ACOs, It’s Time To Commit To Risk

By March 31, 2021 June 23rd, 2021 No Comments
Many ACOs are at a crossroads in determining whether to leave the program, stay at the same risk level, or take on more risk. Taking on more accountability has proven to be extremely rewarding for ACOs. This article explains how ACOs can get to risk faster, and why they need to.

5 Reasons to Get to Risk Faster

For just about everything in life, taking a risk is scary. Whether it’s a business decision or a personal one, either you go all-in or shy away from risk.

March 31, 2021

The expression, “no risk, no reward,” has become part of the American vernacular because it’s a rallying call for success. Big ideas, while risky, can also lead to big outcomes.   

This couldn’t be more true for Accountable Care Organizations (ACOs)—the result of a big idea to transform the healthcare system to the value-based care model. This model relies on quality of care versus quantity, and accountability among providers to deliver positive patient outcomes.

When the Medicare Shared Savings Program began in 2012, ACOs could enjoy 6 years of one-sided risk. In 2018, the new Pathways to Success final rule pushed ACOs toward accepting more risk, faster. The rule reduced the amount of time that an ACO can remain in the program without taking accountability for healthcare spending (from six years to two years for most eligible ACOs, one year for experienced or “legacy” ACOs, three years for new, “low revenue” physician-led ACOs, including some rural ACOs). After these contracts expire, ACOs face a decision. Get out, dismantle, and lose the investment in the ACOs? Or join the new glide path to risk? This cycle of decision-making continues for ACOs depending on their contractual lifecycle with the Centers for Medicare & Medicaid Services (CMS).

Meanwhile, a global pandemic risked the success of ACOs on a mission to change healthcare. CMS offered relief on quality reporting requirements and taking on more risk.   

“CMS is also forgoing the annual application cycle for 2021 and giving ACOs whose participation is set to end [in 2020] the option to extend for another year. ACOs that are required to increase their financial risk over the course of their current agreement period in the program will have the option to maintain their current risk level for next year, instead of being advanced automatically to the next risk level.” 

Clif Gaus, ScD, president and CEO of NAACOS, reflected in a written statement.

“[This] rule will help ease the concerns of many ACOs, who earlier this month said they might leave the program in droves because of the catastrophic effects of the COVID-19 pandemic.”

In addition, there are the unestablished ACOs that have until June 2021 to submit a notice of intent to apply (NOIA). For those ACOs, what path makes the most sense?

This year, the variables stated above will cause the largest cohort of ACOs at one time to face a decision. This article examines the glide path to risk, explains how ACOs can get to risk faster, why they need to, and how having a risk-sharing partner can make all the difference.

In the original MSSP, CMS designed legacy Tracks 1-3 and redesigned them with Pathways to Success (see graph) to offer ACOs options depending on the level of accountability they desire. CMS is making it clear: They want organizations to take on downside risk.

The glide path to risk

“The movement toward value-based care is like flying a plane on a glide path, hence the term. There is a risk to landing—pulling power and dealing with all the variables like wind, airspeed, radios—but landing safely is the reward. Also, a “go-around”—aborting a landing—in aviation is difficult. Once you commit to the glide path, it’s complicated to get out. Does that sound familiar to Track 1 ACOs deciding whether or not to participate in Pathways, knowing you will be assuming risk in 2022? Don’t get pushed around by the variables but find a strategy to navigate through them. Stay on the path, it will lead to a safe landing.”

—Brian Fuller, ICS CEO

Here’s where our favorite expression comes back. Should ACOs join pathways with risk? Or spend 1-3 years in Basic A/B with only 40/60 shared savings? We would argue that rather than staying comfortable with one-sided shared savings (i.e. upside only), it’s time to embrace downside risk. The model is simple in theory: ACOs that take on more risk reap more reward for their organization and for CMS.

At Integrated Care Solutions (ICS), we help ACOs get to risk faster, and do it better, in order to get the most out of the program.

“The faster we can collectively shoulder the risk as an industry, the faster we will be able to move to value, which is ultimately the best for our patients and our industry as a whole,” says Brian Fuller, ICS CEO. “Data shows us that ACOs that take on the highest accountability are doing better financially as well as helping healthcare transform to value more quickly.” 

Let’s explain … 

5 Reasons to Get to Risk Faster 

“Data on ACO performance shows that over time ACOs taking accountability for costs perform better than those that do not.” —CMS

Risk is a Track to Permanent Savings

The movement toward accountability is not going away. The fee-for-service (FFS) model has allowed physicians to get paid for patient volume, not quality. CMS has been forced to pay out, not having a way to keep providers accountable for cost-effective care. As a result, the Medicare Trust Fund has been on the verge of bankruptcy for most of its 55 years of existence. 

“CMS’ goal in testing alternative payment models is to move risk to providers and healthcare organizations,” says Dana Strauss, ICS VP of Partner Engagement. “Risk has turned out to be a greater incentive, overall, than shared savings. ACOs represent a significant step toward CMS being able to budget for and control spend in the FFS population. The limited-time without risk in Pathways to Success is a ‘semi-mandate.’ You can only partner with CMS if you are willing to share risk.” 

Risk-bearing programs are working and savings are accruing. In 2019, 541 ACOs participated in MSSP and saved $1.2 billion for Medicare.  

According to CMS, “ACOs that took on downside financial risk outperformed ACOs that did not, with net per beneficiary savings of $152 per beneficiary compared to $107 per beneficiary.”

