Medicare

CMS Innovation Center announces ACO PC Flex model to enhance Medicare access

This week, our In Focus section looks at the voluntary Accountable Care Organization Primary Care Flex (ACO PC Flex) Model, which the Centers for Medicare & Medicaid Services (CMS) Innovation Center announced on March 19, 2024. This model is designed to increase the number of low revenue ACOs in the Medicare Shared Savings Program (MSSP). Model participants will receive a one-time advanced shared savings payment and monthly prospective population-based payments. The ACO PC Flex Model is intended aims to support care delivery transformation, innovation, and team-based approaches to improve quality and reduce costs of care.

The ACO PC Flex Model is structured to increase the number of low revenue ACOs (i.e., ACOs composed of physicians, a small hospital, and/or serve rural areas). CMS published results in August 2022 indicating  that low revenue ACOs generated $113 more per capita savings than their high revenue counterparts.  CMS wrote in July of 2023 that the agency was seeking new opportunities for ACOs to serve Medicare beneficiaries. With this model, the Innovation Center is providing flexible payment to support innovative, team-based, person-centered, and proactive approaches to care for a subset of ACOs that have historically generated savings.

ACO PC Flex Model payments are structured to provide advanced shared savings to support administrative activities necessary for the model and ongoing payments specifically for primary care. The payment approach includes:

  • A monthly prospective primary care payment consisting of 1) a county base rate determined by average primary care spending, and 2) payment enhancements to support increased access to primary care, provision of care, and care coordination, which are exempt from CMS recoupment
  • An advanced shared savings payment as a one-time advance the changes needed to support needed operations and administration

With the approach, the Innovation Center anticipates CMS will be able to improve access to primary care services, particularly for underserved communities, and empower providers through flexible, stable payments to innovate care delivery to better meet their patients’ needs.

The demonstration will start January 1, 2025, and run for five years. The request for applicants (RFA) is expected in the second quarter of 2024, and ACOs must apply for participation in MSSP as a new or renewing organization to be eligible for ACO PC Flex. Applications for MSSP close June 17, 2024.

More details are expected to be included in the RFA. If you are interested learning more about the ACO PC Flex Model, please contact our featured experts.

HMA 2024 Spring Workshop summary and key takeaways

On March 6, HMA convened a spring workshop of 100 healthcare stakeholders interested in making value-based care delivery and payment work better. This event was designed for those engaging in value-based care and payment transformation, but who are looking to learn from peers to overcome challenges; participants included insurers, health systems, data and tech innovators, service providers, and trade associations.

The event’s name implored people to “Get Real” about the challenges we all face, while reminding ourselves of the imperative of making this transition to ensure the sustainability of our uniquely American healthcare system. In between plenary panels, participants were engaged in cohort discussions exploring the opportunities for progress in areas critical to making value-based care work.  While a summary cannot recreate the real-time discussions and simulations from the event, our discussions delivered insights on several critical themes that we believe are important to track. 

EMPLOYERS ARE LEANING IN: For all employers pay, they are getting less value over the past decade; the changes made to ERISA that hold the C-suite accountable for paying fair prices for healthcare benefits is a seismic shift in making healthcare purchasing a more strategic priority for employers.

  • Elizabeth Mitchell of the Purchaser Business Group on Health illustrated the shift in employers’ awareness – due to data transparency rules – that they aren’t getting the quality they thought they were getting for all that they pay. Transparency, plus a recent change to the Employee Retirement Income Security Act of 1974 (ERISA), is bringing employers back to the table with very specific requests for better outcomes, which they are increasingly pursuing through direct contracting and specific quality frameworks for primary care, maternal care, and behavioral health. Participants continued to reflect on this dynamic in all subsequent discussions, underscoring that this could be a really big deal.
  • Cheryl Larson of the Midwestern Business Group on Health talked about the cost pressure on her members leading them to partner in new and different ways, expressing optimism about all payer solutions and other innovative approaches to leverage the cost data that are now available. In her closing plenary session, she said “this issue of accountability on employers…I am excited and optimistic that there are things we can do to get there faster now.”

Data & Technology HAVE TO IMPACT DECISION MAKING: Patients are using the system the way it is designed today, so we can’t just blame them for poor outcomes…we have to actually stop doing things that don’t work and start measuring things the right way.

  • Dr. Katie Kaney opened with a dinner keynote discussing her efforts to create metrics that give purchasers a better measurement of whole person care, including clinical, genetic, behavioral, and social factors. Audience members remarked that this was a novel approach to quantify what has become accepted correlation in adverse health outcomes.
  • Ryan Howells, Dave Lee, and Stuart Venzke led discussions on Data & Technology, diving into updated federal regulations that present both opportunities and challenges for stakeholders, as well as ways to create corporate strategies that include data and technology, as these issues are no longer optional for anyone in this business. The breakout discussions talked about where we are today vs where we need to be – bridging the gap between data and decision making.

