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A Holistic Framework for APMs will Accelerate Adoption

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Key takeaways:
  • Confusing and contradictory requirements make it challenging for health systems to create holistic programs that span across two or more alternative payment models (APMs).
  • To encourage adoption, the Centers for Medicare & Medicaid Services (CMS) should allow risk bearing providers to participate in multiple downstream payment arrangements with subsets of their partners, such as primary care or specialists.
  • CMS should also address some of the disincentives associated with today’s programs, allowing voluntary attribution through specialists, better risk adjustment methods and continued availability of advanced APM bonuses.
For more on this topic:

The CMS Innovation Center Strategy Refresh established a goal for all Medicare beneficiaries to be covered via total cost of care arrangements by 2030. With greater alignment of beneficiaries to alternative payment models (APMs) and a longer-term, clear commitment to value-based payment, the hope is that a greater number of communities and healthcare providers will move to a person-centered healthcare system, enabling a more proactive approach that reduces disparities and improves the health of populations.

To ensure the models are attractive and covering the largest swaths of the population, it’s imperative that providers be granted flexibility to combine multiple APMs within a holistic framework. For instance, a risk-bearing accountable care organization (ACO) should be able to implement its own primary care capitation or bundled payment approaches. This speeds the shift away from fee-for-service reimbursement, creates more opportunities for APM participants to engage specialists and other providers for better care coordination, allows the participant to define targeted interventions that best serve their populations and enables multi-payer alignment.

Doing so, however, is a challenge. Complicated and overlapping rules define which beneficiaries can participate in multiple models, as well as how the payment incentives flow. In addition, providers often are not aware which beneficiaries are assigned to their organization until reconciliation, making it difficult to assess where and with whom concurrent participation makes the most sense.

To promote alignment, CMS should collaborate with payers and ACOs to define a set of downstream payment arrangements that could be easily adapted by all. For example, common agreement on episode length and included services could help facilitate greater alignment.

To create a pathway for total cost of care entities to alter downstream payment arrangements, CMS should do the following:

  1. Allow ACOs to establish their own downstream payment arrangements, including various forms of capitated payments. This approach is currently possible under the ACO REACH model, but is best left to highly experienced ACOs that have systems in place to pay providers.
  2. For ACOs that do not have the ability to directly pay providers, allow them to choose from a list of CMS-established bundled payment programs. In this approach, CMS would establish bundled payments with prospectively set target prices. The ACO would select the set of bundled payment programs and enter into agreements with specialists to implement the bundle. CMS would run the bundled payment program and provide the specialists and ACOs information about spending compared to the target. Ideally, CMS would allow some flexibility (i.e., ranges) in the target prices, allowing the ACOs and bundlers to negotiate payment. To start on this path, CMS should begin with a test of primary care capitation in the Medicare Shared Savings Program.
  3. While we work toward achieving CMS’s goal for 2030, we should maintain specialty-focused models. The CMS-established bundles noted above should be available for providers serving any beneficiary that is not aligned to an ACO.
  4. CMS should also address some of the disincentives for engaging specialists in APMs, including:
    1. Attribution. Existing methods for attributing ACO beneficiaries to an ACO focus on plurality of primary care services. This results in a low volume of patients being aligned to the ACO through the specialists. As a result, many specialists may not find it worthwhile to engage with the ACO or APM. CMS should test other forms of attribution or alignment, such as voluntary alignment through specialists or other providers (e.g., participant hospitals or post-acute providers).
    2. Budget and Benchmarks. Currently, the financial methodologies under ACOs do not appropriately account for patient clinical risk, especially for complex populations. As a result, ACOs are disincented from including specialists, who are likely to have higher cost patients with complex medical needs aligned to the ACO without being accounted for in the benchmark setting process. For example, the Part B drug spend for oncology patients is a significant deterrent to including oncologists and their patients in an ACO. CMS should consider risk adjustment and benchmarking that reflect the clinical and social risk of the population.
    3. Advanced APM Bonus. The advanced APM bonus has created strong incentives for some providers to move into risk-bearing ACOs, but the bonus structure has been a deterrent for specialists. Inclusions of specialists in an ACO lowers the percentage of total patients or payments flowing through the APM because specialists do not contribute alignment to the ACO and typically have a high proportion of their patients outside of an ACO. CMS should consider other approaches for determining the QP thresholds, such as setting thresholds by specialty type.

In following these approaches, CMS has a much greater likelihood of actually achieving their 2030 goal. Without reform, progress will be challenging to achieve absent mandates.



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