Take the Next Gen model, which sunsets December 2021, as an additional indicator. In 2017, Next Gen ACOs saved $164 million across 44 ACOs for the Medicare Trust Fund. CMS took note of the Next Gen successes and is now accelerating the value movement. Direct Contracting, the newest, highest risk, total-cost-of-care model that officially launched April 1, 2021, is likened to Medicare Advantage for the FFS population, with similarities to Next Gen.   

Take Advantage of the Advanced APM QPP 

CMS states: “An Advanced APM is a track of the Quality Payment Program (QPP) that offers a 5 percent incentive for achieving threshold levels of payments or patients through Advanced APMs. If you achieve these thresholds, you are excluded from the MIPS reporting requirements and payment adjustment.”

This is a significant incentive. ACOs that take the higher-risk tracks (Basic E and Enhanced) are considered Advanced APM QPPs, and therefore qualifying participants (QPs)—qualification based on patient volume or payment thresholds—enjoy the benefits of the Advanced APM QPP program, most notably MIPs exclusion and a 5% APM incentive payment.

Strauss breaks it down: “Taking advantage of the Advanced APM QPP status through Track E or Enhanced participation is a great option for organizations experienced with MSSP, Next Gen, or other risk-bearing programs like BPCI-A. Tracks A and B have no downside risk, but choosing this option means also opting for a 40/60 shared saving split. Though Track A is a gateway for a change-making path, it should only be chosen if there is a significant concern —through data and risk-tolerance—about the possibility of overspending. Tracks C, D, or E, with their accompanying risk profiles, may be the incentive needed for providers to make the needed adjustments to how they manage and coordinate patient care.”

Avoiding Risk May Create More Risk

Track A is a postponement of the inevitable, and a reduction of shared savings from 50/50 to 40/60.

“It’s not the ideal step for legacy Track 1 ACOs to start in Track A,” Strauss says. “Adjusting operations to make the change to risk right away may be helpful motivation when collaborating with physicians who are ACO members. Another trade-off for accepting more risk is the potential for more reward via the Advanced APM QPP status with its 5 percent bonus and MIPS avoidance.”

Another way to think about it: Paying for the outcomes of patient care rather than Relative Value Units (RVUs), which is an unstoppable trajectory for not only CMS but also other payers. Participating in risk and making the needed changes to how medicine and care coordination are practiced sets providers up for success in all risk-bearing models of outcomes-based payment that are being tested and are yet to be tested. 

“From our perspective, legacy Track 1 ACOs starting with risk in a program with which you are already familiar is a great way to see the next level of benefit to MSSP participation,” Strauss says. Also, consider that others are taking on significant risk already. Some are entering Direct Contracting full capitation for this year and next. There is risk in not getting comfortable with these models if you view this similarly. These models are going to continue being rolled out and more and more patients will be under some risk-based alternative payment model in the next couple of years.”

And the BIGGEST Reason: Change Won’t Happen Without More Risk

“Jump in,” Strauss says, “because for many providers and organizations, unless there is a substantial commitment to risk, it’s hard to incentivize a new way to manage a population. This is absolutely 100 percent the crux of the matter—the key to being successful in these models are primary care providers practicing differently, communicating carefully with patients, and identifying all their needs.

“Payers, including CMS, view primary care providers as ‘care quarterbacks.’ This is the role they are well-suited to fulfill and critical for high-quality patient care along the continuum. But in FFS models, they are rewarded for how many patients are seen in a day (RVUs). To align incentives, providers have to see the potential upside. The Enhanced Track offers that in the MSSP program. When all is said and done, CMS would rather bonus primary care providers and increase their earnings as a trade-off for preventing hospitalizations and related avoidable downstream utilization and costs. Building up primary care as the backbone of America’s health system is an essential goal of population health management alternative payment models.”

Risk is Easier with the Right Partner

It’s easy to say “take on more risk—the more risk, the more reward.” That’s where a partner can make a big difference in the decision-making process. At ICS, we assume a risk-sharing approach with our ACO partners. 

We know operationalizing an ACO is a large endeavor for a physician practice or healthcare organization. Being a part of driving the shift to value-based care presents numerous challenges. One of these challenges is knowing where your patients are, and how to stay connected to their health and disease management, among other things.

On average, 70% of an ACO’s total annual spend is attributable to care outside the hospital, and only around 7% is attributable to their primary care spend.

That’s where we come in.  

ICS has lowered the total cost-of-care for our ACO partners by up to 20% (average 11%).

“Communication is the cornerstone of success in risk-based programs,” Strauss says. “Taking on a partner like ICS will help shoulder the burden of care coordination, establish relationships with your patients and achieve care goals, manage chronic conditions optimally, identify Social Behavioral Determinants of Health (SBDoH) issues that could affect patients’ well-being, and provide consulting and expertise for ACOs throughout the care continuum. We pick up where you left off as an extension of your practice. We assist in making sure patients are seen for their annual wellness visits and that gaps in care are being closed. Patient satisfaction with care improves when patients feel connected to their providers, not just when they are ill. We work closely with patients—especially those deemed rising-risk and higher-risk and those transitioning between care settings. There is follow-up that must be done beyond the work in the office. That’s where ICS comes in.” 

Downside risk doesn’t have to be entirely owned alone. Take on more accountability with the right partner to confidently navigate the risk while establishing strong opportunity to enjoy the rewards of these models. 

Collectively, we can continue the evolution of value-based care and be the change-makers in healthcare.

ICS helps organizations through their transformation from fee-for-service to-value-based care and delivers ongoing care coordination, consulting, and expertise in data-driven processes necessary to achieve quality care and financial success. If you are an ACO in need of a partner with expertise in value-based care and proven results working with risk-bearing organizations, contact ICS today for a free consultation.


DCEs, Get the Most Out of Your Commitment to Risk