Payment & Risk TOOLS ARE ALIGNING INFORMATION TO ACTION:  Achieving meaningful risk-based contracts is possible but the details matter…mismatched data and information leads to unequal buying power, which cannot be the case in value-based care.

  • Kelsey Stevens, Scott Malan, Hunter Schouweiler, and Kate de Lisle led discussions on Payment & Risk, including an exciting hands-on simulation exercise that helped participants understand ways to increase premium scores by implementing risk-based payment approaches within the care delivery system; this session provided very concrete takeaways for those who attended by combining a simulation with a discussion on measures of success to improve risk-based contracting strategies.
  • Amy Bassano and Kate de Lisle discussed their recent publication on the expanded ecosystem of value-based care entities, looking at the “enablers” who are working with providers and payers to manage risk. This groundbreaking landscape of this market segment highlighted a set of Guiding Principles to ensure these entities are aligned with CMS, provider, and patient goals. Participants had lots of questions for the presenters and were anxious to read the HMA full report.

CARE DELIVERY MEASURES MUST BE TANGIBLE TO PROVIDERS AND PATIENTS: Value-based care requires aligning the right metrics with the right incentives, ensuring providers understand not only WHY but HOW they help improve patient outcomes.

  • Rachel Bembas, Dr. Jean Glossa, and Dr. Elizabeth Wolff led discussions on Care Delivery Measures, underscoring the importance of involving clinicians in the establishment of outcomes measures, as well as ensuring that the diversity of patient experiences are included. Participants remarked that we have a lot of “messy” data today, so we now have to ask the next set of questions on how we best use the messy data to make an impact?
  • Former Congresswoman Allyson Schwartz talked about the continuing promise of Medicare Advantage, and the opportunity to convene a new alliance around Medicare quality metrics as well as the increasing pressure to align these metrics across payers. In the closing plenary, she said “We need to define what we want healthcare in America to look like and then go out and get it…. We have to align the measurements and the standards we use so that providers understand what’s needed and it benefits government, taxpayers, and beneficiaries…we should require plans to have risk-based contracting with providers.”

Policy & Strategy HAVE TO STAY THE COURSE TO ALIGN INCENTIVES: Policymakers can help or hinder movement forward to ensure success…value-based care has to be more than a section in an RFP, but part of the entire scope of paying for outcomes-based care delivery.

  • Governor and former HHS Secretary Mike Leavitt reminded us of the political and policy journey that got value to where it is today, and the unique moment we are in right now that gives us hope as we enter this post-pandemic phase of healthcare spending and policy. He reflected, “We are beginning to see regulations and mechanisms to hold people accountable for healthcare costs…we have to integrate value and caregiving or we will never get to value.”
  • Theresa Eagelson, former Illinois Director of Healthcare and Family Services, talked about the opportunity for states to expand value-based care by setting strong expectations through contracting and by thinking differently about policy choices. She reflected on the role of state administrators, “When we sit here and talk about value-based care, do we know what our north star is? Have we mastered what we want to see in RFPs (for Medicaid)?  We’re working on a good FQHC model in Illinois, but should it be just for FQHCs? We need to spend more time together, across payers, across plans and providers and consumers to figure out what success looks like.”
  • Caprice Knapp and Teresa Garate led a discussion on state and local Policy & Strategy to support integrated care and services that are required to achieve better outcomes. There is a need for services to better coordinate and manage care across social and health services, bringing contracting and payment expertise to more efficiently serve patients. The highly anticipated Medicaid managed care rule can help guide states in updating their approach. Federal analysis of Medicaid data is needed to set benchmarks before we can get to total cost of care approaches.
  • Amy Bassano and Anne Marie Lauterbach led a discussion on federal policy alignment of Medicare FFS and Medicare Advantage, particularly looking at drug spending and the very real burden of medical debt as a driver of policy change. Participants reflected that half the country is indirectly covered through some public insurance. It’s just being done hyper-inefficiently.

HMA is leading the way on value-based care and is committed to continuing these dialogues to drive local, state, and national change. HMA’s value-based care expertise draws from our acquisition of Leavitt Partners and Wakely Consulting Group, two firms with deep ties and expertise on policy, strategy and risk-based pricing strategies, as well as recruitment of clinicians and operational experts who have led organizations through this transition. We will continue to advance the dialogue – and the work – to drive value as a critical way to ensure that our systems of health and healthcare are more affordable, equitable, and sustainable.

Let’s keep the conversation going! Learn more about how HMA can help you succeed with value-based payments and check out the newly released value-based payment readiness assessment tool for behavioral health providers.

New Leavitt Partners report examines site-neutral payments

A new report by Leavitt Partners, an HMA Company, outlines the concept of site-neutral payment reforms being considered as a potential program improvement, and proposes a compromise approach to implementing site-neutral payments that benefits beneficiaries, hospitals, and the Medicare program. Site-neutral payments, which would equalize payment for the same services across all settings of care, are most commonly considered in connection with outpatient or ambulatory settings. Because out-of-pocket costs for Medicare beneficiaries are based on a percentage of the total reimbursement costs, any policy that reduces reimbursement for some services would result in savings to Medicare beneficiaries.

