Travis Broome

Travis Broome is vice president of policy at Aledade, a new company helping doctors stay independent and thrive in the transition to value-based care. Joining Aledade early on, Travis helped Aledade grow from 2 accountable care organizations (ACOs) to 20 ACOs. From business development with both practices and payers, to early population health analytics, to serving as executive director for the Aledade Louisiana ACO, he has touched every part of Aledade as it has grown. Today, he is a thought leader on accountable care and is responsible for strategy development, policy analysis and economic modeling. Prior to Aledade, Travis was a regional director at CMS. He earned his MPH and MBA from the University of Alabama at Birmingham.

This article is co-written with Britainy Barnes, policy analyst, Aledade.  

Small businesses across the country are trying to navigate federal loan applications in the midst of the greatest economic crisis in at least a generation. Often, they are doing so with very little guidance on how to adhere to the terms and conditions, and how best to protect themselves from failing future audits. The administrative burden on these small business owners weighs heavily, especially as they adapt to the new reality of commerce during a pandemic. Fortunately,  many of these small business owners have had additional time to devote to understanding these applications, since they’ve had limited operations during the public health emergency.

One crucial segment of the nation’s small business community is directly fighting COVID-19 and administrative burden at the same time—small, independent physician practices.

At Aledade, we have been working with more than 500 independent and small primary care practices across the country as they navigate these loans and grant programs. Their experience has taught us a few lessons. We have learned that even well-intentioned programs present unexpected difficulties for smaller practices. Sometimes these issues have been addressed in later modifications. Most of the time these changes came too late, after practices had already wasted extensive time deciphering program rules. Any new program should similarly assume that it will disfavor small businesses without an army of accountants, lawyers, and policy experts—unless explicitly designed with the intent of minimizing administrative burden.

When the rest of the world slowed down, health care providers stepped up to ensure the safety of their patients. Thirty-four percent of providers reported 

 during evenings and weekends now than before the start of the pandemic. These health care heroes have spent long hours and late nights caring for their patients in spite of the uncertainty their businesses face. And that uncertainty cannot be overstated. Many practices have seen revenue drop by 50% to 60% over the past few months.

Primary care providers are putting in this extra time because they are often a patient’s first and most personal connection to the rest of the health care system. Yet the simple, stark fact of a fee-for-service health care system is that this extra work does not translate into extra revenue. Under the current payment system, performing procedures and ancillary services is more profitable than talking to patients and evaluating and managing their conditions.

COVID-19 caused the postponement of all elective procedures. This, coupled with patients’ fear of leaving their homes even when they need care, left providers with large gaps in the services they provided.

For safety reasons, telehealth and telephone visits have replaced in-person visits while simultaneously adding administrative burden. Patients are often confused at the beginning and end of these visits—from technical difficulties and a lack of familiarity with virtual platforms, to receiving unexpected co-insurance bills for a call to their provider. The providers are often caught in a confusing situation themselves. CMS has been making continual, well-intentioned changes to their telehealth policies as have private payers. Each change is both an improvement and a burden. The physician has to stop seeing patients, process the change and determine what to do. Because CMS made many of these changes retroactive, providers don’t know whether their claims will be paid or whether they have to resubmit them. All of these questions and issues are just for Medicare patients. Providers then also have to figure out how to correctly bill telehealth for private payers amidst a kaleidoscope of everchanging guidance.

Despite the mostly positive changes in telehealth payment, expansion of the Paycheck Protection Program, and the Provider Relief Fund General Distribution from HHS, we at Aledade have heard from many physicians that they are taking significant pay cuts or foregoing their salary altogether.

Generally, they’re doing this for 1 of 2 reasons. The first is that the funding they received wasn’t enough and they have to make up the difference. The second is that it’s simply easier for them to take these cuts and hope it’s enough to survive this crisis than it is to carve out time between patients, take off their mask and face shield and gown and gloves (assuming they were able to secure PPE), sit down with their practice manager, figure out what documentation each program requires, gather all the required documents, apply, and then make sure that once they’ve received the money it is only being used for approved expenses. Often, they have to track every detail of what this funding is spent on in preparation for a report that they will have to produce in a month, while having  no idea what that report will ask.

In general, these providers are very fearful that—even as they are taking time away from their patients to interpret laws and regulations&mdash;if they unintentionally fail to comply with even one of the various conditions or requirements, an audit or knock on the door from the FBI could be in their future.

