Wide Support for House Bill to Boost CMS Alternative Pay Models

Ken Terry

July 29, 2020

A newly introduced House bill designed to strengthen the Medicare Shared Savings Program (MSSP) and other Advanced Alternative Payment Models (APMs) of the Centers for Medicare & Medicaid Services (CMS) has gained the support of 13 national health stakeholder groups, it was announced on July 24.

Among the heavyweight associations endorsing the bipartisan measure are the American Medical Association (AMA), the American Hospital Association (AHA), the Federation of American Hospitals, the American Academy of Family Physicians (AAFP), the American College of Physicians (ACP), the American Medical Group Association (AMGA), the Medical Group Management Association (MGMA), and the National Associations of ACOs (NAACOS).

The Value in Health Care Act was introduced in Congress on July 24 by Reps. Peter Welch (D-VT), Suzan DelBene (D-WA), and Darin LaHood (R-IL). In broad strokes, the legislation would make it easier for accountable care organizations (ACOs) to participate in the MSSP by reducing their financial risk, would increase shared savings rates for many ACOs, and would extend the annual 5% bonuses to clinicians who participate in advanced APMs by an additional 6 years.

In a news release, AMA President Susan R. Bailey, MD, commented, "Medicare alternative payment models are critical to supporting physician efforts to redesign care delivery, improve outcomes and reduce costs.... This legislation would help ensure that these models continue to facilitate high-quality care for patients and savings for the Medicare program."

Tom Nickels, executive vice president of the AHA, said that hospitals and health systems support the MSSP and ACOs as vehicles to transform care delivery. The AHA endorses this bill because it "will help accelerate the move to value-based care," he said.

"This bill addresses several critical issues that will reignite ACO growth by correcting incentives and better rewarding Advanced APM participation," Clif Gaus, ScD, president and CEO of NAACOS, said.

In an interview with Medscape Medical News, David Muhlestein, PhD, JD, chief strategy and chief research officer for Leavitt Partners, said, "The bill makes a lot of sense to providers, because it rolls back a lot of the risk and increases how much they're going to get paid."

However, he said, it remains to be seen how the Congressional Budget Office will score the legislation. Both the MSSP and other APMs were created to reduce the growth in Medicare spending, he noted, "and this bill has the potential to eliminate those savings. I'd be surprised if it shows anything but a loss to the government."

Nuts and Bolts of Bill

To encourage participation in the MSSP, the Value Act raises the shared savings rates in the program's Basic track, in which the majority of ACOs participate. Currently, ACOs in the entry level of Basic, which entails no downside risk, can receive up to 40% of savings, depending on their quality scores; the bill would raise that to 50%.

CMS updates the benchmarks — in effect, the budgets — of ACOs yearly on the basis of spending trends and changes in the health risk of their Medicare beneficiaries, some of whom turn over annually. Under current regulations, the risk adjustment is capped at 3% over 5 years, which the bill summary says is "unreasonably low, especially as COVID-19 may cause unpredicted spikes in risk scores." The legislation would raise the cap to at least 5%.

MSSP benchmarking methodology blends an ACO's own historical spending with the expenditures of other ACOs in their region to make it easier for efficient ACOs to achieve savings. This approach, however, penalizes rural ACOs in areas that have few other ACOs. So the bill changes the methodology for removing an ACO's own members from the regional reference population for benchmarking purposes.

Under CMS's 2018 Pathways to Success rule, which was designed to accelerate ACOs' assumption of risk, the agency created a distinction between high-revenue and low-revenue ACOs. The latter organizations, mostly physician-led, were not required to take downside risk for 3 years, whereas the other ACOs had 2 years. The bill would give 3 years to all MSSP ACOs and would make eventual participation in the risk-heavy Enhanced track voluntary instead of mandatory.

CMS previously offered advance payments to ACOs to help them start up, recouping those advances from later shared savings. The proposed legislation would reinstate those programs, including the ACO Investment Model.

