Advanced Alternative Payment Models Part IV: Understanding the Other Advanced Models

This article is the fourth of four parts.

In May 2016, CMS formally announced the six Advanced Alternative Payment Models (APMs) that it will consider as fully qualifying APMs under the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) in a proposed rule.(1) This is a major step toward moving the entire national system toward a “fee-for-performance” setup. This step is significant for all physicians practicing in the United States, because if an APM is not embraced by any given practice, it could result in said practice being forced to compete for reimbursements against predetermined peer groups through the non-APM Merit-Based Incentive Payment System (MIPS), which replaces the former Sustainable Growth Rate–driven conversion factor in determining how relative value units (RVUs) are altered for specific practices under the former fee-for-service (FFS) system.(2) For some, MIPS may represent an unacceptable risk to practice viability, because changes in reimbursement levels can vary from ±4% to ±9% after 2019. Although some may “win” and receive bonuses through MIPS, just as many may see significant losses through not meeting CMS performance targets.

Thus we have chosen to highlight the most critical aspects of the Advanced APMs listed as acceptable alternatives to the MIPS-driven reimbursement structures to help foster understanding of these programs and their most salient common elements (Table 1). This article, the fourth in the series, focuses on the most critical aspects of the Next Generation Accountable Care Organization (NGACO) Model, the Oncology Care Model (OCM), and the Comprehensive ESRD Care (CEC) Model. The Medicare Shared Savings Program and Comprehensive Primary Care Plus (CPC+) were discussed in greater detail in previous articles in this series.(3)

What Is the Next Generation ACO Model?

The NGACO is another refined APM that was born in response to clinicians’ experience with and industry feedback on the Pioneer ACO Model and the Medicare Shared Savings Program,(4) discussed in Part I of this article series. Operating under the same concept of coordinated care across organizations as the Shared Savings Program, this Advanced APM takes the concepts of risk–benefit sharing beyond the limits established in the three tracks of the Shared Savings Program. The NGACO Model is suitable only for organizations heavily experienced with ACO-specific operational requirements and is not appropriate for organizations or practices seeking their first APM, particularly an ACO, for adoption. This Advanced APM is still in the initiative phase, meaning that it is still being evaluated for suitability for broader wide-scale adoption and refinement. Hence, CMS reports that only 21 ACOs are participating in it as of the time of this article’s writing.(5)

The NGACO Model will apply to claims filed under Medicare Parts A and B for relevant organizations and eligible providers. Adjustments to payments based on quality performance, as in the Shared Savings Program, are made based on performance in the Electronic Health Record (EHR) Incentive Program, Physician Value Modifier (VM) program, and the Physician Quality Reporting System (PQRS) across the domains of patient experience, care coordination and patient safety, preventive health, and at-risk population management. Two risk–benefit sharing avenues exist for participants who exceed the capped limits of the Shared Savings Program. Arrangement A participants share 80% of losses/savings to CMS, up to a total annual cap of 15%, whereas Arrangement B participants observe 100% shared savings and losses, up to the same annual maximum. The symmetry of this equal sharing of savings versus losses may be skewed, however, because budget sequestration may lower maximum shared savings but not be applied to shared losses.(6) No specific uniform minimum savings or loss rates must be met before sharing dollar amounts occurs, as was seen with the Shared Savings Program or the older Pioneer ACO Model. However, a standard regional, national, and organizational quality-discounted benchmark will be calculated to determine organization-specific baselines of anywhere from 0.5% to 4.5% (Table 2). The benchmark itself is calculated based on annual cost and program-specific efficiency data, with a maximum year-to-year baseline adjustment limited to ±3.0%.

Organizations and eligible providers electing participation will be offered four major payment mechanisms to choose from to receive their reimbursements for services rendered(7):

• Participants may elect to receive normal FFS claims, as is traditional for Medicare claims, with adjustments made each year.

• Participants can choose a combination of the traditional FFS claim system plus a shared savings/losses infrastructure based on the amount of savings/losses per Medicare beneficiary per month (PBPM).