Take for example the Paycheck Protection Program. We followed that program very closely, from the moment we heard it would be available in early April. We put together instructions informing our partner practices how to apply and what documents they would need in preparation for April 3, 2020, when banks would begin accepting applications.

In spite of all this, few of Aledade’s partner practices were able to secure funding before the first round of PPP ran out of funds. We received emails from many of these practice owners telling us that their bank wasn’t accepting applications. Some said they weren’t being prioritized because they didn’t have the right kind of account. All we could offer was a choice—wait and be patient, or try another bank.

When the program was refunded, we made sure to inform practices of this again. Thankfully, most of them were able to secure a loan. It still wasn’t easy. In some cases, it meant they left the bank they had been doing business with for years for another bank that was accepting applications from new customers. 

Then the worries increased. After securing a loan, practices told us of their concerns about getting audited and the inspector seeing they had also received funds from the Provider Relief Fund and/or a Medicare Accelerated Payment (another loan which is not eligible for forgiveness).

The scale of these practices is crucial context. We’re talking about small practices, typically with fewer than 10 providers and little in savings. These are practices that are working in one of the lowest-paid specialties on razor-thin margins. They were being asked to compete against, and fulfill the same regulatory obligations as, huge organizations with hundreds of employees, finance and accounting departments, and many more resources. It was only when the Treasury Department announced its safe harbor exception for businesses that received less than $2 million dollars that practices sighed with relief. That was one less administrative burden they had to worry about.

HHS should implement a similar exception for the money it is disbursing through the Provider Relief Fund’s General Allocation. Any provider that receives less than $1 million from the Provider Relief Fund should be exempt from any reporting requirements or future audits on these funds (

). If the Treasury Department can extend a safe-harbor to over 

, why can’t HHS do the same for its eligible health care providers?

Another option that would provide the largest amount of much needed relief to small practices would be to raise the amount at which HHS requires providers to submit quarterly reports to the Secretary. Currently, this level is set at $150,000. The type of accounting needed to track which revenue dollar was spent on which cost item is rarely seen in our practices. They do not have full time accountants. That $150,001 does not go very far if it requires a practice to overhaul its accounting system. The average amount received by providers is 

. In other words, it’s a few places that are getting most of the money. By only requiring quarterly reports from providers who received more than $1 million, HHS can target the places that have the capacity to produce these reports.

Effect of Increasing HHS Reporting Limit to $1M

 Considering the $50 billion that has been distributed as a power distribution, where a few providers received most of the money, HHS’s $150,000 limit is unduly burdening small practices. The graph (

) shows that by increasing the amount at which providers must submit quarterly reports to $1 million, 78% of the money continues to be accounted for while removing the burden for over 10,000 providers.

Below is just a sampling of questions we received. All these gritty questions take time and energy away from the practice of medicine and usually result is spending stimulus money on consulting services to figure out how to spend the stimulus money.

Can I use this funding to pay my staff a “hazard pay”?

Can I use this money to pay my rent, utilities, and more after the 8 weeks from PPP?

The end of my financial cycle is coming up on June 30th. How do I account for this with regards to taxable income?

Is there any way to track the status of my application? It’s been over 10 days since I applied.

I just got a DocuSign email saying my application had been voided because it expired. What do I do now?

HHS should increase its communication with providers. After providers received the first round of funding in April, HHS sent an email informing them of next steps (attest to the Terms and Conditions and confirm receipt of the funds). But that was the extent of their communications with providers. A practice in Pennsylvania told us, “Had it not been for the communication we’ve received from you [Aledade], we would not have had any idea that there was an application for a second round of funds.”

Similarly, there was no direct communication to providers regarding the June 3rd deadline that they had to submit revenue information in order to be considered for an additional payment. Finally, most practices that have called the CARES Hotline have been unable to get an update on the status of their application. HHS has made them wait over 4 weeks. Four weeks in which they have been awaiting a decision that will dictate whether they are able to keep their doors open for a few more weeks or not.

As Congress considers future legislation, it should be aware of the trials that independent practices went through in the first two rounds. If Congress does not provide for different requirements for large and small businesses in its legislation, it is ensuring that large businesses with their CFOs and full time accountants will be at an advantage over small businesses. Imposing administrative burdens on thousands of independent practices who will receive only a small fraction of the funding.