The approach proposed in the report lowers out-of-pocket costs to Medicare beneficiaries, improves the financing of the Medicare program by addressing a payment distortion, and reinvests in hospitals through new targeted funding and inclusion of policy priorities. 

If you have any questions, contact our expert below.

Access the full report

Federal policymakers consider current and future spending measures on simultaneous tracks

This week, our In Focus section covers Congress’s and the Administration’s parallel efforts to finalize fiscal year (FY) 2024 spending bills and begin the budget process for FY 2025.  

Congress approved a bipartisan package for some of the FY 2024 spending bills, and on March 9, 2024, President Biden signed the Consolidated Appropriations Act of 2024 into law (PL 118-42). Programs funded through this measure include the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and other federal nutrition supports, rental assistance for safe and affordable housing, and veterans medical care and benefits.  

Several mandatory funding extensions of public health programs and health-related policies also found their way into the 2024 consolidated appropriations package, including extending the Community Health Center Fund, delaying reductions in the disproportionate share hospital allotments, defining Certified Community Behavioral Health Centers (CCBHCs) as a Medicaid service, extending incentive payments for certain Medicare providers, and mitigating the impact of cuts to the Medicare physician fee schedule.  

These policies, however, addressed a narrower set of issues than the expansive and bipartisan legislation that has been moving through both chambers of Congress. For example, House and Senate members have worked on respective bipartisan policies affecting price transparency, pharmacy benefit managers, and Medicare site-neutral policies, among others.  

Meanwhile, President Biden released the FY 2025 Budget proposal March 11, 2024, kicking off the annual budget process. Like the administration’s FY 2024 budget proposal, the FY 2025 plan emphasizes deficit reduction and continues to make equity and Medicare solvency cornerstones of the budget. Health-related priorities include expanding access to affordable healthcare services, lowering drug costs, improving maternal health, addressing the mental health and substance use disorder crises, and enhancing biodefense and preparedness activities.  

Check out the FY 2025 budget analysis from Leavitt Partners, a Health Management Associates, Inc. (HMA), company, and a deeper dive into the Consolidated Appropriations Act of 2024.

What We’re Watching 

Congress is continuing negotiations on the outstanding spending bills, including the one that funds the Departments of Health and Human Services, Labor, and Education through September 2024. Lawmakers are working to reach an agreement before the next funding deadline of March 22.  

The administration’s FY 2025 budget proposals are generally being characterized as a blueprint for President Biden’s re-election campaign and, if successful, a policy agenda for his second term. Though Congress has already begun holding hearings on the budget request, members on both sides of the aisle will likely focus on issues that resonate in an election year.  

Regardless of the outcome of the November elections, Congress has an opportunity to address unfinished business during the lame duck session later this year.  

HMA and Leavitt Partners collaborate to monitor legislative and regulatory developments in healthcare and adjacent spaces and to assess the impact of policy changes on the healthcare industry. 

Driving change in healthcare delivery: HMA Spring Workshop shapes policy and strategy frameworks for value-based care implementation

Federal policy frameworks establishing alternative payment models in Medicare and Medicaid have been the kick-starter of value-based care (VBC) innovation in healthcare delivery. However, employers provide health insurance to most Americans, and very few employers – with the exception of jumbo, self-insured employers  – have leaned heavily into VBC. Small- and medium-sized firms rely on brokers to find an affordable health insurance plan, and often lack the resources required to negotiate more. Though the tide has been changing, our fragmented payment system has yielded only a subset voluntarily taking substantial risk for patient outcomes.

It has been said that to truly transform our American healthcare system to pay for value – improved outcomes for lower cost – it would require better alignment across public and commercial payers to support care providers in shifting their business models to take risk.

Quality and cost information are critical to implement VBC payment and delivery systems. Federal initiatives in Medicare and Medicaid have opened the door for providers, payers, and innovators  to use health information to improve outcomes, with patients more engaged and more in control; the “Universal Foundation” announced by the Centers for Medicare and Medicaid Services (CMS) in 2023 seeks to align quality measures across the more than 20 CMS quality initiatives; and policies included in the 21st Century Cures Act and CMS Interoperability and Patient Access rule are creating more transparency on price and quality.

By enabling an infrastructure to measure, digitize, and share cost and quality information, federal and state governments have set the stage for greater collaboration among all purchasers – including employers – and the healthcare delivery system to redesign care that addresses health related social needs and behavioral health, ensuring that healthcare is provided equitably and sustainably. As the care delivery system is better able to deliver high value care, more employers will demand this for their workforce to provide a better benefit to their workers.

These issues, and more, will be a part of the expert-led conversation on VBC at HMA’s 2024 Spring Workshop March 5-6, in Chicago. This workshop offers a unique opportunity for payers, government officials, community organizations, vendors, and providers to have an unvarnished conversation about the challenges, lessons, and opportunities in implementing VBC. The meeting is designed to share insights, change-oriented strategies and actions that advance VBC from top industry experts, health plan executives, state and federal leaders, and policy experts. 

