APG and Don Crane Respond to Criticisms of APMs and Medicare Advantage

Dec. 18, 2021
As a debate over some of the complexities of APMs and of the Medicare Advantage program continues to emerge, Don Crane and fellow APG leaders are taking an assertive stance in defending their priorities

An emerging policy debate is becoming more contentious and getting more attention this fall and winter season, involving some of the complexities involved in alternative payment models (APMs), including in accountable care organizations (ACOs), and in contracting in the Medicare Advantage (MA) program.

The debate had already begun emerging out into the open when a series of two blogs published in Health Affairs broke everything wide open.

As this publication reported on Sept. 30, “Donald Berwick, M.D., and Richard Gilfillan, M.D., published an article in the Health Affairs Blog entitled “Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 2: Building on the ACO Model,” in which they criticized in the very strongest terms the new Direct Contracting program under Medicare, the ongoing evolution of the Medicare Advantage program, and some core aspects of the ways in which accountable care organizations (ACOs) are managed in the Medicare Shared Savings Program (MSSP). In response, the leaders of the Los Angeles-based APG, America’s Physician Groups, wrote a letter to Health and Human Services Secretary Xavier Becerra, signed by APG president and CEO Donald H. Crane, criticizing the criticism.”

We noted that “Donald Berwick, M.D., president emeritus and senior fellow at the Cambridge, Mass.-based Institute for Healthcare Improvement, served as administrator of the Centers for Medicare and Medicaid Services (CMS) from July, 2010, to December, 2011. Richard Gilfillan, M.D., was the CEO of Trinity Health System from 2013 to 2019; prior to that, he served as a Deputy Administrator of the Centers for Medicare and Medicaid Services and Director of the Center for Medicare and Medicaid Innovation from 2010 to 2013. He has served in a variety of senior role across the industry including CEO of Geisinger Health Plan, Senior Vice-President for National Contracting at Coventry Health Plan, General Manager of AmeriHealth New Jersey and Chief Medical Officer of Independence Blue Cross.”

As our Sep. 30 report noted, “The Health Affairs blog by Drs. Berwick and Gilfillan was filled with intense criticism of Medicare Advantage of the way in which the MSSP is being run, and most of all, of the new Direct Contracting program. Among their core criticisms: the Medicare Advantage program is essentially providing private health insurance plans with a back door towards privatizing the Medicare program while not adding value, while the entire way in which risk is calculated both in MA and in the MSSP is riddled with errors and problems.”

Indeed, in that blog, Berwick and Gilfillan write that, “Given an Orwellian title, Direct Contracting, launched by Center for Medicare and Medicaid Innovation (CMMI), was anything but direct. 'Indirect Contracting' would have been a far more accurate name, since the cornerstone of the program was CMS’s opening the door to non-provider-controlled ‘Direct Contracting Entities (DCEs)’ to become the fiscal intermediaries between patients and providers. Originally CMS proposed three Direct Contracting Models: Professional, Global, and Geographic (GEO). The GEO Direct Contracting model was the most extreme, proposing to auto-assign every fee-for-service (FFS) beneficiary in a number of large geographic regions into a fully capitated MA-like ‘Geo DCE.’ Beneficiaries were not given the right to opt out. GEO DCEs were expected to assume total responsibility for all FFS beneficiaries in their region. This responsibility included beneficiaries in any accountable care organizations (ACOs) or other Alternative Payment Models (APMs), except those assigned to other types of DCEs. With full capitation, as with MA, GEO DCEs would be responsible for most claims payments as well as medical management. This was, therefore, straightforward privatization of traditional Medicare, differing from MA only in that GEO Direct Contracting beneficiaries retained the right to see any Medicare provider under standard Medicare coverage.”

