NAACOS, APG, and This Exceptional Healthcare Policy Moment

Nov. 16, 2020
One of the more immediate health policy challenges for the incoming administration will be how to balance out the need to intensify the shift to a value-based healthcare system with challenging current financial realities

As we reported last week, with the change of administrations that will be coming in January, the leaders of the Washington, D.C.-based National Association of ACOs (NAACOS), which represents hundreds of accountable care organizations nationwide, on Thursday, Nov. 12, published an outline of what they consider to be successful ACO models, and NAACOS’s president and CEO has published an analysis in the Health Affairs Blog.

We noted that, in a press release published to the association’s website, NAACOS’s leaders said on Thursday that, “As the Biden-Harris administration starts its transition work and crafts its policy priorities, an evaluation published today of different alternative payment models (APMs) outlined the success of accountable care organization (ACO) models, which make providers financially responsible for all of patients’ spending over the course of a year. Compared to APMs that focus on discrete episodes of care or patients’ medical homes, ACO models have generated savings while maintaining quality of care. As such, Clif Gaus, NAACOS president and CEO, and David Pittman, NAACOS policy and communications advisor, argue in a Health Affairs Blog published today that the Biden-Harris administration should focus their attention on ACO models as they work to change the way Medicare pays hospitals, doctors and other providers.

In the Health Affairs Blog article published on Thursday, Clif Gaus, Sc.D., and David Pittman wrote that, “As policymakers take stock of the new line-up in Washington, they will consider how best to implement health care payment reform. The evidence presented below suggests that accountable care organizations (ACOs) are the best path forward. We think the data in Medicare are clear: The success of total cost of care, population-health models such as Medicare ACOs far outpaces the performance of narrowly focused alternative payment models (APMs). As leaders of the National Association of ACOs, we believe policy makers need to recognize this disparity in Medicare and stop wasting time and energy trying to develop and fine-tune other medical home and episodic-based payment models.”

Gaus and Pittman noted that, “After a decade, we have enough knowledge to know we should focus on ACOs in our delivery system reform efforts, although we recognize that there may be other models worth exploring if they don’t interfere with total cost of care models. Furthermore, we have learned during this pandemic that total reliance on a fee-for-service payment model is dangerous. As providers learn to appreciate the value of capitated payments, ACOs provide a natural bridge from fee-for-service to capitated payments.”

Among other elements in the discussion, the authors noted that “We now have eight years of experience with ACO and Center for Medicare and Medicaid Innovation (CMMI) models,” experience that shows that “Population-focused, total cost of care models, such as ACOs, incentivize all providers to work together to care for the whole patient and provide quality care throughout the continuum to address patients’ social needs, manage comorbidities, and coordinate medications.”

Among other pieces of evidence, the authors wrote that “Data from MedPAC [the Medicare Payment Advisory Commission], researchers at Harvard University, and the analytic firm Dobson DaVanzo and Associates show that ACOs are lowering Medicare spending annually by 1 percent to 2 percent. Knowing Medicare Parts A and B cost $636 billion in 2018, a 2 percent reduction in spending would save nearly $200 billion when compounded over a decade, assuming Medicare spending would grow at 4.5 percent per year without ACOs. Importantly,” they added, “based on the authors’ analysis of Centers for Medicare and Medicaid Services Public Use Files, ACOs also hit an average quality score of more than 94 percent in 2019, the latest year for which Medicare data are available. Also, the Office of Inspector General found that ACOs outperformed fee-for-service providers on most quality measures and improved quality over time in the program. Finally, stories from the experiences of ACO care during the pandemic illustrate the advantages of being responsible for the whole patient and using state-of-the-art data and care coordination best practices.”

All of that is quite compelling evidence for the argument that the senior policy officials at the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS), as well as the leaders at the Center for Medicare and Medicaid Innovation (CMMI) will really nee to consider thoughtfully NAACOS’s arguments that now is absolutely the time for the federal government to intensify its policy an practical levels of support for the ACO movement—that ACOs nationwide have proven their case that their form of alternative payment model (APM) really works, and, given the appropriate benchmarks and supports, works very well.

So now, the challenge: the people at the heads of HHS, CMS, and CMMI will all be gone in January. We don’t know yet who will replace Alex Azar, Seema Verma, and Brad Smith; but we know that different people will be in charge, once Joe Biden becomes president. What’s more, it’s not simply a matter of a different president, but of a different political party, with different policy priorities. In her speeches and announcements, current CMS Administrator Seema Verma has always been eager to promote two central and interrelated ideas: first, the idea that the “free market” should, to the extent possible, shape the outlines of federal healthcare policy; and second, the idea that healthcare consumers should choose, and that their choices should determine how hospitals, physicians, and health plans respond and design their offerings and the delivery of care.

That conceptual proposition has always sat a bit awkwardly in relation to the reality of the U.S. healthcare delivery and payment system, given that healthcare is one of the very most highly regulated industries in this country, and that it is the Medicare program—for decades commonly referred to as the “800-pound gorilla” of U.S. healthcare policy—that has shaped so many trends in payment systems and incentives, given that, the moment that Medicare enshrines something, the private health insurers inevitably follow suit. So it has always struck many as at least mildly disingenuous for Verma, who runs Medicare, to say that “the free market” will decide what happens in the U.S. healthcare payment and delivery system, when she’s in charge of the single agency that has more power in all of this than anyone.

More substantively, one of the big questions facing the incoming administration, at the outset, will be how to balance the forward thrust around the ongoing evolution of the shift from volume to value in healthcare, with an immediate need to address the financial impact of the COVID-19 pandemic on providers, for at least the first quarter or first half of 2021.

So January 21, 2021 is going to be a complex date for many. President-elect Joe Biden and his top people, including whoever becomes the HHS Secretary and the CMS Administrator, will have to very carefully weigh a number of factors. The good news? Don Crane, president and CEO of the Los Angeles-based America’s Physician Groups (APG), the association representing physician groups involved in risk-based contracting, told me on Friday, “Fortunately for us, our leading focus is the value movement, and that remains largely non-partisan. There’s almost a unanimity that we need to move away from fee-for-service. And if you asked 100 people what could be done to fix healthcare, nearly all would say, change the payment system. Interestingly, the Trump administration has been full-out in supportive of the value shift. And the Biden administration doesn’t want to seem to withdraw from that one iota.” What’s more, his association’s member physician groups, like the member ACOs of NAACOS (and there’s overlap between the two groups), have been proving, over and over and over, that providers can succeed in risk-based and value-based contracts, given the right terms and frameworks. The value-based care delivery movement is no longer in its infancy, which means that senior federal health policy officials will not be working in the dark, but rather, will be able to turn to industry leaders with genuine experience in value-based healthcare, as advisers.

So 2021 will be a fascinating one in the U.S. healthcare system, as an incoming administration cooperates with providers nationwide to try to alleviate some of their challenges, while nevertheless pushing forward on the shift from volume to value. As all the experts agree, that shift is inevitable, in a healthcare system hurtling towards nearly $6 trillion in annual total U.S. healthcare expenditures by 2027, and 19.4 percent of gross domestic product, according to the Medicare actuaries.

In other words, the fundamental question will not be whether the shift continues forward, but how, and most importantly, at what pace. Everything else really is inevitable; but with the right level of skill, political cleverness, and a bit of luck, the incoming administration really could help facilitate that shift in a way that will work out for all the stakeholders involved. Let’s hope that those in the incoming administration listen—really listen—to the leaders of NAACOS, APG, and other associations representing the pioneering providers in healthcare. They’ve earned the right to be listened to.

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