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National Association of ACOs Spring 2019

CMS' Verma: Upend the Status Quo to Move to Value-Based Care

Laura Joszt
Creating a value-based care system means upending the current one and providing more models to encourage providers to take on risk.
Reforms in US healthcare are urgently needed to reorient the system around value, and during her keynote at the National Association of Accountable Care Organizations (NAACOs), CMS Administrator Seema Verma highlighted efforts by the Trump administration, including the recently finalized Pathways to Success and 5 new payment models under the CMS Primary Cares Initiative that were announced earlier in the week.

Verma immediately criticized the idea of Medicare for all that has been gaining ground among Democrats, particularly among presidential candidates, highlighting the fact that the rate of growth for healthcare spending has not changed since the Affordable Care Act was implemented.

“I believe giving the government complete control of the entire system will eviscerate innovation and undermine what is working in our system,” she said.

Instead of “doubling down on government control,” Verma advocated for reforms that address the drivers of spending, as well as continuing to do what is already working and fixing what currently is not. The key focus of the administration is payment reform that aligns financial incentives to lower costs, deliver high-quality care, and improve patient experience.

Value-based care will mean tracking and rewarding improvements in quality and providing clinicians with the flexibility they need to innovate, while still holding them accountable for cost and quality.

“Value-based care means upending the current paradigm and, in my view, it’s not happening fast enough,” she said.

One of the barriers that CMS is looking to remove in order to advance the transition to value-based care is the set of regulations related to the Stark Law. When it was first enacted, the Stark Law was a safeguard against financial incentives that would inappropriately influence physicians’ decisions. Today, the Stark Law limits the ability of providers to make referrals and coordinate care. Verma noted that CMS is reviewing the Stark Law to ensure that its regulations encourage and do not hinder value-based care.

The greatest challenge that Verma identified in the move to a value-based care system is adoption among providers. Only 10% of clinicians are currently participating in an advanced alternative payment model under the Medicare Access and CHIP Reauthorization Act and taking on significant risk. Adoption has been hampered by a number of issues, such as the complexity of regulations and care models, the difficulty of obtaining data, and the limited number of models available.

“A risk-based model designed for a large hospital system will not work for a smaller physician practice for example, but we have not offered enough models to accommodate all provider types,” she acknowledged. “A one-size-fits-all approach won’t work.”

The new models announced as part of the CMS Primary Cares Initiative is one way that CMS is launching new models to encourage more providers to join the transition to value. There are 5 options available under 2 paths: Primary Care First (PCF) and Direct Contracting (DC).

PCF will use a simplified total monthly payment plus flat fees with an option for higher payments for practices caring for high-need patients. DC aims to engage organizations that already have experience taking on risk and serve larger patient populations. Under the DC options, there is a fixed monthly fee that ranges from a portion of anticipated primary care costs to the total cost of care. Participants can choose to bear full risk or share risk with CMS.

“…the Direct Contracting model represents the next phase of payment innovation for ACOs [accountable care organizations],” she said. “We encourage ACOs to apply for the model, and other organizations, such as Medicare Advantage plans and Medicaid managed care organizations, may be interested as well.”

These new models are voluntary, but Verma did say that some of the models under development will be mandatory to prevent selection bias—in which only providers who know they will benefit financially choose to participate—and to generate data that is more broadly representative.

Verma also discussed Pathways to Success, which was finalized in December 2018. ACOs whose Medicare Shared Savings agreements ended December 31, 2018, had the option to start the Pathways to Success program under a 1-year contract starting July 2019. Other ACOs with 3-year agreements expiring at the end of 2019 or 2020 will complete their contracts before transitioning to the new program.

So far, 85% of ACOs whose agreements ended in 2018 have applied to join Pathways to Success. However, in a panel discussion among NAACOS board members, Stephen Nuckolls, chief executive officer of Coastal Carolina Quality Care, had some questions about those ACOs that did not apply. Were they bigger ACOs? Were they in higher cost regions?

“They might be saving the program money and it would be a shame to lose them,” he said.

The board members largely agreed: there is a lot to like about CMS’ reforms, but the devil is in the details. NAACOS and its members are busy trying to understand the new models and what overlap there might be. Emily Brower, senior vice president of clinical integration and physician services at Trinity Health, pointed out that there had been a time when people were asking where the new models were, and now it feels more like, “Woah, they’re just coming fast and furious,” she said.

At the end of her keynote, Verma emphasized that not only has the administration invested in the ACOs program and the value-based care transformation, but there has been real progress. Of the applications for Pathways to Success, 38% are applied for risk levels that would make the participants eligible for advanced alternative payment model status, which is a large increase from 19% of ACOs that are currently in 2-sided risk arrangements, she noted.

“This administration is upending the old way of doing things—for the betterment of patient health, and our country’s economic health,” she said. “Our entire agency is fully committed to driving value.”

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