The Outlook for ACA Healthcare Delivery Reforms

Guest post by Ken Perez, vice president of healthcare policy, Omnicell, Inc.

Ken Perez
Ken Perez

The Patient Protection and Affordable Care Act (ACA) mandated five major healthcare delivery reforms that collectively aim to improve care quality and slow the growth of healthcare spending. In the five years since passage of the ACA, each of these delivery reforms has been implemented, revised and broadened.

What is the outlook for these changes? Clearly, the long-term strategic intent of the Obama administration is to shift Medicare payments from fee for service to fee for value. On Jan. 26, 2015, Health and Human Services Secretary Sylvia Burwell set forth quantified goals and an aggressive timeline for directing an increasing share of Medicare payments through alternative payment models (APMs) such as accountable care organizations (ACOs) and bundled payments, from 20 percent in 2014 to 50 percent in 2018. Let’s consider each of the major healthcare delivery reforms.

Accountable Care Organizations

On January 11, the Centers for Medicare & Medicaid Services (CMS) announced that 477 organizations are participating in one of Medicare’s four accountable care programs.

With 434 current participants, the Medicare Shared Savings Program (MSSP) accounts for the vast majority (91 percent) of the total. Although the total number of MSSP ACOs has grown steadily each year since the program’s inception in 2012, cumulatively about 100 ACOs (19 percent) have dropped out of the program.

Medicare’s first ACO program, the higher-risk, higher-reward Pioneer ACO Model, suffered numerous departures during the second half of 2015, as the number of Pioneers has dropped from 32 original participants announced in December 2011 to a current total of nine, a 72 percent decline. However, some of the departing Pioneers have transferred to the MSSP or the even higher-risk, higher-reward Next Generation ACO Model, which was launched in March 2015.

CMS also disclosed that 21 organizations are participating in the Next Generation ACO Model, including five former Pioneers. The remaining 13 of the 477 ACOs are the initial participants in the first disease-specific Medicare ACO program, the Comprehensive ESRD Care Model, which was announced in October 2015.

Despite these seemingly impressive numbers, to achieve the aforementioned goal of flowing half of Medicare payments through APMs by 2018, CMS needs even more growth in the number of Medicare ACOs coming onboard in the next couple of years, perhaps 150-200 net new ACOs per year in 2017 and 2018.

Bundled Payments

In 2013, CMS launched the Bundled Payments for Care Improvement Initiative (BPCI), a voluntary program which offers providers four episode-based payment models. In three of the models, implementation is divided into two phases. During Phase 1, “the preparation period,” CMS shares data and helps the participating providers learn in preparation for Phase 2, “risk-bearing implementation,” in which the providers begin bearing financial risk with CMS for some or all of their episodes. CMS required all participants to transition at least one episode (e.g., Acute Myocardial Infarction) into Phase 2 by July 1, 2015, to continue participating in the BPCI.

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The Stunning Rise of the Medicare Part B Value-Based Payment Modifier

Guest post by Tom S. Lee, Ph.D, CEO and founder, SA Ignite

Tom Lee, Founder and CEO, SA Ignite
Tom Lee

The Value-Based Payment Modifier (VBM) is one of the most impactful yet least understood components of the portfolio of value-based programs under Medicare Part B. Provider organizations widely know that their Physician Quality Reporting System (PQRS) quality measures must be reported to CMS in order to avoid significant VBM penalties. Yet, few organizations understand the value-based payment modifier rules well enough to know how to improve their value-based payment modifier quality and cost scores, which directly impact Part B reimbursement. And, the stakes are high as the 2015 VBM can have a +/-4 percent or greater impact on Part B, and starting in 2017, value-based payment modifier comprises 60 percent of the reimbursement impact of the newly-passed Merit-Based Incentive Payment System (MIPS). MIPS rolls up value-based payment modifier, meaningful use and other value-based programs into a single score for each provider that can impact Part B reimbursement up to approximately 30 percent based upon cost and quality performance relative to peers.

One way to understand the growing importance of VBM is to compare the rules and metrics of the 2013 program to those of CMS’ proposed 2016 program. The rise is stunning and reminiscent of the rapid expansion of other game-changing programs, such as meaningful use, but where the financial and reputational impacts are even greater.

The growing number of providers subject to VBM penalties

VBM penalizes providers falling into the lowest tier of quality performance among peers nationally, as determined by PQRS and other quality measures. In 2013, approximately 30,000 providers were subject to value-based payment modifier quality-performance penalties. In 2016, CMS projections and proposals taken together indicate that 1.25 million providers will be subject to such value-based payment modifier penalties, representing a 40-fold increase in the span of 4 years.

Why the growth? It’s all about regulatory change. In 2013, this quality-performance penalty only applied to groups with more than 100 providers, which opted into quality tiering, and it excluded organizations in the Medicare Shared Savings Program (MSSP), Pioneer ACO Model, or the Comprehensive Primary Care Initiative (CPCI). Furthermore, penalties were only applicable to Part B payments to physicians (MD, DO), not payments to non-physician providers (nurse practitioners, physician assistants, etc.) In 2015, CMS cast the net wider by expanding quality-performance penalties to apply to all groups down to only 10 providers in size and including participants in MSSP ACOs, Pioneer ACO Model and CPCI. For 2016, CMS is proposing that the size threshold be removed entirely such that all groups and solo physicians be subject to quality-performance penalties and that the penalties should be applied to Part B payments to non-physicians as well, not just physicians.

The amplification of VBM incentive and penalty dollars

The sizes of the maximum incentives and penalties in 2013 were 9.8 percent and -1.0 percent, respectively. The national incentive pool is set to be equal to the national penalties assessed in order to keep value-based payment modifier as an overall budget-neutral program. Hence, the “winners take from the losers,” where “losers” also include those providers who simply did not meet the minimum PQRS reporting requirement imposed by value-based payment modifier. This non-reporting percentage was about 30 percent of eligible providers in 2013, and CMS projects about the same percentage for the 2016 performance year. Hence, assuming that the proportion between winners and losers remains about the same in 2016 as compared to 2013 (about 13 percent), and factoring in the proposed 2016 value-based payment modifier rules, the maximum value-based payment modifier performance-based incentive could rise to as high as 20 percent, while the maximum penalty would be -4 percent, respectively representing 2 times and 4 times increases from 2013. As mentioned above, MIPS further increases the potential financial impact to 30 percent or even more of Part B payments.

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CMS Makes Substantial Investment in Rural ACOs

The Centers for Medicare & Medicaid Services (CMS) announces the availability of a new initiative for Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program. The new ACO Investment Model is designed to bring these efforts to to rural and underserved areas by providing up to $114 million in upfront investments to up to 75 ACOs across the country.

The ACO Investment Model will give Medicare Accountable Care Organizations more flexibility in setting quality and financial goals, while giving them greater accountability for delivering quality care efficiently, said CMS administrator Marilyn Tavenner.

“We are working with these organizations to make necessary investments that encourage doctors, hospitals and other health care providers to work together to better coordinate care and keep people healthy,” Tavennaer said.

Through its Innovation Center, CMS will provide up front investments in infrastructure and redesigned care process to help eligible ACOs continue to provide higher quality care. This will help increase the number of beneficiaries – regardless of geographic location – that can benefit from lower costs and improved health care through Medicare ACOs.

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