In the March-April issue of Healthcare Innovation, the publication’s editors examined Ten Transformative Trends that are evolving forward right now, and that are helping to shape the landscape for healthcare providers for the coming years. One of those articles looked at “The Policy Year Ahead.” In that report, Editor-in-Chief Mark Hagland looked at the welter of healthcare policy issues facing both the Biden administration and the U.S. Congress, both as the healthcare industry works to manage the current COVID-19 pandemic, and as healthcare policy leaders look beyond the pandemic to address payment and regulatory issues going forward.
One of the industry observers whom Hagland interviewed for that article was Seth Edwards, vice president for strategy, innovation, and population health, at the Charlotte-based Premier Inc. In Hagland’s late-January interview, conducted for the Trends cover story package, he discussed with Edwards a range of policy- and payment-related issues, including risk-based contracting and the future of accountable care organizations (ACOs). Below are excerpts from that longer interview with Edwards.
Let’s talk a bit about the differing trajectories around physician groups and hospital-based organizations, when it comes to taking on two-sided risk. Medical group leaders are seizing that opportunity earlier and faster. What are your thoughts on that phenomenon?
Yes, it’s an interesting situation. What we’re seeing is that there are a lot of models that are being promulgated by CMS [the Centers for Medicare and Medicaid Services] and CMMI [the Center for Medicare and Medicaid Innovation]. And what we’re seeing is that there are a large number of models being promulgated, with private payers following up on those closely, with many of them focused on primary care and physician groups. Primary Care First and the Primary Care Plus Initiative were designed with a focus on primary care first. And we’re seeing health system employees and others enrolled.
But, with regard to broader programs like MSSP [the Medicare Shared Savings Program] and the Next Generation ACO model, we’re seeing more physicians taking on risk, but there are also programmatic design elements, particularly in the MSSP, that are driving that. If you’re a low-revenue provider, as defined by the program, you can spend longer time in lower risk, and thus, that creates more of an incentive for primary care physicians to move into that model. Still, a large number of health systems and health system-affiliated medical groups involved. So I do think we’re seeing a large number of employed-physician groups affiliated with hospitals, involved in those models.
One physician group CEO told me recently that he can totally understand why the senior executives of hospital-based integrated health systems, with their very high overhead expenses and physical equipment and facility footprints, would be moving more slowly into two-sided risk.
I can say generally that there’s certainly a necessity for health systems to be thoughtful about the pacing of their movement into risk, in that a large proportion of their payments will still be based on fee-for-service reimbursement. In my work, I lead our Population Health Management Collaborative, designed to help largely hospital-based health systems to move into risk. And we spend a lot of time wondering how we can move through a period of both FFS and risk-based, and towards risk-based. And that takes a lot of time and effort.
That harkens back to the classic “one foot in the boat, one foot on the shore” problem that most organizations continue to struggle with right now in U.S. healthcare, correct?
Yes, that’s correct. And I like to use MSSP as an example., because it offers a great view of the broader healthcare system, with participants from all backgrounds. And looking at the 2019 rules, they [CMS officials] found three key elements to focus on, in terms of the critical success factors in the MMSP program: reducing post-acute care spending; reducing hospitalizations; and reducing ED visits. In order for a health system to be successful in that type of model, it takes a longer time to deal with that demand destruction, while at the same time, maintaining a sustainable approach to doing so. And the longer that organizations are in the model, the better they perform. And that’s reflective of the idea that organizations need time to learn how to care-manage and to integrate across a broad number of physicians, and to find ways to be successful.
Also, health systems are more likely to participate in multiple APMs [alternative payment models], and there’s a challenge there. There are a lot of health system-employed physician groups that were parti of the Primary Care Plus initiative. And when they go at risk, the care management and enhanced primary care payments they got from CPC Plus, all counted against their expenditures. So let’s say I’m a health system and I have some employed primary care practices participating in CPC-plus. They got a per participant per month payment for participating in CPC-plus. And then the ACO payment on top of the FFS, counted as an expenditure against my benchmark. So officially, you’re adding on additional costs. So if I’m looking at it as a health system, I would say, we’re doing great work in the primary care space and also in the ACO space, but we want to be careful about moving forward. So that idea of overlap and how that impacts your trajectory for moving into risk, can be more complicated, because it involves a broader piece of the continuum of care.
They’re losing the bonus payments they got from CPC Plus?
You would lose the CPC Plus by moving into MSSP, but that’s not the challenge. The challenge is that in MSSP, they set your benchmarks based on historical expenditures using a three-year lookback. In CPC Plus, those physicians were receiving a per beneficiary per month payment not included in the benchmark. So as an ACO you’re being judged on your historical expenditures, but you have this additional payment that is counted as an expenditure. So you’re doing great in CPC Plus, and now we have the ACO, but have to contend with this additional payment. That overlap can slow down the move into risk. That might be an hindrance.
So that’s like a weight against you if you’re participating in the MSSP program, then?
That’s exactly right.
Medical group leaders don’t have that weight of conflicted alignments that hospital systems have, generally speaking. So do you see that as a genuine issue for hospital-based health systems?
I do think it’s one of many factors that drive how rapidly organizations can move into risk, as you think about the ability to successfully manage an organization’s move into two-sided models, understanding how to do that in a sustainable way, can be complicated by the one-foot-one-foot issue, but that’s a challenge really to all organizations. Based on what kind of network you’ve created, for example, a clinically integrated network (CIN).