Our working sessions will feature solutions-focused conversations among peers:

  • Care delivery measures that drive outcomes, equity, population health
  • Payment & risk management models for payment, pricing, attribution
  • Data that is interoperable, consumer focused, deploying technology that is aligned to deliver on strategic objectives
  • Policy & Strategy Frameworks at federal, state, and local levels that incentivize VBC

The closing panel will look at ways to take action through policy and collaboration to move our industry toward more sustainable approaches to healthcare payment and delivery.

To learn more and register for this unique event, please visit HMA’s 2024 Spring Workshop page. Act fast – online registration ends Wednesday, February 28!

Interoperability and patient access final rule: the next phase in the data exchange journey

This week, our In Focus section reviews the Centers for Medicare & Medicaid Services (CMS) Interoperability and Prior Authorization Final Rule, published on January 17, 2024. This is CMS’s latest effort to flesh out regulations mandating payer interoperability and fully electronic prior authorization (PA) policies. The 2024 final rule also represents a new phase in the agency’s work to advance interoperability as it moves beyond policymaking focused on building interoperable systems to policies centered on the applications and usage of shared data.

The new requirements affect a large segment of the nation’s public health insurance programs, including Medicare Advantage (MA) organizations, state Medicaid fee-for-service (FFS) programs, state Children’s Health Insurance Program (CHIP) FFS programs, Medicaid managed care plans, CHIP managed care organizations, and qualified health plan (QHP) issuers on the federally facilitated exchanges (FFEs). These payers must implement and adhere to Health Level 7® (HL7®) Fast Healthcare Interoperability Resources® (FHIR®) application programming interfaces (APIs). These APIs were developed by the DaVinci project and the CARIN Alliance which are both HL7 FHIR accelerator programs. Leavitt Partners, an HMA company, leads the work of the CARIN Alliance.

The final rule demonstrates a commitment to information sharing across the industry landscape and confidence in the FHIR standard to support health data exchange across all required APIs. Ultimately, FHIR APIs are creating a more patient-centered data ecosystem that can provide a tangible return on investment.

Following are details about the requirements, opportunities, and next steps for stakeholders.

Prior Authorization API and Process

Payers must build and maintain PA APIs by January 1, 2027, allowing providers to ask payers whether PA is required for a patient’s procedure, what documents must be submitted to attain authorization, and to receive the final decision and reason for denied requests electronically within a specified timeframe (seven days for standard procedures and three days for expedited decisions).

The rule finalizes requirements for the PA process, regardless of whether the payer receives the PA request through the Prior Authorization API. Specifically, CMS is requiring that:

  • Affected payers send notices to providers when they make a prior authorization decision, including a specific reason for denial when they deny a PA request
  • Payers, other than QHP issuers on the FFEs, respond to prior authorization requests within specific timeframes
  • Affected payers publicly report certain metrics about their PA processes

These prior authorization process requirements become effective January 1, 2026. The last 12 months of PA information also must be shared with patient, providers, and other payers when the member switches a plan through the respective APIs.

To promote adoption of electronic prior authorization processes, CMS is adding an Electronic Prior Authorization measure for Medicare clinicians who participate in the Merit-based Incentive Payment System (MIPS) and hospitals and critical access hospitals in the Medicare Promoting Interoperability Program as an attestation measure.

Payer to Payer FHIR API

To support continuity of care and value-based programs, payers must be able to send, receive, and incorporate enrolled member data from previous and concurrent payers if members are dually enrolled.

To comply with the new electronic data sharing, the final rule requires payers to build and use FHIR API by January 1, 2027. Payer-to-payer (P2P) data sharing will include the last five years of claims/encounters, clinical data, and the active and pending PA requests. The data collected through the P2P APIs will need to be available to the other APIs (i.e., provider, patient, and prior authorization). The rule requires payers to request data from previous payers within a week after the patient opts in to sharing data. For dually enrolled members, data sharing will incur at least quarterly.

Patients must opt in and agree to the P2P data sharing. To this end, health plans must adjust their enrollment administrative process to allow members to easily share previous and concurrent payer information and consent to data sharing. CMS allows Medicaid or CHIP agencies to contract with entities, such as Health Information Exchanges (HIEs), for the digital access and transfer of a patient’s medical records, which supports the Payer-to-Payer API.

Provider Access FHIR API

Payers also must build and maintain a Provider Access API to share patient data with in-network providers with whom the patient has a treatment relationship, enabling continuity and coordination of care, by January 1, 2027. Affected payers must maintain an attribution process to associate patients with the appropriate in-network providers responsible for the patient care. The data from the payer via the Provider Access API must be added to a provider’s electronic health record, practice management solution, or any other technology solution that a provider uses for treatment purposes.

