As seen on RACMonitor.
More than a third of ACOs might leave if the proposed rule takes effect.
The comment period closed for the Centers for Medicare and Medicaid Services (CMS) Medicare Shared Savings Program (MSSP) proposed rule on Oct. 16. The MSSP has been a controversial program since its inception. The chief concern is that the financial “dis-incentives” will decrease the number of Accountable Care Organizations (ACOs). The proposed rule for MSSP intensifies the financial “dis-incentives,” causing even more concern about the number of ACOs.
What is the Medicare Shared Savings Program? It is a voluntary program that is supposed to encourage groups of doctors, hospitals, and other healthcare providers to come together as ACOs to give coordinated, high-quality care to their Medicare patients. Providers can choose among three distinctive tracks, depending on the amount of risk the providers want to bear. The purpose of the MSSP is to diversify risk – of both loss and gain – between the government and the ACOs. For example, Track 1 ACOs do not assume downside risk (shared losses) if they do not lower growth in Medicare expenditures.
CMS created the MSSP in hopes that doctors, hospitals, and other healthcare providers would want to participate, with the incentive of the chance to make more money, rather than remaining in the traditional Medicare relationship. The program turned out to be more successful than anticipated, with the majority of ACOs opting to become Track 1, or the least risky model (one-sided risk).
CMS’s new proposed rule, however, increases the risk placed on the ACOs. Needless to say, providers aren’t happy, and many ACOs in the program warn that they’ll drop out if CMS finalizes its proposal as is.
What are these proposed changes to the MSSP?
Restricting Track 1 Enrollment
ACOs currently have six years to shift to a risk-bearing model from a shared savings-only model (Track 1). The proposed rule would give existing ACOs one year and new ACOs two years to transfer to a risk-bearing model. This one change could cause mass exodus from the MSSP, as many providers are, by nature, risk-averse.
Morphing to Five-Year Agreement Periods
The proposed rule requires CMS and the ACOs to morph into using five-year agreement periods. I am on the fence regarding this change. It could strengthen ACOs’ incentives to reduce spending by breaking the link between ACOs’ performance in the first two years of each agreement period and their future benchmarks. However, this modification could worsen incentives during the first two years of each agreement period. I would love to hear your opinions.
Slashing Shared Savings Rates
The proposed rule purports to slash shared savings rates for upside-risk models from 50 percent to as low as 25 percent. Under the one-sided model years of the glide path, an ACO’s maximum shared savings rate would be 25 percent, based on quality performance, applicable to first-dollar shared savings after the ACO meets the minimum savings rate. The glide path concludes with a maximum 50 percent sharing rate, based on quality performance, and a maximum level of risk, which qualifies a provider as an Advanced APM for purposes of the Quality Payment Program.
Other proposed changes include the following:
- A bifurcated system for high- and low-revenue ACOs, which functionally would penalize certain ACOs for the size of their patient populations and volume of services.
- A differential system for experienced versus inexperienced ACOs, which would allow experienced ACOs to choose from a more robust menu of participation options.
- Dis-incentives to lower spending: ACOs have had little incentive to lower spending because of the link between the spending reductions they achieve and subsequent benchmarks. One could argue that it is astonishing that the MSSP has produced any savings at all. CMS proposes that the MSSP needs to be re-vamped.
- A modified and more rigorous application review process to screen for good standing among ACOs seeking to renew or re-enter MSSP after termination or expiration of their previous agreement. ACOs in two-sided models would be held accountable for partial-year losses if either the ACO or CMS terminates the agreement during a performance year.
Will there be too much risk too quickly placed on the ACOs? Stay tuned for whether this proposed rule becomes finalized.
Senate Bill 568 was filed today!!! It is a bill that you should follow!
SB 568 reads: “It is the intent of the General Assembly to transform the State’s health care purchasing methods from a traditional fee-for-service system into a value-based system that provides budget predictability for the taxpayers of this State while ensuring quality care to those in need.”
It proposes, among other things, a consolidation of the 9 current managed care organizations (MCO) here in North Carolina to “not more than 6” and “no less than 4” MCOs.
It further establishes another acronym: ARPLOs.
“At-Risk Provider-Led Organizations (ARPLOs). ARPLOs are capitated health plans administered by North Carolina’s provider-led Accountable Care Organizations that will manage and coordinate the care for the Patient Population, outside of the PCMHs, pending waiver approval where appropriate for this transformation by the Center for Medicare & Medicaid Services.”
Remember, the House has pushed for ACOs and the Senate has pushed for MCOs. See blog.
Is the Senate bending toward the House??????