It is a difficult time to be a health care provider, regardless of specialty. Hospitals and independent practices alike are trapped by the advancing flames of falling revenue, with the only way out a dangerous,  complicated, often foggy thicket of long applications with vague conditions and dire consequences for getting it wrong.

The difference is that providers employed by hospitals don't have to worry about any of this. They have an army of accountants, lawyers, and policy experts in corporate figuring it out while their only worry is their patients. They also know that once this is over, they will continue to have a job.

Meanwhile, independent providers are being asked to take time away from their patients and instead learn how to interpret laws and regulations just to keep their business open, all the while with the specter of an audit or the FBI knocking on their door if they, unintentionally, fail to comply with the various conditions and requirements.

Small, independent primary care practices are suffering, just like countless small businesses across the country. But unlike other small businesses, these practices are crucial to the fight against COVID-19, a key element in our eventual reopening and recovery, and the foundation of building a health care system with lower costs and higher quality care. Simply put, small practices with limited resources shouldn’t be held to the same requirements as large health systems. They need streamlined, dedicated, tailored support. Because, once this pandemic ends, if we fail to help these independent practices survive, we will be left with an even more 

consolidated health care market and higher prices

 - one that is fundamentally weaker and more fragile for the pandemics of the future.

1. Based on 6/3 data (which now also includes Rural, High Impact, and SNF payments)

Articles

Minimizing Administrative Burden in the Provider Relief Fund: Spending Money on Care, Not Accounting

It can be one of the scariest moments in your life.  When you end up at the emergency department (ED) or you’ve been admitted to the hospital, your health has deteriorated and you’re likely to find yourself in the full time care of health care providers you’ve never met before.

If you have a primary care relationship, there is at least one health care provider who does know you: your primary care physician (PCP). Yet in the turmoil of admission and the danger of discharge, it has often been likely that the only physician on earth who knows you and your health would never know that you spent 3 days in the hospital. That is, until you recovered and told the person.

Technology is changing this. Today, Aledade partner physicians receive admission, transfer and discharge (ADT) notices for 50% of their patients’ admissions. It hasn’t been easy. Getting to 50% has required Aledade team members across the country pounding on desks to get access, a few engineers finding new and innovative ways to make the connections work well and our partner practices changing their workflows to use the information to make a difference in people’s lives. We have known that it will 

than asking, cajoling, pleading and prodding to get everyone on board. We have known that the barriers are operational and business based, 

 to ensure the safety and quality of transitions of care for Medicare beneficiaries. For the first time, it officially included ADT notices as a condition of participation (CoP) with Medicare under Medical Record services. That means CMS is requiring that hospitals do their best to determine the patient’s relationships with primary care and post- acute care and notify those providers of admission, transfer and discharge. This is the biggest stick Medicare has, and they bravely used it to ensure that dangerous transitions of care no longer happen in the dark.

ADT notification is the easiest form of health information exchange. Every day, thousands of notifications flow across this country, yet thousands more should be flowing. Making that flow a condition of participation took careful consideration on CMS’s part. CMS finalized several compromises:

Limit the required information to only the most essential information:	

Only hospitals with systems capable of sending such notices are required to do so

Any means of electronic transmission of the notice is acceptable

Focus on just primary and post-acute care.

None of this, of course, limits a hospital from doing more. Aledade works with many hospitals and health information exchanges that accomplish far more than these minimum requirements.

Here’s precisely what the rule requires. Starting 6 months from now, hospitals (including psychiatric hospitals and CAHs) must send electronic patient event notifications of a patient’s admission to inpatient or emergency department, transfer between ED, inpatient and observation status, and discharge from ED, inpatient or observation status to:

Post-acute service providers who have a prior to admission relationship with the patient and/or post-acute service providers to whom the hospital is discharging the patient

The patient’s established primary care providers (physicians, nurse practitioners, physician assistants)

Other providers or groups identified by the patient

These notifications are required at the time of admission and immediately prior to, or at the time of, a patient’s discharge. At Aledade, we have gone so far as to set up real time text alerts for some of our practices.

Hospitals can use any technology that gets the job done. While HL7 2.5.1 is common, hospitals could use C-CDA or a FHIR-based API. CMS’s mantra here is “if it works, use it.” Hospitals can also use multiple modes of transmission. For example, if some physicians are using the same electronic health record (EHR) as the hospital, the transmission might never leave the EHR. On the other hand, for physicians using different EHRs, a hospital may use the HL7 2.5.1 transmissions. Hospitals can also use an intermediary such as a health information exchange. They can do so either exclusively, in combination with other intermediaries, or direct from the hospital notices. The only limitation is that intermediary cannot be used to limit the notifications to a specified set of recipients.

