Has a New Policy Fault Line Opened Up Around APMs?

Oct. 5, 2021
A proxy fight between Drs. Donald Berwick and Richard Gilfillan on one side, and the leaders of APG, on the other side, has erupted over issues around incentives in Medicare programs

As we reported in a news article on Sept. 30, “A dispute has arisen over controversial statements made by two prominent healthcare policy leaders around the Medicare Advantage program. 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.

Both Donald Berwick, M.D., president emeritus and senior fellow at the Cambridge, Mass.-based Institute for Healthcare Improvement, who served as administrator of the Centers for Medicare and Medicaid Services (CMS) from July, 2010, to December, 2011, and Richard Gilfillan, M.D., who was the CEO of Trinity Health System from 2013 to 2019, and who, prior to that, had 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, have been prominent figures in the healthcare policy world, so their blog was widely noticed.

And that blog 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.

Among their accusations: “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),” they wrote. “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.”

And, they wrote quite strongly, “If Direct Contracting should be indeed ‘direct,’ that is, an arrangement with provider-governed organizations, not financial intermediaries. If primary care needs invested capital, that capital should be tied to the expectation that providers will control how it is used. If CMMI wants to test investor-backed start-up firms, it should do it only at the limited scale needed for the test and only through direct providers of care, not through reconstituted or renamed MA Plans. If the scale of Direct Contracting outpaces the evidence, the Direct Contracting model will instead be what the Trump Administration seemed to intend: an effort, driven by ideological doctrine to turn over to private hands Medicare, the nation’s most popular universal public program.”

But Don Crane, president and CEO of the Los Angeles-based America’s Physician Groups (APG), objected very strongly, and wrote a letter to Health and Human Services Secretary Xavier Becerra, contradicting pretty much everything that Berwick and Gilfillan had said in their two-part blog. “In their materials, Drs. Berwick and Gilfillan suggest that CMS replace the HCC RAF [risk adjustment factor] 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,” Crane emphasized, “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.”

Indeed, Crane noted, “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,” he wrote, “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.”

So, where does this leave all of us? Well, from a public policy standpoint, this is a bit of a muddle. Let’s examine some of the key back-and-forth contentions.

First of all, is the new Medicare Direct Contracting program really going to lead to the “privatization of Medicare,” as Berwick and Gilfillan claim? That is quite a dramatic assertion. Indeed, their argument completely skips over a key reality, which is that many of the most significant innovations in terms of care management in Medicare are taking place inside Medicare Advantage plans. Indeed, if it weren’t for MA, there would at this point be very little innovation at scale inside the Medicare program. Consider the fact that the entirety of the Medicare Shared Savings Program (MSSP) accounts for just 10.7 million attributed Medicare beneficiaries, spread out across 477 participating ACOs; but, taken altogether, more than 26.4 million Americans are enrolled in Medicare Advantage plans, with 7.2 million, or 27 percent, being cared for by UnitedHealthcare, 4.8 million, or 18 percent, being cared for by Humana, and 3.8 million, or 14 percent, being cared for in Blue Cross and Blue Shield plans.

Simply looking at those numbers, one can see easily that the Medicare Advantage plans literally have the advantage over the MSSP ACOs, in terms of their leverage over providers, around population health management, and especially around quality measures.

It seems that Drs. Berwick and Gilfillan have taken an extremely ideological stance, one that automatically equates

In that regard, here is some evidence of the value of Medicare Advantage as a program: the results of a study sponsored by the Better Medicare Alliance—a coalition of Medicare Advantage-participating organizations and supportive organizations (so, one needs to take that into account). As Allyson Y. Schwartz, the former Pennsylvania congresswoman who was at the time president and CEO of the Better Medicare Alliance, wrote in a BMA-sponsored article in Health Affairs on Jan. 5 of this year, a study by the BMA found differences in quality outcomes between fee-for-service Medicare and MA. She noted that “The study analyzed a sample of more than 1.4 million Medicare Advantage beneficiaries and nearly 8 million Traditional FFS Medicare beneficiaries. Researchers applied a validated, peer-reviewed algorithm for identifying the high-need, high-cost beneficiaries in Medicare Advantage and Traditional FFS Medicare.”

Schwartz wrote that “The overall Medicare Advantage population had 30 percent higher primary care costs than Traditional FFS Medicare. When comparing high-need, high-cost beneficiaries, Medicare Advantage had 28 percent higher primary care costs for the disabled under age 65, 29 percent higher primary care costs for the frail elderly, and 41 percent higher primary care costs for beneficiaries with major complex chronic conditions – suggesting higher utilization of primary care among Medicare Advantage beneficiaries.” She also added that “The study also examined the preventive services typically offered at these non-specialty clinical visits to Traditional FFS Medicare and Medicare Advantage beneficiaries. Findings showed that, across the Medicare Advantage population, beneficiaries received a pneumonia vaccination 49 percent more often and an influenza vaccination 11 percent more often than those in Traditional FFS Medicare. Medicare Advantage also saw a 10 percent higher rate of screening for prostate cancer and a 7 percent higher rate of mammography as compared to Traditional FFS Medicare.”

But here’s the key section of that sponsored article: “The contrast between Medicare Advantage and Traditional FFS Medicare was often starker among high-need, high-cost beneficiaries. For example, 50 percent more frail elderly beneficiaries and 52 percent more beneficiaries with major complex chronic conditions in Medicare Advantage received a pneumonia vaccine than similar patients in Traditional FFS Medicare. For beneficiaries with diabetes, 79 percent of the disabled under age 65 in Medicare Advantage received an eye exam – used to detect conditions such as diabetic retinopathy – as compared to 51 percent in Traditional FFS Medicare; a difference of 56 percent. Frail elderly and major complex chronic Medicare Advantage beneficiaries received such exams at 21 and 14 percent higher rates than Traditional FFS Medicare beneficiaries.”

In other words, the slightly higher costs for Medicare Advantage members can clearly be associated with care management—care management that simply doesn’t exist in fee-for-service Medicare. And that speaks to value.

Now, is it possible that there is some relatively low level of incentive for health plans to game the system via the risk adjustment mechanisms applied to Medicare Advantage? Of course that is a possibility. But, as the APG’s Crane argues, “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.”

Fundamentally, here’s the thing: for policy thought-leaders to insist on providers and payers pursuing outcomes-improvement and cost-reduction strategies purely out of the goodness of their hearts seems naïve; in reality, monetary incentives clearly drive clinical practice change. And it is disingenuous to argue that fee-for-service Medicare is somehow implicitly better than Medicare Advantage, when FFS Medicare offers very little incentive to care-manage Medicare beneficiaries. There’s got to be a monetary incentive for health plans and payers to engage in value-based strategies; indeed, that tension around incentives lies at the heart of the running conflict that was ongoing between former CMS Administrator Seema Verma and NACCOS (the National Association of ACOs), as Verma was constantly hectoring ACO leaders to move more quickly into two-sided risk in the 2018-2020 time period, and the NAACOS leaders kept pointing out that plunging into two-sided risk without some bumpers, in terms of the ways in which benchmarks were architected, was tantamount to demanding that providers commit financial suicide.

So really, in this dispute between two policy leaders on the one hand and the physician groups and health plans in the trenches on the other, one simply has to acknowledge that the provider and plan people are the ones being asked to take responsibility for care management, and know what they’re doing. Ideological arguments are one thing; but no one in healthcare is going to willingly go broke, and acknowledging the power of financial incentives is simply Realpolitik. And it seems as though we need more Realpolitik right now even than we have in the recent past.

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