Choosing a Track in Pathways to Success for Medicare ACOs

November 11, 2020

The Medicare Pathways to Success program includes a lot of choices for accountable care organizations. How should ACOs decide where to begin with value-based care and choose an acceptable level of financial risk?


In 2018, the Medicare Shared Savings Program (MSSP) underwent a major makeover. The new iteration of the program, now known as Pathways to Success, offers a multistep glide path for accountable care organizations (ACO) looking to make the most of the value-based care environment.

Each step creates the opportunity for ACOs to earn a greater portion of the savings they generated by keeping costs below their benchmark while also requiring participants to shoulder an increasing amount of financial accountability should their costs and quality trend in the opposite direction.

But with five different options to choose from in the Basic track’s glide path plus the Enhanced Track, many ACOs simply aren’t sure where they should begin.

“Not every practice is in the same place right now with finances, quality, or risk tolerance, which is exactly why Medicare has created so many options for participants to choose from,” says Ahmed Haque, Senior Vice President of Network Performance and Strategy at Aledade. “You have to take the time to discuss the basics of your ACO and how your partners are feeling about their readiness for value-based care before committing to a track.”

Carefully assessing an ACO’s composition, experience, performance, and outlook can help leaders decide how to start off strong and maximize their opportunities as a participant in the Medicare Pathways to Success program.

How big is the ACO?

The number of Medicare beneficiaries attributed to an ACO can have a significant impact on quality and cost calculations, Haque explained. 

Pathways to Success requires ACOs to have at least 5,000 attributed Medicare fee-for-service beneficiaries in each benchmark year across their member practices, but many groups have a much higher number of beneficiaries to care for. 

“When you have a lower number of lives under management, everything has a bigger impact,” said Haque. “You only need a handful of high-cost patient cases, such as new cancers or kidney failure, to really drive up your costs and change your outcome measures, which can create challenges for predicting performance and achieving shared savings.” 

“In contrast, an ACO that has 20,000 attributed patients is likely to have more predictable patterns. A smaller ACO that doesn’t have a good handle on its historical performance might want to take some time to develop a more accurate sense of what its ‘normal’ trends really look like before it starts to put a lot of revenue at risk.”

ACOs that want more time to become familiar with value-based care and gain experience can start in the upside-only Basic A or Basic B tracks. But they can advance to another level at the beginning of any year if they start feeling ready to take some financial risk, Haque added.

“In Pathways, you can move up the ladder at any point in time,” he said. “You just can’t move backwards. So ACOs that find themselves wanting to move a little faster can do so, while those that are comfortable with where they are can stay there for as long as the program allows.” 

“The point of the program is that everyone has to take risk eventually, but you can spend up to three years in the upside-only environment if you need to and it’s your first time participating in MSSP as a low-revenue ACO. That’s very attractive for ACOs that might need to work on gaining experience and generating data to help them make future decisions.”

What types of providers are participating?

Pathways to Success is open to hospitals, specialists, and primary care providers. Some ACOs may contain a mix of provider types, especially if they are based around a health system that includes a main hospital, specialty groups, and primary care physician offices. Others may include community health centers (CHCs), while some ACOs are composed only of primary care providers.

“The composition of the ACO will impact how well-aligned its activities can be as well as how quickly it must progress to taking on more financial risk,” said Haque. “For example, a hospital-operated ACO will fundamentally conflict with itself. Value-based care is about shifting dollars from expensive, low-value services to less costly, higher-value care. Most of the time, that means keeping patients healthier and out of the hospital.” 

“But when you have a hospital involved in the ACO, you’ve got two core business models that are polar opposites. There’s a disconnect there that can be very challenging. It also means you are most likely considered a ‘high-revenue ACO’ which requires you to shoulder financial risk more quickly ”

Aledade partners with independent primary care providers and community health centers to create ACOs with strong internal alignment and a unified financial imperative.

“That way, the ACO is fully focused on proactively providing care to patients to keep them healthy and out of the rest of the healthcare system,” explained Haque. “When they do that, they get rewarded, and it’s much easier to see the way into success with downside risk from there.”

What is the level of experience and commitment you need to succeed in value-based care?

Value-based care requires practices to make a number of changes to their traditional strategies. In an ACO, providers need to implement proactive, preventive, team-based processes that emphasize wellness and coordinated care.

While some organizations have previous experience in an ACO or are already taking steps to transform their practices, others have not yet fully adopted the workflows, technologies, and techniques that can help them thrive in the new environment.

When helping an ACO decide where to start with Pathways to Success, Haque typically looks for whether or not the practices are currently conducting Medicare Annual Wellness Visits (AWVs), transitional care management, and other care coordination activities. He will also examine their specialist referral patterns to identify areas of opportunity for clinical and financial improvements.

Staff buy-in and committed physician leadership are also very important when starting out as an ACO,” stressed Haque. “If the member practices are fully committed to engaging in proactive management of the health and costs of their patients, they are likely going to be in a better place for one of the more advanced tracks.”

“On the other hand, groups with a lot of skepticism, a lack of internal champions, and high turbulence – practices coming and going from the ACO every year – might not have the same buy-in required to do really well with risk,” he said.

ACOs that show higher levels of readiness and foundational infrastructure for care coordination are more likely to do well when starting out in Basic E or Enhanced, says Haque.

For ACOs that are still working to develop their approach to value-based care, Basic A or Basic B may be a better fit.

“We will likely recommend that less experienced ACOs start at the beginning to allow them to build the skills and competencies they need to take on risk at a later point,” said Haque. 

How much risk tolerance does the ACO have?

Even well-prepared ACOs might feel wary about the idea of putting some of their revenue at risk under a two-sided risk contract which requires them to pay money back to CMS if the total cost of care for the performance year exceeds the benchmark. The concept of accountable care is still very new for many providers, and they may wonder how putting a portion of their potential revenue on the line will translate into financial success.

“I’ve definitely had some difficult conversations about taking risk, why it’s necessary, and how it works,” said Haque. “On one hand, there has to be an element of motivation, and finances are a strong motivator for many participants. On the other hand, it's important to realize that putting some of your revenue at risk doesn’t mean you’re definitely going to lose it, especially if you have a good understanding of the program.”

Every ACO has its benchmarks for clinical quality and costs. However, in order to account for normal fluctuations in expenditures, CMS has established additional buffers in the calculation around shared savings and losses. These guardrails are known as the minimum savings rate (MSR) and minimum loss rate (MLR). ACOs will need to show savings or losses that exceed these rates before they trigger a positive or negative financial transaction.

“The MLR gives you a little extra room around the benchmark,” said Haque. “If you’re an ACO that is holding spending down to 4 or 5 percent below your benchmarks, and you have a 2 percent MLR, your costs will actually need to increase by around 6 percent before you become liable for paying money back to Medicare.” 

“If you really think that your spending will increase by 6 percent in the next year, then don’t take on the risk. But if you have been reducing costs over the past few years, there’s a very low chance you’re suddenly going to see a massive increase. In that case, you might be better off taking the larger opportunity for shared savings while assuming the small risk of having to repay money.”

Every ACO will need to make a shared decision about its risk tolerance before choosing between an upside-only track or committing to a two-sided arrangement.  

“It helps to have historical data available so you can look at your spending and quality trends to get a better idea of where your opportunities lie,” Haque said. “It also helps to have a partner with experience in Pathways to Success, like Aledade, who can guide you in the right direction.”

“Ultimately, your decision has to be good for your patients,” he concluded. “There are many ways Pathways to Success can support better health for your patients and more favorable economics for your practice. The key is to be aligned internally and understand exactly what it takes to make the best of whichever track you choose to start with.”