On Capitol Hill, Healthcare Leaders Raise Concerns with CMS’ Proposed ACO Rule

Sept. 17, 2018
During a House subcommittee hearing, healthcare leaders voiced concerns that CMS' proposed changes to the MSSP ACO program will impede progress in the transition to value-based care.

A panel of healthcare organization leaders voiced concerns about moving Medicare accountable care organizations (ACOs) to two-sided risk too quickly, as proposed in a recent federal draft rule, and highlighted the need for Stark Law reform during a U.S. House of Representatives Health subcommittee hearing last week.

The U.S. House of Representatives Energy and Commerce Committee subcommittee on Health held a hearing last Thursday examining the barriers to expanding value-based care in Medicare, and panelists used the opportunity to voice concerns to lawmakers about a number of polices and laws that they believe are impeding progress in the transition to value-based care and payment models.

Subcommittee chairman Michael Burgess, M.D. (R-Texas) said the purpose of the hearing was to focus on the evolving transition to value-based care as well as new ways of assuming risk, and the role technology can play in these efforts. In his opening statement, Burgess recognized that value-based care models have been effective at improving quality and lowering costs. “These models are the future of heath care, and it is important that Congress hear from the industry about how the implementation of such models work on the ground or, to the extent it’s not working, it’s important that we hear that as well,” he said.

Many of the panelists shared their opinions on a proposed rule issued by the Centers for Medicare & Medicaid Services (CMS) that proposes a new direction for ACOs in the Medicare Shared Savings program (MSSP), with the goal to push these organizations into two-sided risk models.

The MSSP is the largest value-based payment model in the U.S., growing to 561 ACOs with more than 350,000 providers caring for 10.5 million Medicare beneficiaries in 2018. Under current MSSP rules, new ACOs are eligible to share savings with Medicare for up to six years if they meet quality and spending goals but are not at financial risk for any losses. In the proposed rule, issued Aug. 9, CMS is proposing to shorten that glide path for new ACOs to assume financial risk, reducing time in a one-sided risk model from the current six years to two years. CMS also recommends reducing potential shared savings in half—from 50 percent to 25 percent for one-sided risk ACOs. As such, The proposed rule has so far been met with varying degrees of scrutiny.

During his testimony, Nishant Anand, M.D., chief medical officer for population health services and chief transformation officer for Adventist Health System, and chairman of the Adventist Health System ACO, said he was concerned that policies contained in CMS’ proposed redesign of the MSSP, if finalized, would discourage providers from participating in value-based care.

Anand, who is based at Florida Hospital Orlando and has led value transformations at other health systems, noted that Adventist has ACO arrangements in Kansas, North Carolina and Florida, where the system has 55,000 beneficiaries in its MSSP ACO.

“The existing financial benchmarks, especially in lower cost markets, make it financially prohibitive to transition to a two-sided risk model and will deter providers from participating in the program. If the benchmarks do not provide room for improvement, allowing providers to transition towards value-based care delivery over time, providers will not participate. We must find ways to adjust for the regional variations across the country,” he said.

Continuing, he said, “Second, benchmarks need to be accurately risk adjusted to reflect the underlying health status of the ACO’s population.” And, with regard to CMS’ proposal to limit shared savings payments to 25 percent, he said: “A lower shared savings rate means we will have less to reinvest into population management and care coordination. Limiting the shared saving payments to 25 percent will create an unsustainable business model.”

Anand urged Congressional leaders to consider a “deeper dive into value-based care reforms that will accelerate the journey. “We’re ready to go faster but need additional help with payment reform to focus on holistic care as well as regulatory reform. We need to help ACOs achieve critical mass in order to hit the tipping point where value-based care is what we deliver,” he said.

Michael Robertson, M.D., chief medical officer of Covenant Health Partners and Covenant ACO in Lubbock, Texas, also voiced similar concerns. Robertson, testifying on behalf of the National Association of Accountable Care Organizations (NAACOS), said Covenant Health Partners has operated a clinically integrated network for the past 11 years, through which it has instituted robust health information technology, contracts for hospital services, and quality metrics for measures like hospital-acquired infections.

“We then branched out to commercial contracts and, in 2014, made the quantum leap to a three-year Track 1 MSSP agreement. If we had not already had a clinically integrated network in place, where we had already done much of the work to get ready for MSSP participation, it is unlikely that we would have made the decision to participate in the MSSP. It was also important for us that we didn’t have to be concerned about taking downside risk, since we were in a shared savings-only model,” he said.

