Our Take: CMS introduces new model for low-revenue, primary care-focused ACOs
On Tuesday, CMS announced the ACO Primary Care Flex Model, with the goal of improving access to high-quality primary care for underserved Medicare populations.
The voluntary, five-year model will provide participating accountable care organizations with a one-time advanced shared savings payment of $250,000 and monthly prospective primary care payments in place of fee-for-service reimbursement.
CMS said the advanced shared savings payments could be used to cover infrastructure and administrative costs associated with forming and operating an ACO. Participating ACOs will distribute the monthly payments to their primary care practices, giving them additional resources to provide person-centered care.
“Incentivizing greater investments in primary care will promote competition among health care providers and enable more people to receive coordinated, high-quality preventive care to keep them healthy — regardless of where they live,” said Xavier Becerra, secretary of the Department of Health and Human Services.
The ACO PC Flex Model is designed to incorporate health equity in primary care while addressing health disparities, CMS said. Rates for the monthly payments will be determined in accordance with county-average spending on primary care, the agency noted, which will “more accurately reflect the cost of providing comprehensive primary care to underserved populations.”
CMS Administrator Chiquita Brooks-LaSure said patients of the participating ACOs will be able to receive care “in more convenient ways, like care based at home or through virtual means, extra help managing chronic diseases, and more preventive health services to keep them healthy.”
The new model will be tested within the Medicare Shared Savings Program, starting Jan. 1, 2025, and will focus on and invest in low-revenue ACOs, CMS said.
The agency plans to select around 130 ACOs to participate in the model. Those who agree to participate will participate in both the MSSP and the ACO PC Flex Model. “High revenue” ACOs will be ineligible. (For clarification on what CMS deems a low-revenue ACO, see the FAQ link below.)
CMS plans to release a Request for Applications for the new model in the second quarter. A fact sheet provides additional details, and the Center for Medicare and Medicaid Innovation’s website has a frequently asked questions section for the ACO PC Flex Model.
Our Take: The new model is intended to give smaller ACOs consisting mostly of primary care physicians more opportunity and flexibility to transition to value-based care by providing upfront funds to get the organization started, and then providing a more predictable revenue stream with the monthly payments.
The National Association of ACOs (NAACOS) said in a statement that it has been advocating for this kind of approach to paying for primary care in the MSSP and applauds CMS for taking this step.
“Shifting to prospective payments provides primary care practices with stable and predictable cash flow needed to transform care delivery and provide comprehensive, team-based care,” the organization noted.
But NAACOS criticized the decision to exclude high-revenue ACOs from the new model, saying it “prevents independent primary care practices who have partnered with their local health systems from taking advantage of these much-needed innovations.”
One step at a time. Practices that are already partnering with health systems in high-revenue ACOs are deriving some benefit from the MSSP — at least in theory.
CMS is attempting to help those who need it most by bringing practices in underserved and rural areas into value-based care. If the model achieves enough success, maybe, just maybe, CMS will expand the model to include more ACOs.
It’s worth asking the question: is CMS adding new participants with this new model, or is it simply recycling the same players year after year?
In an email to me, one seasoned ACO chief executive called it a “non-event,” noting that “There have been zero net new ACOs in the last 4+ years in terms of participants and beneficiaries, only churn and changing names.”
That may be true, and it’s problematic if the agency’s goal is to grow the ACO program through more providers and Medicare beneficiaries. But if CMS is merely tinkering with the ACO model — which began with the Pioneer ACO program in 2012 and ended in December 2016 — in an effort to redouble its efforts on improving primary care in rural areas, then the new model holds promise.
CMS has been focused on rural providers since nearly the inception of the program with the Advance Payment ACO Model and ACO Investment Model (AIM). Post-program evaluations showed that both models demonstrated modest improvements in quality but mixed results on cost savings. However, these efforts did provide the necessary capital for many rural providers to invest in the technology required to practice in a value-based care environment, along with some prepaid funds to offset more patients receiving care.
Looking back, then, the PC Flex Model borrows concepts from several other models previously implemented by CMS. Additionally, it appears to offer more flexibility in how care is delivered, recognizing the benefits of virtual and home-based care. But as with any new quality initiative that CMS introduces, time will tell how well the theory plays out in practice, and whether meaningful gains in quality and reductions in spending are ultimately achieved.
