Medicare payment consultants agreed in a meeting on Monday that it is worth investigating whether administrative setting a factor in predicting cost trends for accountable care organizations can make it easier for high-performing organizations to share the savings each year. But the panel wondered if a viable benchmarking system was possible for the ACO as part of a voluntary program.
This could set the stage for future Medicare Payments Advisory Board sessions on ACO Compulsory Participation and shows that MedPAC Commissioners are moving in the same direction as the Medicare and Medicaid Service Centers, which said in their application. October White Paper that it aims to ensure that all Medicare recipients receive value-based health care by 2030.
ACOs are made up of doctors, hospitals, and other providers who work to coordinate the care of Medicare recipients. A provider’s participation in the ACO is voluntary, and those who do participate can earn bonuses based on how much they helped save Medicare and their quality work.
ACOs can participate in Medicare savings if their beneficiaries’ spending is below a set benchmark. The benchmark is determined based on the costs of beneficiaries who would be eligible to participate in the ACO in the base years, and on the increase in ACO costs between the base period and the implementation year.
As ACO benchmarks reset each performance period based on past ACO performance, the ACO, which increases the amount of savings it generates annually, will be dealing with benchmarks that are becoming increasingly difficult to beat.
The effect is known as a ratchet, and it jeopardizes long-term participation in the ACO, reducing the incentives for the ACO to save, MedPAC staff warned during Monday’s meeting.
To tackle the ratchet directly, MedPAC staff suggested using an administratively established trend factor that could be based on a number of metrics, including discounted projections of Medicare spending growth or projected gross domestic product growth.
This would eliminate the ratchet effect, but entails its own problems, including the fact that cost forecasts may not always be correct. ACOs, especially small ones, can be positively or negatively impacted by one-off changes in spending, practice patterns, and more, which can lead to ACOs with unwanted benchmarks leaving the program.
However, the panelists overwhelmingly agreed that MedPAC should study how to get rid of the ratchet effect, and said they want to study the administrative setting of the trend factor as a way to eliminate this phenomenon.
But many panelists questioned whether it would be possible to create a better test system if the ACO program remains voluntary.
Part of what makes it difficult to balance the goals of rewarding provider performance, creating Medicare savings, and avoiding ACO withdrawals, says MedPAC Commissioner Dr Jonathan Jaffery, is partly what makes it difficult to balance the goals of rewarding provider performance.
Jafferi said that in his ideal world, every Medicare recipient is covered by a cost-based payment model, be it Medicare Advantage or ACO.
Commissioners, including Betty Rambor and Bruce Pienson, said there must be some urgency behind the move to making ACO participation the standard of Medicare payment.
“Like others, I don’t see a solution in a voluntary system. [I think] that some form of binding or quasi-binding system is needed, ”Pienson said.
MedPAC vice chairman Paul Ginsburg said he envisions creating a system in which ACO participation will be mandatory for certain types of providers, with strong incentives in the form of higher service fees for other providers to participate. This will help achieve fairer and more effective benchmarks, he said.
Commissioner Dr Amol Nawat said data analytics from MedPAC staff could help clarify whether it is possible to develop a benchmark bias and trend-based system in a voluntary program that is independent of choice effects, although he suggested that the design of this system was would be difficult.
Some panelists expressed doubts about the transition to a mandatory ACO model. Commissioner Dr. Laurence Casalino warned that the more mandatory Medicare becomes and the more financial pressure is put on participating organizations, the greater the risk that these organizations will pay less attention to quality.
“Today we are only talking about cost control. But I think there is much more opportunity and there really needs to be more emphasis, in a way – better than we have now – measuring and rewarding the quality of care in organizations, ”he said.
MedPAC Chairman Michael Cernyu indicated that he did not like the idea of mandatory ACOs and said it should be more about incentives to join the program. However, he acknowledged that although the voluntary program and the high level of selection among the program participants made it difficult to set benchmarks.
“But we definitely won’t be able to get all groups to use strong two-sided risk models,” says Chernev.