Medicare's newest program testing accountable care
organizations is not even a year old, and three out of 21 participants have
already exited.
Three organizations have withdrawn from the CMS'
Next
Generation ACO program since January: Heritage California ACO in Northridge,
Calif., River Health ACO in Harrisburg, Pa., and WakeMed Key Community Care in
Raleigh, N.C. The program started out with
21
ACOs and is now
down
to 18. Organizations had until April 1 to bow out without incurring a
financial penalty.
The remaining 18 are still
within
the range of 15-20 ACOs CMS officials thought would participate. But the
exiting parties indicate Medicare's payment reforms, which center around quality
and the ability to keep costs down, still have not completely won over many
hospitals and doctors.
It's also a
case
of déjà vu. Many groups that
were
part of the
Pioneer
ACO program, a predecessor to the Next Generation cohort, have
dropped
out over the years citing financial uncertainty. Nine Pioneer ACOs
remain
from the original 32.
River Health ACO, a collaboration among
PinnacleHealth, Susquehanna Health and other providers in central Pennsylvania,
quit the program almost immediately
in
February. Executives
expressed
excitement after they initially were selected, but they later estimated the
ACO would not be able to lower costs gto meet the current target set by
CMS.h
WakeMed Key Community Care, organized by WakeMed Health &
Hospitals and local physicians, was
committed
to the Next Generation program but decided to back out gafter evaluating
financial and operational metrics.h
gAs an ACO with a very low benchmark,
we are much more susceptible to any variability,h the ACO said in an emailed
statement. The group, which is evaluating its Medicare ACO participation for
2017, also said it was unable to obtain reinsurance to protect itself from
potential losses.
Heritage California ACO did not
respond to multiple requests for comment. The organization, operated by the
Heritage
Provider Network, lost money
as
a Pioneer ACO before
jumping
into the Next Generation program.
When asked about the Next
Generation departures, a CMS spokesman sent a statement that said, gACOs make
their own business decisions regarding participation in ACO initiatives and may
determine that a certain model is no longer the best fit for their
organizational priorities.h
Like other ACOs, Next Generation participants
share in savings or losses depending on whether they meet clinical quality
targets and lower healthcare spending below a certain threshold. Next Generation
ACOs can take on more payment risk than other ACOs and qualify as an gadvanced
alternative payment modelh under
Medicare's
new physician payment law.
However, Medicare beneficiaries who are
part of ACOs can continue to go to any doctor or hospital they want, which
providers
view
as an obstacle to meeting their spending targets.
gThe big challenge
with all the Medicare models is the fact that there is no network,h said Greg
Maddrey, a director at The Chartis Group, a consulting firm. gIt takes away a
fairly significant control point in managing care and risk.h
The CMS
tried to account for that in the Next Generation model by allowing ACOs to pay
beneficiaries $50 in cash per year as an incentive to stay within their network.
Next Generation groups can also offer added benefits to their patients, such as
post-discharge home visits and waivers for telehealth and skilled-nursing
facilities.
The federal Medicare agency also has tinkered with
ACO
spending benchmarks in response to feedback from Pioneer ACOs and other
providers, which may entice some groups to stick with or move to the less risky
Shared Savings Program.
gACOs with spending below the regional average
will find the (Shared Savings Program) far more attractive than Next Gen,h said
Dr. J. Michael McWilliams, a health policy professor at Harvard Medical School
who has studied ACOs.
Maddrey added that because of the way ACO filing
deadlines are structured, many organizations are applying and analyzing their
chances of financial success after they are accepted.
gAfter you apply
and start to look at the data that comes back and your cost targets, it's
natural to say, 'Are we sure we want to take this leap?' h he said. g 'Do we
think we have the organizational capability and time to be successful in this
program?' h
The remaining 18 ACOs are staying within the program for now
but could drop out down the line. The next round of Next Generation ACOs will be
announced in August.