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Medicare Advantage Plan Representatives’ Perspectives on Pay for Success

Emily A. Gadbois, PhD; Shayla Durfey, BS; David J. Meyers, MPH; Joan F. Brazier, MS; Brendan O’Connor, BA; Ellen McCreedy, PhD; Terrie Fox Wetle, PhD; and Kali S. Thomas, PhD
This study examined how Medicare Advantage plan representatives perceive the alternative financing model Pay for Success and its potential to address members’ social risk factors.
Awareness of and receptivity to PFS. Representatives had a range of familiarity with PFS. Some had never heard of PFS or first discovered it as a result of our sending introductory materials for the interview, some had “read about it” but did not have “personal experience” (plan 1), and others were more familiar with PFS, indicating that PFS had been discussed at recent board meetings (plan 7) or that they were collaborating with consultant groups to think through the possibility of implementation (plan 16). Representatives recognized the potential of PFS to address members’ social risk and mitigate the financial risk of a new intervention. They suggested that PFS was “right up our alley” (plan 13) and that it “fills a gap” (plan 3). Representatives also expressed interest in receiving more information about this payment mechanism (plan 1). Other representatives highlighted potential barriers to PFS, including a desire for additional evidence. Representatives were hesitant to be among the first to implement PFS (plan 8) and expressed concerns about both incorporating this model “within the confines of CMS” (plan 11) and achieving a balance of risks and rewards (plan 9). For representative quotes, see Table 3.

Receptivity to data sharing and working with an independent evaluator. Representatives discussed their willingness to share data with external partners, as well as their receptivity to having outcomes assessed by an independent evaluator. Representatives described their plans as being “very open and hav[ing] a desire to continually evaluate the efficacy of our work” (plan 11), but they also highlighted that they must “know at the beginning” of the relationship with service providers and evaluators what they will be collecting and measuring and “build that into the work effort” (plan 7). Representatives also highlighted the need to be confident that they are working with “appropriate partners” (plan 5). Such representatives were also willing to work with an independent evaluator for the purposes of assessing whether or not predefined outcomes were achieved. Some representatives reported working with third-party evaluators “many times in the past” (plan 6) and employing “external partners” to assess outcomes (plan 16). However, other representatives expressed hesitancy to share data with outside evaluators, preferring instead to conduct evaluations in-house (eg, plans 3, 4, and 9), or they highlighted barriers to sharing data outside of their organization. Some representatives described their plans as “very hesitant to share our data outside of our organization” (plan 8), citing “a really high bar…dictated by federal and state law” (plan 2), as well as the competitive environment in which they work (plan 1). See Table 4 for representative quotes.

Willingness to innovate/test new services. When asked about their willingness to consider alternative payment models like PFS, representatives responded by commenting more broadly on their willingness to innovate. Some representatives were very open to testing new services and programs. These were representatives of plans that tended to be smaller and less established in their markets, and they seemed to view innovation as a way to differentiate themselves from more well-known, larger plans. Such representatives described their plans as having the need to pilot interventions “in our DNA” (plan 12), liking to “test and learn” (plan 13), viewing “excellence in innovation” as a “pillar” of their plan (plan 9), and being a “giant intervention machine” (plan 5). These plans often had informal methods and acceptance of quickly testing innovative ideas. Plans that were more risk averse tended to be larger, with more formal, established systems around innovation and the testing of new services or programs. Such representatives described requiring “extensive research” examining “what’s already been proven in the literature” (plan 16), wanting to be “pretty sure of the outcome that we want” before committing resources (plan 3), desiring to “build on already-gathered evidence” (plan 1), having thorough processes in place for vetting new ideas (plan 4), and the importance of ensuring return on investment (plan 15). For representative quotes, see Table 5.

DISCUSSION

The purpose of this research was to understand MA plan representatives’ perspectives and interest in PFS as a mechanism to develop new initiatives targeting members’ social risk factors. MA plan representatives in this study were largely unfamiliar with PFS and were generally interested in learning more. Similarly, those who were familiar with PFS expressed receptivity to exploring it further. Although some representatives reported willingness to share data and measures with project partners and to work with an independent evaluator to assess if predetermined outcomes had been met for the purposes of repayment, others were more hesitant and voiced concerns or expressed their preference to validate analyses internally. Lastly, although most representatives described a mission of innovation and goals of piloting new programs and services, some were more risk averse and described preferring to use tried-and-true methods to deliver new programs and services.

With the passage of the CHRONIC Care Act and recent industry changes,13 managed care organizations, like MA, are increasingly looking to address members’ social needs in addition to their medical needs.24 The findings of this study align with those of previous work that has also found that although MA plans may be interested in expanding the types of services they are offering, hesitation about regulation and the true potential of programs that address social needs remains.14 In 2019, when MA plans were first granted flexibility in offering new supplemental benefits, only 12.7% of plans offered any newly available service.25 PFS could be one way to increase uptake of new supplemental benefit offerings in future contract years, as it may help mitigate plan financial risk.

