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CMS Didn't Disclose Problems, Changes to ACO Program, OIG Says

By Erin Mershon, CQ Roll Call

June 8, 2016—The Centers for Medicare and Medicaid Services (CMS) helped five participants in one of its most ambitious, high-profile Medicare payment models avoid nearly $6.8 million in penalties that would have gone to the Medicare Trust Funds—and didn't reveal that to the public or other providers interested in the program, according to the agency's inspector general.

The Office of Inspector General (OIG) report released Tuesday centers on the Pioneer accountable care organization (ACO) model, a program launched in 2012 as part of the Obama administration's efforts to transition Medicare away from fee-for-service payments. The program, which was aimed at some of the country's most efficient and top-performing hospitals, rewards participating organizations with bonus payments if they keep costs low and penalizes them if they fail to do so.

But CMS helped five organizations switch to a different payment structure to avoid those penalties in the first year, the OIG said. The organizations had originally chosen to be on the hook for penalties as well as bonus payments—but after a year of participation, data showed they'd be hit with big penalties. CMS let them switch, retroactively, to a penalty-free track. Four would have been on the hook collectively to repay CMS a combined total of $6.8 million; the fifth did not lose enough to trigger the penalties.

What CMS did wasn't illegal, according to the OIG—but the watchdog group maintains CMS should have been more transparent. When it announced the first-year results, CMS did not disclose which ACOs had taken on risk or that any switch had occurred.

Providers involved in the ACO program voiced similar criticisms, lamenting the loss of a learning opportunity for a fledgling program that has become a focal point of efforts to transition Medicare toward a system that bases provider payments more on performance rather than volume.

The agency "should have been transparent and forthright about this change," said Clif Gaus, who heads the National Association of ACOs.

"It should have made known in some way, shape, or form," added Dave Introcaso, senior director of regulatory and public policy at the American Medical Group Association (AMGA). "They could have gotten away with saying, 'Hey, this was the first year, we'll made mistakes, we're trying to make it better, but this is important information everyone should know.' It has these sort of ripple effects—it's a lesson lost that could have been learned."

The report also highlights the challenges of running a complicated program like Pioneer—a task the administration is taking on more often as it launches new alternative payment models like other ACO programs and bundled payment demonstrations for hip and knee surgeries, among others. The agency is investing heavily in efforts to encourage physicians to take on risk in these models. They are the only models that will earn substantial bonus payments under new proposed rules for implementing a 2015 law overhauling physician payments.

But providers looking to succeed in those programs need timely data on the care they are responsible for coordinating and making more efficient—and even CMS acknowledges it has struggled to provide that data.

CMS explains in comments appended to the OIG report that it allowed the Pioneer groups to switch their payment structures because it had failed to provide the ACOs with data officials had promised them within the timeframe in their contracts. Since that data is important for preventing the penalties, CMS officials said they offered the ACOs the chance to switch programs.

CMS did not return a request for comment after the report's release.

Both Gaus and Introcaso said that given the issues with data availability, CMS was doing the responsible thing by allowing the ACOs to switch to a different payment structure.

Those same problems with data availability—which CMS did not disclose publicly at the time—have plagued other ACO and alternative payment model efforts. Both the AMGA and the American Hospital Association have lobbied for broader access to claims data. Provider comments on alternative payment model design and improvement efforts regularly include requests for better and faster access to that information.

"It's one of the persistent problems. Even the [Medicare shared savings] ACOs have claimed that data is late, data is incomplete, data is lacking," Introcaso said. "And of course with MACRA, this doesn't go away. If you're going to start rewarding on quality need to do a better job just on claims work."

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