Healthcare Innovation Managing Editor Rajiv Leventhal, in his report here on Monday, shared with our readers about some of the tremendously important discussions that took place at the World Health Care Congress, held this week in Washington, D.C. As he noted, “Across two robust conference panel discussions on April 29, industry leaders offered their varying perspectives on the value-based care progress that has been made, while discussing next steps—such as new payment models that have recently been introduced—and the primary challenges that still do exist.”
In particular, Leventhal reported on statements made by a range of industry leaders from the provider, payer, and association sides, including by Redonda Miller, M.D., president of The Johns Hopkins Hospital in Baltimore; Jason Mitchell, M.D., chief medical and clinical transformation officer at Presbyterian Healthcare Services in Albuquerque, New Mexico; Craig Samitt, M.D., president and CEO of Blue Cross and Blue Shield of Minnesota; Valinda Rutledge, vice president of federal affairs at America’s Physician Groups and vice president, public payer health strategy at Greenville (South Carolina) Health System; and Niyum Gandhi, executive vice president and chief population health officer at the Mount Sinai Health System in New York City.
Johns Hopkins’ Miller spoke to the lift that Maryland’s all-payer reimbursement system has given to her and her colleagues, making it easier to focus on wellness and population health. Presbyterian’s Mitchell talked about how, by looking at new clinical models and leveraging data analytics, Presbyterian has been able to identify high-risk members and provide access and interventions in their homes, including at-home palliative care services.
But BCBSMN’s Samitt noted that “[M]ost systems are not like Presbyterian or Hopkins. We have been talking about our pace to transformative value for 25 years, and we are really good at admiring our problems, but not very good at making progress,” he lamented. “We need value-based care to scale in every market and every state. I applaud the innovation; I want us to get on it and do it everywhere,” Samitt said. And APG’s Rutledge stated that she’s seen lagging adoption of new payment models from commercial payers, in comparison to how the government has pushed financial risk. But Mount Sinai’s Gandhi, who shared a panel discussion with Rutledge, pointed out that “it took 100 years to build the sick care system we have today. To say that we are going to rebuild the $3.5 trillion healthcare system in seven years…well, no one really expects that,” he said. “There is meaningful progress being made.”
This glass-half-full-or-half-empty discussion is extremely important. It’s also interesting, in light of federal healthcare officials’ insistence that providers take on more two-sided risk. As Leventhal reported in an April 25 article, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma, in a speech at the Spring 2019 Conference of the National Association of Accountable Care Organizations (NAACOS), stated that ACOs in the government’s new Pathways to Success program are gearing up to take on higher levels of financial risk. Speaking of the shift from volume to value, Verma told attendees at that conference that “CMS is correcting misaligned financial incentives that have been in place for decades and creating new innovative payment models for providers. But as I’ve learned in my time at CMS, these models are complex to develop.”
Adoption, Verma continued, is perhaps the biggest challenge. “Today, only 10 percent of clinicians are participating in Advanced APMs [alternative payment models] and taking on significant levels of risk—no wonder frustration continues. The value-based transformation is not moving quickly enough, and there are several reasons behind this issue.” Those reasons, she said, are: the complexity of models; difficulty of obtaining data; and simply having a limited number of models available. To that end, Verma pointed to the recently finalized Pathways to Success program that will make massive changes to Medicare ACOs going forward, with the principle aim to push organizations into two-sided risk more quickly.
What’s more, in that speech at the NAACOS conference, Administrator Verma hinted that more value-based care models will be coming. “We will have more to announce soon as we continue our work developing new value-based payment models that will help us further hone in on areas of high cost and high medical need—including for seriously ill patients, such as those with end-stage renal disease,” she said, adding that “We are continuing to work on our model for oncology care, and we want to offer options for radiation oncology providers. We will also be developing new models for rural care, as roughly one in six Americans live in a rural area, and statistically, residents of rural communities tend to have worse health status than those living in urban areas. And while we are excited about models for primary care, we also need more models for specialty physicians and surgeons.”