Among their arguments: that the Medicare Advantage program has failed to add value to healthcare. They write that one stated aim of Direct Contracting was “to accelerate progress of Medicare coverage away from FFS [fee-for-service] payment toward value-based contracting (VBC) “alternative payment models” (APMs). The illogical hypothesis was that MA firms, so expert at driving costs up, could do a better job controlling costs than existing ACOs. While savings from ACOs have been modest (MedPAC reports 1 percent to 2 percent),” they wrote, “accurate evaluation has been difficult, and the level of ACO success has been controversial, momentum has built every year in this voluntary program. CMS recently announced that ACOs in 2020 decreased costs by over $4 billion and saved CMS almost $2 billion. MedPAC projects that, at a minimum, MA will cost CMS $8 billion more than FFS in 2020.”

Since then, there have been several developments. On Sept. 30, America’s Physician Groups (APG), the Los Angeles- and Washington, D.C.-based association that represents more than 195,000 physicians nationwide whose organizations are involved in value-based care delivery and contracting, wrote a letter to Health and Human Services Secretary Xavier Becerra (and copying CMS Administrator Chiquita Brooks-LaSure and CMMI Director Elizabeth Fowler), under the signature of APG president and CEO Don Crane.

Here is the text of that letter:

“Dear Secretary Becerra:

America’s Physician Groups (APG) would like to congratulate you on your first eight months in Washington, D.C. working to best serve the nation and its healthcare system. As an association that represents hundreds of healthcare organizations that are engaged in serving patients through the Medicare program and the various advanced payment models currently ongoing within CMS and CMMI, we recognize the important work that you do in supporting these models and the providers who work within them.

Ours is an association of physician-focused healthcare organizations focused on the good of patients who have successfully utilized Medicare Advantage (MA) to better care for patients and the healthcare system. It is in this spirit that we write this letter to address recent complaints and recommendations made by Drs. Don Berwick and Rick Gilfillan regarding MA and CMMI’s Global and Professional Direct Contracting (GPDC) pilot programs.

Drs. Berwick and Gilfillan have presented you and other healthcare policy professionals in Washington with a 66-page PowerPoint presentation outlining some of their concerns with MA’s cost and payment issues among participating physicians, organizations, and health plans and GPDC’s potential to do the same.

APG has tremendous respect for Drs. Berwick and Gilfillan, their decades of experience, and what they have achieved and contributed on behalf of the movement toward value-based care. However, we would like the opportunity to address some of what we believe to be inaccuracies in what they have presented to you in their arguments against the MA and GPDC programs.

About America’s Physician Groups

APG is a national professional association representing over 340 physician groups that employ or contract with approximately 195,000 physicians providing care for nearly 45 million patients as well as over 25% of the Nation’s Medicare Advantage beneficiaries. Just as you do, we have deep Californian roots, starting as the California Association of Physician Organizations (CAPO) in 2002, transitioning to the California Association of Physician Groups (CAPG), then expanding to become APG in 2018. No matter our name, APG has always been the leading association representing accountable, coordinated physician groups. Our tagline, “Taking Responsibility for America’s Health,” represents our members’ vision to move away from the antiquated fee-for-service (FFS) reimbursement system where clinicians are paid “per click” for each service rendered rather than on the outcomes of the care provided. Our preferred model of accountable, risk based, and coordinated care avoids incentives for the high utilization associated with FFS reimbursement. APG is strongly committed to Medicare Advantage and comprehensive, affordable, and efficient care it provides for seniors.


In their materials, Drs. Berwick and Gilfillan suggest that CMS replace the HCC RAF scoring process in two years and begin a process to develop an approach that does not rely on provider reporting. They claim this is necessary because of significant MA “overpayment” they attribute to risk score inflation through risk adjusted coding.

Risk adjustment was designed to estimate a beneficiary’s future health care costs and align compensation with acuity and severity of disease and the related costs of care as complex patients require the use of more resources. Risk adjustment encourages the enrollment of the sickest patients, and those in a lower socioeconomic status and is widely used in MA and the Medicare Shared Savings Program (MSSP) to appropriately risk adjust quality, expenditure benchmarks, and cost metrics, allowing for a more precise measurement of performance. Alignment of payment and performance goals rewards coordinated care and enhances the achievement of improved health and care among all individuals.

