Medicare To Overhaul ACOs But Critics Fear Less Participation

Accountable care organizations were one of the key initiatives from the Affordable Care Act, designed to help control soaring Medicare costs.

ACOs were likely to save the federal government nearly $5 billion by 2021, based on the Congressional Budget Office.

It hasn't come anywhere close.

On Thursday, the Trump administration proposed an overhaul to the program, which was designed to encourage doctors and hospitals to work together to coordinate care by reducing unnecessary tests, procedures and hospitalizations. The move could dramatically cut back the amount of participating health providers.

Administration officials say ACOs have resulted in higher Medicare spending.

The announcement only agreed to be the latest in a steady drumbeat of moves by Trump administration officials to unwind health policies set up through the Obama administration.

Medicare ACOs began this year and today enroll more than Ten million beneficiaries. If they provide care for under certain cost targets – while meeting quality of care standards – then they get to be part of any of the savings. Commercial insurers and Medicaid have also adopted ACOs in the past decade.

About 82 % of the 561 Medicare ACOs are positioned up so that they are not vulnerable to losing money from Medicare. They can share in any savings they achieve. The remainder have been in one where they are able to gain a higher share of savings, but also risk paying back money to Medicare when they do not meet their savings targets. Those ACOs have been more productive in saving money, Medicare officials said.

The Medicare program said hello would phase out its no-risk model beginning in 2021.

A recent industry-sponsored survey showed 70 percent of ACOs would rather quit than assume such financial risk.

Seema Verma, administrator from the Centers for Medicare & Medicaid Services, said it's wrong to have ACOs that can only make profits but not risk any losses. “We wish to place the accountability back into Accountable Care Organizations,” she said during a briefing with reporters.

Existing ACOs will have one year to change to some model accepting financial risk. New ACOs will have 2 yrs.

Currently, ACOs have as much as six years to shift to some model where they be part of financial risk.

These along with other proposed changes would save Medicare $2.2 billion over the next decade, Verma said.

The proposal drew rare praise from a former Obama administration official. Andy Slavitt, who once headed CMS, tweeted: “CMS is proposing changes to Medicare purchase value (ACO) models. – Initially look, they appear positive in my experience.”

CMS estimated that its new policy would lead to a drop of approximately 100 ACOs by 2027.

Industry observers state that prediction seems modest at best.

“That does not appear too realistic,” said Ross White, manager from the Center for Healthcare Regulatory Insight at KPMG, a large consulting firm. “This is going to come as quite a shock to numerous current participants, although the administration continues to be sending these signals for several months. – It will be seems like they are trying to ratchet down and squeeze the dollar savings out and never have participants inside it for that wrong reasons.”

Clif Gaus, the CEO of the National Association of ACOs, blasted the proposal, saying it will “upend the ACO movement” and introduces “many untested and troubling policies.”

CMS is “pulling the rug from ACOs by redoing the program in a short time frame,” he said.

He added that the “likely outcome will be that many ACOs quit this program, divest their care coordination resources and go back to payment models that emphasize volume over value.”

Tom Nickels, executive vice president from the American Hospital Association, also criticized the new ACO rules. “The proposed rule fails to take into account the fact that creating a successful ACO, not to mention one that's capable of taking on financial risk, isn't any small task; it takes significant investments of your time, effort and finances.”

Under the brand new plan, CMS also wants to require doctors in ACOs to inform their sufferers that they're in an ACO. That has not occurred previously, because unlike HMOs, ACOs do not restrict which providers they can see.

Verma, who has repeatedly said unleashing the free market principles will help control costs and improve quality, said ACOs are driving more hospitals and doctors into mergers, which results in higher costs.

“We wish to work with ACOS which are serious about delivering value. We can no longer run a program that is taking a loss for taxpayers,” she said.