Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
Under the authority of Section 3021 of the Affordable Care Act (ACA), the Centers for Medicare and Medicaid Services (CMS) has launched a variety of accountable care organization (ACO) initiatives, including the Pioneer ACO Model, the Medicare Shared Savings Program (MSSP), the Advance Payment ACO Model, and the Next Generation ACO Model. ACOs continue to be the most aggressive of the healthcare delivery reforms mandated by the ACA.
Notably, none of the aforementioned ACO models has a disease-specific focus. During the past few years, DaVita Inc., the nation’s second-largest dialysis provider, lobbied CMS diligently for a renal-specific ACO or at least creation of a framework that would allow for a disease-specific approach. DaVita formed the Accountable Kidney Care Collaborative to prepare the nephrology community to participate broadly in general ACOs and/or in disease-specific renal ACOs.
An ACO Program Focused on Renal Disease
On Oct. 7, 2015, the Center for Medicare and Medicaid Innovation (the Innovation Center) made a groundbreaking announcement, launching the Comprehensive ESRD Care (CEC) Model, with its sole focus on end-stage renal disease (ESRD), also known as kidney failure. This disease afflicts more than 600,000 Americans. These individuals require life-sustaining dialysis treatments several times each week. In 2012, ESRD beneficiaries comprised 1.1 percent of the Medicare population and accounted for $26 billion or 5.6 percent of total Medicare spending.
The CEC Model’s first three-year agreement period began on Oct. 1, 2015, with 13 ESCOs in 11 states: Arizona, California, Florida, Illinois, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, and Texas. All except one of the 13 ESCOs are owned by a large dialysis organization (LDO), defined as an organization that owns 200 or more dialysis facilities. Dialysis Clinic, Inc. (DCI), the nation’s largest non-profit dialysis provider, owns three of the ESCOs, as does DaVita. Fresenius, the largest dialysis provider, owns six of the ESCOs. The lone non-LDO is the Rogosin Institute in New York City.
As with all Medicare ACO programs, the CEC Model has both quality measures and expenditure-reduction targets which impact the model’s payment arrangements.
The CEC Model features 26 quality measures—14 outcome and 12 process—for both LDOs and non-LDOs. The quality measures span five domains: patient safety, person- and caregiver-centered experience and outcomes, communication and care coordination, clinical quality of care, and population health.
The payment arrangements for LDOs and non-LDOs differ, with LDOs subject to a two-sided model with upside potential and downside risk, while non-LDOs have a one-sided, upside-only model.
LDO Payment Arrangement
For LDOs, the Minimum Savings Rate (MSR)/Minimum Loss Rate (MLR) is 1 percent of the Total Expenditure Benchmark (target). For performance year one, the Shared Savings Percentage for the ESCO is 70 percent and 75 percent in performance year two and beyond. Preliminary Shared Savings will be adjusted for quality—based on reporting in performance year 1 and on a sliding-scale basis for quality performance in performance year two and beyond.
In the event that an ESCO incurs shared losses, for performance year one, the Shared Losses Percentage for the ESCO is 70 percent and 75 percent in performance year 2. The percentage is adjusted on a sliding-scale basis for quality performance, with a Shared Losses Floor of 50 percent for a perfect quality score.
Preliminary Shared Savings or Preliminary Shared Losses are capped at 10 percent of the Total Expenditure Benchmark for performance years 1 and 2, and at 15 percent in performance year 3 and later years.
The Preliminary Shared Savings for LDOs are subject to the 2 percent sequestration reduction, per the Budget Control Act of 2011.
Non-LDO Payment Arrangement
For non-LDOs, the MSR is tiered on the basis of the number of ESCO beneficiaries and ranges from 2 percent for ESCOs with 2,000 or more beneficiaries to 4.75 percent for ESCOs with 350 to 399 beneficiaries. For all performance years, the Shared Savings Percentage for the ESCO is 50 percent. Preliminary Shared Savings will be adjusted for quality—based on reporting in performance year 1 and on a sliding-scale basis for quality performance in performance year 2 and beyond.
Preliminary Shared Savings are capped at 5 percent of the Total Expenditure Benchmark for each performance year.
As with the LDO payment arrangement, the Preliminary Shared Savings for non-LDOs are subject to the 2 percent sequestration reduction.
The CEC Model is focused on a significant chronic disease that is costly in human and economic terms. The program applies general ACO principles and leverages many of the specific lessons learned from the experience of other Medicare ACO programs, and with the support of the largest dialysis providers in the nation, its prospects for success are bright.