Population health insights

CMS ACO risk and reward stakes growing

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May 22, 2018

In early May, CMS Administrator Seema Verma signaled that the agency intends to push more of its MSSP Track 1 ACOs into taking on downside risk. Now, the industry is awaiting an agency rule under federal review that might force the issue.


recent study from Avalere found that upside-only ACOs have cost CMS a total of $444 million, while two-sided Track 2 and 3 MSSP ACOs have saved $60 million over five years. Given that in 2010, the Congressional Budget Office projected MSSP ACO savings of $1.7 billion, it shouldn’t surprise Track 1 ACOs that the pressure to show results or migrate up the risk chain is on.

Projections were likely optimistic that ACOs could hit estimates within their initial three-year run. Many have elected to remain in Track 1 status after that initial participation period. As we’ve learned in working with our customers, there’s a lot to put in place to take on risk and manage an ACO, such as including sharing actionable data, risk-stratifying patients, getting clinicians on board and managing care so that you can influence utilization.


But gradually gaining that experience is invaluable. Philips Wellcentive’s 10 MSSP ACO customers generated a total of $18.6 million in value-based revenues in 2016, and supports a health system operating within the Next Generation ACO model, which carries the highest level of risk.


For other systems, the new Track 1+ model, which carries intermediate risk, may be a good fit. Like within other two-sided risk ACOs, participants qualify as an Advanced Alternative Payment Model (AAPM) within MACRA, meaning exemption from MIPS reporting and access to a five percent incentive bonus on billings.

CMS rule may limit Track 1 status

It is expected the new CMS rule, vaguely titled “Medicare Shared Savings Program/Accountable Care Organizations,” may not extend Track 1 status past the initial three-year signup period, but may also propose new risk elements to ease the transition. Upwards of 80 percent of all CMS ACOs are Track 1, and many have remained in that status going on six years.


By design, one-sided or Track 1 MSSPs don’t share losses with CMS upon overspending benchmarks, but do share in the gains, which leaves CMS to shoulder the losses alone.

ACO signup is growing, even with risk

In reaction to Verma’s announcement, many upside-only ACO representatives say they may leave the MSSP program if they are made to take on more risk, but time will tell if CMS rulemaking follows Verma’s words and whether ACO governance boards are bluffing or serious about dropping out.


Meantime, the beginning of 2018 saw gains in CMS ACO participation across the board. Just more than a dozen new Next Generation ACO participants were announced for 2018, bringing the total of ACOs taking on the most risk to nearly 50.


Next Generation ACOs also enjoy AAPM status within MACRA, and have been recognized via recent Congressional legislation. Included within the Chronic Care Act – which itself was included in the Bipartisan Budget Act that kept the government open in February – is a provision granting waivers for expanded telehealth coverage for Next Generation providers.

Also for 2018, CMS announced that 51 participants did migrate up the risk chain into Track 1+ status. All told, more than 100 new MSSPs were announced, bringing the total to more than 500 across the country. Again, we’ll have to see if ACOs pushed into risk will indeed drop out of the program or find ways to make it work.


Critics of “ACO squatting” note that it’s too safe for a Track 1 ACO to remain so, all while health systems continue to consolidate. MSSP advocates say tweaks such as allowing prospective assignment of beneficiaries will help their cause, a change that was also included in the Chronic Care Act.

Preparing for downside risk

For those electing to migrate or end up facing the proposition of taking on risk, there are some fundamentals to consider:
  1. Get the basic building blocks in place. You can’t do it without timely, quality data that is easy for clinicians to access before or during the patient encounter. That means having a PHM platform that can aggregate and normalize data from disparate EHRs and other sources such as lab, imaging, HIE and payer data. Clinicians need to know which patients can be attributed to the ACO and what key metrics they must focus on.
  2. Identify the right patients. You need to get ACO members in early in the year for wellness checks and screenings so that you can risk-stratify your population, identify care gaps and start closing them.
  3. Create a shared culture that involves clinicians in the governance of the ACO from day 1 and marry your clinical, financial and operational data so that administrative and clinical goals are aligned.
  4. Manage care for high-risk and rising-risk populations. The value of care managers has been repeatedly demonstrated, but there are numerous models and some of them may not be cost effective for your population. To successfully reduce readmissions and ED utilization, you’ll have to prioritize who gets this service and how it’s delivered. If you’ve already gained experience addressing the high-risk population, you need to begin managing those at risk for expensive chronic diseases such as diabetes. Achieving continued gains in year three and beyond depends on going beyond the ‘frequent fliers’ to manage the rest of your population so they don’t become tomorrow’s high utilizers.
  5. Deliver cost-effective, proactive care. Leverage digital solutions that help you provide less expensive, proactive care in the home and community, such as telehealth, remote patient monitoring, and connected medication adherence solutions.

It’s understandable that ACOs are concerned about managing downside risk, but done right it may actually increase margins over time, along with realizing benefits from MACRA and other policy levers.


Our ACO readiness checklist can help ACOs determine and track status over time in four key areas:

  • Governance and leadership
  • Operational structure
  • Clinical coordination
  • Reporting capabilities
The National Association of ACOs, of which Philips Wellcentive is a member, is also a very good resource of information and news.

About the author

Greg Fulton
Greg Fulton,
Industry & Public Policy Lead, Philips
Greg Fulton is Industry & Public Policy Lead for Philips PHM. He has extensive health IT experience in government relations at Congressional, Health & Human Services, state and industry organizational levels. He is a current member of the CommonWell Health Alliance Government Affairs Advisory Council and the HIMSS Government Relations Roundtable.

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