Turning to the CoP, there are 2 important qualifiers to understand. The first is about established PCPs and post-acute providers. To quote the rule:

We expect that hospitals would demonstrate this capability in a variety of ways, for instance, by demonstrating that the hospital has processes and policies in place to identify patients’ primary care practitioners and incorporate this information into the patient event notification system, or through recording information received from patients about their providers. 

Aledade takes care of this requirement by providing hospitals a list of patients for whom our partner practices have such established relationships.

Second, the hospital must make a reasonable effort to ensure that the notifications are received. To again quote the rule:

We believe that this modified standard will provide hospitals and CAHs with appropriate flexibility and can account for the constraints of providers’ existing systems. We also believe that this modified standard takes into account the fact that some recipients may not be able to receive patient event notifications, or may not be able to receive notifications in a manner consistent with a hospital system’s capabilities, and the fact that hospitals and CAHs may not be able to identify provider recipients for some patients. We expect that surveyors will evaluate whether a hospital is making a reasonable effort to send patient event notifications while working within the constraints of its existing technology infrastructure. 

Today, Aledade provides many different types of connections to hospitals and conforms to different patient matching strategies to maximize our ADT coverage.

We are thrilled for our practices and for Medicare beneficiaries that this rule has gone into effect. We look forward to the day when not 50% of people are safeguarded, but all people are. And when the admission into the hospital, or the discharge out of one, doesn’t have to be quite as scary.

Medicare Steps In to Make Transitions of Care Safer

Cowritten by Sean Cavanaugh, chief administrative officer of Aledade; Hayden Rooke-Ley of Aledade; and Farzad Mostashari, MD, cofounder and CEO of Aledade.

 to the Medicare Shared Savings Program (MSSP) of the current administration. This is the second of a series of blogs that explores the proposed regulation. In this blog, we explore the proposed changes to how MSSP benchmarks are set.

,” and this is doubly true when performance-based risk is involved. Our 

 identified 3 types of risk an accountable care organization (ACO) must consider: medical risk, insurance risk, and regulatory risk. Medical risk is changes in costs driven by the delivery of healthcare services, such as how well diabetic patients are managed. Insurance risk is changes in costs that are not driven by the delivery of healthcare services, such as changes in the rates of accidents. Regulatory risk is the risk of changing the rules and/or rules that affect risk in nontransparent ways. The benchmark methodology is crucial to determining how much medical and insurance risk an ACO assumes, and whether ACOs are appropriately rewarded for reducing costs. CMS is proposing several substantial changes to this benchmark methodology.

In today’s value-based landscape, physicians are becoming more amenable to accepting responsibility for medical risk. But insurance risk remains daunting—and beyond the purview of most providers. Therefore, a benchmark methodology should minimize the transfer of insurance risk to healthcare providers. The primary mechanism for transferring medical risk, but not insurance risk, is risk adjustment. CMS uses the Hierarchical Condition Categories, or the “HCC mode,” in both Medicare Advantage (MA) and in MSSP. In MA, payments are adjusted up or down for changes in risk score, without caps, and based on a normalized risk score. In MSSP, the ACO population is divided into continuously assigned beneficiaries (those who saw an ACO provider both last year and this year) and newly assigned beneficiaries (those who did not see an ACO provider last year). For the continuously assigned beneficiaries (75% to 90% of the ACO population), the population-level risk score is asymmetric: it cannot increase, but it can decrease. This means that essentially all insurance risk that this population gets sicker is transferred to the ACO. For the newly assigned population, the risk score floats freely like in MA.

CMS is proposing to remove the distinction between the 2 ACO populations; instead, it would calculate a single risk score for the entire assigned population to adjust the benchmark. However, unlike MA, CMS is proposing a 3% cap, up or down, on changes in risk score compared with the most recent benchmark year. This limit could hold for as long as 5 years, although an ACO can shorten this timeframe by ending its agreement early and going to the Enhanced track. CMS proposes to use the cap instead of a MA-style coding intensity adjustment. CMS is asking for comment on whether the caps should be higher, whether the caps should be replaced with a coding intensity adjustment, or whether the risk score should just freely float with no adjustment until CMS has more data in such an environment.

