51% of ACOs Likely to Exit MSSP Due to Downside Risk Requirements

April 26, 2019 - Just over half of accountable care organizations (ACOs) said they would consider leaving the Medicare Shared Savings Program (MSSP) if required to take on more downside risk, revealed a study published in Health Affairs.

Thirty-two percent of ACOs said they are extremely or very likely to leave, and 19 percent believe they are moderately likely to leave.

In 2018, there were more than 600 ACOs managing care for nearly 12 million Medicare beneficiaries, the researchers said.

The majority of Medicare ACOs participate in Track 1 of the Medicare Shared Savings Program under a one-sided arrangement, also known as an upside-only structure. About 25 percent of Medicare ACOs were in two-sided or downside risk arrangements in 2018, including MSSP Track 1+, Tack 2, Track 3, and next generation ACOs.

CMS’s recent “Pathways to Success” policy, a revamp of the MSSP, has created two new MSSP tracks. Those in the Basic track will be required to accept moderate downside risk after two years, while those in the Enhanced track would face downside risk of 40 to 75 percent of financial losses if their spending exceeds the annual benchmark.

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“Certain more experienced ACOs will be required to join the Enhanced track if they wish to continue in the MSSP,” the Health Affairs team said. 

“There is concern that these changes will result in fewer ACOs participating in the program, mostly due to the program being less attractive to new entrants.”

These concerns may be valid.

ACO respondents were asked whether they had contracts with traditional Medicare, Medicare Advantage, commercial plans, and Medicaid plans.

Almost 91 percent of respondents said they are participating in a Medicare ACO arrangement, and 52 percent reported a commercial ACO contract. One-third said they have a contract with a Medicare Advantage plan, and one-fifth reported having a contract with a Medicaid plan.

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Across all payers, 56 percent said their contracts were exclusively shared savings, while 44 percent said they had at least one contract with downside risk. About ten percent of ACOs reported having multiple types of contracts within particular payer categories.

The team then examined the characteristics, strategies, and perceived challenges for ACOs that have already entered two-sided risk contracts and those that have not. The survey asked upside-only Medicare ACOs how likely they were to leave the program if required to take downside risk at the same level as existing Medicare ACO two-sided risk options.

Of those in MSSP Track 1 ACOs, 44 percent said they were not likely or slightly likely to leave the MSSP program if there were such a requirement. Thirty-two percent said they were very or extremely likely to leave, while 19 percent said they were moderately likely to leave.

The results also showed that there were significant differences in responses from physician-based ACOs and hospital-based ACOs.

“Approximately two-thirds of physician-based ACO respondents reported that they were likely to remain in the program if required to accept downside risk, compared with only about one-third of hospital-based ACOs,” the team said.

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“This reflects the fact that physician-based ACOs have performed better, and a higher proportion of these ACOs have earned shared savings, than hospital-based ACOs. Physician-based ACOs have generated substantial savings by reducing spending for both inpatient and outpatient hospital services, which has not been true for hospital-based ACOs.”

Researchers also asked Medicare Track 1 ACO respondents to identify the top three barriers to accepting risk. Participants who said they were likely to stay in MSSP named “unpredictable changes to the ACO” as the top challenge.

Those ACOs who said they were likely to leave MSSP if required to take on downside risk selected “too much risk is required” as the primary barrier. These respondents also reported a higher rate of concern about their own past performance, with 40 percent of respondents saying they were worried about this compared to just 17 percent of other ACOs.

When comparing the characteristics of ACOs with two-sided risk contracts to those exclusively in upside-only arrangements, the results indicated that ACOs bearing two-sided risk have developed a broader network of care delivery partners.

This trend was especially prevalent in post-acute care, where 60 percent of ACOs with a two-sided risk contract said they had partnerships with post-acute care providers, while just 22 percent of upside-only ACOs said the same.

To be successful, ACOs must adapt to new approaches to managing care. Although recent policies are aiming to accelerate this process, many ACOs are still hesitant to take on downside risk.

“The movement of ACO contracting models towards two-sided risk is an important element of the model’s evolution. But there is limited evidence about how the assumption of downside risk affects organizational performance, and not all ACOs are ready to manage such risk,” the team concluded.

“The question of how quickly to move to downside risk is important, but there are no clear answers. The Pathways to Success MSSP rule puts a stake in the ground to accelerate the adoption of ACO contracts with downside risk. It remains to be seen whether there will be a corresponding increase in commercial and Medicare Advantage ACO two-sided risk contracting.”