ACO Participant and Track Selection:

Using TIN-Level Metrics to Make ACO-Level Decisions

When should ACOs make decisions about participant and track selection?
Which metrics should ACOs monitor to inform participant and track decisions?
Which track should ACOs choose?
Which participants should ACOs include?
To whom do these decisions apply?

Each year, ACOs are faced with a series of complex decisions that yield uncertain outcomes. Among the most important decisions ACOs make each year are which providers to include in their ACO and which risk track to select; both decisions are made with the prevailing goal of optimizing an ACO’s chance of earning shared savings (SS). This article provides an overview of tactics to help ACOs achieve that goal that were developed by Validate Health and shared at a NAACOS webinar in June 2021.
In order to make informed, optimal decisions about participant and track selection, ACOs should dissect ACO-level decisions into more granular, TIN-level metrics. TIN-level metrics allow ACOs to see into the black box of calculations of an ACO’s benchmark, beneficiary attribution, and expenditures – insights which can empower ACO leadership to be proactive about optimizing SS (rather than reactive).
Annual participant and track selection decisions are defined by a series of factors: decision deadlines, key metrics, track options, and participant rosters. This article shares insights about how to approach these factors, as well as some specific use cases for certain ACO profiles.

When should ACOs make decisions about participant and track selection?

Figure 1 shows the CMS deadlines for 2022 participant addition and removal, as well as track selection.

Regulatory-calendar-by-CMS-deadline-for-2022-decisions

Figure 1: Regulatory calendar by CMS deadline, 2022 decisions

ACOs have two strategy options for participant and track selection: either select ACO participants first and optimize track selection afterward (“participant-first”), or select the risk track first and participants afterward (“track-first”). Either strategy can work for an ACO depending on the circumstances. Since the participant addition deadline occurs first and is non-binding (participants can be removed later), ACOs should focus on adding participants as the first stage of the selection process. Figure 2, below, shows a series of decisions that ACOs may make alongside CMS deadlines.

Suggested-3-4-month-schedule-for-participant-and-track-selection

Figure 2: Suggested 3-4 month schedule for participant and track selection

Which metrics should ACOs monitor to inform participant and track decisions?

In order to make optimal decisions about selecting their participants and track, ACOs need to understand more than just their ACO-level performance – they need to understand TIN-level performance. TIN-level metrics answer a key question for ACO leaders: “Which TINs should ACOs include to optimize performance under a selected risk track?” Optimizing TIN selection applies to both participant-first and track-first strategies.

Some key TIN-level metrics for ACO leaders include: revenue contribution by TIN, experience with VBC by TIN, regional efficiency by TIN, and HCC risk-scoring gaps by TIN. Metrics like these provide key insights into constructing a participant network that is best suited to earn shared savings in a given risk track. Figure 3 shows a series of metrics by TIN which are relevant to ACOs based on which track they’re in.

ACO leaders can also use participant selection to aid in track selection. By understanding TIN-level performance, ACO leaders can make participant decisions that can open up risk tracks which are currently unavailable.

TIN-level-metrics-that-help-drive-optimal-ACO-level-decisions

Figure 3: TIN-level metrics that help drive optimal ACO-level decisions

Which track should ACOs choose?

While each ACO’s choice of risk track is interwoven with their participant selection, it is critical that ACO leaders understand their track options, which available track is optimal, and what their rebased benchmark will be if they change tracks.

Track-options-for-2022-based-on-current-2021-track-and-status

Figure 4: Track options for 2022 based on current 2021 track and status

What are ACOs’ track options?

Figure 4 details which risk tracks are available to ACOs in 2022 based on their current track and status in 2021.

Some ACOs have more flexibility than others with their track options. For instance, ACOs in Pathways BASIC A or B with low-revenue status have the full range of risk tracks available to them, while Legacy MSSP ACOs in Track 1+ with high-revenue status must change to ENHANCED in 2022.

Which track should an ACO choose for 2022?

ACOs should select the track that offers the highest potential to earn shared savings. In order to know which track will offer the highest yield, ACO leaders must predict the financial outcomes of changing tracks – a process which includes forecasting TIN performance under different risk scenarios.