There has been much debate and contention between CMS and healthcare industry stakeholders on just how much money one-sided risk ACOs are saving Medicare. An independent evaluation by NAACOs published last week found MSSP ACOs generated gross savings of $1.84 billion for Medicare between 2013 and 2015, nearly double the $954 million estimated by CMS. Last month, CMS data showed ACOs generated $314 million in net savings to Medicare in 2017 after accounting for payments earned by ACOs for hitting spending and quality targets.

Moving to value-based care is a massive undertaking that requires changing the behavior of multiple providers, Robertson testified. “Participation in the MSSP has allowed us to reinvest in technology and infrastructure to manage our patient population. In our first year of participation in the MSSP, we saved Medicare $5 million and our share was $2.5 million,” Robertson said. The organization used the bulk of those funds to reinvest in its IT infrastructure and to develop physician dashboard. “All of these things take time and money; pushing too quickly to achieve results and take on risk, without giving ample time for providers to develop the necessary infrastructure, will mean people don’t participate,” Robertson said.

CMS’ recently proposed MSSP ACO rule would improve the existing MSSP in a number of ways, he said, such as implementing ACO-specific payment rule waivers and beneficiary incentives. “Some of these improvements lend stability to the program, which is very positive,” he said.

“I do have significant concerns about the speed in which the agency is asking people to move to risk as well as the proposal to cut shared savings from 50 to 25 percent. Two years is not enough time to take on risk; it took us 11 years and we’re still hard at it,” Robertson testified. “The reduced shared savings amount is going to keep providers out of this program because it does not allow them to keep enough savings to reinvest in the IT infrastructure and the care coordination that is needed to make these programs work. The limitation of the risk score adjustment of +/- 3 percent over the five-year contractual period will also be harmful as it penalizes physicians financially for taking care of patients who are sicker.”

Stark Law and Anti-Kickback Statue Reforms

During the hearing, panelists also shared their perspectives on how legal barriers are preventing healthcare providers from accelerating toward value-based care.

Mary Grealy, president of the Healthcare Leadership Council, comprised of industry leaders from all sectors of the U.S. healthcare system, testified that the Stark Physician Self-Referral Law and the Anti-Kickback Statute were created to prevent overutilization and inappropriate influence in a fee-for-service environment in which healthcare sectors and entities operated in their own individual silos.

“Today, however, in order to make the transformation to value-based care, we need greater integration of services, improved coordination of care with cross-sector collaborations, and payment that is linked to outcomes rather than volume. Adopting these new delivery and payment models becomes difficult when faced with outdated fraud and abuse laws and potential penalties of considerable severity,” Grealy said.

She said, for example, that hospitals can run afoul of current law by offering physicians performance-based compensation to engage in coordinated care and meet high quality metrics.

Adventist’s Anand also highlighted the need for Stark Law modernization, noting that it is an “impediment” to value-based care. “The Stark Law is highly complex and has created a minefield for the health care industry due to its huge financial penalty risks and its unclear provisions. These risks result in health care providers avoiding value-based arrangements,” he said. While Congress authorized the U.S. Department of Health and Human Services (HHS) Secretary to issue regulatory waivers for models of care, such as the MSSP program, these waivers are issued program-by-program and are not permanent, he said.

Michael Weinstein, M.D., a practicing gastroenterologist and president of Capital Digestive Care, a physician practice with 65 GI doctors in the Washington, D.C. area, also urged policymakers to modernize the Stark Law, noting that fraud and abuse laws are an impediment to develop and implement innovative alternative payment models (APMs). “Physician practices are facing increasing challenges competing with mega-hospital systems, in part, because antiquated Medicare law and regulations generally favor hospital systems,” Weinstein testified.

CMS issued a request for information (RFI) this summer for public input on how to address any undue regulatory impact and burden of the Stark Law. HHS also is considering making changes to the anti-kickback statute as the HHS Office of the Inspector General (OIG) is looking for stakeholder feedback, via an RFI issued August 27.

Morgan Reed, president of ACT | The App Association and executive director of the Connected Health Initiative, told the Health subcommittee members that Medicare regulations and payment policies present serious challenges to the incorporation of technology-driven tools that can make healthcare more accessible and user-friendly. He specifically urged policymakers to take a number of steps, including passing the Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) to Health Act of 2017 and filing down regulations such as features of the Anti-Kickback Statute and the Stark Law. He also urged policymakers to enhance interoperability and access to data through better guidance from the Office of Civil Rights (OCR) and finalizing the “data blocking” rules.

In her testimony, Grealy also noted that the expanded use of telemedicine is essential in more efficient utilization of healthcare resources and expanding the reach of health providers. “We urge Congress and the administration to further address Medicare’s restrictions on reimbursement for telemedicine services. There is also considerable value to be found in making digital health applications more accessible for beneficiaries,” she said.

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