However, in addition to the barriers revealed in our interviews, a number of other barriers may be potentially problematic in employing PFS in MA. First, as highlighted by representatives of plan A, CMS may not allow a plan to layer the costs of an intervention onto members’ premiums, costs that they will be required to pay whether or not the plan ultimately achieves the intervention’s anticipated outcomes. Further regulatory guidance from CMS is needed to help plans understand the extent to which this arrangement would be allowable. Second, many PFS projects are multiyear, whereas MA contracts are annual. This introduces risk to the investors if the plan changes vendors, decides not to rebid, or is not awarded the contract from CMS, or if other regulatory changes disrupt the project. More work is needed to understand the degree to which plan reserves or other funding pools can be tapped to repay investors in the case that projects are prematurely shut down due to contracting or CMS policy changes. Third, if an MA bid is submitted in June, accepted in October, and expected to be deployed on January 1, but the project is unable to secure an investment to fund the service delivery, the service provider, typically a community-based organization (CBO) partner, will still be expected to provide the services, but without the capital required to do so effectively. To mitigate this risk, plans should consider how investors could be conditionally secured before CMS approval of the bid, or ways in which MA plans can act as a bridge financing vehicle for performance-based contracts with CBOs that require startup and bridge funding.

In the standard PFS model in which investor repayment flows from the plan back to the investor through a special purpose vehicle, a legal entity created for a limited business transaction, there may be regulatory barriers to the adoption of PFS programs by MA plans. Guidance from CMS is needed on how this cash flow model may or may not align with regulations. This may be further complicated in Dual Eligible Special Needs Plans and Medicare–Medicaid plans within MA, both of which are additionally subject to state Medicaid regulation. However, more traditional forms of performance-based contracting between MA plans and providers could be applied to CBOs, opening up the ability of CBOs to partner with plans and participate in risk sharing. It is likely that variations of the original PFS model will be needed to give plans confidence that they are structuring projects in a compliant manner. Future studies could explore how plans that utilize value-based contracting apply similar models to nonprovider vendors and CBOs. With the passage of the CHRONIC Care Act13 and the expansion of the MA Value-Based Payment Insurance Design pilot,26 MA plans will be given more flexibility in addressing social risk factors. Plans may want to test the provision of services that address social risk factors, and PFS may allow them to do so with less financial risk. In order for PFS to be a viable model, however, further guidance from CMS will likely be needed to assuage these regulatory concerns.

Limitations

This research had several limitations. Because we began with a convenience sample, we may have initially selected plans known to our organization that were proactively working on alternative payment models or innovative practices. Additionally, a convenience sample means that our findings may not be generalizable to the entire set of MA plans offered in the United States, despite our sample representing 65% of MA beneficiaries nationally. Our snowball strategy added plans with which we were not familiar, and although we selected plans of varying sizes, geographic locations, and quality, participating plans might differ from plans that did not participate. For example, plans or representatives with a particular interest in PFS may have self-selected to participate in our study. Nonetheless, results from this research provide initial evidence of how plans are approaching innovative alternative financing models like PFS.

CONCLUSIONS

Our results indicate that MA plan representatives may be interested in PFS as an option for expanding their supplemental benefits offerings and that some may be more willing or able to address challenges with PFS than others. Allowing PFS programs to be disconnected from member premiums may help plans incorporate PFS into the complex cost structure in MA as long as concerns about the regulatory environment can be addressed. Future work is needed to better understand the types of PFS arrangements that may be most efficacious to MA plans and their members. As the healthcare system continues to evolve to address upstream health issues, PFS may have the ability to impact the lives of Medicare beneficiaries.

Author Affiliations: Department of Health Services, Policy, and Practice, Brown University School of Public Health (EAG, DJM, JFB, EM, TFW, KST), Providence, RI; Warren Alpert Medical School, Brown University (SD), Providence, RI; Quantified Ventures (BO), Denver, CO; US Department of Veterans Affairs Medical Center (KST), Providence, RI.

Source of Funding: Meals on Wheels America.

Author Disclosures: Mr O’Connor is an employee of Quantified Ventures, which was a paid consultant working with one of the health plans interviewed and received funding from a grant to support its work with the health plan. The remaining authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (EAG, DJM, EM, TFW, KST); acquisition of data (EAG, JFB, TFW, KST); analysis and interpretation of data (EAG, SD, DJM, BO, EM, TFW, KST); drafting of the manuscript (EAG, SD, BO, TFW, KST); critical revision of the manuscript for important intellectual content (EAG, SD, DJM, JFB, BO, EM, TFW, KST); statistical analysis (EAG, JFB); provision of patients or study materials (JFB); obtaining funding (KST); administrative, technical, or logistic support (EAG, JFB); and supervision (EAG, KST).

Address Correspondence to: Emily A. Gadbois, PhD, Brown University School of Public Health, 121 S Main St, Providence, RI 02912. Email: Emily_Gadbois@brown.edu.
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