Accurate, complete coding data is analyzed to identify sickness, predict outcomes, stratify patient populations, create disease registries, conduct outreach, and a host of other invaluable opportunities to strengthen physicians’ ability to care for their most sick patients, a stark contrast to Drs. Berwick and Gilfillan’s claims that coding is replacing care management under MA as the focus of investment.

Risk adjustment promotes quality care be offered for beneficiaries who experience high rates of comorbidities. The adjusted compensation for high-risk patients provides physicians, healthcare organizations, and health plans resources to create additional programs and services to support and manage patients with important and impactful diseases and conditions. Risk adjustment plays a pivotal role in MA and thus, expanding access to high quality care nationwide.

In recent years, there has been concern that risk adjusted coding has incented Medicare Advantage Organizations (MAOs) to increase premium revenue by coding more diagnoses through home visits and health risk assessment (HRA) tools. APG believes comprehensive diagnosis coding should be performed by the treating physician (or affiliated provider) as close to the point of care delivery as possible, and each coded diagnosis should be accompanied by supporting documentation, including the status and management plan for the condition, as applicable.

APG stands in support of any investigative efforts of potentially fraudulent coding in MA and subsequent ‘prosecution,’ just as we support investigation and prosecution of those submitting fraudulent claims for traditional Medicare beneficiaries.

HCC Coding is not the only coding system that could be used to assess disease burden in a population. If better ways exist to determine the acuity and social determinants of health of a population, we support your agency’s exploration of such possibilities and would be very interested in helping to develop them. In the meantime, for all the reasons stated above, we believe that appropriate risk adjustment is needed as an integral part of MA and the Medicare Shared Savings Program (MSSP).

Drs. Berwick and Gilfillan have also criticized the percent of premium contract used by some MA plans and some physician groups. Percent of premium contracts create ownership and accountability for all parties to create better programs for beneficiaries. While topline revenue may increase in percent of premium agreements, the true goal in MA is to lower total cost of care while achieving quality goals and putting the patient at the forefront of programs and activities designed to keep them healthy and at home. The additional premium received for sicker patients allows the creation of these programs and activities.

Primary care is vulnerable in this country, and MA percent-of-premium contracts with appropriate risk adjustment provides resources to achieve the larger goal of ensuring primary care remains strengthened and accessible for all. Primary care thrives in prospectively paid value-based models and is integral to address our nation’s increasing burden of chronic disease.

While we acknowledge that MA is not perfect and work must be done to ensure the program is working as fairly and efficiently as possible, we also caution HHS not to do more harm than good in making the necessary corrections and reforms, such as the use of state benchmarks for end stage renal disease, county benchmark caps, and removing future data from 2020 cost rebasing, all of which APG recommended in our November 2020 comment letter on the MA program advance notice. A strong MA program allows physicians to directly build strong relationships with patient populations, the majority of which express satisfaction with their experiences in the MA program.

Recent polling conducted by Morning Consult found that of the 1,200 MA beneficiaries polled, 98% were satisfied with the MA coverage, 97% expressed satisfaction with their provider networks, and 98% were pleased with the program’s response to the COVID-19 pandemic. MA provides an opportunity for participating providers to focus on and find opportunities to reduce waste across care continuum. The growth of the program also belies this patient satisfaction as the annual rate of growth of MA enrollment reached nine percent between 2019 and 2020 with the Congressional Budget Office (CBO) projecting that MA enrollees will comprise as much as 51% of all Medicare beneficiaries by 2030.

A robust MA program is beneficial not just for physicians and health plans, but for patients and the future of America’s healthcare system. Through their participation in MA that begins with total population risk-based MA contracts, physicians are then able to develop key core competencies that allow them to address total cost of care along the continuum.

Finally, Drs. Berwick and Gilfillan argue that the GPDC model will bring these same costly MA dynamics to the Medicare fee-for-service spend which will subsequently impair accountable care organization (ACO) program and is forcing primary care providers to choose between continuing in their ACOs or joining a direct contracting entity (DCE). In their presentation, they ask that both CMS and Congress redefine the GPDC model through various methods such as requiring DCEs to follow the same ACO requirement for 75% provider governance, limiting the size of the model, and creating guardrails for investor DCEs.

