Our Take: CMS revamps one Direct Contracting model, cancels another, and eliminates ACO track in CHART
CMS Administrator Chiquita Brooks-LaSure and CMMI Director Elizabeth Fowler continue to follow through on their plans to evaluate and streamline the alternative care models being tested at the CMS Innovation Center.
On Tuesday, CMS removed the ACO Transformation Track from the Community Health and Rural Transportation (CHART) payment model without offering any concrete reason but stating that “broader efforts are underway.”
The CHART model was announced in August 2020 with the overarching goal of helping rural communities transform their health care delivery systems so that Medicare beneficiaries in these communities have better access to services. The model aims to increase providers’ financial stability through upfront investments and predictable, capitated payments. It also eases providers’ regulatory burden through waivers that offer greater regulatory and operational flexibility.
There were to be two tracks in the CHART model — the ACO Transformation Track and the Community Transformation Track. The community track proceeded with a slightly extended application period last spring, but last March the application period for the ACO track was delayed for a year. Now, it’s off the table.
Had the ACO track been implemented, participating ACOs would have received upfront payments of at least $200,000 per beneficiary, along with monthly prospective payments for each beneficiary, for up to two years — if they also participated in the Medicare Shared Savings Program.
On Thursday, CMS announced that it had redesigned the Global and Professional Direct Contracting (GPDC) model to advance the Biden-Harris administration’s priorities, including its commitment to health equity, “and in response to stakeholder feedback and participant experience.”
The model has been renamed the Accountable Care Organization (ACO) Realizing Equity, Access, and Community Health (REACH) model. The goals, according to a fact sheet, are to improve quality of care and care coordination for patients in traditional Medicare, especially for patients in underserved communities.
CMS said ACO REACH is different from the GPDC model in three areas:
First, all participants will be required to develop and implement a “robust” health equity plan to identify underserved communities and undertake steps to measurably reduce health disparities in their beneficiary populations.
Second, at least 75% control of each ACO’s governing body must be held by participating providers or their proxies. In the GPDC, the proportion was only 25%. Further, the governing board of each ACO must include at least two beneficiary advocates — at least one Medicare beneficiary and at least one consumer advocate.
Third, CMS will screen participation applicants more stringently and more closely monitor those who are accepted. The model includes measures for enhanced transparency and data sharing on the participants’ care quality and financial performance, as well as stronger protections against “inappropriate coding and risk score growth.”
Similar to the GPDC model, participants in ACO REACH can choose from two voluntary risk-sharing options. The Professional Option has 50% shared savings/losses and primary care capitation payment. The Global Option has 100% shared savings/losses and either primary care capitation payment or total care capitation payment.
And like the GPDC model, ACO REACH offers three participation types based either on the ACO’s degree of experience serving patients with traditional Medicare or the ACO’s patient population: Standard ACOs, New Entrant ACOs, and High Needs Population ACOs.
The GPDC model will transition to the ACO REACH model at the end of this year. Current participants will need to meet the new model’s requirements by Jan. 1, 2023, if they wish to continue. Applications will be accepted this spring for the first cohort of ACO REACH participants, and the model will run through 2026.
As part of the announcement of ACO REACH, CMS noted the permanent cancellation of the Geographic Direct Contracting model, which was initially announced in December 2020 but subsequently paused in March 2021. The agency said the model was being canceled because of “concerns raised by stakeholders.”
Our Take: In a Health Affairs blog post published on Aug. 12 of last year, Brooks-LaSure, Fowler and two other senior health care policy officials wrote about the Innovation Center’s vision for value-based care for the next decade.
They noted that CMMI had launched more than 50 alternative payment models (at least 54, according to MedPAC), and that beneficiaries, providers, and other stakeholders were calling on the center to leverage the lessons learned from all of those models.
Just six of those models generated statistically significant saving to taxpayers and Medicare, according to the blog post’s authors. Four of the models met the requirements to be expanded in duration and scope, they noted. Those are not exactly stellar results.
The authors said their review of CMMI’s experience with these APMs generated six key takeaways. It seems to us that three of those are of particular note.
For one, they wrote that testing too many models at the same time can create opposing and at times conflicting incentives for participants, and that the center needs to focus on launching fewer models and scaling “what works.” MedPAC devoted an entire chapter to streamlining CMS’ portfolio of APMs in its June 2021 report to Congress on Medicare and the health care delivery system.
