Risk-averse ACOs miss out on nearly $1B in savings

A vast majority of accountable-care organizations in zero-risk contracts would reap additional savings if they took on downside risk because of the bonuses incurred as an advanced alternative payment model under MACRA, a new analysis finds.

About 91% of the ACOs in tracks without risk in 2016 would have saved an additional $966 million overall if they were in a contract with downside risk, according to an Avalere Health analysis released Thursday. The analysis applied 2016 performance data for non-risk bearing ACOs to Track 1+, a downside risk-based contract introduced this year. Medicare ACO performance data is not yet available for 2017, and the analysis aims to show how non-risk bearing ACOs can perform under the newest model, said John Feore, a director at Avalere Health. Track 1+ is viewed as a stepping stone track because it doesn't require as much financial risk as Tracks 2 or 3 of the program. Under MACRA, all of these downside risk tracks are considered advanced APMs and therefore give physicians an automatic 5% bonus under Medicare Part B spending. The analysis found that although the 372 non-risk bearing ACOs would have incurred $263 million in losses under Track 1+, the 5% advanced APM bonus would have accounted for $1.2 billion in incentive payments, so the ACOs would still reap hefty savings. "What this simulation shows is that with the 5% bonus, providers that are participating in downside risk ACOs are largely insulated form potential penalties they may owe," Feore said. Of the 101 ACOs in downside risk tracks in 2018, 55 ACOs are in the Track 1+ model. About 18% of all ACOs in the Medicare shared savings program are in such downside risk tracks. Feore said for its first enrollment year, the newest model attracted substantial interest from ACOs across the board. The data shows new ACOs joined the model as well as returning ACOs. "The fact that we saw (55 ACOs join Track 1+) is a pretty good indication that a lot of ACOs are willing and ready to get into downside risk, but the intermediate ramp up period is what they would prefer," he added.