Contrary to these claims, the direct contracting model has been viewed as the next iteration of the ACO framework, empowering PCPs’ transition to performance-based risk contracting while delivering better value to patients through the coordination of care across multiple settings and the improved care management of patients suffering from significant chronic diseases.

Whereas earlier ACO models did not sufficiently drive providers toward the acceptance of risk and delivering value-based care to Medicare beneficiaries and the Medicare Trust Fund, DCEs build upon the framework that those earlier ACO models, from 2012 Pioneer ACOs to 2016 Next Generation ACOs, set and represent the gradual, evolutionary path toward educating providers on how best to manage a population and accept risk that is tied to quality outcomes.

GPDC presents an invaluable opportunity to study the effects that a capitated payment system could have on primary care in real-time and opens the door for expansion of primary care into distressed communities and proactively empowers PCPs to serve underserved communities and minority populations that are harmed by the consequences of health inequities and disparities. As reform efforts in the healthcare space seek the best way to lower costs without negatively affecting patient care, the opportunity represented by direct contracting must be supported and allowed to grow.

Thank you for your attention to the above comments. We look forward to meeting with you soon and continuing to work with you during your time at HHS. Please feel free to contact Valinda Rutledge, Executive Vice President, Federal Affairs, ([email protected]) with the best available times to connect, if you have any questions, or if America’s Physician Groups can provide any assistance as you consider these issues.

Sincerely, Donald H. Crane President and CEO America’s Physician Groups

cc: Chiquita Brooks-LaSure, Administrator, Centers for Medicare and Medicaid Services Elizabeth Fowler, Deputy Administrator & Director, Center for Medicare and Medicaid Innovation”

Addressing the issues at their conference

And, even as the debate around this set of issues continues forward, Don Crane, in an opening presentation at the APG annual meeting, held Dec. 9-11 in San Diego, and entitled “Emerging from the Pandemic: The Path Forward,” gave an impassioned defense of the value-based contracting in which APG member physician groups are involved, and tilted directly at the charges lodged against certain types of value-based contracting by Drs. Berwick and Gilfillan.

Here are excerpts from Crane’s Dec. 9 presentation:

“I want to talk about the advocacy work of Don Berwick and Rick Gilfillan. It’s very important, and I think we need to level-set. It is an intrafamily debate. I want to talk about why it’s important. I want to summarize their research and recommendations; I want to talk about what they got right and wrong, and look at next steps. Don Berwick and Rick Gilfillan are friends, personally of me, and of APG. Don Berwick coined the term The Triple Aim and is considered by some to be the godfather of ACOs. Don, as you know, was the head of CMS just after the ACA was enacted, so he was the initial kickoff acting administrator at the time, and Rick Gilfillan was the director of CMMI at the time.

We first saw their advocacy in the form of a 66-page deck that was unpublished but was circulating around Congress. And then they authored two really well-written blogs in Health Affairs, but highly inflammatory, in my view, in terms of naming names of some organizations, some of whose representatives are sitting in this room. But there are squabbles within families. Why am I taking the time to talk about this? Well, the answer is that it is getting traction. Indeed, the second cohort of the professional and global risk model is on the shelf in limbo at CMMI right now, because it was halted, we believe, in response to this advocacy. That’s a big deal. Just a few weeks ago, there was a large protest on the steps of HHS, by a group of physicians supporting single-payer. Four or five congressmen signed onto a letter that we believe has the fingerprints of Don and Rick on it that asks Becerra to stop the model Rep. Jayapal wrote a similar letter. We’re advised by high-ranking people that it is making a difference in the dialogue at HHS and elsewhere; so it is indeed getting traction. It will damage the value movement. But it’s also a complicated picture, because it’s based on some fairly legitimate observations about how the system is working, specifically HCC coding, and they do have good ideas in it. They haven’t completely abandoned the idea of capitated/integrated, and they’re urging it for the public option, if one is to ever issue; that’s why it’s important.

Now, I will try to accurately summarize their key assertions, because I refuse to engage in disinformation. There are two primary areas we’re talking about here: Medicare Advantage and the Professional and Global Risk Model.

