MedPAC develops new alternative payment model strategy

The Medicare Payments Advisory Panel believes the new model, with varying risk lanes and administratively set savings benchmarks, could be a step forward for alternative population-based payment models, although panel members noted at Friday’s meeting that there are still many details to be worked out.

MedPAC should advise Congress to consider timeliness and simplicity, Commissioner Brian DeBusk, CEO of medical device maker DeRoyal Industries, said during Friday’s meeting. He added that as Medicare Advantage grows every year, alternative payment models for the population, such as accountable healthcare organizations, remain with a shrinking pool of beneficiaries.

In October, MedPAC commissioners discussed the development of a single, multipurpose, population-based payment model that will guide the strategy for an alternative CMS payment model. That same month, CMS set a goal to have a value-based payment contract for all Medicare recipients by 2030.

MedPAC then held a November discussion about developing administratively set benchmarks for ACOs that can participate in Medicare savings if their beneficiaries’ spending falls below the set benchmark. The benchmark is determined based on the expenditure of beneficiaries who would have been eligible for ACO in the base years, as well as the increase in ACO expenditure between the base and result years.

As ACO benchmarks reset every performance period based on past ACO performance, an ACO increasing the amount of savings it generates each year must deal with benchmarks that are increasingly difficult to beat, jeopardizing ACO’s long-term involvement.

On Friday, MedPAC staff provided commissioners with a blueprint for a hypothetical new three-way alternative payment model. The model will divide suppliers into three distinct categories. Independent medical practices, small social care providers, or health care providers in rural areas may have a non-financial risk path. Suppliers can withhold up to 50% of the savings generated over their benchmark after reaching the minimum savings rate.

Medium-sized organizations such as general practitioners or small community hospitals can retain up to 75% of savings or recoup 75% of losses. Large health systems will use a 100 percent total savings or loss rate.

Commissioner Dr. Jonathan Jaffery, who heads the ACO at the University of Wisconsin, questioned whether the size of an organization should determine its willingness to take risks. Large organizations can have trouble generating overall savings when the cost of the services they provide is low, and small organizations are sometimes more flexible than larger ones, he says.

There is also discussion about how quickly service providers should be encouraged to accept financial risk. Small providers may be allowed to remain on the no-risk path indefinitely or eventually be asked to switch to a different path.

Commissioner David Grabowski, a professor at Harvard Medical School, said the risk of loss should not be forced on suppliers, while Commissioner Dana Gelb Safran, President and CEO of the National Quality Forum, said bilateral risk could force suppliers to take savings seriously. .

Another hurdle that MedPAC wants to remove is getting health care providers to participate in these models. Incentives for service providers to participate in APM are already written into the law. By 2040, pay rates for advanced APM doctors will be 8% higher than for those who choose not to participate, according to MedPAC staff.

But to encourage even more participation, officials could simply make the model mandatory for certain providers to receive Medicare funds. Other options include paying lower rates to doctors not enrolled in the model, waiving certain Medicare requirements for members, and offering additional technical assistance to members.

Establishing future mandatory participation dates, at least for mid-sized and large organizations, can help secure participation in the short term, said Commissioner Dr. Lawrence Casalino, a professor at the Weill Cornell Graduate School of Health Sciences.

“One of the things I heard a lot about when pay reform was my job was how important it was to have a clear signal of where things were going,” agrees Safran. “That would certainly be a very clear signal.”

The hypothetical model would also administratively set ACO benchmarks using external factors to bypass the ratchet effect. Most commissioners welcomed this idea.

“Removing the ratchet effect is absolutely essential. The ACO program cannot work until the ratchet is the problem,” Casalino said.

But Commissioner Lynn Barr, head of Caravan Health, which helps providers provide value-based care, expressed concern about changing the system so that providers generate less savings and end up paying back to the government.

According to Vice Chairman Paul Ginsburg, a senior fellow at the USC-Brookings Schaeffer Initiative for Health Policy, MedPAC should assume that legislation will be needed to make reforms to the alternative payment model the commission is considering.

“We don’t want to get locked into the 2010 charters where there was a lot less experience with these payment approaches,” he said.

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