More to come…
I think of Bob Dylan’s raspy voice singing:
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.
In 1933, Franklin D. Roosevelt took the presidency during a time of severe poverty. The Great Depression, which would last until the late 1930s or early 1940s, cast shadows and doubt over the future of America. People were starving. Unemployment and homelessness were at an all-time high.
FDR’s first 100 days in office were monumental. In fact, FDR’s first 100 days in office changed America forever. With bold legislation and a myriad of executive orders, he instituted the New Deal. The New Deal created government jobs for the homeless, banking reform, and emergency relief to states and cities. During those 100 days of lawmaking, Congress granted every major request Roosevelt asked. This is an example of what I call blending of the separation of powers. In a time of great national need, Congress took an expansive view of the president’s constitutional powers and cooperated with him to effect major change.
I am in no way comparing our General Assembly to Congress back in the 1930s nor am I comparing FDR to Gov. McCrory. In fact, there are vast differences. I am only making the point that rarely does the legislative body create such change.
But North Carolina’s current Senate Bill 744 may create this change. For example, if Senate Bill 744 passes the House, the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA) may no longer manage Medicaid. That’s right. A whole new state agency may manage Medicaid.
This past Friday, May 30, 2014, the state Senate passed a $21.2 billion budget, which is known as Senate Bill 744. On May 31, 2014, Senate Bill 744 passed its 3rd reading and will now go on to the House. So far, it has been revised 3 times, so we do not know whether the House will make substantial changes. But, as it stands today, it is shocking. Is it good? Bad? I don’t think we can know whether the changes are good or bad yet, and, quite honestly, I have not had time to digest all of the possible implications of Senate Bill 744. But, regardless, the changes are shocking.
Of the most shocking changes (should SB 744 get passed), consider the following:
1. DHHS must immediately cease all efforts to transition Medicaid to the affordable care organizations (ACOs) system that DHHS had touted would be in effect by July 2015;
2. DHHS’s DMA will no longer manage Medicaid. Instead, a new state entity will be formed to manage Medicaid. (A kind of…”scratch it all and start over” method);
3. All funds previously appropriated to DMA will be transferred to the Office of State Budget and Management (OSBM) and will be used for Medicaid reform and may not be used for any other purpose such as funding any shortfalls in the Medicaid program.
4. Categorical coverage for recipients of the optional state supplemental program State County Special Assistance is eliminated.
5. Coverage for the medically needy is eliminated, except those categories that the State is prohibited from eliminating by the “maintenance of effort” requirement of the Patient Protection and Affordable Care Act. Effective October 1, 2019, coverage for all medically needy categories is eliminated.
6. It is the intent of the General Assembly to reduce optional coverage for certain aged, blind, and disabled persons effective July 1, 2015, while meeting the State’s obligation under the Americans with Disabilities Act and the United States Supreme Court decision in Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581 (1999).
7. Repeal the shared savings program and just reduce the reimbursement rates by 3%.
8. DHHS shall implement a Medicaid assessment program for local management entities/managed care organizations (LME/MCOs) at a rate of three and one-half percent (3.5%).
9. For additional notices as to State Plan Amendments (SPAs), DHHS must post the proposed SPAs on its website at least 10 days prior to submitting the SPAs to the federal Center for Medicare and Medicaid Services (CMS).
10. Reimbursement rate changes become effective when CMS approves the reimbursement rate changes.
11. The Department of Health and Human Services shall not enter into any contract involving the program integrity functions listed in subsection (a) of this section of SB 774 that would have a termination date after September 1, 2015.
12. The Medicaid PROVIDER will have the burden of proof in contested case actions against the Department.
13. The Department shall withhold payment to any Medicaid provider for whom the DMA, or its vendor, has identified an overpayment in a written notice to the provider. Withholding shall begin on the 75th day after the day the notice of overpayment is mailed and shall continue during the pendency of any appeal until the overpayment becomes a final overpayment (can we say injunction?).
Senate Bill 744 purports to make immense modifications to our Medicaid system. I wonder what Gov. McCrory and Secretary Wos think about Senate Bill 744. If SB 744 passes, McCrory and Wos can no longer continue down the ACO path. Does the General Assembly even have the authority to bind their hands from creating ACOs? It seems so.
As for the “new state agency” that will manage Medicaid, maybe the General Assembly is right and we do need to scratch out the current Medicaid management and start over…I doubt anyone would disagree that DHHS has had some “oops” moments in the past year or so. But (a) is this the way to start all over; and (b) does the General Assembly have the legal power to remove the management of Medicaid from Secretary Wos?
