The Year in Policy and Payment: A Look at One Critical Alternative Payment Issue

Dec. 24, 2019
The conflict across the entirety of 2019 between CMS’ Seema Verma and a number of healthcare associations over her attempt to aggressively push ACOs into downside risk encapsulated so many of the year’s tensions

This week, I’m looking back at the year 2019, in two parts. In this blog, I’ll look at policy; in my second blog in this series, I’ll look at “everything else”—fully recognizing, of course, that policy and “everything else” are completely interconnected; but I needed to divide up this year in review conceptually, so that’s how I’m accomplishing it.

Indeed, per interconnectedness, everything between policy and not-policy was deeply and closely interconnected this year, even more than in past years. That’s because policy has driven everything in the U.S. healthcare industry this year; and policy has in turn been driven by cost and payment issues. As Managing Editor Rajiv Leventhal wrote in a news report on February 20:

“National health expenditure growth is expected to average 5.5 percent annually from 2018 to 2027, reaching nearly $6 trillion by 2027, according to a report published on Feb. 20 by the independent Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS). The report projects the health share of Gross Domestic Product (GDP) to rise from 17.9 percent in 2017 to 19.4 percent by 2027, as growth in national health spending is projected to be faster than projected growth in GDP by 0.8 percentage points over the same period.”

As Leventhal noted, citing the Medicare actuaries, “According to the analysis, the outlook for national health spending and enrollment over the next decade is expected to be driven primarily by: key economic factors, such as growth in income and employment, and demographic factors, such as the baby-boom generation continuing to age from private insurance into Medicare; and increases in prices for medical goods and services, which are projected to grow 2.5 percent over 2018-2027 compared to 1.1 percent during the period of 2014 to 2017). Similar to the findings in last year’s report, this report found that by 2027, federal, state and local governments are projected to finance 47 percent of national health spending, an increase of 2 percentage points from 45 percent in 2017.”

Further, as I reported on Dec. 5, the Medicare actuaries’ update on that date confirmed that “U.S. health care spending increased 4.6 percent to reach $3.6 trillion in 2018, a faster growth rate than the rate of 4.2 percent in 2017 but the same rate as in 2016,” the Medicare actuaries wrote. “The share of the economy devoted to health care spending declined to 17.7 percent in 2018, compared to 17.9 percent in 2017. The 0.4-percentage-point acceleration in overall growth in 2018 was driven by faster growth in both private health insurance and Medicare, which were influenced by the reinstatement of the health insurance tax. For personal health care spending (which accounted for 84 percent of national health care spending), growth in 2018 remained unchanged from 2017 at 4.1 percent. The total number of uninsured people increased by 1.0 million for the second year in a row, to reach 30.7 million in 2018.”

And, as I wrote on February 21, that $6 trillion—or, to be more precise, that $5.963 trillion—that the Medicare actuaries have predicted to be our annual total healthcare expenditures by 2027—is an absolutely mind-shattering number—and is the burning platform on which transformational change is predicated. Because, literally, our nation is about to go over a healthcare cost cliff—going from $3.6 trillion this year to nearly $6 trillion in less than eight years, or a 60-ish-percent increase in overall healthcare system costs, in less than eight years? That is mind-blowing—and should be, to anyone with a conscious thought process.

So our emerging cost cliff has been energizing the purchasers and payers of U.S. healthcare to take action to demand change. Now, what that looks like, gets more complicated the more “into the weeds” one gets.

I’ve been particularly fascinated this year by the enormous, ongoing back-and-forth between Seema Verma, Administrator of CMS, and provider associations, including especially NAACOS, the National Association of ACOs, over the forward evolution of the Medicare Shared Savings Program (MSSP) for accountable care organizations, and some of the policy and payment changes that Administrator Verma has implemented in the past year-ish. There’s a raft of details involved, but, boiled down to its essence, the leaders of NAACOS, and to some extent those of other national healthcare associations, including the AMGA (the Alexandria, Va.-based American Medical Group Association), MGMA (the Englewood, Colo.-based Medical Group Management Association), and Premier Inc. (based in Charlotte), have all complained about the benchmarks and parameters set in the MSSP, about the timing of the periods allowed for participating organizations in which to make their decisions on ongoing participation, about the direct contracting program that will soon be brought into existence—even about the reliability of MSSP-related statistics coming out of CMS. And most of all, the ongoing dispute centers around Verma’s insistence on accelerating the acceptance of downside risk.

