CMS plans to 'retire' some ACOs

(Story updated at 7 p.m. ET)The CMS wants to eliminate zero- and low-risk tracks for accountable care organizations to more quickly move them to downside risk.

The agency announced Thursday that it is planning to overhaul the Medicare Shared Savings Program by scrapping Track 1 and Track 2 and will launch a Basic track that provides a smaller window for an ACO to be upside before it must take on modest downside financial risk. The agency proposes keeping the Track 3 high-risk option but it would be renamed the Enhanced track.

Currently, 460 of the 561 ACOs in the Shared Savings Program this year are in Track 1. Another eight are in Track 2, 38 are in Track 3 and 55 are in Track 1+. Over 10.5 million Medicare fee-for-service beneficiaries are in the models. The majority are in arrangements that do not take risks for increases in cost.

"After six years of experience, the time has come to put real 'accountability' in Accountable Care Organizations," CMS Administrator Seema Verma said in a statement. "Medicare cannot afford to support programs with weak incentives that do not deliver value."

The agency proposes that ACOs in the two years of an upside-risk arrangement would get 25% rather than 50% of savings.

Under Obama-era regulations, ACOs that started in Track 1 in either 2012 or 2013 are supposed to move to a risk-based model by the third contract period, which begins next year. There are 561 Medicare ACOs this year, 82% of which are in Track 1.

The CMS proposes shortening the maximum amount of time permitted in upside-only risk to just two years for first-time ACOs, or one year for ACOs that previously participated in the MSSP under upside-only risk.

The agency also will terminate ACOs that have repeated poor financial performance. The CMS would use market data early in an ACO's existence to more accurately ensure that the organization is meeting local growth rates and spending levels. The revised program will provide ACOs spending targets and make them more accountable for those goals. It also proposes that risk-based ACOs offer financial incentives to patients for healthy behavior.

Among those that first entered MSSP in 2012 or 2013, 82 ACOs that would be required to renew their participation agreements to enter a third agreement period beginning in 2019.

This past spring, the National Association of ACOs surveyed those 82 ACOs and found 71% said they are likely to leave the MSSP if forced to take on more risk.

The trade group called the proposed changes misguided.

"It's naïve to think that ACOs that aren't ready can be forced to take on risk, given that the program is voluntary," NAACOS President and CEO Clif Gaus said in a statement. "The more likely outcome will be that many ACOs quit the program, divest their care coordination resources and return to payment models that emphasize volume over value."

The CMS estimates that 107 ACOs will exit the program by 2026. Even with the exits, it expects the organizations to save Medicare $2.24 billion by 2028.

The CMS will not accept applications this year for new agreement periods that would start on Jan. 1. Instead it will offer an application cycle for a one-time new agreement period with a start date of July 1, 2019. ACOs with a participation agreement ending on Dec. 31, 2018, could apply to extend their current involvement for an additional 6-month performance year and may apply for a new agreement beginning on July 1 of next year.

The agency will also require ACOs to report fewer quality measures in an effort to reduce burden.

So far, ACOs have saved Medicare relatively little money because so many of them are risk-averse.

Last year, HHS' Office of Inspector General said ACOs in MSSP reduced Medicare spending by about $1 billion in three years. Every year, Medicare spends more than $500 billion. Upside-only ACOs actually cost the CMS $384 million from 2013 to 2016.

The proposed changes would also promote interoperability by requiring ACOs to adopt the newest EHR technology.

Comments on the proposed changes are due Oct. 16.