CMS next explored how best to balance past performance in managing medical risk with future improvements in managing medical risk. As MSSP is inserted into our existing system, no one is starting from zero. Every possible mix of ACOs will include some providers who are better than average at controlling costs on day 1 and some who are worse than average on day 1. How do you simultaneously encourage inefficient providers to achieve efficiency while encouraging efficient providers to fight against reversion to the mean when your program is voluntary? Currently, MSSP does this by transitioning from a historical benchmark to a regional benchmark over time. In the first 3 years an ACO gets rewarded only for improvement over historical costs. In subsequent years, ACOs are progressively awarded bonuses or penalties at the start of each agreement based on how regionally efficient or inefficient they are. CMS is proposing to move regional benchmarking into the first agreement period. This will remove the waiting period that efficient providers must survive to be rewarded for their relative performance which is expected to increase both the number and longevity of regionally efficient ACOs. The tradeoff is that the program will become less attractive to regionally inefficient ACOs than it is today. As the perfect balance is unknowable, CMS seeks comment on this tradeoff.

Percent of ACO Benchmark based on Regional Comparison

			(As soon as year 2, as late at year 6)

It was not all good news for regionally efficient ACOs, though. The ultimate percentage in MSSP of regional benchmark is reduced from 70% to 50% (MA is 100%). Furthermore, CMS is proposing a 5% cap on the bonus a regionally efficient ACO can receive at the start of an agreement period. The stated purpose of the cap is to prevent excessively high savings for past performance. By using the national average costs to calculate the cap, CMS is rewarding ACOs in low-cost regions with a higher cap than 5% and penalizing ACOs in high-cost regions with a cap that is lower than 5%. This rewards ACOs that accomplish the harder task of regional separation in a low-cost area. CMS asks for comments on whether the cap should be lower, higher, or whether CMS should have a cap at all.

The next proposed change to the benchmarking methodology is also moving regional trend factors into the first contract. Currently, CMS moves from a 100% national trend (or annual inflation) update to a 100% regional trend in the second contract. CMS is proposing to move to a blended regional and national trend for all years. The proposed blend is based on the penetration of the ACO in its region. If 20% of the Medicare fee-for-service beneficiaries in the ACO’s region are assigned to the ACO, then the trend update would be 80% regional trend and 20% national trend. CMS gives 2 reason for the blend. First, CMS has long sought to find ways to reward ACOs in regions where trend increases less than the national rate. This continues that attempt. Second, CMS is trying to solve the

 circularity problem of including ACOs in its own region trend

. As ACOs drive down costs for their aligned beneficiaries, they are also driving down costs in their region and thus lowering their own regional adjustment. This effect can be large for rural ACOs that serve a high proportion of a county’s beneficiaries.

Unfortunately, we do not believe the blended trend addresses this problem. For example, consider a hypothetical ACO that has 20% market penetration and reduces costs by 5% in a region where trend went up 5% in the 80% of beneficiaries not assigned to the ACO. Under current methodology, the regional trend would be 4% for the region (5% x 80% + 0% x 20%). Under the proposed rule the regional trend would still be 4%, but it would only account for 80% of the trend (3.2%). National trend would make up the other 20%. If national trend is 3%, then we are actually at a lower trend than current policy for the ACO (4% x 80% + 3% x 20% = 3.8%). CMS captures 100% of the 1.2% of the savings generated by the ACO (the difference between the 5% cost reductions achieved by the ACO and the proposed blended trend of 3.8%) in addition to the share rate CMS receives on the rest of the savings. However, it is not the reduction in the actual share rate that is the most concerning part of this policy. An ACO must have 5000 members. This effectively means that rural ACOs will have a greater percentage of the savings they generate captured by CMS than urban ACOs. CMS has not proposed to do the straightforward thing of removing an ACO’s assigned beneficiaries from regional trend because of a concern about small numbers in some counties. This concern is easily addressed by expanding the region to contiguous counties.

Taken together, these proposals do make risk more appealing to an ACO by better measuring medical risk, reducing insurance risk, and reducing regulatory risk. We look forward to working with our partner physicians, the ACO community, and CMS to make these policies simpler and more predictable to create the best ACO program possible.

CMS' Medicare Shared Savings Program proposal would make substantial changes to the benchmarking methodology for accountable care organizations.