For another, they noted that CMMI has to re-evaluate the design of its models’ financial incentives “to ensure meaningful provider participation.” Too many participants were opting in when they thought it would benefit them financially and then opting out — or not joining to start with — if they thought they would be at risk for losses. Making participation in an APM mandatory is one way to avoid this situation, but, as MedPAC stated in its report, that tends to meet with provider resistance.
And third, the authors commented that CMMI needs to make sure providers have the tools they need to effect changes in care delivery if they are expected to accept downside risk. Mark Hagland, editor-in-chief of Healthcare Innovation, criticized the previous administration’s CMS administrator for spending “a tremendous amount of energy trying to pressure providers to take on downside risk, while not giving them sufficient reasons to take it on.”
At any rate, the redesign of the Direct Contracting model — at least the global and professional components — seems to have met with overall approval. The National Association of ACOs (NAACOS) said in a news release that it’s “the right decision for both traditional Medicare patients and the future of value-based care.”
Presumably the 222 organizations that asked Health and Human Services Secretary Xavier Bacerra in February to “fix, don’t end” the Direct Contracting model are happy as well. They said in a letter to Secretary Bacerra that a better option than canceling the model would be to adjust it, “which the CMS Innovation Center can quickly do.”
And that’s just what CMMI did.
The Department of Justice is suing to stop UnitedHealth Group’s Optum from acquiring Change Healthcare in a $13 billion deal. Minnesota and New York’s attorneys general are joining the civil suit, which was filed in the U.S. District Court of Washington, D.C., the DOJ said Thursday in a press release. “Unless the deal is blocked, United stands to see and potentially use its health insurance rivals’ competitively sensitive information for its own business purposes and control these competitors’ access to innovations in vital health care technology,” said Doha Mekki, principal deputy assistant attorney general of the DOJ’s antitrust division. In response, Optum stated that it would defend the case “vigorously.” Optum called the DOJ’s position on the acquisition “deeply flawed” and said it was “based on highly speculative theories that do not reflect the realities of the health care system.”
Care New England and Lifespan dropped their merger plans, according to multiple news outlets. The health systems said they would not pursue a legislative solution after Rhode Island’s attorney general denied their merger application earlier this month and the Federal Trade Commission announced that it was filing a lawsuit to block the merger, claiming that combining the systems would effectively eliminate competition and drive up prices. After the systems revealed that they would no longer attempt to merge, StoneBridge Healthcare offered via a nonbinding letter of intent to acquire Care New England for $550 million. That figure includes a purchase price of $250 million and an investment of $300 million in capital improvements over six years.
Optum launched a platform called Optum Specialty Fusion intended to simplify specialty care for patients with complex medical conditions and lower the cost of expensive specialty drugs. The “benefit-agnostic” platform lets providers initiate the approval process for specialty drugs that require prior approval through a single portal, at the point of care. They can then compare the drugs against other “clinically appropriate, lower-cost treatment options across benefits in seconds,” Optum’s parent company, UnitedHealth Group (UHG), stated in a press release. The platform also provides information about pharmacy networks, sites of care, and dosage management policies. UHG said Optum Specialty Fusion is available to “all large health plans.”
Michigan Gov. Gretchen Whitmer signed three bipartisan bills designed to reform pharmacy benefit management (PBM) practices and lower prescription drugs costs. Moving forward, PBMs must get licenses and file transparency reports with the state’s insurance department to ensure that consumers have access to information about the backend cost and profits of drugs they are prescribed. In addition, PBMs are prohibited from practicing “spread pricing,” charging a copay that is higher than the drug’s selling cost, or forcing pharmacists to sign “gag clauses” that prevent them from advising patients about less expensive options, including paying out of pocket. Further, PBMs cannot discriminate against 340B entities or pharmacies in cases where the insurer does not have a vested financial interest in the pharmacy.
When GlaxoSmithKline (GSK) spins off its consumer health care unit later this year, the new company will be named Haleon. The unit includes products such as Advil, Centrum, Chapstick, Excedrin, Nexium, Nicorette, Sensodyne, and Tums. The demerging of the unit from GSK’s pharmaceutical business was announced in June 2021. Haleon will have its headquarters in Weybridge, near London; Brian McNamara, who currently heads the department, will be the company’s inaugural CEO.
Stabilizing Health Care’s Share of the GDP. NEJM Perspective, 2.24.22
US Health Care Workforce Changes During the First and Second Years of the COVID-19 Pandemic. JAMA Health Forum, 2.25.22
The Effectiveness Of Government Masking Mandates On COVID-19 County-Level Case Incidence Across The United States, 2020. Health Affairs, 2.16.22