Going to the reduction of optional services for the “medically needy,” what services are considered optional? Here is a list of optional services, as defined by the Center of Medicare and Medicaid Services (CMS):
• Case Management
• Mental Health
• Intermediate Care Facilities (ICF-MR)
• Personal Care Services
• Respiratory Therapy
• Adult Dentures
• Prescription Drugs
• Community Alternative Programs (CAP)
• Private Duty Nursing
• Home Infusion Therapy
• Physical Therapy/Speech Therapy
I cannot comment on all the changes proposed by Senate Bill 744; I simply have not had enough time to review them in detail, because there are so many changes. I do not purport to know whether these modifications are ultimately for the good or for the bad.
All I know is that we better start swimming or we will sink like a stone, because the times they are a-changin’.
As NC Morphs to ACOs, the Brains (The Mental Side of Medicaid) Remain With MCOs: Perfect for the Headless Horseman
ACOs could be the answer to Medicaid budget problems. At least for physical services for the neck down. The brain, for now, will continue with the MCOs.
I understand that Medicaid services for physical needs will be within the parameters of the ACOs and that MH/DD/SA will remain with MCOs. But it seems that we are cutting the head off the body. This system would be perfect for the Headless Horseman; I assume the Headless Horseman did not suffer from any mental afflictions being that he had no head.
The shift to the ACO system is an attempt to revamp the fee-for-service payment method and dissuade physicians from ordering more procedures and services than are actually necessary.
According to a new Harvard study, as many as 42 percent of U.S. Medicare patients were subjected to procedures providing little if any medical benefit, costing the government program up to $8.5 billion in wasteful spending.
What could be the cause of this needless spending? You could argue that plaintiffs’ lawyers are at fault because of creating a fear of medical malpractice lawsuits. Doctors become so concerned about being the subject of a medical malpractice lawsuit that the physician is over-inclusive as to tests/procedures rather than risk being accused of medical malpractice by failing to test. This is commonly referred to as practicing “defensive medicine.”
But you could also argue that the entire fee-for-service payment method currently used by physicians gives a financial incentive to providers to recommend more services, more testing, more procedures. For example, ordering a test a patient doesn’t really need, in an effort simply to have the results show up in her records, would be considered practicing defensive medicine.
It is without question that defensive medicine is better for physicians, and very understandable. If I were a physician, knowing as much as I do about health care law, I would definitely practice defensive medicine. And purchase the Cadillac of the liability insurances, one that covers 100% of attorneys’ fees for my choice of attorney. Those plaintiff lawyers would scare me, too!
But defensive medicine is not the best approach for the Medicaid budget. One possible way to eliminate defensive medicine practices is to implement the accountable care organizations (ACOs). While ACOs do not completely do away with a fee-for-service payment system, they creates incentives to be more efficient by offering bonuses when physicians keep costs down. Providers get paid more for keeping patients out of the hospitals.
North Carolina is implementing the ACO model for physical health care (not for MH/DD/SA).
North Carolina Department of the Health and Human Services (DHHS) has announced that the NC Medicaid system will be changed over to the ACO model by July 2015, although some question whether the deadline is a bit unrealistic.
However, in NC, there are already ACOs, whose experience can give us an idea of what the NC Medicaid system’s ACO experience will resemble. Here is a list of active ACOs in NC (according to one website):
Physicians HealthCare Collaborative
Cornerstone Health Care, PA
Meridian Holdings, Inc.
Triad Healthcare Network, LLC
Coastal Carolina Quality Care, Inc.
Accountable Care Coalition of Caldwell County, LLC
Accountable Care Coalition of Eastern North Carolina
Another article cites that in NC we have 14 ACOs currently active.
Our ACOs in NC service MediCARE patients, not MediCAID.
I am not aware of a single other state in USA that has implemented ACOs to Medicaid, which seems odd, considering the number of ACOs across the nation for Medicare and the touted success of ACOs in Medicare. Could NC possibly be the leader in ACOs for Medicaid? There is no question that, when we implement the ACOs, all eyes will be on NC to determine the success or failure of the program.
The ACOs will not, however, manage behavioral health. We will continue with the MCOs behavioral health care. So the ACOs will be in charge of everything the neck down. But is the ACO system going to replicate the MCO system? (As everyone knows who has read my blogs, I am not a fan of the MCO system).
ACO…MCO….What’s the difference?
Hopefully, and I believe it is correct to say, the ACOs will be vastly different from their counterpart, the MCO (in a good way).
In essence, I have high hopes for the ACOs. I believe that the brain (MH/DD/SA) should have been included with the rest of the body, but, maybe, in time it will be.