What does that sound like? It sounds a lot like a very concerted push into risk, including mandatory risk, for a wide range of providers and patient care organizations. I have to say that, in the speeches I’ve seen Seema Verma give in the past year and a half, the CMS chief has become increasingly vehement in her statements, and especially in her tone. And I can understand why. When one looks at, for example, the Medicare Shared Savings Program for ACOs, as of January 2018, there were 561 ACOs in the MSSP, with a total of 10.5 million beneficiaries, according to CMS. But as of last year, only somewhere around one-fifth of ACOs had entered into two-sided risk; and most MSSP ACO populations remain relatively small—typically between 5,000 and 25,000 attributed Medicare beneficiaries.
Meanwhile, our country continues to move towards a healthcare cost catastrophe. As the Office of the Actuary at CMS revealed on February 20, total national healthcare spending is expected to explode in the next eight years, reaching $5.963 trillion by 2027, compared to $3.647 trillion in 2018. That’s an increase of 61 percent within a span of nine years, and going from 17.8 percent of gross domestic product to 19.4 percent during that same period of time. That is breathtaking. And everyone knows it.
So we find ourselves caught in a vise of elements involve timing, pace, quantity, and quality. Overall, both the MSSP ACOs, and the other federal ACOs, are making progress in some key areas. But that progress is not fast enough. What’s more, we’re finding that the hospital-led ACOs are lagging behind the physician group-led ones, in terms of advancing along key indicators, especially with regard to utilization—and most unsurprisingly, with regard to avoidable readmissions prevention.
So the absolutely key question remains: what can—and should—federal healthcare officials do, to move this train forward faster? That remains a huge unanswered, and perhaps unanswerable question. On an immediate level, there is a very strong risk that Verma’s insistence on accelerating progress, might well backfire.
Now, one rather crunchy element in this has to do with how, exactly, federal healthcare officials define and calculate progress. In an article published in Health Affairs on September 11, 2018, Robert Mechanic and Clifton Gaus (and Gaus is CEO of NAACOS) strongly disputed some aspects of the methodology by which CMS has been measuring outcomes in the MSSP program. They wrote that “Researchers have determined…that using benchmarks to calculate MSSP saving systematically understates true program savings. This occurs for several reasons. ACO benchmarks have been trended forward using a national average per-beneficiary amount, but Medicare spending growth varies substantially across geographic areas due to underlying market factors, and ACOs tend to be located in areas of higher Medicare spending growth. Therefore,” the authors wrote, “an ACO could significantly outperform its regional peers but still lose money based on CMS’s accounting. Exacerbating this problem is the fact that CMS does not adjust the benchmarks to account for the growing burden of illness as continually enrolled beneficiaries age during each three-year contract period, even though this results in higher actual spending.”
For Mechanic and Gaus, the glass is definitely half-full, not half-empty. “The MSSP is a voluntary program and growth in program participation has greatly exceeded expectations,” they wrote in September. Furthermore, though “Most ACOs opted to join MSSP Track 1, which offers the opportunity to earn up to 50 percent of the Medicare savings they generate,” the authors noted that “About one in five ACOs in the MSSP has voluntarily entered a track with downside financial risk. Organizations that are developing accountable care models, especially for the first time, face many uncertainties about the program and their own ability to earn shared savings. They may be hesitant to take on risk.” Thus, they believe that CMS’s push to compel ACOs to take on downside risk “would reduce the number of ACOs participating in the MSSP and also slow the growth of new entrants. It is impossible to accurately predict the magnitude of the reduction,” they stated, potentially outstripping CMS’s own estimates that perhaps 109 ACOs might leave the program over the next 10 years.
So, in the end, the fundamental question remains: how hard should CMS push down on providers, to try to force the acceleration of change? At this moment in time, that question honestly is impossible to answer. But the fact is that we’ve reached a precarious inflection point when it comes to providers’ participation in value-based and accountable care-based contracting—and no one really knows which strategies will move the U.S. healthcare system forward in the most effective way possible. One thing is certain: the next two years will be a time of testing for everyone—and a time of revelation.
