Medicare Payment Reform, ACO Participation Discussed During ACO Coalition Keynote

In the keynote speech at the ACO & Emerging Healthcare Delivery Coalition^TM, Mark McClellan, MD, PhD, director of the Duke-Margolis Center for Health Policy, started out by providing a broad picture of Medicare reform before narrowing it down to what is happening on the ground.

The innovations in treatment—cures for hepatitis C, treatments for cancer that turn it into a chronic condition—have come with a higher cost. These big price tags aren’t a result of the cost savings that happen down the road by treating the disease, but reflect how people value living better and longer lives.

“What we really enjoy is more time … it’s really valuable,” McClellan said.

Medicare and Medicaid spending as a percentage of gross domestic product are currently 5%, and are on track to be 8% or 9% by the mid-2020s. This growth is happening because the American public is telling Congress to prioritize dollars spent toward healthcare, he said.

During his keynote, McClellan briefly touched on the impending presidential election, but mostly noted that there had not been a lot of talk during the presidential campaign about healthcare entitlements.

What is interesting is that there are some bipartisan healthcare proposals that he expects to garner more attention in January. There were 4 key areas where there is bipartisanship occurring:

1. More efficient biomedical innovation without compromising safety

2. Better evidence on what works through big data, collaborative networks, and better methods of turning data into evidence

3. Lower prices without limiting access to needed care

4. Changing healthcare delivery without reducing needed access to care

The Medicare Access and CHIP Reauthorization Act (MACRA) is another example of bipartisan collaboration. The new payment structure created under MACRA will have a large impact on providers, and those that participate in accountable care organizations (ACOs) stand to benefit. MACRA created 2 pathways: the Merit-based Incentive Payment System (MIPS) and advanced alternative payment models (APMs).

While the number of ACOs (currently, more than 600) is not expected to increase much, McClellan noted that the existing ACOs are expanding their reach and increasing the number of contracts they have.

In the coming years, he expects to see an increase again in the number of ACOs as MACRA kicks in. Providers in Medicare Shared Savings Program (MSSP) ACOs in tracks 2 or 3—which are considered advanced APMs—will be eligible for a 5% payment bonus beginning in 2019.

“If you want to be MIPS exempt in an advanced APM, the most important way to do that today is through ACO programs that take downside risk, or CMS has also identified a few bundled payment models that can qualify,” McClellan said.

Other than that, there aren’t too many options available to be eligible for advanced APMs and exempt from MIPS. He expects that will change though as additional pathways to advanced APMs in 2018 and beyond are added. For instance, CMS has proposed a MSSP Track 1+, which won’t have quite the level of downside risk as tracks 2 and 3. Track 1+ would have downside risk that is proportional to the practice revenue, which helps physician-led ACOs and smaller ACOs.

“The general theme of this regulation is very much wanting to make it easier for organizations that are not as big to do well in MIPS and APMs without creating big, consolidated groups,” McClellan said.

With the Medicare ACO program a few years old now, the industry is beginning to better understand what works. For instance, physician-led and integrated ACOs tend to do better, McClellan said, which is likely because they are closer to patients.

In addition, the ACOs that have been in the program for 3 or 4 years generated more savings, which is something both Patrick Conway, MD, chief medical officer of CMS, and Sean Cavanaugh, deputy administration and director of the Center for Medicare at CMS, had discussed during the National Association of ACOs fall meeting in September.

Still, building a successful ACO has proven to be hard. A lot of organizations that undertake the effort aren’t successful, and those that are don’t succeed right off the bat. The takeaway is that getting to success takes time.

“Organizations that stick with this can make it work,” McClellan said.