Accelerating the Shift to Downside Risk in Medicare Accountable Care Organizations: Effects on Clinical Quality and Costs among Older Patients

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PROJECT SUMMARY Older patients receive fragmented healthcare that is of variable quality and cost. To address this problem, the Centers for Medicare & Medicaid Services (CMS) developed accountable care organizations (ACOs). ACOs create incentives for providers to work together, while being mindful of their spending. Evaluations of the Medicare Shared Savings Program (MSSP)—CMS’s largest ACO initiative—show that participating organizations have improved care quality for older patients. Nonetheless, their costs remain high because they do not have enough “skin in the game.” The majority of ACOs have contracts in which they share a small percentage of the savings with Medicare when they reduce their annual costs below a benchmark but are not penalized if they fall short (i.e., they have no downside risk). Without the financial threat of downside risk, ACOs have less reason to innovate and increase efficiency. Thus, CMS announced “Pathways to Success” in December 2018, requiring current MSSP ACOs to shift to downside risk in as little as one year. However, shifting so quickly may be detrimental. The MSSP is voluntary, and many ACOs that have engaged in meaningful care redesign may not be ready to take on the possibility of having to repay CMS millions and leave the program instead. Indeed, 40% of ACOs facing contract renewal this July dropped out. Without the potential for shared savings, exiting ACOs may divest their data systems and coordination capabilities needed for population health management, which are costly to maintain. In turn, the ACOs’ patients may suffer lower care quality and higher costs. The decision to stay in the MSSP may have unintended consequences, too. ACOs may pursue cost-containment strategies like favorable patient selection. They may also limit their focus to CMS-required metrics (at the expense of other clinically important ones). These moves would hurt older patients who stand to gain the most from ACOs. In this context, we propose a combined qualitative and quantitative study with three Specific Aims. 1) To examine decisions around MSSP participation and the impact that these decisions have on an organization’s approach to care delivery after launch of Pathways to Success. Using administrative data, we will purposefully sample 12 ACOs without downside risk that faced contract renewal in 2019—six that renewed and six that did not. We will conduct semi-structured phone interviews with key stakeholders to better understand what factors influenced their participation decision and how their decision is affecting their efforts to improve care coordination and population health. 2) To assess the effects of MSSP exit on clinical quality and costs among older patients. We will analyze national Medicare claims (2008 to 2022) and identify MSSP-aligned fee-for-service beneficiaries. Among these beneficiaries, we will then measure their healthcare quality and costs (based on CMS-required outcome and process metrics and total price-standardized Medicare spending) before and after launch of Pathways to Success. 3) To evaluate for unintended consequences on older patients from continued participation. For ACOs identified in Aim 2 that remain in the MSSP, we will evaluate whether they take part in favorable patient selection. We will also measure their organizational performance against CMS-required and non- required outcome and process metrics before and after launch of Pathways to Success. Impact. Findings from our study will provide policymakers with actionable insights as they incorporate downside risk into advanced payment models and serve to inform ACO stakeholders who are considering organizational next steps.