Population Health Helps Medicare ACO Models Earn Shared Savings

November 29, 2016 - Medicare ACO models operating through the Medicare Shared Savings Program have faced some significant challenges in garnering shared savings and taking on more financial risk. With multiple programs competing for funding from the Centers for Medicare & Medicaid Services (CMS), many Medicare ACO models have not seen significant shared savings come their way.

For example, a CMS fact sheet shows that, out of 12 Pioneer accountable care organizations, six were able to earn shared savings in 2015. Additionally, out of more than 400 participating ACOs within the Medicare Shared Savings Program, only 125 Medicare ACO models earned shared savings last year.

A report from the National Association of ACOs (NAACOS) published this past summer outlines some steps and recommendations for CMS to follow in order to strengthen the Medicare Shared Savings Program and ensure its accountable care organizations maintain greater stability.

The report recommends for CMS to use its initial investment when measuring accountable care risk among the participating ACOs. Also, MAACOS makes an important recommendation for CMS to prioritize population-based payments for its programs including the Medicare Shared Savings Program.

CMS will need to improve the stability of Medicare ACO models since there are a wide number of reforms coming up for the healthcare industry including MACRA legislation and the potential repeal of the Affordable Care Act by the GOP.

In order to help ACOs garner more shared savings, CMS and payers in the private sector will need to encourage these organizations to take on more financial risk. Out of the three tracks available for Medicare ACO models to follow, only the first track in the Medicare Shared Savings Program lacks downside risk. ACOs can take part in the first track for a total of six years, but CMS may need to encourage providers to switch to subsequent tracks in order to take on downside financial risk and potentially earn more shared savings.

A report from the American Hospital Association and the Robert Wood Johnson Foundation details how accountable care organizations could remain profitable through strengthening their population health management protocols.

A greater focus on population health management could help payers and providers improve the use of preventive services and reduce the rate of acute care utilization, which are more costly overall. Patient data analysis and new technologies could also bring about better patient health outcomes. These steps would go a long way toward helping accountable care organizations earn shared savings and keep their revenue stable.

CMS has been more devoted in recent years toward boosting population health management among accountable care organizations. For instance, the Medicaid program in Massachusetts received a waiver from CMS earlier this month that would enable providers to more fully participate in ACOs and other programs aimed at expanding population health management.

The MA Medicaid program has created a plan to begin an accountable care solution in July 2017. Medicaid providers will be able to take part in one of three different types of ACOs.

The first model is called the Accountable Care Partnership Plans and it allows managed care organizations to work alongside an ACO. Primary Care ACOs is the second option open to Medicaid providers, which allows them to contract more directly with the Medicaid program and to take on financial risk for their specific patient base. The last option available is the Managed Care Organization-administered ACO, which must contract with Massachusetts’ Medical Managed Care Organization contractors.

These three tracks all bring a focus on mental healthcare and long-term care with the primary care physicians playing a major role in coordinating patient services among multiple medical facilities. Acting CMS Administrator Andy Slavitt emphasized the focus on substance abuse treatment for Medicaid providers through the accountable care program.

“Payers need a truly engaged relationship with their providers,” Steve Keltie, President of Network Development and Marketing at WellHealth Quality Care, told HealthPayerIntelligence.com. “Population health management programs deliver good care to the patients and they make sure our high-risk patients are getting into the specialized programs that they need to, but pay-for-performance models allow for more improvement beyond the traditional fee-for-service PPO.”

“This is what allows us to allow for true engagement with the provider. We’re not just asking them to change their utilization pattern,” Keltie continued. “Since it’s in the best interest of the payer group, we can also show that it’s in the best interest of the provider.”

Keltie also discussed how vital population health management is to pay-for-performance models like the accountable care organization.

“It’s very difficult to have a discussion with a provider about managing the medical loss ratio or managing their claims when you pay them only per claim. The more population health management we do and the more pay-for-performance accountable care programs we do, we fulfill this accountable care model. What’s the future look like? The future is accountable care,” Keltie concluded.

Population health management remains a key strategy for strengthening Medicare ACO models and ensuring these organizations earn shared savings.

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