MSSP Proposal Better Measures Risk With Changes to the Benchmark Methodology

Cowritten by Britainy Barnes of Aledade; Sean Cavanaugh, chief administrative officer of Aledade; and Farzad Mostashari, MD, cofounder and CEO of Aledade.

 to the Medicare Shared Savings Program (MSSP) of the current administration. This is the first of a series of posts that will explore the proposed regulation. Here, we will identify CMS’ goals in updating the MSSP and introduce the concepts that we will explore in more depth later in the series.

The theme of the proposal was no surprise: performance-based risk. CMS Administrator Seema Verma has been 

she believes accountable care organizations (ACOs) that take on risk

 perform better than those that do not. The 609 pages of the proposed regulation, named the Pathways to Success, document CMS’ thoughts on how to move more ACOs into risk faster.

Before we dive into the details of the proposed regulations, we should review why CMS is so focused on performance-based risk. First and foremost, ACOs that take risk perform better against their benchmarks than those that do not. There are several reasons for this, but the reason CMS focuses on is motivation. CMS believes, as do we, that risk-taking ACOs are more likely to make greater investments in reducing costs. CMS is also concerned that some ACOs that do not take on risk may not be focused on reducing costs at all. These “ACO squatters,” as we have referred to them in the past, use the waivers and data available in MSSP not to provide better care at lower cost but to consolidate a healthcare market.

1) Providing a glide path of increased risk taking over time that recognizes differences between ACOs in their experience, finances, and composition

Most ACOs are not squatters. Most ACOs attempt to deliver better care at lower cost. These ACOs make significant investments in administration and care delivery. CMS acknowledges this investment risk but deems it insufficient. Since no ACO is required to make these investments, guaranteed accountability comes from performance-based risk. Therefore, CMS proposes to reduce the maximum time allowed in 1-sided risk from 6 years to 2 years for new ACOs. CMS also proposes policies that it believes will make taking on risk more appealing. These policies fall into 3 buckets, which we discuss below and will explore in greater depth later in our blog series:

CMS proposes to replace the current Track 1, Track 2, Track 3, and Track 1+ model with 2 tracks: Basic and Enhanced. Basic is a 5-year glide path from Track 1 to Track 1+. Enhanced is essentially Track 3. Every ACO will move from current tracks to this Basic/Enhanced framework over time. The soonest is July 1, 2019, for new ACOs and any ACO that chooses to transition. The latest will be January 1, 2021, for ACOs that started their 3-year agreement period in 2018. As part of the glide path, CMS proposes to embrace 

 with the risk cap based on revenue instead of total cost of care. CMS also tailors the glide path to the characteristics of the ACOs based on experience with risk and their financial capacity, as measured through revenue.

Generally speaking, a low-revenue ACO is a physician-led ACO without a hospital and a high-revenue ACO is an ACO with a hospital. CMS points out that physician-led ACOs have generated 2.9% gross savings compared with only 0.5% gross savings for hospital-based ACOs. This significant underperformance by hospital-based ACOs is why CMS singles them out for moving to risk faster. CMS believes high-revenue ACOs can do better. If the rule is finalized, we will find out if those hospital-based ACOs share that belief: either they will double down and take risk or, as projected, leave the MSSP.

Where an ACO falls on this chart determines its slowest possible glide path. An experienced/high ACO would have to go straight into Enhanced. While an inexperienced ACO could spend 10 years in Basic, with its revenue-based risk track, before moving to Enhanced.

The table below shows the 10 years in Basic available to Inexperienced ACOs.

The first flexibility CMS proposes is to allow ACOs to choose to move faster through the steps of the Basic glide path by accepting more performance-based risk through an annual election, or to skip parts of Basic and move on to Enhanced by voluntarily terminating their current agreement and renewing for the next year in Enhanced. CMS proposes various protections to prevent using this flexibility to slow down the progression toward risk, while still allowing ACOs to move to risk faster, and the agency rewards these choices with greater sharing rates.

Second, CMS would allow ACOs to choose between prospective and retrospective attribution. Currently, the attribution methodology is aligned with tracks forcing ACOs with a strong preference for one methodology over the other into certain tracks and corresponding levels of risk. By allowing ACOs to choose their preferred methodology, CMS ensures the greatest level of ACO participation.

Finally, CMS is expanding the skilled nursing facility 3-day waiver from prospective attribution to be available for both retrospective and prospective attribution.

,” and this is doubly true when performance-based risk is involved. No ACO should think of risk as a single thing. There are 3 types of risk an ACO must consider: medical risk, insurance risk and regulatory risk.

