Tuesday, January 22, 2019

Why CMS Alternative Payment Models Are Failing

The reason CMS Alternative Payment Models (APMs) are failing to significantly reduce spending in Medicare is that none of the major APMs meets the majority of the eight criteria for a successful APM.  The Problems with Medicare’s Alternative Payment Models and How to Fix Them details the serious weaknesses in the six major Advanced APMs that have been implemented by CMS and the CMS Innovation Center:

  • Bundled Payments for Care Improvement Advanced (BPCI-A);
  • Comprehensive Care for Joint Replacement (CJR);
  • Comprehensive End Stage Renal Disease Care (CEC);
  • Comprehensive Primary Care Plus (CPC+);
  • The newly adopted Basic Track Level E and Enhanced Track in the Medicare Shared Savings Program (MSSP); and
  • The Oncology Care Model (OCM).

As shown in the chart, not only do these APMs fail to meet the majority of criteria for a successful APM, most of the APMs fail to correct any of the problems with fee-for-service payment.  The reason is simple – most CMS APMs don’t actually change the way physicians, hospitals, and other healthcare providers are paid.  Most of the APMs don’t pay for high-value services needed to improve care nor do they ensure the amounts paid for key services match the costs of delivering those services.  Only CPC+ and OCM provide new payments to physicians so they can provide different services than they do today. 

What is even more problematic is that the spending accountability mechanisms included in most CMS APMs penalize healthcare providers for treating sicker patients and patients who need more expensive treatments, while providing no assurance to individual patients that necessary services won’t be withheld in order to meet spending targets.  Although all of the APMs include quality measures, the bonuses and penalties under the APMs are based on the average quality of care for all patients, not the quality of care for individual patients.  Moreover, the risk adjustment systems used in the APMs fail to recognize some of the most important reasons why patients may need more services or more expensive services to successfully treat their health problems.  As a result, under most of the APMs, physicians and hospitals could actually receive financial bonuses if they give some patients less treatment than they need, and providers could be penalized when they provide the most effective care for complex patients. 

CMS can do better – much better.  The Problems with Medicare’s Alternative Payment Models and How to Fix Them describes two different APMs designed to improve care for patients with chronic conditions.  Unlike the existing CMS APMs, each of these APMs would meet all eight of the criteria for a successful APM.

Moreover, these APMs would address a major opportunity for saving money and improving care for Medicare beneficiaries that CMS has completely ignored – providing the resources that teams of specialists and primary care physicians need to provide high-quality care to patients with chronic conditions.  Patients with asthma, chronic kidney disease, COPD, diabetes, heart failure, inflammatory bowel disease, and other chronic conditions are often hospitalized for exacerbations of their condition that could have been avoided through better care management services, in-home services, and other services, but these services aren’t paid for adequately or at all under current Medicare payment systems.  Yet despite the fact that a large percentage of Medicare beneficiaries have one or more of these chronic conditions and there are opportunities for significant savings by improving their care, CMS has not implemented any APMs specifically focused on helping patients with these conditions avoid hospitalizations.  None of the existing CMS APMs change payments for the specialists who typically manage or co-manage care for the subset of patients who are most at risk of complications, even though these physicians are often in the best position to help such patients avoid hospitalizations. 

Alternative Payment Models hold the potential for accelerating progress toward more affordable and higher-quality care, but only if they are designed in the right way and only if they are focused on opportunities to reduce spending without harming patients.  Faster progress in developing and implementing these types of APMs needs to be a national priority.

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