Medicare's accountable care contracts have proliferated fast and the program is poised to expand again. But federal officials acknowledged that it may be difficult to maintain that momentum without easing the financial risk of participating.
The officials responsible for the initiative, created by the 2010 healthcare reform law, say it's worth tweaking the structure to keep healthcare providers committed to the cause.
The CMS and the hospitals and doctors that formed roughly 330 accountable care organizations in the program have wrangled since before its 2012 launch over the right balance of bonuses and penalties employed to improve quality and reduce the cost of healthcare.
Nearly all of the participants so far have chosen a track that allows them to earn bonuses if they meet cost and quality targets, with no risk of paying Medicare back if they allow costs to rise beyond benchmarks. Now the CMS will allow them to keep operating that way for another three years before wading into the riskier end of the ACO model.
“We're big believers in this program,” said Sean Cavanaugh, director of the CMS Center for Medicare.
Cavanaugh said policymakers are taking a chance by allowing providers to defer the possibility of penalties, which are viewed as a way to deter abuse of the program—participating offers some leeway from antitrust and fraud scrutiny as hospitals and doctors organize new delivery networks. “But we think it's certainly worth that risk because we see a lot of organizations that we feel are genuinely committed to this model of care and are in it for the right reasons but do need an extended period of time.”
The one-sided risk track was devised as a way to allow providers to build infrastructure and gain experience managing the health of a population of patients before they had to face the prospect of losing money if they failed.
The program, Cavanaugh said, “caught the attention of a lot of physicians and hospitals and others who had not been working together and hadn't seen a way to work together.” The feedback from the industry suggested strongly that three years of experience wasn't enough for them to be willing to risk penalties.
To make it more attractive to move into the more rigorous track—which already has the carrot of bigger bonuses—the CMS wants to award smaller bonuses to organizations that choose to wait another three years before risking penalties.
The CMS is also asking for feedback on the formula used to calculate an ACO's financial performance, another major source of contention among organizations in the program. The draft rules float several ideas but don't propose a specific change. Cavanaugh said the Patient Protection and Affordable Care Act sets the formula but also gives CMS the authority to draft its own. “We don't deviate from that lightly,” he said.
The agency remains committed to exposing ACOs to losses in the Shared Savings Program. “We just think it's a stronger signal,” he said. “But it is a financial risk, and people need to be ready both organizationally and financially.”
The revised structure, if adopted, might be enough to keep one of the program's first participants on board. Stephen Nuckolls, CEO of the Coastal Carolina Quality Care in New Bern, N.C., said the small, physician-led network considered dropping out of the program rather than face penalties in the fourth year. And changes to the formula for calculating financial performance might even entice the organization to accept that risk, he said.
But he challenged the notion that what Cavanaugh described as a “stronger signal” would encourage Coastal Carolina's providers to do more to deliver efficient care. “I think we are already doing everything we can, and we are trying as hard as we can.”
Follow Melanie Evans on Twitter: @MHmevans