There are four main components to consider when forecasting net SS: savings rate, regional blending, loss sharing limit, and benchmark rebasing. While some of these components may be forecast as positive or negative under a given risk scenario, it is important to understand the weighted average probability of each component and the overall impact to net savings.

The case study in Figure 5 shows an ACO performance forecast for switching from a BASIC track to ENHANCED; in this case, the positive contributions of an increased savings rate and favorable regional blending were outweighed by the increased loss sharing limit and benchmark rebasing.

Case-example-of-forecasting-financial-outcomes-of-changing-tracks

Figure 5: Case example of forecasting financial outcomes of changing tracks

By simulating performance within different available tracks, ACOs can ensure they’re not leaving money on the table.

How will track selection impact an ACO’s benchmark?

An ACO’s performance year benchmark will be rebased upon changing models. Figure 6 shows which performance years will be factored into an ACO’s benchmark for each risk track, including years impacted by COVID (2020-2021). The ACOs that will be impacted by COVID years in their rebased benchmark calculation are: new ACOs, renewing ACOs (2018 starters), Next Gen ACOs (program is sunsetting), and ACOs who are voluntarily switching models.

Benchmark-years-included-in-benchmark-calculation-based-on-risk-track

Figure 6: Benchmark years included in benchmark calculation based on risk track

Which participants should ACOs include?

Participant selection depends on a series of ACO performance factors: benchmark years, market share, revenue status, experience status, history of earning shared savings, upcoming track options, etc. ACO participants should be strategically selected based on performance along any of these factors and can optimize potential SS beyond simple profit and loss calculations. The TIN-level metrics detailed in Figure 4 can help ACO leaders determine which participants contribute to the likelihood of earning SS.

Select-TINs-strategically-for-benchmark-years

Figure 7: Select TINs strategically for benchmark years

Benchmark Years  ACOs should select TINs as calculated by the TINs’ simulated performance during the benchmark years that are included in the benchmark rebasing. Figure 7 underlines the potential scenarios under which an ACO would strategically select its TINs to optimize SS potential.
Market share  If an ACO is losing market share, the ACO could add high-performing TINs (using market data to identify them). An ACO would need to analyze the regional efficiency of a TIN to accurately assess its performance relative to other TINs in its region.

Revenue and experience status  Certain ACOs have restricted track options for 2022 because of their revenue and experience status. ACOs without track options can strategically select participants in order to change revenue or experience status and unlock different risk tracks. This is particularly relevant to high-revenue Legacy MSSPs in Track 1+, 2, or 3, who face the involuntary transition to ENHANCED in 2022 – changing to low-revenue status, for instance, could open up Pathways BASIC E as an alternative to ENHANCED.an>

To whom do these decisions apply?

While all ACOs have to make participant and track decisions, this section will analyze specific ACO profiles which can make use of the insights included above: High-Revenue Legacy MSSPs, Small ACOs, High-Revenue Basic E, ACOs who missed their MSR, and ACOs who likely won’t benefit from the AAPM bonus.

High-Revenue Legacy MSSPs

High-revenue, Legacy MSSP in risk-bearing tracks face the transition to ENHANCED in 2022 – unless they can change to low-revenue status and select Basic E.

For these ACOs in particular, the “High / low revenue contribution by TIN” (see Figure 3) metric calculates the revenue vs benchmark contribution by provider and can be used to ensure they end up with a low revenue status. It’s important both for identifying an ACO’s current participants for removal and for scanning an ACO’s geography for compatible participants to add.

Smaller ACOs

For smaller ACOs hovering close to the minimum number of beneficiaries, adding participant TINs would help the ACO stay well above the 5,000 bene minimum and spread the PBPY risk exposure.

The “Attributable benes by TIN” metric (see Figure 3) identifies the number of lives that could be added by scanning the surrounding geography for compatible potential participants. It does this by recreating CMS’s MSSP attribution and assignment rules. As a side benefit, it also tells us how many lives existing participants are attributing. For ACOs wanting to stay in BASIC Levels A or B, having more lives also drives down the MSR, making it easier to bring in net savings.

High-Revenue, BASIC E

High-revenue ACOs in the BASIC Level E track have an opportunity to reduce their risk exposure and repayment mechanism amount by strategically selecting TINs that have lower revenue contribution.

