Monday, March 19, 2018

How to Create More Successful Alternative Payment Models More Quickly

There is broad consensus that the fee-for-service payment systems currently used in Medicare create significant barriers to delivering higher-quality care to Medicare beneficiaries at a more affordable cost. There is also growing concern that rather than solving the problems with fee-for-service payments, Medicare’s pay-for-performance programs are making things worse. Properly-designed Alternative Payment Models (APMs) are needed to solve the problems with both current fee-for-service payment systems and pay-for-performance programs.

Problems With CMS’s Current Approach to Creating Alternative Payment Models

In 2010, Congress created the Center for Medicare and Medicaid Innovation (CMMI) and provided it with $10 billion in funding over a ten year period in order to create Alternative Payment Models. However, after more than seven years and more than $5 billion in spending, only six payment models created by CMMI meet the APM requirements established by Congress, and only one of the models tested by CMMI has been expanded nationally. The slow progress in implementing successful Alternative Payment Models means that each year, millions of Medicare beneficiaries are being denied the opportunity to receive higher-quality care and the Medicare program is spending billions of dollars more than is necessary.

The lack of progress is due to several problems with the approach CMMI has used for developing and testing Alternative Payment Models:

1.   Most of the Models Being Tested Don’t Solve the Problems with Fee-for-Service Payment

Most of the large Alternative Payment Models created by CMMI – the Bundled Payments for Care Improvement (BPCI) model, the Comprehensive Care for Joint Replacement Model, the Comprehensive ESRD Model, the NextGen ACO Model, and the Pioneer ACO Model – follow the same basic formula:

  • No changes are made in the current fee for service structure. In most CMMI APMs, physicians, hospitals, and other providers continue to be paid under standard Medicare payment systems. No additional payments are made for any additional services, even if those additional services would be necessary or highly desirable in improving patient care and reducing avoidable spending.
  • Additional payments are dependent on achieving “shared savings.” A year or more after services are delivered, the physicians, hospitals, or other providers in the APM may receive an additional payment (or be required to repay some of the payments they have already received) based on whether CMS determines that it spent less than it otherwise would have. This approach is essentially the same as CMS’s pay-for-performance programs, except that the bonuses and penalties are proportional to the amount of money saved. This means that providers who already have high levels of performance receive no additional resources to sustain their operations, while providers who have had high rates of complications or who have overused expensive services can receive large bonuses for addressing those problems.

Adding “shared savings” on top of the current fee-for-service payment system does not solve the barriers in the current payment system, since participating providers may or may not receive adequate or timely funding to support new high-value services that would benefit their patients. An even greater concern is that a shared savings program can financially reward a healthcare provider for failing to order or deliver a costly service that a patient needs, since the provider could receive a portion of the savings when fewer services are delivered.

Moreover, the shared savings payment approach is already being used extensively for Accountable Care Organizations as part of the Medicare Shared Savings Program (MSSP). Rather than trying to find significantly different approaches to Alternative Payment Models, CMMI has focused a large portion of its resources on developing and testing variations on the MSSP model. In fact, during the first six years of CMMI’s existence, it spent over $600 million on four different variations on the MSSP ACO model (Pioneer ACOs, NextGen ACOs, the ACO Investment Model, and the Advance Payment ACO model).

Only two current CMMI Alternative Payment Models – the Comprehensive Primary Care Plus Model and the Oncology Care Model – provide significant new, upfront payments that are specifically designed to address barriers in the current fee-for-service payment system. However, continued payments under the Oncology Care Model are contingent on the oncology practice achieving savings. Even though CMMI tried using the shared savings model in the Comprehensive Primary Care Initiative and concluded that it was not an effective mechanism of paying physician practices, it proceeded to use a similar approach to pay oncology practices as part of the Oncology Care Model.

2.   Too Few Physician-Focused Payment Models Are Being Tested

Not only do the APMs developed by CMMI fail to solve the problems with fee-for-service payment and create potentially problematic incentives to stint on care, most are designed in one or more ways that make it difficult for physician practices, particularly small physician practices and single-specialty practices, to participate.