Medical risk is changes in costs driven by the delivery of healthcare services, such as how well diabetic patients are managed. Insurance risk is changes in costs that are not driven by the delivery of healthcare services, such as changes in the prevalence of diabetes in a population. Regulatory risk is the risk of changing the rules and/or rules that stack the deck. The benchmark methodology is crucial to determining how much medical and insurance risk an ACO is taking, and whether ACOs are appropriately rewarded for actually reducing costs. The original MSSP benchmarking methodology did 3 things that made taking performance-based risk

First, in order to be welcoming to all ACOs, regardless of past performance, the original rule did not consider the value ACO participants were delivering prior to becoming an ACO. Poor performers were rewarded for making modest improvements, while high performers struggled to be rewarded at all. Second, in reaction to how risk adjustment has led to overspending on Medicare Advantage (MA), CMS transferred nearly all insurance risk to ACOs by placing a cap on risk scores. ACOs take on more insurance risk than MA plans do where risk adjustment matches the population. Finally, through its use of national inflation to establish performance benchmarks, the original ACO statute imposed regulatory risk on the ACO for any variation in its local market compared with national changes without any consideration as to the ACO’s ability to control that variation. For example, in 1 of Aledade’s ACOs, a new rehab hospital opened in our first performance year. Unsurprisingly, our rehab hospital costs went up significantly, amounting to an increase of nearly a percentage point in total cost of care in the local area. There is a large body of literature demonstrating that Medicare costs and cost growth varies tremendously by region.

 Back in 2016, CMS initiated a new system in which performance benchmarks would be set using regional cost trends and would be adjusted to reflect an ACO’s efficiency compared to its own market. Using regional cost trends is a fairer measure of whether an ACO is actually generating cost savings to Medicare (the “counterfactual”) and adding an adjustment for regional efficiency creates a sustainable business case for ACOs. However, in order to smooth the transition to these new rules and mitigate arbitrage by regionally efficient providers, CMS did this for the second agreement period and not the first. Unsurprisingly, ACOs are far more likely to take risk in their second agreement.

In conjunction with moving risk into the first agreement, CMS proposes moving many of the 2016 changes into the first agreement, as well. CMS proposes to include a regional adjustment to the benchmark at the start of the first agreement. CMS will then trend forward the benchmark using a blend of regional trend and national trend. The regional adjustment will be recalculated each time the ACO enters a new agreement.

Given the flexibility discussed earlier, CMS expects that regionally efficient ACOs will move to risk faster. This is the reason given for the proposals to reduce the maximum percentage of regional benchmarking from 70% to 50% and to cap the size of the regional bonus at roughly 5% of the benchmark.

CMS is also proposing to slightly reduce the insurance risk an ACO takes on. CMS is proposing to eliminate the current risk score cap on continuously assigned beneficiaries where the risk score compared with the most recent benchmark year cannot go up with a symmetrical cap of 3%. Under the symmetrical cap, the risk score for the ACO population would be allowed to increase up to 3% or decrease up to 3% from the risk score in the most recent benchmark year. While this still leaves ACOs with significantly more insurance risk than MA, it is a marked improvement over current policy.

 methodology that disadvantages all ACOs, but particularly, rural ACOs. As ACOs drive down costs for their aligned beneficiaries, they are also driving down costs in their region and, thus, lowering their own regional adjustment. This effect can be large for rural ACOs that serve a high proportion of a county’s beneficiaries. CMS acknowledges the flaw but does not propose the simple solution of removing the ACO’s beneficiaries from the regional comparison. The agency’s complex proposal of blending regional and national trends based on market share is unlikely to solve the problem and could have unintended consequences, as we will detail later in the series.

Taken together, we believe these proposals do make risk more appealing to an ACO by better measuring medical risk, reducing insurance risk, and reducing regulatory risk. We look forward to working with our partner physicians, the ACO community, and CMS to make these policies simpler and more predictable to create the best ACO program possible.

The first in a series of articles that identifies CMS' goals in updating the Medicare Shared Savings Program and how well the proposals make taking on more risk appealing for accountable care organizations.

Travis Broome

Articles

Minimizing Administrative Burden in the Provider Relief Fund: Spending Money on Care, Not Accounting

Medicare Steps In to Make Transitions of Care Safer

MSSP Proposal Better Measures Risk With Changes to the Benchmark Methodology

CMS Proposal Is a Start for Making Risk More Appealing to ACOs