Now that the final regulations regarding Medicare Value-Based Care organizations have been published, will interest levels return to pre-March levels? Before addressing that question, let’s review the ACO regulations and what changed from the Proposed to the Final rule.
Models: There are still two types of ACOs. Track 1: organizations no longer have to assume downside risk in the third year, rewards are up to 10% of the benchmark, and savings are split equally with CMS. Track 2: can receive greater rewards, up to 15% of the benchmark and they get a bigger share of the savings, with 60% to the ACO and 40% to CMS.
Shared Savings: While the 2% savings threshold still exits, once that point is passed the savings pool reverts to the first dollar. Previously, CMS kept that initial amount. Also gone is the 25% withhold of shared savings payments. All funds will be distributed as earned.
Quality: The 65 quality measures have been reduced to 33 but they still play a significant role in sharing of savings or paying back losses.
Patient Assignment: There are two big changes here. Patients are no longer assigned solely on the basis of primary care physicians. Patients who receive the bulk of their primary services from specialists (such as cardiologists or endocrinologists) can be assigned those physicians, as well as nurse practitioners or other non-physician providers.
The second change eliminates retrospective attribution. Patients will be assigned prospectively and potentially reassigned at year end based on actual experience.
Sponsors: Eligible organizations were expanded to include rural health centers, federally qualified health centers, and critical access hospitals.
What Was Unchanged?
With these changes, what factors might still keep organizations from pursuing ACOs? The following are the major ones:
Patient choice is still dominant. This may be politically appropriate but hinders the ability of any ACO to have a maximum impact on care.
Return on investment may be minimal. While CMS suggests formation costs for an ACO will be in the range of $500,000, the groups in the Physician Group Practice Demonstration spent upwards of $10 million. Care management will have to be very effective to create a payback.
Estimates of how many Medicare ACOs will be formed are 240 at the top end, with the low-end estimate by CMS at 50. That might be closer to reality.
