As CMS’s menu of alternative payment models continues to grow, hospital, health system, and physician group leaders find themselves confronting major Medicare contracting decisions. While some have questioned the financial viability of the ACO programs, the pressure to take on risk is only increasing as CMS implements MACRA. And in many markets, the Medicare landscape is shifting as more beneficiaries enroll in private Medicare Advantage plans.

Given the strong bipartisan support for payment reform, the continued rollout of MACRA, and the growing popularity of Medicare Advantage, developing an intentional Medicare risk strategy is more important than ever before.

This study explains how to navigate the Medicare ACO programs, expand into the Medicare Advantage market, and ensure the longevity of your Medicare risk strategy by actively cultivating contracts over time.

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Three major components of a comprehensive Medicare risk strategy

To be successful across the long-term, hospitals and health systems must develop an intentional strategy for entering into risk-based contracts for their Medicare business, which includes three key components and their corresponding imperatives below.

1. Redefine the path to risk for traditional Medicare

With MACRA starting to affect provider strategy in 2017, organizations must revisit the Medicare ACO programs to ensure sufficient time for planning a MACRA response strategy.

• Capitalize on newfound opportunity through Track 1 (p. 17)
• Prioritize benchmark analysis to pace transition to downside (p. 24)
• Match model selection to risk tolerance (p. 28)

2. Expand into the Medicare Advantage market

Although focusing on ACO opportunities in the Traditional Medicare program will almost certainly be the top near-term priority for most organizations due to the higher volume of beneficiaries and immediate connection to MACRA, a comprehensive Medicare risk strategy should also include Medicare Advantage, which offers some clear financial opportunities.

• Set parameters for must-have contract elements (p. 38)
• Establish clear glide path to increased risk over time (p. 44)
• Clarify desired scope of delegated responsibilities (p. 48)
• Secure first-mover advantage in provider-sponsored MA (p. 50)

3. Ensure the longevity of your Medicare risk strategy

Selecting or negotiating a strong risk contract is only the first step in an intentional Medicare risk strategy. Once the initial contracts are signed, providers must actively cultivate those contracts to ensure that they will drive success over time.

• Improve coding, documentation to ensure a fair standard (p. 57)
• Prioritize near-term savings to protect buy-in (p. 64)
• Tip market toward most favorable contracts (p. 70)
• Minimize churn to stabilize cost targets, enable ROI (p. 74)

Additional resources

This research report includes an array of tools and resources to help leaders set their Medicare risk strategy. Jump to the appendix where you'll find:

• Acronym glossary
• Illustrative financial model: MIPS impact of adding independent physicians to ACO
• Detailed benchmark methodology: Medicare Shared Savings Program
• Detailed benchmark methodology: Next Generation ACO Model
• Summary of financial elements of ACO benchmark methodologies
• Decision guide for evaluating downside ACO models
• Evaluation guide for potential MA plan partners
• Picklist of near-term savings opportunities

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