The Medicare Payment Advisory Commission thinks a new model with different risk tracks and administratively-set savings benchmarks could be the way forward for population-based alternative payment models, though commission members noted during a Friday meeting that there are still many details to work out.
MedPAC should recommend that Congress have timeliness and simplicity in mind, Commissioner Brian DeBusk, CEO of medical device company DeRoyal Industries, said during Friday’s meeting. As Medicare Advantage grows each year, population-based alternative payment models like accountable care organizations are left with a shrinking pool of beneficiaries, he added.
In October, MedPAC commissioners discussed developing a single multi-track, population-based payment model to guide CMS’ alternative payment model strategy. CMS set a goal that same month to have all Medicare beneficiaries in a value-based payment arrangement by 2030.
MedPAC followed with a November discussion about developing administratively-set benchmarks for ACOs, which can share in Medicare savings if their beneficiaries’ expenditures come in below an assigned benchmark level. The benchmark is determined based on spending for beneficiaries who would’ve been eligible for the ACO in the baseline years, along with the growth in an ACO’s spending between the baseline and performance years.
Because ACO benchmarks are reset each performance period based on the ACO’s past performance, an ACO that improves the amount of savings it generates each year will have to deal with benchmarks that are increasingly harder to exceed, which puts long-term ACO participation at risk.
MedPAC staff Friday provided commissioners with a blueprint for a hypothetical new three-track alternative payment model. The model would divide providers into three separate categories. Independent physician practices, small safety net providers or rural providers, could be in a track that involves no financial risk. Providers could keep up to 50% of savings generated relative to their benchmark after a minimum savings rate is met.
Mid-sized organizations like multi-specialty physician practices or small community hospitals could keep up to 75% of savings generated or repay 75% of losses. Large health systems would use a 100% shared savings or loss rate.
Commissioner Dr. Jonathan Jaffery, who leads the University of Wisconsin Health ACO, questioned whether an organization’s size should determine its risk readiness. Large organizations could have trouble earning shared savings when the cost of the care they deliver is low, and smaller organizations are sometimes more nimble than larger ones, he said.
Also up for debate is how quickly providers should be pushed to accept financial risk. Small providers could be allowed to stay in the no-risk track indefinitely, or eventually be encouraged to move to another track.
Commissioner David Grabowski, a professor at Harvard Medical School, said downside risk shouldn’t be forced onto providers, while Commissioner Dana Gelb Safran, president and CEO of the National Quality Forum, said two-sided risk can make providers serious about generating savings.
Getting providers to participate in such models in the first place is another hurdle MedPAC wants to clear. Incentives for providers to participate in APMs are already written into statute. By 2040, payment rates will be 8% higher for physicians in advanced APMs than those who choose not to participate, MedPAC staff said.
But to encourage even more participation, officials could simply make the model mandatory for certain providers to receive Medicare funds. Other options include paying lower rates to clinicians not enrolled in the model, waiving certain Medicare requirements for participants and offering participants more technical assistance.
Setting future dates for mandatory participation for at least mid-sized and larger organizations might help generate participation in the short-run, said Commissioner Dr. Lawrence Casalino, a professor at Weill Cornell Graduate School of Medicine.
“One of the things that I heard a lot when when payment reform was my job was how important it was for there to be a clear signal of where things are going,” Safran said in agreement. “That would certainly be a very clear signal.”
The hypothetical model would also administratively set ACO benchmarks using external factors to work around the ratcheting effect. Most commissioners applauded this idea.
“Eliminating the ratchet effect is absolutely critical. The ACO program can’t work as long as the ratchet is a problem,” Casalino said.
But Commissioner Lynn Barr, leader of Caravan Health, which guides providers through value-based care, expressed concern about changing the system in a way that would cause providers to generate less savings and end up having to pay the government back.
MedPAC should assume legislation will be needed to make the alternative payment model reforms the commission is looking towards, according to Vice Chair Paul Ginsburg, a senior fellow at the USC-Brookings Schaeffer Initiative for Health Policy.
“We don’t want to lock ourselves into the 2010 statutes, where there was much less experience with these approaches to payments,” he said.