ACOs — There must be a pony in here someplace

We’ve all heard that story.  Now, CMS is in that proverbial barn and with the proposed rules, have doubled down on the time they’re taking to look for ACO success at managing risk.   Does it make sense given that only two current ACOs have gone to the two-sided risk model?  My guess is that is not what they are really looking for in just another three years.

CMS is really looking at how many beneficiaries are in the fee-for-service Medicare world and they’re taking the long view.  So, that’s the 70% who can’t be absorbed overnight into Medicare Advantage.  It wasn’t hard to think that CMS would change how payment formulas could be adjusted to affect success especially when they were given a quick stake of 5 million fee-for-service beneficiaries who are served by 330 ACOs with another 89 added on January 1.  First, CMS always does that.  Second, getting to those numbers in just three years took years in the various editions of Medicare managed care.  So, there just might be something here.

Another point, for now ACOs have a political advantage.  Just follow the ying and the yang between fee-for-service and managed care when the White House changes.  Republicans have fed managed care but Democrats have looked for ways to avoid insurance companies and entice provider entities.  Nothing could be clearer; the ACA was passed in 2010 by the Dems, funding for the ACA came from Medicare Advantage and  “ACO” is nomenclature born in the ACA.  Also, the additional three-year term extends ACOs into the next administration and, just maybe, provider-operated organizations will evolve into viable risk bearing entities.

Further, the advances in data management and technology along with their combined effects are telling CMS that a sweet spot is developing for a population-based approach to managing chronic conditions, the current Holy Grail.  Mega investments in IT by HHS and micro changes in capability to manage and share individual health information will help.  But other changes also include diverse things like developing methods to avoid penalties for readmissions.  Care management programs are actually touching patients who are no longer in the hospital by the hospital.  All of these are encouraging a long view and the belief that there is a nearby tipping point.  So, why not keep ACOs going?

Finally, CMS has committed to care coordination and value-based services with a myriad of programs and demonstrations that encircle the underpinnings of ACOs.  The latest and largest is the $670 million Practice Transformation demonstration aimed at engaging 150,000 physicians and 5 million beneficiaries. The CMS long view understands that none of these work overnight and that waiting for 70% of the Medicare population in fee-for-service to be absorbed into Medicare Advantage is beyond myopic.   So, make comments on these proposed rules, expect more tweaks, and expect evolution.  CMS will continue building the infrastructure to deal with this entrenched population.  Clearly, ACOs are in the mix for some time to come.

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