Here's just one example. As I reported on September 14:

“Writing in an opinion piece in the Health Affairs Blog on September 11, three leaders from NAACOS, the Arlington, Virginia-based National Association of ACOs, strongly disputed key assertions made this year by Seema Verma, Administrator of the federal Centers for Medicare and Medicaid Services. The NAACOs leaders asserted, in their article, ‘ACO Participation Numbers Worth Watching as CMS Changes Take Root,’ that Administrator Verma has framed the current statistics around the participation of accountable care organizations in the Medicare Shared Savings Program (MSSP) in a way that overstates MSSP-participating ACOs’ performance and understates the challenges involved in moving forward. The article was written by David Pittman, Allison Brennan, Clifton Gaus, ScD. The three are, respectively, NAACOS’ health policy and communications adviser, its senior vice president of government affairs, and its president and CEO.” Pittman, Brennan, and Gaus noted in their blog that “Verma and CMS failed to point out several concerning findings in the latest participation numbers. In 2019, the Shared Savings Program experienced a dip in ACO participation for the first time since it started in 2012, according to CMS data (exhibit 1). Fewer than half the number of new ACOs joined this year compared to the average of all previous years. While more ACOs than ever are taking on risk for their performance, ACOs dropped out of the program at record numbers as well, according to our analysis of publicly available data. While not yet a reason to sound an alarm, these data will be problematic for the Medicare program, patients, taxpayers, and providers if they continue. Policy makers should pay close attention as we move forward.”

There’s more detail here, but the fundamental cause of conflict is a set of issues around what levers federal healthcare authorities should use to encourage providers forward into downside risk in order to accelerate healthcare system change, and how fast to try to force that change. Many in the industry, including the leaders of the most advanced medical groups, which are doing the best in the MSSP program so far, are deeply concerned that Seema Verma’s overall strategy to force advanced medical groups into taking on risk at a pace too fast for them to financially sustain, could cause large numbers to leave the MSSP program altogether. And where would we be then…???

One of the leaders of a truly advanced medical group who feels exactly that way is Barbara Spivak, M.D. the president and CEO of the Mt. Auburn Cambridge IPA (MACIPA) in the Boston metropolitan area. “More and more insurers are moving towards some type of value-based care,” Dr. Spivak, told me recently. “But most organizations are not really organized in a way as to take downside risk. And among those that do, many of them are achieving success more through luck than by design. I also think that success is often defined in odd ways, around whether you make or lose money. But so often, whether you make or lose money is based on how your benchmark is set, rather than through your utilization work. And in the commercial world, Medicare, and Medicaid, it’s not about whether you’ve improved quality or utilization, but rather about whether you’ve improved against a budget that may or may not have been set appropriately. That’s why people have been unexcited about taking on downside risk.”

Dr. Spivak’s eloquent statement reflects the policy/payment fragility of this moment, as the year comes to a close. Should CMS and HHS keep pushing so aggressively on trying to force more providers into downside risk, even at the risk of alienating them, and cause the MSSP Program to collapse? It is after all the largest experiment, by size and number of attributed patients covered, in alternative payment in the U.S. healthcare system right now. What if it actually does collapse? Then what?

Meanwhile, at the other end of CMS, as it were, the agency actually opened up greater flexibility for Medicare Advantage plans, in order to address the social determinants of health.

As I wrote on April 1:

“The federal Centers for Medicare & Medicaid Services (CMS) on April 1 announced that it was changing its polices in the Medicare Advantage program in order to support MA beneficiaries in enhancing their health, including around the social determinants of health (SDOH) elements in health status. In a press release announced on its website, the agency announced that, ‘Today, the Centers for Medicare & Medicaid Services (CMS) finalized updates that will take significant steps in continuing the Trump administration’s efforts to increase competition among Medicare Advantage and Part D plans so patients get higher quality care at lower costs. These changes will increase plan choices and benefits, and include important actions to address the opioid crisis.’ The press release quoted a statement from CMS Administrator Seema Verma, in which Verma stated that ‘Today’s changes give plans the ability to be innovative and offering benefits and services that address social determinants of health for people with chronic disease. With Medicare Advantage enrollment at an all-time high, plans need greater flexibility in offering benefits that they focus on preventing disease and keeping people healthy,” she added.’ And, ‘The final policies will further expand opportunities for seniors to choose Medicare Advantage plans that are providing new supplemental benefits tailored to their specific needs. Last year, CMS empowered patients through expanding the definition of health-related supplemental benefits that Medicare Advantage plans could offer to enrollees, where the primary purpose of the benefits are daily maintenance of health. Beginning in 2019, Medicare Advantage plans can now offer supplemental benefits that are not covered under Medicare Parts A or B, if they diagnose, compensate for physical impairments, diminish the impact of injuries or health conditions, and/or reduce avoidable emergency room utilization.”

So there remains a great deal of confusion over exactly how federal healthcare policy and payment will evolve forward in the coming months and couple of years. And then, of course, 2020 will be an election year, with presidential, U.S. Senate and House elections, not to mention elections in the state legislatures. So much is up in the air; but what is clear is that, for now, the policy-payment landscape around federal healthcare, especially around alternative payment models, will remain in considerable flux and uncertainty for now. What will 2020 look like, policy-/payment-wise? No one can really say for certain.

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