With regard to MA, the chief complaint is that MA is overpaid as compared to traditional Medicare. This is familiar to all of us; we’ve heard it and seen it waged in D.C. for many years, so it’s nothing particularly new, though there was a recent report from MedPAC saying MA was overpaid by 3 percent even after the coding intensity factor, a small percentage, but that translates into huge absolute dollars. So if correct, that would be important; but many disagree. A recent report from Milliman took the opposite view; an earlier report from HFMA also took the opposite view, that MA is frankly costing us less. So that is a core principle on which their advocacy rests. The next assertion they make, one that was particularly galling to our members, and appropriately so—and that is that the quality in MA is no better than the quality in traditional Medicare; but there is a lot of literature proving otherwise; and then there’s our own experience; those in this room who treat patients in both MA and traditional Medicare, know first hand that the coordination and integration, etc., in MA, produce a much higher-quality product.

And here’s the inflammatory language: they think there is underway a “Medicare gold rush,” and that plans and physician groups are operating a coding machine, and are engaged in coding games. As regards to the global risk and professional risk model, they think the participation by health plans semi-permitted now will ruin traditional Medicare—they talk about an “onslaught of privatization.” My own personal take, as I read between the lines is that you see in their blogs a couple of things that aren’t really called out: one is a bias in favor of the MSSP program. Interesting that they think it’s a better model than MA or the global and direct contracting models. The other thing that sort of suffuses its way through their advocacy is the belief that this is basically the corporate practice of medicine; that there’s profiteering going on, and that the health plans are sending the profits to Wall Street, and you can smell that through the paper.

Moving on to their recommendations, they want to freeze the current coding intensity factor; eliminate HCC coding within two years and replace it within two years; implement a new risk adjustment system, but one that doesn’t involve physician reporting. They don’t think physicians should code. And of course, that’s anathema to us, because coding allows us to know who our population is, to stratify, and basically, to deliver better care. And finally, they want to eliminate percentage-of-premium contacts. They think that creates some kind of cabal that’s bad; we think it creates needed collaboration.

With respect to the professional and global risk pilot, they want to prevent any health plans from participating. We represent physician groups, of course, but we have many health plan partners. And we know our groups are sometimes owned by hospitals, sometimes owned by plans; sometimes owned by mom-and-pop operations; sometimes, there’s private equity or venture capital involved. We simply take the view that parents stay out of the room, and this is a physician group organization. That’s how we deal with the fact that there is a plurality of funding sources, and a plurality of ownership models, throughout the industry, and what really matters is the performance. So those are the recommendations.

Now, here’s what we think they got right: we are not defending abusers of HCC coding; they exist, we know it, some of the practices are frankly distasteful. We think they should be pursued, just as we think fraudulent billing in traditional Medicare should be pursued. That’s very clear. We think the rules should be rewritten and made clear. Our workgroup on HCC coding has produced a whitepaper that’s on our website. The ideal would be coding done by engaged, integrated physician organizations. That’s when it’s done right; you want physicians knowing their populations. And we’re not wedded to HCC coding; if there’s a better system, we’ll look at it. We’re wedded to risk adjustment. We don’t in any manner condone any type of improper activity.

Now, what did they get wrong? As you know, risk adjustment is essential. You recall the anecdotes of the old days, prior to risk adjustment in Medicare Plus Choice, and the early days of Medicare Advantage—you recall how the anecdote, whether true or not, that the adjustment system involved having the enrollment was done on the second or third floor of buildings, so seniors had to walk up two or three flights of stairs before they could enroll in Medicare Advantage, thus eliminating those that had COPD and other enrollments, creating a healthier population on which a health plan could make more money. I don’t know whether that’s true or not; but indeed, we learned that when we learned that when we introduced risk adjustment, all kinds of good things happened: incentives lined up where physicians sought out those with high acuity, like frail elderly, those in underserved communities. It changed the name of the game, it changed practices and the strategies entirely. So, risk adjustment is critical.

With regard to condition coding, this is how we stratify populations, how we create disease registries, how we know who our diabetics are, who our hypertensives are; this is how we create outreach, and so forth, in order to keep people healthy. This is how we make for better care; and to be stripped of that ability would be disastrous. So, they got that dead wrong.

