The Trump administration announced recently that it plans on curtailing one payment model in the Accountable Care Organization (ACO) pilot – the Medicare Shared Savings Program (MSSP). Since the broader ACO program (after the Pioneer pilot) started, ACOs have had the ability to gain bonuses if they improve costs and quality or gain greater bonus if they also take on so-called downside risk. Over 80 percent are governed under the softer arrangement.
We have been supportive of the program as it has been the most successful innovation in the decrepit Medicare fee-for-service (FFS) program and because about one sixth of all Medicare beneficiaries are now covered by ACOs. Data seemed to show that the program did save money overall, but Trump administration officials note that the upside-only MSSPs cost money while the others with upside and downside risk saved.
Whatever the debate about the numbers, it does seem to us that the program needs to show its worth. The upside-win-only scenario was good to get hospitals and other providers to play, but the program has now gone on long enough to make the rules stricter. The new Trump rule would limit upside-only risk to two years (only one year less than what the Obama administration had put in its rule). This is certainly not unreasonable. The new rule, too, should force the organizations to mature and look more like the Medicare Advantage (MA) plan model.
Yes, some ACOs could drop out, but others may step up their efforts – a positive result. While we question the administration’s policy motivations in many cases, we don’t here. Predictably, ACOs and their trade organizations declared that the change will upend the experiment. We, too, heard these charges from MA plans when the Affordable Care Act passed and mandated an aggressive Star program with major rate reductions. The MA plans adapted and are on pace to hit 50 percent of all Medicare beneficiaries by 2025 (and perhaps 70 percent between 2030 and 2040). In the end, if ACOs do drop out, MA plans could become the beneficiaries as they may be the only viable large-scale model to reduce costs and improve quality in Medicare.
We do think that CMS should reconsider the limit of 25 percent of savings for the first two years and return to 50 percent as an initial incentive for groups to join the program.