The “High / low revenue contribution by TIN” metric (see Figure 3) calculates the revenue vs expenditure by each participant provider and allows ACO leaders to strategically select their participants and reduce risk exposure and repayment mechanism amount.

ACOs that did not reach their MSR

For ACOs who earned savings for CMS in the past without reaching the MSR, there are ways to improve one’s chances of receiving a check for 2022: strategic TIN selection, moving to a higher risk track, adding beneficiaries (for Tracks A & B).

Contribution-to-Shared-Savings-by-Practice

Figure 8: Contribution to Shared Savings by Practice

Strategic TIN selection can help ACOs improve their performance and reach their MSR. The metrics “Likelihood of savings by TIN” and “Regional efficiency by TIN” (see Figure 3) can be used to increase ACO leaders’ confidence in 2022 performance through strategic TIN selection in order to overcome one’s MSR; risk-bearing tracks BASIC Level C-E and ENHANCED don’t have the same MSR hurdles as BASIC Levels A/B. As represented in Figure 8, Validate Health’s nationwide study found that the majority of ACOs have high variance in shared savings contribution by provider.

If ACO leaders can gain enough confidence to move to Level E or ENHANCED, it’s possible that the gain from the 5% AAPM bonus will be greater than the projected loss associated with increased risk exposure. Restated, it is possible that the margin of projected downside risk will be absorbed by the gain of the AAPM bonus. This decision could be informed by the “QP threshold contribution by TIN” metric (see Figure 3) and related estimates of AAPM vs MIPS payments. Additionally, some ACOs choose to add aggregate reinsurance as another way to find the right level of risk tolerance across their provider participants and other stakeholders.

For ACOs wanting to stay in BASIC Levels A or B, having more lives drives down the MSR, making it easier to bring in net savings. The “Attributable benes by TIN” metric (see Figure 3) identifies the number of lives an ACO could add by scanning their geography for compatible participants to add.

ACOs likely to benefit from AAPM bonus

Some ACOs can leverage the AAPM bonus to justify a decision to move to BASIC Level E.

Although going from lower risk BASIC Level A-D tracks to Level E increases risk exposure, once again, the gain from the 5% AAPM bonus could potentially outweigh the margin of projected loss.

This situation is demonstrated in Figure 9, the case study of an ACO deciding to move from BASIC Level B to Level E.

Impact-to-net-savings-moving-from-BASIC-Level-B-to-E

Figure 9: Impact to net savings moving from BASIC Level B to E

***Important note: The AAPM bonus is only guaranteed to be earned through 2022 for ACOs who meet the QP threshold.

The decision to select Level E could also be informed by the “QP threshold contribution by TIN” metric (see Figure 3) and related estimate of AAPM vs MIPS payments, as well as the probability distribution of payouts by track. As we’ve seen  in examples throughout this paper, ACOs can gain additional benefits from higher risk tracks, such as MSR reduction and improved sharing rate.

ACOs can increase their confidence in taking on higher risk by using the metrics “Likelihood of savings by TIN” and “Regional efficiency by TIN” during TIN selection. Again, Validate Health’s nationwide study found that the majority of ACOs have high variance in shared savings contribution by provider.

While some of the same benefits could be gained by moving to ENHANCED instead of Level E, the risk associated with unfavorable benchmark rebasing might make this option unattractive.

Whatever their particular situation, it is imperative that every ACO carefully consider the metrics discussed above before making their participant and track selection decisions this year in order to maximize the potential to earn shared savings and avoid the probability of loss.

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This article aims to provide ACO leaders with valuable insights to optimize their participant and track selection for 2022 and earn shared savings. Unpacking ACO-level metrics into TIN-level metrics empowers ACO leaders to see tactics that may otherwise be hidden within higher-level performance figures – and ensure they’re not leaving money on the table or over-exposing themselves to risk.

Each year, Validate Health helps ACOs make optimal decisions for participant and track selection by providing granular actuarial modeling services and leveraging unique access to Medicare FFS claims data. For inquiries about the insights shared in this article, or any of Validate’s ACO-specific financial optimization services, please contact us on our website, validatehealth.com/contact.