The Provider Access API includes the same data covered in the Payer to Payer Access API (claims/encounters, clinical data, and prior authorizations). The payer has one business day to deliver the required information. Payers must offer a mechanism for members to opt out from making their data available to the attributed providers.

Patient Access FHIR API

The final rule further enhances patient access to data to improve their treatment and shopping experience. In addition to claims and clinical data, as of January 1, 2027, payers must make PA data available through the Patient Access API to inform patients on their plan’s PA process and the status of requests.

In addition, affected payers must report annual metrics about Patient Access API usage and data requests to CMS beginning January 1, 2026.

Key Considerations and Early Results

The rule presents a significant opportunity to improve patient experiences and outcomes and to address some of the administrative burden on clinicians. Though CMS made some adjustments to timeframes in the proposed rule, immediate attention is needed to evaluate technological solutions available to payers, assess gaps between current and future required state, and develop policies to comply with new requirements and measures reporting.

Commercial payers may also leverage the improved electronic data sharing but are not required to do so. CMS-funded payers must respond to any inquiries from commercial payers and must require commercial payers to provide the same information as affected payers. Commercial payers, state governments, and other stakeholders have an opportunity to collaborate around the electronic data exchange.

This rule may have positive downstream application to other areas beyond PA, including quality measurements, risk adjustment, and population health. Early adopters who have implemented the prior authorization APIs have, on average, recorded a 150% – 300% return on investment (ROI). The implementation of API-based prior authorization represents a demonstrable increase in efficiency and significantly reduced provider burden. Given the measurable ROI, state-based regional collaboratives being led by Leavitt Partners are forming between payers and providers to implement the core tenants of the CMS rule well in advance of the 2027 deadline.

Similar initiatives are taking place in the technology space, like the Digital Quality Implementers Community, which was recently convened by Leavitt Partners and National Committee for Quality Assurance (NCQA) to build industry readiness for transitioning to FHIR-based digital measurement that hinges on improved electronic data sharing

What to Watch

The HMA team will continue to analyze the CMS’s Interoperability and Patient Access rule in the context of other federal and state policy changes affecting MA organizations, Medicaid FFS programs, state CHIP FFS programs, Medicaid and CHIP managed care programs, and QHPs.

The work and opportunities afforded with the Interoperability and Patient Access final rule will be featured prominently at The HMA Spring Workshop: Getting Real About Transforming Healthcare Quality and Value, March 5-6. In addition to rich discussions, HMA and HMA companies, including Leavitt Partners and Wakely Consulting LLC, are available to support planning and implementation and related system redesign initiatives. If you have questions about these topics, contact our experts below.

CMS releases advance notice of changes to MA capitation rates and Part C/D payment policies

This week, our In Focus section reviews the Centers for Medicare & Medicaid Services (CMS) Calendar Year (CY) 2025 Advance Notice for the Medicare Advantage (Part C) and Part D Prescription Drug Programs published on January 31, 2024. Alongside the advance notice, CMS published draft CY 2025 Part D Redesign Program Instructions. This guidance includes CY 2025 payment updates as well as additional proposed technical and methodological changes to Medicare Advantage (MA) and Part D. CMS previously released a proposed rule in November 2023 that included proposed policy changes to MA and Part D for CY 2025.

The proposed payment policies signal CMS is working to ensure the stability of MA and Part D programs, while also addressing concerns about the appropriateness of payments to plans. Furthermore, CMS remains highly focused on the impact methodological changes could have on payment to plans that enroll beneficiaries who are dually eligible for Medicare and Medicaid services. Proposals to align quality measures across programs and strengthen the measures used to assess the quality of beneficiary experiences and services provide directional information on CMS’s plans for the forthcoming annual payment rules for 2025.

Following are highlights from the 2025 Advance Notice and Part D Redesign Program Instructions. The deadline for submitting comments is Friday, March 1, 2024. CMS will announce the MA capitation rates and final payment policies for 2025 no later than April 1, 2024.

Payment Impact on MA: CMS is projecting that federal payments to MA plans will increase on average 3.7 percent from 2024 to 2025. The increase reflects multiple factors, including growth rates in underlying costs, change in Star ratings, continued implementation of the new risk adjustment model and fee for service (FFS) normalization, and risk score trends. Actual impacts of the proposed payment policies will vary from plan to plan.

Risk Adjustment: CMS is proposing to continue its three-year phase in of the updated Part C risk adjustment model, first published in the CY 2024 Rate Announcement. In CY 2025, risk scores will be calculated by blending 67 percent of the risk score using the 2024 CMS hierarchical condition categories (HCC) risk adjustment model and 33 percent using the 2020 CMS-HCC risk adjustment model. In addition, the MA risk score trend is being calculated separately under each model, then blended by the respective percentage to determine a CY 2025 risk score trend of 3.86 percent.

CMS is proposing a new methodology for calculating the FFS normalization factor to accurately address the effects of the COVID-19 pandemic without excluding any years of FFS risk scores.