  • No upfront payments for new or enhanced services. Although upside-only shared savings models are commonly portrayed as “risk-free” for providers, the fact is that if the providers want to change the way they deliver care, they incur significant financial risk, since they have to pay for any new or enhanced services themselves and then hope that they will qualify for a large enough shared savings payment to cover those unreimbursed costs. This is particularly difficult for small physician practices and hospitals.
  • Eligibility limited to hospitalized patients, patients receiving expensive procedures, and complex patients. Most of the CMMI models developed to date have focused on reducing spending after a patient has already been hospitalized (e.g., the Bundled Payments for Care Improvement initiative), reducing spending on patients who are receiving expensive outpatient procedures (e.g., the Oncology Care Model for chemotherapy and the Comprehensive ESRD Care model for dialysis), and reducing spending on complex patients with multiple health problems (e.g., Accountable Care Organizations). These models ignore the many opportunities that exist to reduce spending by preventing hospitalizations, using lower-cost alternatives to expensive procedures, and preventing the development and progression of chronic diseases. Moreover, by limiting alternative payment models to patients who receive expensive procedures, the CMMI models could unintentionally encourage delivery of unnecessary procedures.
  • Participation restricted to hospitals. Even though physician practices have been successful in managing bundled episode payments for orthopedic and cardiac procedures in the private sector and in the Bundled Payments for Care Improvement initiative, CMMI has only permitted hospitals to participate in the Comprehensive Care for Joint Replacement (CJR) program, and the proposed CMMI Episode Payment program for cardiac procedures would have been open only to hospitals.
  • Requirements for large numbers of patients. In many of its models, the minimum number of patients CMMI requires for participation is much higher than the number of patients that small physician practices care for.
  • Financial penalties for providers based on things they cannot control. In most CMMI payment models, participating providers are rewarded or penalized based on whether the total Medicare spending on their patients is lower than expected, even if the providers have no ability to control or even influence all of the services their patients receive. For example, in the Oncology Care Model, oncologists could be penalized for increases in spending due to increases in drug prices, treatments for injuries the patients receive in car accidents, or complications of treatment delivered by other physicians for health issues unrelated to their cancer, even though the oncologists could not reasonably be expected to control or even influence many of these cost drivers.
  • Failure to risk adjust spending and quality measures based on clinical characteristics of patients that affect costs and outcomes. A physician, hospital, or other healthcare provider can significantly influence the cost and quality of care through the decisions they make about how to treat patients and the way they deliver treatments, but they cannot control how sick or frail the patients who come to them for treatment are. The risk adjustment systems used in CMMI APMs fail to recognize many of the key patient characteristics that affect costs and outcomes, which means that providers who care for sicker or higher-risk patients can face financial penalties, which in turn could make it more difficult for such patients to obtain the care they need.

Despite the fact that most of the healthcare services received by Medicare beneficiaries are delivered by non-primary care specialists, the CMMI Alternative Payment Model portfolio is almost devoid of models specifically designed for such specialists. In 2014, CMMI issued a Request for Information asking for input on the creation of specialty-specific payment models , and it convened several Technical Expert Panels to explore payment models in specialties such as cardiology, gastroenterology, neurology, and oncology. However, in the three years since then, CMMI has implemented only one APM – the Oncology Care Model — that was specifically designed for participation by small, non-primary care specialty physician practices.

In 2015, Congress recognized that CMMI had done too little to create Alternative Payment Models that were specifically designed for physicians. In the Medicare Access and CHIP Reauthorization Act (MACRA), it specifically encouraged the development of physician-focused payment models (PFPMs) by:

  • requiring the Secretary of Health and Human Services to establish criteria for PFPMs, including models for specialist physicians;
  • authorizing individuals and stakeholder entities to submit proposals for PFPMs that meet these criteria;
  • creating the Physician-Focused Payment Model Technical Advisory Committee (PTAC) to review these proposals and to prepare comments and recommendations to the Secretary regarding whether the proposals meet the criteria; and
  • requiring the Secretary of Health and Human Services to publicly post a detailed response to the PTAC’s comments and recommendations.

In its initial year of operation, PTAC received dozens of proposals for physician-focused payment models, and in April 2017, only four months after receiving the initial proposals, the PTAC recommended two payment models for limited-scale testing. These payment models would have enabled a wide range of specialists to participate in APMs that would improve care for a much broader range of patients than CMMI models. Unfortunately, in the Secretary of HHS’s response to PTAC, CMMI indicated it was not willing to implement the models PTAC had recommended.  PTAC recommended additional payment models for implementation and testing in October 2017, but five months later, the Secretary of HHS had not responded to those recommendations.

3.   The CMMI Testing Process is Slow, Burdensome, Expensive, and Discourages Significant Innovation

When CMMI decides to pursue development and testing of an Alternative Payment Model, the process it uses is extremely long, complex, and resource-intensive. This not only slows down the process of testing and implementation but it reduces the number of models that CMMI can or will test. Although many proposals for innovative alternative payment models have been submitted to CMMI, most have not been implemented even after many months of discussion with CMMI staff and despite efforts to modify proposals to address concerns raised by CMMI. Once CMMI decides to pursue a payment demonstration, it typically takes 18-24 months or more from the time an initiative is first announced to the time when providers actually begin to receive different payments. Even if a payment model is succeeding and other providers would like to participate, the evaluation process will take 3-5 years to complete before a decision is made as to whether a payment model should be continued or expanded. As a result, under the current process for implementing APMs, it will take 6-8 years to make a desirable alternative payment model broadly available.