And that leads also to the topic of encouraging a far higher percentage of provider organizations to take the plunge into two-sided risk. Is it in the cards for Congress and the Biden administration to push providers faster into two-sided risk, given the escalating costs of the overall U.S. healthcare system?
I think if you look at our current financial position for the Medicare Trust Fund, I’ve seen some really smart people suggest that we could move more rapidly except for some of the pandemic-related challenges. I think it will necessitate Congress and the Administration figuring out how to shore up the Medicare Trust Fund. And that would actually stimulate more providers to take on risk, because some of the actions that would have to occur.
What I’m speculating is that, in order to shore up the Trust Fund, there will be likely payment reductions, regulatory movement around site neutrality, and other actions that would incentivize organizations to move into risk-based APMs. And I think we’re all seeing that. I work with about 75 health systems and clinically integrated networks (CINs) in our population health management collaborative, and many of them are already taking on two-sided risk in the MSSP [Medicare Shared Savings Program] and in MA. And we’re seeing a downstream impact of that in the commercial and employer space as well. And that movement could catalyze other organizations to move into the MSSP, which has a determined path into two-sided risk. So I think we’ll see that happening more and more among all ACOs, including health system.
What about the Medicare Shared Savings Program and its benchmarks? Much controversy emerged over the course of the Trump administration, as CMS Administrator Seema Verma appeared to battle with some provider associations over how the benchmarks in the MSSP program are organized and applied.
There’s a confusion around whether or not we should use the benchmark to determine whether the program is being successful. It’s important to call out that benchmarks aren’t counterfactuals, they’re not accurate ways to determine how successful the program is. These organizations are generating savings for CMS. There’s really important context for policy for those models as they go forward. The next step becomes, why are they pushing additional amounts of risk? At CMS, they believe that it prods greater performance. But it’s really challenging to say, in the model, you get two years under Pathways to Success before you have to take on downside risk; that’s a very short time. The longer organizations are in the program, the more successful they are. So there needs to be a conversation around that, as well as to make sure there’s a level playing field around the classifications of different ACOs. So I would imagine there would be a look at that, as well as the underlying incentives for taking on additional amounts of risk.
In fact, I think there could be an acceleration, not so much directly tied to risk, but more weighting of the base models in terms of the bonuses and discounts that might be applied. I do think that the public health emergency is creating a dynamic where economically or politically, it could benefit a discussion of the deficit and debt, and a large proportion of that expenditure is driven by healthcare.
What are the critical success factors that allow organizations to move more deeply into risk?
What’s interesting is that, among our member organizations that are MSSP participant organizations 75 percent of our members generated savings and 44 percent generated shared savings in the last performance year, 2019, for Medicare. And what we’re seeing is that physician-led, strong clinical leadership to implement the changes needed to be successful, is one absolute critical success factor. A second critical success factor is the strong leveraging of technology to be able to identify where to utilize their resources. So predictive modeling and risk stratification. And the third thing is finding the best way to engage in beneficiary engagement, to be sure the beneficiaries are active in their care and that the care team understands the beneficiaries’ care goals. That’s really challenging, but critical. So the patient engagement. There’s a lot of other areas where organizations are focusing, but those are probably the three that stand out to me.
In the battle that took place between Seema Verma and some providers under the previous administration, one of the core questions was whether, if CMS pushed too hard, it might backfire, causing providers to leave MSSP. In that context, do you see MSSP being fragilized or strengthened over time, in the battle over performance measures?
That’s a difficult question to answer. There’s a confusion around whether or not we should use the benchmark to determine whether the program is being successful. It’s important to call out that benchmarks aren’t counterfactuals, they’re not accurate ways to determine how successful the program is. These organizations are generating savings for CMS. There’s really important context for policy for those models as they go forward. The next step becomes, why are they pushing additional amounts of risk. CMS, they believe that it prods greater performance. But it’s really challenging to say, in the model, you get two years under Pathways to Success before you have to take on downside risk; that’s a very short time. The longer organizations are in the program, the more successful they are.
So there needs to be a conversation around that, as well as to make sure there’s a level playing field around the classifications of different ACOs. So I would imagine there would be a look at that, as well as the underlying incentives for taking on additional amounts of risk. The incentives aren’t as strong as they appear. So if we believe that moving into risk faster is important, what is the corresponding incentive structure that needs to be put into place to make that successful.
How might things play out in this Congress, and under this administration?
I think there could be an acceleration, not so much directly tied to risk, but more weighting of the base models in terms of the bonuses and discounts that might be applied. I do think that the public health emergency is creating a dynamic where economically or politically, it could benefit a discussion of the deficit and debt, and a large proportion of that expenditure is driven by HC. So I imagine there will be a look at that, and that value-based models will be looked at over draconian payment cuts. So more maybe what we’ll see, in fact, is a more rapid pace of movement into value, though not necessarily into risk itself.
What advice might you like to leave with our readers, around all of this?
I think first is to recognize that, for a long time, risk has been looked at in a negative light, and there needs to be an understanding of the potential opportunity in risk. So, culturally and operationally, changing the viewpoint within organizations. So understanding that there’s an opportunity for better care for the community, better stewardship of healthcare dollars, and most of all, better ways to put the patient at the center, which is why all of us went into healthcare. So making that shift is going to be important. And thinking longer term about what that means for the organization, and developing an opportunity to develop that pacing around movement into risk, will be critical.