Benchmarking makes ACO success difficult

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 - Fistful of Money / Finance

The Medicare Shared Savings Program (MSSP) rewards incremental rather than sustained health care savings, a shortcoming that needs to be addressed by the Centers for Medicare and Medicaid Services (CMS), according to an article published online Dec. 20 in the Journal of the American College of Radiology.

The MSSP, which is a cornerstone of the Affordable Care Act, propels the Accountable Care Organization (ACO) model. ACOs are meant to enhance the quality of health care while reducing overall costs through the realignment of economic incentives among providers. ACOs receive a percentage of their health care savings under the MSSP if performance and cost criteria are met as a means of encouraging medical professionals and health care systems to adopt the ACO model.

As health systems in the U.S. consider participating in the three year renewable MSSP contract, it is necessary to understand a potential pitfall of the MSSP, which is the benchmarking and rebasing method, wrote the article’s lead author, Benjamin Harvey, MD, JD, of Massachusetts General Hospital in Boston, and colleagues.

The MSSP mandates that savings are calculated by comparing actual expenditures to a benchmark value that’s determined by CMS for each ACO. In order for an ACO to qualify for the bonus, their average per capita Medicare expenditures need to be less than the benchmark (known as the Minimum Savings Rate) by anywhere from 2-3.9 percent. The ACO is financially penalized if their average expenditures exceed the benchmark.

The benchmark is rebased at the start of each new three year contract term, meaning that the new benchmark is calculated based on the patient health care costs from the prior three years. Achieving success in the second term requires the ACO to sustain health care savings from the previous three years and achieve an additional 2-3.9 percent reduction in expenditures.

“By placing an ACO in a race against itself, the MSSP rebasing method makes shared savings increasingly difficult to generate,” wrote Harvey and colleagues. “The extent to which any health care institution can safely and effectively generate incremental health care savings term after term is finite.”

The article’s authors suggest a feasible solution to the pitfall: trying a different approach to rebasing the benchmark through the authority that is granted to CMS by current legislation. CMS could create a new method in which the benchmark is partially rebased so that ACOs could gain some benefit from their sustained savings and so that incentives could still be promoted. However, this approach could be perceived as one that only defers the problem. A second approach proposed by the authors would be a reset of the benchmark against local and national expenditure data rather than institution-specific data.

The MSSP has radiology-specific implications for the community, as radiology groups and departments have had to redesign their service to better meet the needs and goals of ACOs. Because some ACOs have had a difficult time succeeding due to the MSSP, those in radiology should consider the potential for long-term instability before participating in large financial investments that may be short-lived, wrote the authors.

“The current method of benchmarking and rebasing under the MSSP focuses too heavily on continual incremental savings, placing ACOs in a difficult position and making their long-term success unlikely,” wrote Harvey and colleagues. “Moreover, this problem only stands to grow as the private insurance market models its own risk-sharing arrangements after MSSP. If the ACO model is to succeed, radiologists and the broader health care community should push CMS to reform the MSSP model to promote sustainability along with savings. Neglecting to amend MSSP may be tantamount to defeating its initial purpose: the creation of a stable alternative to the broken health care system,” they concluded.