Under CMS's Quality Payment Program, eligible clinicians who participated to a specified extent in advanced APMs — which include the MSSP — were to receive a 5% annual bonus based on their performance each year from 2017 to 2022. Participation in advanced APMs has fallen short of expectations, the bill summary notes, and can be expected to drop further after the bonus expires. So the measure would extend the additional payments for 6 years until performance year 2028.

In addition, the bill significantly lowers the thresholds to qualify for the bonuses. Currently, clinicians must derive 50% of their Medicare Part B payments or 35% of their Medicare patients from an APM; that's slated to rise to 75% and 50%, respectively, in 2021. CMS data show that clinicians are not meeting these thresholds, discouraging APM participation, according to the bill summary. The bill would set the payment at threshold in 50% in 2021 and limit increases to 5% a year thereafter.

"Reasonable Chance of Success"

"Providers are interested in moving into value-based arrangements that are fair and offer them a reasonable chance of success," Robert Mechanic, MBA, senior fellow at the Heller School of Social Policy and Management at Brandeis University, Waltham, Massachusetts, told Medscape Medical News.

The proposed changes in the Value Act, in his view, increase the odds that they will participate in the MSSP and other advanced APMs.

Currently, he noted, the incentive to join an MSSP ACO isn't very strong. ACOs have to invest a lot of money in infrastructure and staff, he pointed out, and only 35% to 40% of those in the MSSP earn shared savings in a typical year.

"There's a lot of uncertainty in this program, and the level of reward or incentive isn't that strong, even at 50% [shared savings rate]," he said. "People are willing to go into it if there's no downside risk. But now you're in a situation [under Pathways to Success] where ACOs will potentially have to write a check back to the government. So it makes organizations more cautious....

"The Value Act aims to provide a little bit more of a runway over a slightly longer period of no risk. They propose 3 years of no risk before you move into a risk track. They propose increasing the incentive to 50% for the entry level and 55% for the other Basic levels, which have minimal risk. That's reasonable to get more ACOs into the program."

The 6-year extension of the advanced APM bonuses and the lowering of thresholds could help many doctors in ACOs, especially primary care physicians, he added. Even if their ACOs fail to generate shared savings, he said, the clinicians can still reap the bonuses.

Earlier CMS Policy Change

The legislation will have fairly little impact on the ability of ACOs to withstand COVID-related losses, he said. Most of that was taken care of, for now, by regulatory changes that CMS made in May. At that time, CMS invoked the emergency provision for natural disasters in existing law, allowing ACOs off the hook for any losses incurred retroactive to January 1. This policy, which has been extended to October, has induced most of the ACOs bearing downside risk to stay in the MSSP, Mechanic said.

The bill would help postpone the MSSP's shift to financial risk under CMS's Pathways to Success program, he noted. But most of that change has already occurred. "As of 2020, about 35% of the MSSP ACOs were taking downside risk, and about 65% weren't. In 2021, that was slated to flip to 65% to 35%. What CMS has said is that they're going to hold that steady for a year."

David Muhlestein views the bill as a "step backward in two-sided risk. Some people say it isn't really value-based care until you have downside risk. So that's a step backward. Is it a step forward in that it will encourage more people to participate? Maybe. But it's been relatively generous for many organizations to start with upside only. You have the flexibility to drop out of the program. You're not committing to years of downside risk. So I don't think it's exclusively the threat of risk that's keeping people from entering into the [MSSP] models."

It's possible some ACOs have benefited from the pandemic, because less money is being spent on non-COVID health services than in the past, Muhlestein pointed out. "I'd be surprised if many organizations weren't disproportionately benefited by the reduction of care relative to those who have high [numbers of] COVID cases."

Another way to look at this, Mechanic noted, is that if health spending drops, ACO benchmarks will be adjusted downward, making it easier for the organizations to reap MSSP rewards.

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