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10 Years of MSSP: 2012 Fears Versus 2022 Realities (Part 2 of 2)

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Key takeaways:
  • The MSSP has been around since 2012, providing us with 10 years of data to review.
  • We dig into three of the biggest fears we heard at the program’s introduction around beneficiary choice, savings potential and structural leadership to see which, if any, came true.
  • The findings prove that ACOs can be effective at managing use, directing care to lower-cost preventive and primary care.
For more on this topic:

Last month, the Medicare Shared Savings Program (MSSP) turned 10 years old. When it was first created, reactions to the program were mixed. While some providers were excited to leave the fee-for-service model to realign care delivery around value and wellness, others believed the program would be a flash in the pan and create perverse incentives in the market.

Now that we have a decade of data to study, we thought it would be interesting to revisit some of the predictions of 2012, and see which, if any, came true. What follows are three of the most common fears we heard in 2012, contrasted with what really happened in the market.

2012 Fear: Accountable Care Organizations (ACOs) will limit beneficiary choices and provider decision making.

2022 Reality: Because this was such a strong concern at the outset of the program, the Centers for Medicare & Medicaid Services (CMS) pulled several policy levers that ultimately prevented this outcome.

A cornerstone of the MSSP program, beneficiaries do not enroll in an ACO, they are assigned to one based on where they receive the plurality of their primary care. Thus, from the outset, the ACO is unable to “cherry pick” because their populations are assigned based on existing beneficiary choices. Even with the introduction of voluntary alignment, alignment is based on who a beneficiary selects as their main provider. As part of their enrollment, beneficiaries are not required to use the services of their existing providers and are told explicitly that they can see any provider of their choosing – however, the ACO is still accountable for that spending.

In setting the program up in this manner, CMS retained the competitive forces that incent providers to prioritize beneficiary satisfaction and high quality of care. If at any time a beneficiary believes they are not being well served, they can continue to vote with their feet, while the ACO remains responsible for the costs provided elsewhere. According to a 2021 report from MedPAC, “this creates an incentive for the ACO providers to satisfy their patients and keep them in the ACO” to avoid patient leakage to competitors.

Recent research indicates these incentives are working as intended, as MSSP ACOs have been found to outperform their fee-for-service counterparts in beneficiary satisfaction, value and quality performance.

2012 Fear: Physicians need to control ACOs to ensure lower costs.

2022 Reality: Physicians are essential providers of care and have a fundamental role in shaping the success of ACOs. Because most of the savings in ACOs come from outside the physician group, some researchers have concluded that physician-led models have stronger incentives to achieve savings than health systems, which must sacrifice revenues to achieve success.

It’s true that health system-led models sacrifice inpatient revenue to generate savings. However, many are doing so in the context of an integrated delivery network or an owned insurance product, where at least a portion of that lost money is shifted to the health plan’s bottom line or to lower-cost settings that also contribute to financial health, including affiliated outpatient centers, urgent care clinics and primary care practices. Through the earning of shared savings payments, health systems are finding that they can maintain financial viability even as they sacrifice inpatient revenues.

Second, classifications of “physician led” and “health-system led” are often subjective and inaccurate. We calculate that 20 percent of Premier’s health-system led ACOs are designated as “physician led” by CMS. This does not mean the health system isn’t engaged in overseeing and managing the overall program; rather, it means that the health system made a strategic decision to operate its MSSP ACO as an aligned, physician-led entity that partners with the health system resources.

Last, if health policy has shown us anything, it’s that unlevel playing fields create perverse reactions. In this case, giving physicians a leg up over others would create a direct incentive to buy up physician practices to overcome the disadvantages created by the policy. In addition, the distinction disincents ACOs from partnering with hospitals and specialists, thus leaving these high-cost areas excluded from total cost of care management efforts – the very definition of a perverse reaction. Instead of establishing a priority list of who should drive the alternative payment model (APM), clinicians should have the freedom to form relationships and decide whether to align with other physicians, insurers, retailers or health systems.

2012 Fear: ACOs are just health maintenance organizations (HMOs) reborn – they will privatize the Medicare program and stint on care.

2022 Reality: Because HMOs never altered the underlying payment systems in healthcare, they were limited in cost control efforts by using very narrow networks, careful controls over services and cost limits. In other words, HMOs’ only options to limit spending were to squeeze providers on price, deny or restrict claims and only pay for in-network treatments.

ACOs differ in many important ways.

ACOs are paid shared savings payments that tie total reimbursement to achievement of savings and quality improvements – they are not rewarded for volume. As such, volume limits that were overlayed by the HMO aren’t necessary and, in fact, work against the ACO. As we discussed earlier, because beneficiaries retain their choice in providers while holding the ACO accountable, the ACO has the built-in incentive to provide timely access to care to maintain competitive positioning. Coupled with the MSSP’s quality metrics that make payments contingent upon improved outcomes, denying or delaying care would ultimately cost them payment in the program – not result in savings.

Second, ACOs are provider, rather than insurer-led organizations, and are self organized via partnerships across the continuum. As such, utilization isn’t restricted (as is the case with HMOs), but rather directed and coordinated. Because payment is linked to total spend, not just in-network spend, ACOs seek to manage costs by preventing the health conditions that require expensive, catastrophic care by partnering with the ACO physicians to improve early access to primary care services. Further, when more serious care is required, ACOs don’t question the medical necessity, and instead focus on improving coordination across providers and the settings of delivered care to prevent gaps and costly readmissions.

For proof that ACOs are not at all like HMOs, just look at the outcomes. HMOs were widely reviled by consumers in the 1990s, whereas most Medicare beneficiaries in an ACO have no idea that their providers are successfully curbing spending. That’s because they are doing so by improving, rather than cutting, necessary care.

Final Thoughts

The MSSP is working as intended to improve the quality and long-term sustainability of our nation’s healthcare system. The fears of 2012 about cherry picking, outcomes and structural leadership have largely been disproven.

Given the clear case of value, now is the time to move forward with new and better value-based care models that incent participation, strengthen market competition, improve quality, reduce costs and meet consumer needs.

This can be accomplished by creating additional incentives for participation in ACO programs, such as passage of the Value in Healthcare Act, which would enable ACOs to receive payments for savings associated with care coordination, increase the shared savings rate with participating providers, create a fund to offset some of the significant start-up costs and extend the MACRA payment bonuses for physician participants.


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