CMS also proposes to apply the statutory minimum MA coding pattern difference adjustment factor of 5.90 percent for CY 2025.

Frailty Adjustment for FIDE SNPs and PACE Organizations. For CY 2025, CMS is proposing to blend the frailty score calculated for fully integrated dual eligible (FIDE) special needs plans (SNPs) consistent with the phase-in of the 2024 CMS-HCC model. The FIDE SNP frailty score is the sum of:

  • 33 percent of the score calculated with the 2020 CMS-HCC model frailty factors
  • 67 percent of the score calculated with the 2024 CMS-HCC model frailty factors

CMS also intends to use only the full Medicaid frailty factors to calculate frailty scores for FIDE SNP enrollees in order to align with the requirement that FIDE SNPs must have exclusively aligned enrollment, meaning that enrollment in FIDE SNPs will be limited to full-benefit dually eligible individuals, beginning in CY 2025. CMS will use the frailty factors associated with the 2017 CMS-HCC model to calculate frailty scores for Program of All-Inclusive Care for the Elderly (PACE) organizations in CY 2025.

Star Ratings: CMS reiterates its plan to further implement the “universal foundation” of quality measures. CMS first announced this subset of metrics in 2023, with the goal of aligning a core set of metrics across the agency’s programs while continuing to allow for program specific measures. CMS reminds plans that beginning with the 2024 measurement year (2026 Star Ratings), the weight of patients’ experience, complaints, and access measures will be reduced from a weight of four to a weight of two.

CMS proposes several updates and refinements to the Star Ratings program, including:

  • Retiring the Care for Older Adults – Pain Assessment (Part C) measure, starting as early as the 2025 measurement year
  • Making changes to the Plan Makes Timely Decisions About Appeals and Reviewing Appeals Decisions (Part C) measures for cases submitted electronically to the independent review entity
  • Adding Social Need Screening and Intervention (Part C) to the display page for the 2025 Star Ratings and giving notice that National Committee on Quality Assurance (NCQA) is evaluating the potential addition of a utilities insecurity screening and intervention rate for this measure in the future
  • Adding Depression Screening and Follow-Up for Adolescents and Adults (Part C) and Adult Immunization Status (Part C) to the display page for the 2026 Star Ratings
  • Updating the Members Choosing to Leave the Plan (Part C and D) measure for the 2026 Star Ratings
  • Possibly adding the Initiation and Engagement of Substance Use Disorder Treatment (Part C) and Initial Opioid Prescribing for Long Duration (IOP-LD) (Part D) measures
  • Revisions to the Care Coordination (Part C) measure, and other changes through future rulemaking

Part D Impact

The advance notice reviews the significant changes to the Part D benefit occurring in 2025 as required in the Inflation Reduction Act (IRA). The IRA’s Part D changes effective in CY 2025 include:

  • Eliminating the coverage gap phase. A newly defined standard Part D benefit will consist of three phases: annual deductible, initial coverage, and catastrophic coverage. There is no initial coverage limit, and the initial coverage phase will extend to the maximum annual out-of-pocket threshold, after which the catastrophic phase begins.
  • Setting the out-of-pocket threshold at $2,000.
  • Sunsetting the Coverage Gap Discount Program and implementing of the Manufacturer Discount Program (Discount Program).
  • Making changes to the liability of enrollees, plans, manufacturers, and CMS.
  • Updating the definition of incurred costs to include, among other categories of costs, supplemental coverage and other health insurance, which was previously excluded. Manufacturer discounts provided under the Discount Program also will be excluded.
  • Premium stabilization will continue to be in effect.

CMS is recalibrating the RxHCC risk adjustment model to account for IRA changes and is proposing to calculate separate normalization factors for risk scores used to pay MA-PD plans versus PDPs.

Key Considerations

The impact of the MA risk score trend on payment will vary across individual MA plans. Plans will want to analyze these effects to inform their comments to CMS.

In the advance notice, CMS emphasized the strong growth in the dual SNP market for 2024. This market continues to present growth opportunities. CMS has sought to ensure that changes to payment accuracy better reflect more recent cost and utilization patterns and the risk profile of the sickest and most complex enrollees. Plans will want to consider payment incentives in the context of major policy, reimbursement, and operational changes required to improve integrated care for dually eligible individuals. MA organizations considering becoming FIDE SNPs and wishing to obtain frailty payments in 2025 will need to understand the specific requirements to be eligible for such payments.

The HMA Medicare team will continue to analyze these proposed changes. We have the depth and breadth of expertise to assist with tailored analysis, to model policy impacts across the multiple rules, and to support the drafting of comment letters on this notice.

If you have questions about the contents of CMS’s MA Advance Notice and payment policies and how these would affect MA plans, including SNPs, providers, and Medicare beneficiaries, contact our experts below.

