Innovative payment models may reduce Part B spending

Some of CMS’ payment plan proposals may have the effect of reducing Part B drug costs, even if not specifically designed to do so. Avalere Health reviewed three categories of programs and found that episode payment models (EPMs), a disease-specific model, and accountable care organizations (ACOs), incentivize providers to reduce Part B spending due to the financial responsibilities imposed. The Center for Medicare and Medicaid Innovation (CMMI) is continually developing and testing new models with the goal of offering higher quality care while minimizing costs.

EPMs

EPMs include the Bundled Payments for Care Improvement (BCPI) demonstration and the mandatory (for metropolitan area hospitals) Comprehensive Care for Joint Replacement (CJR) model. Providers are held accountable for costs incurred over a patient’s episode of care, bearing risk for Part A and B expenditures that begin with a hospital stay. A target is provided based on historical expenditures, and providers are financially responsible for excess spending. Over 1,300 providers now participate in BPCI. CJR covers the initial hospital stay and 90-days after discharge for major joint replacements in the lower extremity, including Part B spending. A proposal has been issued to include non-joint replacement hip and femur treatments.

Similarly, the Oncology Care Model (OCM) provides a fixed monthly payment to providers for management and coordination of patient care for six months while a patient is receiving chemotherapy. This model includes payments for novel oncology therapies to ensure that there is no disincentive to use expensive new treatments.

Disease-specific and ACOs

End stage renal disease (ESRD) beneficiaries are often excluded from payment model demonstrations, so CMMI created the Comprehensive ESRD Care (CEC) model to determine whether improved outcomes and savings are possible for these patients. Providers are accountable for Part A and B spending per beneficiary, per year, including dialysis treatments.

The Medicare Shared Savings Program (MSSP), Next Generation ACOs, and Pioneer ACOs all place risk on providers in various ways, allowing them to share in savings and losses. This includes responsibility Part B spending and the opportunity to receive savings based on low-cost decision-making.

CMS finds savings, quality improvement in ACOs

Accountable care organizations (ACOs) save money and provide a higher quality of care for their patients, according to an announcement from CMS. The assessment was made based on the 2015 performance year results for the Medicare Shared Savings Program (MSSP) and the Pioneer ACO model, which along with all ACOs, had combined total Medicare program savings of $466 million that year.

ACOs

ACOs are groups of physicians, facilities, and other health care professionals that agree to provide coordinated care to their patients to receive savings. ACOs use financial incentives to change behavior, such as paying more to physicians who coordinate care and use health information technologies. ACOs are judged on the care they provide, measured by various metrics. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) authorized two distinct ACO models.

The Pioneer ACO model, created by section 3021 of the ACA, is designed to support organizations with more experience in offering coordinated, patient-centered care. The program aims to test the payment arrangement of shared savings and shared losses, offering “higher levels of reward and risk than in the Shared Savings Program.” For the Pioneer program, ACOs agree to share their savings and losses with CMS, to a certain amount. Each Pioneer ACO had a minimum savings rate/minimum loss rate—if the gross savings/loss percentage was within that rate, the ACO neither received shared savings nor paid shared losses. If the ACO gained or lost more than their minimum rate, they either received a shared savings payment from CMS or owed CMS a shared loss payment, splitting the remaining amount.

Section 3022 of the ACA authorized the MSSP, which requires ACOs to meet certain quality metrics specified in CMS implementing regulations.

2015 results

In 2015, there were 392 MSSP participants and 12 Pioneer ACOs. They showed significant improvements in the quality of care offered to Medicare beneficiaries, with all 12 Pioneer ACOs improving their quality scores by more than 21 percentage points from 2012 to 2015. MSSP ACOs that reported in both 2014 and 2015 showed improvements on 84 percent of the quality measures reported in both years, and average quality performance improved by more than 15 percent on key preventive care measures. Overall, 125 ACOs qualified for shared savings payments by meeting quality performance standards and their savings threshold.

CMS Acting Commissioner Andy Slavitt commended ACOs for their performance, saying, “The coordinated, physician-led care provided by Accountable Care Organizations resulted in better care for over 7.7 million Medicare beneficiaries while also reducing costs.”

ACO movement gains steam as more providers, organizations join up

With a number of new providers participating in accountable care organization (ACO) initiatives, this care model is now available in 49 states, plus the District of Columbia. CMS has announced 121 new participants in these programs, which allow providers to offer better quality, coordinated care to reduce costs and burdens on patients. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) emphasized quality and a patient-centered view of care, offering various tools like Medicare ACOs to move the health care system away from traditional fee-for-service payment arrangements.

Types of ACOs

The Medicare Shared Savings Program (MSSP), created by section 3022 of the ACA, allows providers to work together and reduce redundancy in patient care. Instead of being paid more for ordering more tests, providers are rewarded for quality of care and are able to share in the savings generated by the program. On January 1, 2016, 100 new ACOs and 150 renewing ACOs were participating in the MSSP, serving 7.7 beneficiaries. Some MSSP ACOs are participating in the ACO investment model (AIM), which provides pre-paid shared savings. CMS hopes that this model will encourage more ACO formation in underserved areas.

The Pioneer ACO model is for providers already experienced in care coordination, allowing them to shift toward a population-based payment model. This model involves a higher level of risk along with a generally higher level of shared savings than the MSSP. The Next Generation model was born from the prior models and includes strong patient protections and financial incentives for providers.

Goals

HHS announced last January that it intended to move 30 percent of traditional fee-for-service payments to alternative models by 2016. At the time, ACOs had already saved the Medicare program $417 million. CMS noted that those participating in ACOs in 2013 and 2014 also improved on 27 quality measures.