Are CMS Officials Inadvertently Enlarging the Haves-Versus-Have-Nots Gap in U.S. Healthcare?

Feb. 3, 2020
In their zeal to push MSSP ACOs into downside risk as fast as possible, are CMS officials missing important clues? A new Health Affairs research article suggests that that might be the case

I was fascinated to read a research article published in the February issue of Health Affairs, just out today. The article, entitled “Out-Of-Network Primary care Is Associated With Higher Per Beneficiary Spending in Medicare ACOs,” was authored by a team of healthcare policy researchers: Sunny C. Lin, Phyllis L. Yan, Nicolas M. Moloci, Emily J. Lawton, Andrew M. Ryan, Julia Adler-Milstein, and John M. Hollingsworth; and it raises significant concerns over an ongoing challenge for the leaders of accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP), around attributed patients’ ongoing use of out-of-network primary care, as a significant stumbling block to achieving actual savings over the long term.

In the Health Affairs article, the researchers write that, “Despite expectations that Medicare accountable care organizations (ACOs) would curb healthcare spending, their effect has been modest. One possible explanation is that ACOs’ inability to prohibit out-of-network care limits their control over spending. To examine this possibility, we examined the association between out-of-network care and per beneficiary spending using national Medicare data for 2012-15.”

And what did they find? “While there was no association between out-of-network specialty care and ACO spending,” the authors write, “each percentage-point increase in receipt of out-of-network primary care was associated with an increase of $10.79 in quarterly total ACO spending per beneficiary.” Further, “When we broke down total spending by place of service, we found that out-of-network primary care was associated with higher spending in outpatient, skilled nursing facility, and emergency department settings, but not inpatient settings. Our findings suggest an opportunity for the Medicare program to realize substantial savings, if policy makers developed explicit incentives for beneficiaries to seek more of their primary care within network.”

Overall, the researchers found, the median level of out-of-network primary care utilization was 8 percent (and a full 82 percent in terms of out-of-network specialty care utilization). But here’s the core finding that they uncovered: “ACOs in the highest quartile of out-of-network primary care and those in the highest quartile of out-of-network specialty care shared certain characteristics. Compared to ACOs in the lower three quartiles, these ACOs had significantly different patient, organizational, and regional characteristics. These ACOs cared for beneficiaries who had more comorbidities, were older, and were more likely to be dually eligible and to be Black or Hispanic. They also had fewer beneficiaries and providers, were more likely to be physician-led, were less likely to have an acute care hospital, and had a larger proportion of primary care providers. They were also more likely to be located in rural areas and in areas with higher poverty levels and less educated populations.”

In other words, not all ACOs are created equal; and in fact, the overall design of the MSSP program is failing to account for socioeconomic differences among beneficiaries, particularly among dual-eligible beneficiaries, which are significantly undermining the overall performance of the ACOs caring for the most vulnerable patients.

And here’s where the authors’ research holds major payment and policy implications. They note that, “In light of the recent MSSP overhaul (detailed in CMS’s “Pathways to Success” rule in 2018) that will require ACOs to assume downside risk more quickly, our findings suggest that controlling the level of out-of-network primary care may be one mechanism to lower spending. Our findings also suggest that Medicare might realize more savings if all of its ACO initiatives created explicit incentives for beneficiaries to seek primary care within network. For instance, copayments could be lowered for in-network primary care services. The ACO Beneficiary Incentive Program, which allows certain ACOs to pay beneficiaries a monetary incentive to receive primary care in network, could also be expanded.”

This is an area that should be carefully examined by CMS officials, given that “We…found that ACOs with high levels of out-of-network primary care serve poorer and sicker patients and those from underserved communities. Perhaps these patients lack the mobility necessary to maintain continuity of care. Such an explanation is supported by prior work that showed that ACOs with higher proportions of disadvantaged populations are less likely to achieve shared savings than those with more affluent populations. Without additional support, it is less likely that these ACOs will be able to thrive under current Medicare policies, leading to the further bifurcation of an already two-tiered healthcare system.”

This is actually incredibly important, because it speaks to the ongoing struggle to improve both cost control around, and outcomes for, the sickest patients in the U.S. healthcare system. As leaders in the Medicaid arena are finding, social determinants of health factors remain a gigantic barrier to ongoing improvement on both fronts. And of course, there is overlap there with the work of the MSSP ACOs, some of those attributed patients are in fact dual-eligibles (enrolled in both Medicare and Medicaid).

So while none of this should be particularly surprising to anyone who’s been paying attention, the full implications of these findings should give everyone pause—especially everyone at CMS. There is absolutely no question that the overall cost-trend trajectory of the U.S. healthcare system is becoming of urgent concern, with total annual U.S. healthcare expenditures expected to explode from the current $3.6-ish trillion, to nearly $6 trillion by 2027—in other words, a 60-percent increase from 2019 to 2027, or over just eight years—and a growth from 17.9 percent of GDP to 19.7 percent—a frightening prospect.

Yet if CMS officials aggressively push ACOs into downside risk without fixing this significant underlying problem, it could have a major negative impact on the entire MSSP program, on which many hopes for healthcare system reform are riding. The devil really is in the details, here as everywhere.

This is a significant research study; federal healthcare officials, in their zeal for change, should not overlook it.

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