• Participants can elect to reduce the amount of FFS reimbursement they receive in exchange for greater proportions of monthly PBPM payments or penalties for shared savings or losses, respectively.

• Participants can elect a capitation model, in which the organization receives PBPM capitation payments, which are distributed to providers seeking claims within the organization.

Each of these options is provided to allow appropriate flexibility for an organization to choose the reimbursement method most likely to promote optimal organizational performance.

The Oncology Care Model

The OCM is, as the name implies, a cancer treatment–specific Advanced APM that attempts to financially align incentives in chemotherapy-providing organizations toward improving coordination of provided care, appropriateness of treatment, and overall access to care to Medicare beneficiaries.(8) Currently, CMS states that there are 17 third-party payers and 195 practices participating in the five-year-long OCM, with participating payers given the ability to introduce potential financial aligning measures with quality measures. The model is very similar to the risk model assigned under the Medicare Shared Savings Program and relies on participating practices to participate in a one-sided, benefit-only risk-sharing model for the first three years of participation, with a potential +4% for shared savings. Beginning in the fourth year of participation, if the practice so chooses, they may be allowed to transition to a two-sided loss/benefit sharing track that can lead to a ±2.75% change in reimbursements based on shared savings and quality measures. This second track, despite the lowered discount rate, is automatically eligible for higher performance-based payment adjustments compared with the one-sided track.(9)

Payments in this model are assigned on a “per treatment episode” basis, with episode periods lasting for six months for quality measure and cost efficiency acquisition to determine potential baseline adjustments for the next adjusted payment year. If the treatment episode lasts longer than six months, this time beyond the first episode is counted as a second treatment episode for reimbursement reasons. The Monthly Enhanced Oncology Services payment currently is set to $160 per month per beneficiary, with performance adjustments up to 100% of this amount based on superior national performance in the core OCM reportable quality measures. This creates a two-tiered payment system for participating organizations and practices and makes up the “fee-for-performance” aspect of the model.

Comprehensive End-Stage Renal Disease Care Model

The CEC Model is an APM that addresses the unique needs of the end-stage renal disease (ESRD) patient population by encouraging the creation of Accountable Care Organizations (ACOs) that coordinate care among dialysis clinics, nephrologists, and other pertinent providers for Medicare beneficiaries.(10) Based on lessons from the Pioneer ACO model, Shared Savings Program, and NGACO model, the CEC model seeks to create both one- and two-sided benefit–risk sharing tracks for small dialysis organizations of fewer than 200 facilities and large dialysis organizations of 200 or more facilities, respectively(11,12) (Table 3). As with the previously discussed APMs in this four-part series, the primary goal of this APM is to encourage coordination of care, particularly dialysis treatment, with the aim of improved cost-effectiveness and health outcomes. This is particularly pertinent for patients with ESRD due to their historically high risk of comorbidities, poor health outcomes, hospital readmissions, and increased mortality rates.

Both tracks of the program allow for the establishment of ESRD Seamless Care Organizations (ESCOs), which are the combined efforts of all key model participants focused on maximizing quality while minimizing costs of care. CMS explicitly requires that each formed ESCO must be capable of receiving, distributing, and, possibly, repaying shared savings or losses.(13) All of this must occur while overseeing adherence to the quality performance standard inherent to the Advanced APM models in regard to the EHR Incentive Program and the PQRS, with credits received for the latter and a waiver from required participation in the VM initiative. Physicians may still receive reimbursement adjustments based on non-related CEC quality measures reportable through PQRS, regardless of performance on core CEC measures.(14,15)

Conclusion

Even though the Advanced APMs discussed in this article are not freely open to application at the time of this publication, they serve as a potent reminder of the push by CMS and other third-party payers toward aligning incentives for quality and cost-effectiveness in upcoming years.(16) It can be safely assumed that models using the same basic track strategies, risk sharing, payer recruitment, and quality incentive adjustments discussed in this article will be a recurring theme in upcoming years and this survey of Advanced APMs should illustrate that point to the interested reader.(17) Although the specifics of any new models may be subject to change, it is unlikely that CMS, or the Department of Health and Human Services, will waver from its pursuit of the National Quality Strategy as it applies to reimbursement models.(18) For better or for worse, the APMs will undoubtedly be a topic of discussion in the industry well into the foreseeable future.