Providers report that the process of applying to participate in CMMI payment models is very burdensome. Providers are expected to complete lengthy application forms requiring submission of data and other information that is expensive and time-consuming to assemble, and applications may be rejected for failure to meet non-substantive requirements such as maximum page limits. Applicants may be required to respond within a few days to CMMI’s requests for more information, but the applicants receive no commitment from CMMI as to when it will make a decision regarding their application. This uncertainty makes it difficult for a provider organization to know whether and when to start preparing for participation; starting preparation too soon could mean significant financial losses if the applicant is not accepted, whereas waiting until an application is approved to begin implementation planning could make it difficult for the provider organization to generate savings and quality improvements in the timeframes required in the demonstration.

Once accepted into a CMMI APM, providers are required to assemble and submit large amounts of data and to participate in a variety of meetings; these administrative activities can involve significant costs for providers and/or take significant amounts of their time away from patient care. There is generally little or no compensation provided to practices to offset these costs, even though CMMI spends tens of millions of dollars to pay the consultants who review the information the providers submit and organize the meetings they attend. Many providers, particularly small providers, have decided not to even apply to participate in otherwise desirable CMMI programs and others have dropped out of the programs in the early phases solely or partly because of the cost and time burden of participating.

Providers who do participate in CMMI payment models are told they can only count on the new payments lasting for a few years; the payments will only be continued beyond that if an evaluation proves that the program has saved money for the Medicare program. While this might sound like a very prudent approach, it can have the perverse effect of reducing the chances of significant success. Physicians, hospitals, and other healthcare providers are unlikely to fundamentally change the way they deliver care in response to a payment change that may only last a few years, and it is impossible to measure longer-term impacts on outcomes during an evaluation period that lasts only a few years.

How CMS Can Implement More and Better Alternative Payment Models Faster

CMS and CMMI could dramatically accelerate the implementation of APMs through the following steps:

1.   Embrace a Bottom-Up Approach to Payment Innovation at CMS

As part of MACRA, Congress created a bottom-up approach that specifically welcomes APMs designed by physicians and other practitioners and that encourages development of APMs and delivery models that are feasible for small physician practices and small hospitals to implement. CMS should embrace the process that Congress has created and commit to quickly implement each of the physician-focused Alternative Payment Models that is recommended by the Physician-Focused Payment Model Technical Advisory Committee.

In addition, there are a number of communities across the country where physicians, hospitals, and other providers are working with patients, employers, health plans, and other purchasers to develop and implement alternative payment models to support high quality, more affordable care. If a group of providers and payers in a state or region have developed or implemented an innovative APM, CMS should agree to implement a similar approach to paying for the care of Medicare beneficiaries in that community so that the providers can have full multi-payer support.

2.   Create the Capacity at CMS and its MACs to Implement Bundled Payments and Other Alternative Payment Models

There is no single alternative payment model that will work for all types of patients and all types of healthcare providers. CMS and its Medicare Administrative Contractors (MACs) should quickly make any changes needed in Medicare claims payment and other administrative systems to support implementation of seven types of alternative payment model structures.

1. Payment for a High-Value Service.
2. Condition-Based Payment for Physician Services.
3. Multi-Physician Bundled Payment.
4. Physician-Facility Procedure Bundle.
5. Warrantied Payment for Physician Services.
6. Episode Payment for a Procedure.
7. Condition-Based Payment.

In addition, CMS should revise the definition of “financial risk” in the MACRA regulations for Advanced APMs to enable design of APMs that small physician practices can feasibly participate in. CMS should also designate any APM that is undergoing testing by the Innovation Center as an “Advanced” APM.

3. Use Limited Scale Testing to Accelerate Innovation

Fully specifying the parameters of an innovative Alternative Payment Model often requires information that can only be obtained from providers who are delivering services in a different way, but providers cannot deliver services in that way without having an alternative payment model to support them. Currently, CMMI will only test a payment model if it projects that the model will reduce Medicare spending. However, since it is impossible to confidently make such a projection without specifying the parameters of the model, CMMI’s current approach means that most innovative models will never be tested.

To address this problem, CMMI needs to create a process for “limited scale testing” of innovative alternative payment models. The following five-step process could be used for this:

1. Selection of pilot sites for limited-scale testing.
2. Implementation of the APM at the pilot sites with adjustment of the parameters based on experience.
3. Collection of data for setting APM parameters for future expansion.
4. Decision about broader-scale testing or implementation of a refined model.
5. Transition of pilot sites if a model is not continued.

4.   Create a Faster, More Efficient Approach for Implementing APMs

If CMMI continues to use its current process for testing and implementing alternative payment models in the future, it would take a decade before the majority of physicians in the country would have the ability to participate in an APM designed for the types of patients they care for. CMMI should completely redesign the processes it uses to test and implement alternative payment models in order to achieve the goals that are implicit in MACRA – every physician should have the opportunity to receive at least 25% of their revenues from alternative payment models in 2019, at least 50% of their revenues from APMs in 2021, and at least 75% of their revenues from APMs in 2023. To ensure that the MACRA goals are achieved, CMS should establish specific milestones that are designed to implement as many alternative payment models as possible and as quickly as possible.



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