Klar 1: Key points of agreement about changes needed for Medicare Shared Savings Program

Ron Klar, MD, MPH

Ron Klar, MD, MPH is a health care consultant with a long history of involvement in federal health care policy and health plan innovation.  He recently did an analysis of the draft rules for the Medicare Shared Savings Program (MSSP), the Medicare program that establishes accountable care organizations (ACOs).  Dr. Klar published his critique as a series of three posts in the Health Affairs Blog, an influential forum for discussion of health policy issues.  The first post focused on the sharing model and issues regarding assignment, identification and beneficiary choice.   The second post focused on methods for computing the savings and other financial issues. The third post focused on the approach for assessing quality, rates for shared savings and losses, limits to payments and losses, and sharing of CMS data.

Dr. Klar’s series differed from many critiques of the MSSP by offering detailed proposed changes and by explaining his reasoning.  The posts are quite long, going into technical details that can be tedious (but, who am I to throw such stones!)  They are a valuable contribution to the debate about the MSSP.  They also cover issues that are generally applicable to all value-based contracting arrangements between payers and providers.

Just to make it a more interesting read, I will break up my review of Dr. Klar’s three posts into four posts of my own.  In this post, I’ll describe where I agree with Dr. Klar.  In the remaining posts, I’ll describe some areas of strong disagreement.

First, I agree that the MSSP needs to include a pure shared savings model, with no sharing of losses. Dr. Klar proposes that CMS treat the model that involves sharing of losses as an experiment and make it optional.  He acknowledges that CMS was concerned about the risk of paying a reward that might be undeserved, and that CMS wanted providers to have “skin in the game.”  But, he argues that the program already reduces this risk by:

  1. Requiring ACOs to describe their roadmap for development of population management capabilities
  2. Requiring annual attestation of progress according to this roadmap
  3. Establishing a size-related minimum savings rate to reduce the role of lucky random variation

He proposes to add additional “skin in the game” commitment by adding public transparency in the form on an “ACO Compare” website.

Second, I heartily agree that the savings to be shared should include the full difference between actual vs. expected cost, without subtracting the 2 percent minimum savings rate. Klar points out that the proposed rule does not conform to clear language in the legislation.  This seemingly technical modification by CMS rule makers would remove a huge portion of likely shared savings if not overturned.

Third, I agree that the MSSP should determine eligibility and calculate the amount of payment based on a smaller set of claims-based outcomes measures, and have all other proposed measures serve only for reporting and monitoring purposes. This is a reasonable suggestion except for the elimination of valid claims-based process measures.  Dr. Klar argues that only outcomes measures should be used.  I prefer a mixture of process and outcomes measures, since process measures are more causally proximal and less likely to be obscured by unrelated downstream factors, while outcomes measures more directly reflect  the ultimate value.

Forth, I agree that the MSSP should assess quality performance by comparing an overall summary measure of performance to a local comparison group, not by comparing each separate measure to an arbitrary target. The idea is to assure that ACOs are not harming overall quality.  Klar proposes to impart a bias on these performance measures by doubling the weight for particular measures where the ACO performed more poorly than the local comparison population, and by requiring the ACO to exceed the local comparison group by a growing margin, starting at zero and growing to 5-10% over three years.  That sounds like a reasonable compromise for those that expect ACOs to eventually perform better, not just the same as non-ACO Medicare providers.

Fifth, I agree that the shared savings should be restructured to include a pre-determined “base” rate, plus an additional rate that depends on the quality performance, up to a more generous maximum sharing rate. Klar correctly points out that this will allow prospective ACOs to plan on achieving the base shared savings level (presuming they will achieve minimum quality and other eligibility provisions), while viewing the remainder as a possible bonus.  Klar proposes a base sharing rate of 40 percent for his proposed pure shared savings model and 50% for the shared savings and losses model.  Dr. Klar proposes to increase the maximum sharing rate to 52.5% for pure shared savings, and 75% for the shared savings and losses model, not including the 0.5% to 2.5% “special additions” for having a high rate of FQHC or rural health care.  That sounds at least partly responsive to those who want a more certain and generous sharing of savings.

Sixth, I agree that it is important to eliminate the 25% withholding of shared shavings (intended to cover possible future losses) and limit the shared losses paid during any particular year to 10%. Dr. Klar correctly advocates for establishing symmetry between the base sharing rates and the losses sharing rates.   This proposal seems to go against that principle.  But, it nevertheless seems justified to me based on the recognition that people have a strong fear of losses, and they discount gains if they are earned farther in the future.

Klar argues convincingly that, to be successful, the MSSP must win high participation rates from providers.  The loud chorus of negative feedback from prospective ACO participants suggests that, as currently structured, the program will certainly not achieve significant participation. Even the leading provider organizations thought to be best suited for the program have signaled their reluctance to participate, including Cleveland Clinic, Intermountain, Geisinger and Mayo.

If these six important changes were made, I would feel that CMS had been responsive to skeptical providers, and I would be disappointed if those providers did not seriously consider participating in the program.




3 thoughts on “Klar 1: Key points of agreement about changes needed for Medicare Shared Savings Program”

  1. Pingback: Klar 2: The great attribution debates: Include specialists or not? Plurality or majority? Retrospective or prospective? Derived or declared?

  2. Pingback: Klar 3: Why it is necessary to re-qualify the population to avoid regression-to-the-mean bias in historical comparison groups

  3. Pingback: Klar 4: Why is it important for CMS to Share Claims Data with ACOs?

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