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Jun 15, 2015

The Spectrum of Accountability and Alternative Definitions of Alternative Payment Models

Secretary Burwell set the healthcare community abuzz January 26 when she announced the Department of Health and Human Services’ (HHS) plan to set 30 percent of fee-for-service payments to alternative payment models (APMs) by 2016 and 50 percent by 2018.

The Medicare Access and Chip Reauthorization Act (MACRA or SGR Fix) supports this goal, giving providers the opportunity to forgo participation in the Merit-Based Incentive Payment System (MIPS) if they receive a significant percentage of their overall payment through APMs. Still, the question remains: will HHS achieve its goal? And, if so, what will that mean? It may depend on what counts as “alternative” in alternative payment models. The definitional debate and the measuring of progress on HHS’ goal of reaching 50% of FFS payments in APMs will likely lead to a spectrum of accountability:

Upside and/or downside risk models accountable to total cost of care against a global budget- While all CMS ACOs feature an element of accountability to cost and quality, not all ACO APMs are created equal. CMS’ and CMMI’s ACO payment models hold providers broadly accountable against a global budget for total annual Parts A and B costs, but the level of accountability differs significantly across its ACO programs. Track 1 of the MSSP program, for instance, allows participating ACOs to operate under a one-sided risk structure, wherein successful organizations have the opportunity to share in any realized savings above the minimum savings rate (MSR), but not in any losses. In contrast, organizations in MSSP’s Tracks 2 and 3, CMMI’s Pioneer program, and the upcoming Next Generation ACO program enter a two-sided risk arrangement. In this structure, providers must repay a share of any losses resulting from poor performance against their respective benchmarks. Ninety-four percent of organizations in CMS and CMMI’s ACO programs operate under a one-sided risk structure (See Figure A) and the recently released MSSP 2.0 final rule offers Track 1 ACOs a second three-year agreement period without any negative financial consequence. Given the varying levels of accountability, healthcare stakeholders should be wary of grouping these programs together when considering emerging APMs and progress made in healthcare’s transition from volume to value-based care.

Upside and downside risk models accountable to cost of care for discrete episodes of care- CMMI’s BPCI will complement ACOs as one of the two core elements of HHS’ APM strategy. BPCI differs significantly from ACOs in that bundled payments hold participating entities accountable for services provided in a discrete episode of care for select conditions. Much like ACOs, not all bundled payment participants are the same. In addition to there being 4 basic models in the BPCI program, each focusing on different acute and post-acute episodes of care, the CMMI program features two separate phases. In the first phase, BPCI participants receive data from CMS for care improvement purposes, but do not yet bear any financial risk for their performance. Phase 2 of the initiative is the risk bearing stage, where BPCI participants are expected to enter two-sided risk arrangements with CMMI for their select conditions and episodes of care.  

As of January 2015, only 255 of the 6,364 participants in the four BPCI models were in the risk bearing stage. In order to remain in the program, Phase 1 participants were required to submit their agreements to transition at least one clinical condition to Phase 2’s two-sided risk structure by May 1 for a July 1 start date this year. CMS has not yet made data publicly available indicating which participants, or how many, chose to leave the program or advanced to two-sided risk. As time progresses, more participants are expected to transition to phase 2, but given past preference for phase 1, the future size of the program remains uncertain. Still, all BPCI participants, regardless of risk-bearing status, will likely be considered APMs by HHS when measuring progress against their value-based care goals.

Though BPCI will continue to be a staple of HHS’ episode-based APMs, CMMI will also experiment with care episodes through other constructs- notably the new Oncology Care Model (OCM). In contrast to BPCI’s definition of a care episode, OCM narrowly focuses on chemotherapy services, but extends six-months throughout the duration of a patient’s oncology care. Despite the fact that this APM emphasizes coordinated care over an extended time period, its key programmatic elements- per-beneficiary-per-month (PBPM) payments with the potential for performance-based payment- are still predominantly fee-for-service oriented. 

Incentive-based pay-for-performance models with few mechanisms of accountability- Lastly, the periphery of HHS’ APM strategy will likely be occupied by some of CMMI’s smaller initiatives, such as CPCI, MAPCP, and other similar models. Under CPCI, a four-year multi-payer CMMI initiative, participating practices receive PBPM care management fees to support enhanced care coordination, with opportunities for practices to share in savings in the third and fourth years of the initiative. MAPCP features a similar arrangement as CPCI, as the core component that makes the program an APM is the monthly care management fee practices receive from participating payers for care coordination for chronically ill patients. Encouraging enhanced care coordination for chronically ill beneficiaries is of tremendous value; however, these programs are largely focused on fee-for-service oriented incentives, as opposed to true accountability-based alternative payment models.     

HHS’ APM strategy will not solely focus on its nation-wide models and demonstrations. In order fill any gaps in meeting its national goals, HHS will scale certain local and regional innovative APMs. Whether through transitioning effective Health Care Innovative Awards into more permanent payment and delivery reforms, or facilitating multi-payer models in its State Innovation Models (SIM) program, HHS will encourage local innovation as part of its APM strategy. As these developments unfold, it will be important to take note of where they fall on the accountability spectrum. 

HHS APMs goals are both ambitious and laudable, but attention must be paid not only to the percentage of payments attributable to APMs, but what it actually means to be an APM and where on the accountability spectrum HHS APMs fall. MACRA’s broad statutory definition of eligible APMs gives HHS considerable latitude in defining APMs through regulation. Though HHS will likely succeed in reaching its 50 percent APM goals, how it gets there will determine if the APM glass truly is half full.

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