Next, we do know that this administration, in my view thankfully, is focusing a lot of attention on health equity and disparities, and social determinants. To deal with these disparities and social determinants, we’re going to need risk adjustment, because in fact they’re more acute populations at times, but we also need to invite groups into those areas where appropriately risk-adjusted compensation reflects the acuity of the population, sometimes caused by lack of nutrition, lack of transportation, lack of housing.

And this next point is all about primary care. There isn’t a person in this room who doesn’t know how important primary care is, when 80 to 90 percent of the spend in America is for seniors and others with multiple chronic diseases; that is the domain principally of primary care. We saw that really clearly during the pandemic, where all of a sudden primary care shriveled in fee-for-service models, as it thrived in capitated models. So we need to triple down on those kinds of models that promote and support primary care, unless we want it to shrivel and die. So any kind of recommendation that would thwart these APMs that are calling for capitation, would be very much backwardizing, in our opinion.

Next point: there’s all this talk about, you get rich by upcoding. That is not the business that my members are in. They all manage now, in one way or another, the total cost of care. And that’s where the profit lies, I’ll just say it; but it’s also where the Triple Aim lies. So they got that wrong. They have an inadequate appreciation of that.

Next point: eviscerating MA will severely damage the value movement. So it was frankly fascinating to listen to Don and Rick talk during our board meeting a number of weeks ago, when it was shocking, but clear at least to me, that they didn’t have a complete understanding of the importance of MA, particularly as we’ve seen it grow up in California, but also in Texas and Florida, and now in every state of the union. It is MA that is the backbone of the value movement. It is capitated, it is closed-network, it is value-based; not perfect, because there’s a lot of fee-for-service and sort-of-watered-down MA that we’d like to talk more about. But in the main, MA is the launchpad and the laboratory for value. It is what enables groups to get their chops down, and then transfer those competencies into commercial and then Medicaid. If you eviscerate MA, you will really retard the value movement’s progress.

Meanwhile, this issue of coding intensity is the function of a couple of things. CMS is very explicit in saying, we understand that when you ask people to code in order to get to the acuity so that the payment is proper, there’s going to be an incentive to thoroughly code, and there will probably be abuses, and they don’t seem to be troubled by that; what’s less well known is the laxity of coding in traditional Medicare. In traditional Medicare, almost no one cares about the codes, they’re not critical; so it creates a laxity in traditional Medicare, which is used as the benchmark. So there’s a reflection of the knowledge of these incentives.

And the final point is that seniors are voting with their feet. MA is at 28 million; 42 percent of seniors in Medicare are in Medicare Advantage. At this rate, the day will come when MA is 60-70 percent of the market, as it already is in Puerto Rico.

So, they got all these items wrong. So this is a takeoff on the old saying that one shouldn’t throw the baby out with the bathwater. And HCC is imperfect, but does it make sense to scuttle the capitated model as a result, or to eviscerate Medicare Advantage? The answer would be no.”

And Crane concluded his presentation by stating that he and APG are planning a more aggressive strategy around this going forward.

Sponsored Recommendations

Enhancing Remote Radiology: How Zero Trust Access Revolutionizes Healthcare Connectivity

This content details how a cloud-enabled zero trust architecture ensures high performance, compliance, and scalability, overcoming the limitations of traditional VPN solutions...

Spotlight on Artificial Intelligence

Unlock the potential of AI in our latest series. Discover how AI is revolutionizing clinical decision support, improving workflow efficiency, and transforming medical documentation...

Beyond the VPN: Zero Trust Access for a Healthcare Hybrid Work Environment

This whitepaper explores how a cloud-enabled zero trust architecture ensures secure, least privileged access to applications, meeting regulatory requirements and enhancing user...

Enhancing Remote Radiology: How Zero Trust Access Revolutionizes Healthcare Connectivity

This content details how a cloud-enabled zero trust architecture ensures high performance, compliance, and scalability, overcoming the limitations of traditional VPN solutions...