New HMA report analyzes growth opportunities in the expanded value-based entities landscape

This week, our In Focus section highlights a new report released on January 25, 2024, Analyzing the Expanded Landscape of Value-Based Entities: Implications and Opportunities of Enablers for the CMS Innovation Center and the Broader Value Movement. The analysis explores the growing ecosystem of new entities designed to assume accountability for the total cost and quality of care in order to understand the growth of this market and consider the role these entities play in advancing accountable care in Medicare, Medicaid, and the broader healthcare sector. The report combines the value-based payment (VBP) policy and market expertise of Health Management Associates (HMA) and Leavitt Partners, an HMA company, with support from Arnold Ventures.

At the start of the movement, value-based arrangements primarily involved traditional providers and payers engaging in relatively straight-forward and limited contractual arrangements. In recent years, the value-based care market has expanded to include a variety of risk-bearing healthcare delivery organizations and provider enablement entities, with capabilities and business models aligned with the functions and aims of accountable care. Despite their prevalence, little formal research has been conducted to determine the role, growth, and impact of these entities to date, and publicly available information is limited.

The report introduces a framework for classifying these entities and estimates the size of this market for the first time. Using insights from 60 interviews with entity leaders, providers, and policymakers, and extensive secondary research into approximately 120 organizations, the report details the common offerings, partnership models, and growth strategies of these entities. The research investigated primary care-focused entities as well as risk-bearing delivery organizations and VBP enablers focused on select specialty areas that align with total cost of care models (i.e., kidney care, oncology, cardiology, behavioral health, and palliative care). Authors examined providers’ experiences selecting and collaborating with enablement partners and the role of these entities within Medicare accountable care models, as well as the broader value movement, to inform a set of guiding principles that help providers and policymakers evaluate the attributes of ideal partners.

Market Landscape

For the past decade, the Centers for Medicare & Medicaid Services (CMS), through its Innovation Center (CMMI), has been leading the movement toward value. Going forward, the agency is focused on scaling accountable care adoption to achieve its 2030 goal, but also seeks to ensure that transformation is equitable and sustainable. These entities are helping providers to engage in accountable care, but our guiding principles and policy recommendations aim to support CMS in ensuring that their growth aligns with provider and patient priorities.

In assessing the value-based care market, the report divided the organizations into three main categories by their core business model: VBP enablers (which are not involved in the direct provision of care, but in assisting others to adopt VBP models); risk-bearing delivery organizations (entities designed to deliver value-based care and assume payment risk for the cost of care); and organizations that are a hybrid of the two (companies that own assets that enable other organizations and those that deliver care).

From risk-bearing delivery organizations with business models that hinge on effective population health management and longitudinal patient relationships, to VBP enablers that provide the population health functions needed to succeed in accountable care while sharing responsibility for those outcomes, these entities are creating more opportunities for clinicians to deliver the type of coordinated, proactive, whole-person care that is unsupported in a fee-for-service system.

A Growing Market

Fueling the growth of value enablers are signals from federal and state policymakers that value-based payment (VBP) is here to stay. The certainty of this approach is already leading to increased focus on underserved populations and safety net providers as CMS places greater focus on expanding VBP contracts in Medicaid and other public insurance programs.

As the market matures and pressure to participate in accountable care mounts, organizations will have several paths forward to implementation of alternative payment models. The growth and availability of enablement entities that are designed with the explicit purpose of helping providers overcome barriers to participation – and whose own financial success hinges on the success of their provider partners – could represent a promising gateway toward achieving accountable care.

The research found several similarities across most entities in this space, demonstrating a highly competitive market, with organizations focused on similar priorities in target providers, geographies, and key populations. Entities often use hybrid, high-touch clinical models to support physicians with patient navigators and other clinical extenders and support staff. They heavily rely on health information technology, and often develop homegrown, proprietary tech assets to better address provider pain points. Finally, most entities depend on outside capital and investment to fuel growth, and investor interest in the space seems to be robust and growing, along with the evolution of value-based care models.

Guiding Principles and Policy Recommendations

The report concludes by proposing a set of guiding principles to describe the optimal attributes of value-based enablement entities aligned with CMS, provider, and patient goals. Authors point to steps CMS can take to best engage with this expanded ecosystem in support of its efforts to scale accountable care while ensuring appropriate guardrails are in place to protect patients and providers.

As CMS works to accelerate adoption of accountable care to achieve its 2030 goal and beyond, the agency must find ways to bring in new providers who have yet to engage meaningfully in these models, while retaining current participants and advancing model designs for the next phase of VBP and delivery reform. The report makes policy recommendations to 1) drive new and sustained provider participation and 2) ensure high-quality partnerships for CMS and providers.

Link to Report

What’s Next

With its acquisition of Leavitt Partners and Wakely Consulting, along with its strong and growing Medicare policy practice, HMA is developing a diverse and robust set of solutions for entities engaging in value-based care and payment. On March 5 and 6, HMA will be devoting its spring event to the topic. The report authors will be featured prominently and will lead a session on the report’s implications. More information about the Spring Workshop, Getting Real about Transforming Healthcare Quality and Value, can be found here.

For details about this research, please contact the report authors below.