References

1. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. FederalRegister.gov . May 9, 2016. https://federalregister.gov/a/2016-10032 . Accessed July 6, 2016.

2. Self RH, Coffin J. Finding the best MACRA rout [sic] to provider reimbursement. Medical Economics. February 8, 2016. http://medicaleconomics.modernmedicine.com/medical-economics/news/finding-best-macra-rout-provider-reimbursement?page=0,3 . Accessed June 12, 2017.

3. Self RH, Coffin J. Advanced Alternative Payment Models (APMs): part I—understanding the Medicare Shared Savings Program. J Med Pract Manage. 2017;32:280-282.

4. Next Generation ACO Model. CMS.gov. June 27, 2016. https://innovation.cms.gov/initiatives/next-generation-aco-model/ . Accessed June 12, 2017.

5. Next Generation Accountable Care Organization Model (NGACO Model). CMS.gov . January 11, 2016. www.cms.gov/newsroom/mediareleasedatabase/fact-sheets/2016-fact-sheets-items/2016-01-11.html . Accessed June 12, 2017.

6. Next Generation ACO Model benchmarking methods. CMS.gov . December 15, 2015. https://innovation.cms.gov/Files/x/nextgenaco-methodology.pdf . Accessed June 12, 2017.

7. Pioneer ACO Model and Next Generation ACO Model: comparison across key design elements. Centers for Medicare & Medicaid Services (CMS). April 28, 2015. https://innovation.cms.gov/Files/fact-sheet/nextgenaco-comparefactsheet.pdf . Accessed June 12, 2017.

8. Oncology Care Model. CMS Innovation Center. CMS.gov . July 13, 2016. https://innovation.cms.gov/initiatives/oncology-care/ . Accessed June 12, 2017.

9. OCM Performance-Based Payment Methodology. CMS.gov . https://innovation.cms.gov/Files/slides/ocm-performancemethod-slides.pdf . Published June 27, 2016. Accessed July 20, 2016.

10. Comprehensive ESRD Care Model. CMS Innovation Center. CMS.gov . July 14, 2016. https://innovation.cms.gov/initiatives/comprehensive-esrd-care/ . Accessed June 12, 2017.

11. Financial methodology (Non-LDO CEC Model). CMS.gov . July 15, 2015. https://innovation.cms.gov/Files/x/cec-financial-nonldo.pdf. Accessed June 12, 2017.

12. Appendix 8: LDO financial methodology (LDO – CEC Model). CMS.gov . July 15, 2015. https://innovation.cms.gov/Files/x/cec-financial-ldo.pdf. Published Accessed July 20, 2016.

13. Comprehensive ESRD Care Model: RFA Fact Sheet. CMS.gov . https://innovation.cms.gov/Files/fact-sheet/cec-py2.pdf . Accessed June 12, 2017.

14. Appendix D: Quality Performance. CMS.gov . https://innovation.cms.gov/Files/x/cec-qualityperformance-nonldo.pdf . Accessed June 12, 2017.

15. Appendix D: Quality performance. CMS.gov . https://innovation.cms.gov/Files/x/cec-qualityperformance-ldo.pdf . Accessed July 20, 2016.

16. Self RH, Coffin J. Alternative payment model could be saving grace for quality improvement. Medical Economics. http://medicaleconomics.modernmedicine.com/medical-economics/news/alternative-payment-model-could-be-saving-grace-quality-improvement . Published July 18, 2016. Accessed July 6, 2016.

17. Self RH, Coffin J. Creating loose APM guiding principles: a brief overview. J Med Pract Manage. 2016; 32:6-8.

18. National Strategy for Quality Improvement in Health Care. Agency for Healthcare Research & Quality (AHRQ). www.ahrq.gov/workingforquality/nqs/nqs2011annlrpt.pdf. Published March 2011. Accessed June 12, 2017.