 40% from 50%.

    In another bid to make riskier contracts more attractive, the agency wants to add a new option, or a third track, that would include potential penalties and bonuses and would use new methods to identify which patients are included in the ACO. Organizations in this new track could keep up to 75% of what they save. They also would be responsible for up to 75% of their losses, but the amount could be reduced based on quality performance. The agency capped the bonuses at 20% of ACOs' benchmarks and losses at 15%.

    Participants in the third track would also have a list of patients at the start of the year whose care and costs they must manage. Under the current rules, Medicare identifies beneficiaries as included in the ACO at the end of the year based on how much care they received from the providers in the network. ACOs have called on the CMS to identify the patients at the beginning of the year to allow more focused improvement efforts.

    The CMS has rapidly expanded the Medicare Shared Savings Program over the past three years, and it is perhaps one of the most visible efforts under the law to tame the nation's healthcare bill. But many experts feared the widespread enthusiasm for the program would wane significantly if the CMS declined to modify the program to keep less experienced providers on board.

    All but five of more than 300 ACOs in the program chose to forgo the penalty. That may have been wise, because their financial performance has been uneven. Only a quarter of ACOs launched in 2012 and 2013 have saved enough to earn bonuses.

    Clif Gaus, chief executive officer of the National Association of ACOs, said he was “pleased and disappointed” by the proposed rule. He praised the proposal to give ACOs more time before they face penalties for financial performance, but he also said the decision to couple that with a smaller potential bonus was “counterproductive.”

    Many ACOs need the additional time to prepare for the risk of potential penalties, he said. “Three years is not enough.”

    Efforts to revamp the delivery of care will require more time as ACOs build new relationships, new infrastructure and learn and adapt early redesign efforts, he said. “It's probably a decade-long process to redesign all of the care processes that lead to both better care and more appropriate care,” based on experience of organizations such as Geisinger Health System or Intermountain Healthcare, he said. “There's a big learning curve for many ACOs,” he said. “They are almost new businesses starting from scratch.”

    The association surveyed Medicare Shared Savings Program ACOs in October and found two-thirds were somewhat or highly unlikely to continue if they were required to accept penalties. About 20% of the MSSP ACOs responded. “There's too much risk for the amount of reward” under contracts with penalties and bonuses, he said.

    Coastal Carolina Quality Care in New Bern, N.C., entered Medicare's accountable care program in 2012 and saw its expenditures increase a marginal 0.6% against projections during the first year.

    “It's very unlikely that we would continue” without the continued option to forgo penalties, said Stephen Nuckolls, Coastal Carolina's CEO.

    Dr. Farzad Mostashari, founder and chief executive of accountable care contractor Aledade, said the option to continue without penalties may benefit some smaller organizations in the program. “There are a lot of home grown ACOs,” said Mostashari, a former national coordinator for health information technology at HHS. “It takes them a long time to get going.”

    Policymakers, however, likely also want to discourage organizations from abusing Medicare's shared savings program as a way to consolidate market clout with little interest in achieving the program's savings goals, he said. The proposed rule, however, may do little to discourage them from remaining in the program. The proposed criteria for ACOs to continue without penalties, Mostashari said, is “a pretty low bar."

    Follow Melanie Evans on Twitter: @MHmevans

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    Modern Healthcare
    Copyright © 1996-2019. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Special Features
      • Best Practices
      • InDepth Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Data Points
      • Modern Healthcare Metrics
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Nominate
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Top 25 Minority Leaders
        • Top 25 Women Leaders
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Leadership Symposium
        • Healthcare Transformation Summit
        • Critical Connections: Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
        • Workplace of the Future Conference
        • Strategic Marketing Conference
      • Galas
        • Health Care Hall of Fame Gala
        • Top 25 Women Leaders Gala
        • Best Places to Work Awards Gala
        • Top 25 Minority Leaders Gala (2020)
      • Webinars
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing