CMS Just Accelerated the Path to Value-Based Care

Health systems committed to moving to value-based care got some good news last week with CMS’ release of the Final Rule for the Medicare Shared Savings Program (MSSP) for Accountable Care Organizations, or ACOs. CMS and private payers have been explicit about their plans to migrate away from fee-for-service and toward outcomes-based payment models that hold providers accountable for the cost, quality, and experience of patient care.

Medicare’s announcement reaffirms this commitment, with a new “Track 3” that offers improved financial and operational terms that compare favorably with private-sector ACO deals and now make MSSP an attractive investment opportunity for value-oriented providers.

Medicare’s sheer size demands that any forward-leaning health system seriously consider its value-based offerings; original Medicare is expected to account for nearly 40 percent of the growth in the insured population over the next ten years. Achieving scale through a Medicare ACO will be critical to helping health systems spread fixed costs more broadly, gain more traction with physicians to drive meaningful change in practice patterns, and broaden their impact on the community’s health.


To date, the ability for ACOs to create a viable long-term business case around MSSP Tracks 1 and 2 has been limited. In Track 3, CMS introduced improvements based on the successful Pioneer ACO program, including three main financial terms that health systems were hoping for:

  • Greater maximum shared savings rate of 75 percent, compared to 50-60 percent in Tracks 1 and 2, meaning more potential revenue for providers
  • Allowing ACOs to share in first-dollar savings without being subjected to savings “hurdles,” and
  • Revamped long-term benchmarking methodology that improves the sustainability of the program

Health systems across the country are eager to deliver value-based care. Under the new Track 3, Evolent Health’s analysis suggests that those systems can now be confident in a sufficient financial return to justify making the investments needed to improve care. And while Track 3 does entail some downside risk, robust population health infrastructure can help mitigate this risk and generate financial and clinical returns.

Financial terms, however, mean little without considering the operational terms with which they are paired. Under the new rules, Track 3 ACOs will get upfront knowledge of exactly which beneficiaries they will be held accountable for, allowing for a targeted and efficient approach to care management. CMS is also offering Track 3 ACOs meaningful additional tools, such as the flexibility to create and utilize a network of high-performing post-acute facilities that will help ACOs keep more beneficiaries out of the hospital and in more appropriate settings.


CMS could take more steps to improve the path toward value-based care. It should create thoughtful financial incentives for beneficiaries to seek high-performing ACO care and improve the financial benchmarking process to appropriately reflect the changing risk status of the population over time while shifting to a sustainable regional approach – all of which CMS has begun to explore through the new Next Generation ACO model run by the Innovation Center.

Even with these limitations, though, Track 3 compares favorably to ACO deals being offered by private payers. Evolent’s experience with more than 40 value-based contracts for our health system partners around the country suggests that the terms of the new Track 3 meet – and in many cases exceed – the ACO deals being offered by private payers. And remember, CMS is offering operational terms that many private payers remain unwilling to match, such as access to full and transparent data sets, as well as delegation of care management responsibilities – critical tools that best position ACOs for success.


Program design alone cannot guarantee success. It is incumbent on each ACO to build sophisticated population health capabilities to drive better quality at lower cost. Evolent’s experience with Medicare ACOs since their inception, in both policy and implementation settings across the country, has yielded three key success factors for driving performance:

  1. First, the network must be physician-led, with strong engagement from physicians on the front-lines of delivering relationship-centered care. These physicians can be organized into pods that reinforce local leadership and align incentives to the ACO’s goals, including through referrals to high-value specialists who collaborate with PCPs.
  2. Second, successful ACOs are deploying a structured and integrated approach to care management – not just a fragmented collection of clinical programs – that is designed to be flexible and responsive to the unique health care needs of their Medicare population.
  3. And third, high-performing ACOs don’t just collect and analyze data; they integrate information technology into their entire clinical and business enterprise to turn individual data points into actionable information sets that support care management on the front lines.

The new CMS MSSP rule is another major move this year in the migration to value-based care. We are at a tipping point toward a higher-performing health system that is grounded in supporting the health and wellness of people and their communities, improving the quality of care when it’s needed, and ensuring long-term financial sustainability. Providers have a clear market signal: Value-based care is the only viable growth strategy, and the new Medicare ACO options offer the scale and financial upside needed to grow a thriving value-based business and stay ahead of the competition.

Chris Dawe is Managing Director, Policy and Transformation at Evolent Health and a former health policy advisor at the White House and Senate Finance Committee. Nico Lewine is a Director at Evolent Health.

Morning Consult