What else you need to know
Kroger entered into a definitive agreement to sell its specialty pharmacy business to Elevance Health’s CarelonRx subsidiary, which provides pharmacy benefit management and other services. Kroger said it became clear during an asset review that the specialty pharmacy business unit would “better meet its full potential outside of our business.” The announcement did not provide financial terms of the agreement but noted that Kroger’s in-store pharmacies and Little Clinics are not included in the deal, which is subject to regulatory approval and customary closing conditions. Kroger expects to close the deal later this year. Elevance Health is expanding its specialty pharmacy segment, having acquired BioPlus, previously the largest independent specialty pharmacy in the U.S., a year ago and Paragon Healthcare, a company that operates a network of ambulatory infusion centers and home infusion pharmacies, earlier this month.
Medicare will cover Novo Nordisk’s Wegovy (semaglutide) for overweight or obese adults if they also have heart disease and are at risk for major adverse cardiovascular events such as myocardial infarction or stroke — the additional indication the FDA approved earlier this month. CMS said in a statement that Medicare Part D benefit plans may cover anti-obesity medications if they are approved for an additional medically accepted indication and are used for that purpose, but coverage is not permitted for the drugs when used only for weight loss. According to Tricia Neuman, a Medicare policy specialist at KFF, Wegovy’s “relatively high price” may keep Medicare plans from covering Wegovy right away, “particularly because they won’t be able to adjust premiums before next year,” The Associated Press reported. The drug has a list price of approximately $1,350 for a 28-day supply.
Thyme Care launched a value-based care model called Thyme Care Oncology Partners through which Thyme and more than 400 participating oncologists across the country will collaborate on designing and implementing value-based programs for patients covered by participating risk-bearing entities and government-sponsored programs. The Nashville, Tenn.-based company said in a press release the model gives oncology practices the opportunity to participate in incentive programs that create new revenue streams generated from shared savings through Thyme Care’s arrangements with health plans and risk-bearing entities. Thyme Care operates as an extension of the oncology practices it serves, reducing their administrative burden, increasing practice efficiency, and enabling success in value-based arrangements. The company offers services such as care coordination between providers, symptom management and electronic patient-reported outcomes, and access to resources that can remove or reduce patients’ barriers to care.
AstraZeneca agreed to acquire Fusion Pharmaceuticals in a deal worth up to approximately $2.4 billion. The two companies — which have had a collaboration partnership since 2020 — signed a definitive agreement under which, at closing, AstraZeneca will pay $21 in cash per share of Fusion Pharmaceuticals stock, or about $2 billion. The deal includes a regulatory-related milestone payment in the form of a contingent value right worth $3 per share. Based in Ontario, Canada, Fusion Pharmaceuticals develops next-generation radioconjugates. The company’s most advanced radiotherapy candidate is in Phase II development as a potential treatment for metastatic castration-resistant prostate cancer. The acquisition requires approval by Fusion’s shareholders, in addition to regulatory clearances. It is expected to close in the second quarter, according to the announcement.
The FDA has approved the first-ever treatment for nonalcoholic steatohepatitis, or NASH (also called metabolic dysfunction associated steatohepatitis, or MASH). Madrigal Pharmaceuticals’ Rezdiffra (resmetirom), a once-daily oral drug, received accelerated approval for use in adults with noncirrhotic NASH with moderate to advanced liver fibrosis, in conjunction with dietary modifications and exercise. Of note, the FDA’s approval does not include a liver biopsy requirement. NASH is a form of nonalcoholic fatty liver disease and the leading cause of liver-related mortality, according to Madrigal. The Conshohocken, Pa.-based company said in a press release it expects Rezdiffra to be available in April. According to multiple news outlets, Madrigal has set the drug’s list price at $47,400 per year.
What we’re reading
The Limits of Clinician Vigilance as an AI Safety Bulwark. JAMA, 3.14.24
Setbacks For Pharmaceutical Industry In Challenges To Medicare Drug Price Negotiations. Health Affairs, 3.21.24
How Biopharma Can Make a Difference in Health Equity. BCG Perspectives, 3.22.24