Driving change in healthcare delivery: HMA Spring Workshop dives into metrics, coordination, and partnerships for value-based care

Within the healthcare sector, there is an imperative for a comprehensive understanding of the care delivery framework that will positively impact outcomes, equity, and the overall health of communities. Among the drivers for this imperative is renewed focus among Medicare officials and interest from states and employers to transition to alternative payment methods that focus on value for payers and patients. A variety of care delivery structures and metrics can be used, and all have a role in driving value-based care (VBC).

One critical element of VBC hinges on whether and how healthcare organizations focus their care delivery structures on patients. VBC also incorporates metrics that further validate the ability of the system to positively impact patient outcomes, reduce health disparities, and improve population health. Emphasizing technology, interdisciplinary collaboration, and streamlined communication can revolutionize the care delivery model.

The HMA workshop-style spring conference on March 5 and 6, is designed to delve deeply into the intricacies of these care delivery frameworks and metrics within the context of VBC. This unique workshop will challenge attendees to roll up their sleeves and actively engage to become part of the solution through an interactive conversation, allowing participants to discuss real-world scenarios, analyze data and metrics and, using small-group breakout sessions, engage in focused and in-depth knowledge sharing.

Break-out sessions facilitated and led by subject matter experts will challenge attendees to identify new solutions around care delivery structures and contractual metrics that improve outcomes, that may include:

  • Engaging providers around consistent approaches to enhance patient outcomes, optimize treatment plans, and ensure the delivery of evidence-based, high-quality care.
  • Developing approaches for patient engagement that improve care delivery and foster active involvement and collaboration between patients and healthcare providers.
  • Crafting strategies for seamless coordination among healthcare providers, spanning sectors, and involving non-traditional providers and community organizations.
  • Understanding components of effective provider network agreements and how they contribute to achieving healthcare goals through strong partnerships and collaborations.

The workshop promises to be a dynamic platform for professionals in the healthcare sector, offering valuable insights, practical strategies, and collaborative opportunities to secure a place for high-quality value-based care. By focusing on care delivery structures, patient engagement, care coordination services, and provider network agreements, attendees will be well-equipped to navigate the complexities of healthcare and contribute to a healthier, more equitable future.

To learn more about the HMA 2024 Spring Conference Workshop and to register, visit the conference website.

CMS proposes major changes to Medicare Advantage and Part D for 2025

This week, our In Focus section reviews a wide-ranging proposed rule issued by the Centers for Medicare & Medicaid Services (CMS) on November 6, 2023. The rule would update various policies governing Medicare Advantage (MA, or Part C), the Medicare Prescription Drug Benefit (Part D), Medicare cost plans and Programs of All-Inclusive Care for the Elderly. These proposed policy reforms would implement changes related to Star Ratings, marketing and communications, agent/broker compensation, health equity, dual eligible special needs plans (D-SNPs), utilization management, network adequacy, and other programmatic areas. The proposals reflect the agency’s continuing focus on increasing program transparency, improving health equity, reducing the cost of care for Medicare beneficiaries, and expanding access to behavioral health services.

MA and Part D stakeholders are encouraged to provide CMS with feedback and analysis regarding the potential impact of these changes. Comments on the proposed rule are due by January 5, 2024. The final rule would take effect in contract year 2025.

Improving Access to Behavioral Health Care Providers

CMS proposes regulatory changes intended to improve access to behavioral healthcare by adding certain provider specialties to the MA network adequacy standards as follows.

  • CMS proposes to add a new facility-specialty type to the existing list of facility-specialty types evaluated as part of its plan network adequacy reviews. The new facility-specialty type, outpatient behavioral health, would be included in network adequacy evaluations, including marriage and family therapists (MFTs), mental health counselors (MHCs), opioid treatment programs, community mental health centers, and/or other behavioral health and addiction medicine specialists and facilities.
  • MFTs and MHCs will be eligible to enroll in Medicare and start billing for services beginning January 1, 2024, because of the new statutory benefit category established in the Consolidated Appropriations Act (CAA) of 2023. CMS proposes to make corresponding changes to its network adequacy requirements for MA organizations.
  • For purposes of the network adequacy requirements, the new facility-specialty type would be evaluated using time and distance and minimum number standards in the proposed regulation.

Increased Transparency for Special Supplemental Benefits for the Chronically Ill

In 2018, Congress enacted new authorities pertaining to supplemental benefits for MA members with chronic health conditions. CMS refers to this category of benefits as Special Supplemental Benefits for the Chronically Ill (SSBCI). These services are available only to enrollees with ongoing conditions and who meet certain criteria established in the statute. In contrast to the general policy that MA benefits should be offered uniformly to all plan members, MA plans may offer SSBCI tailored to a qualifying individual’s specific medical diagnosis and needs.

Supplemental benefits, including SSBCI, are generally funded with MA plan rebate dollars. CMS notes that the number of MA plans that offer SSBCI—and the number and scope of SSBCI that individual plans provide—has increased since their introduction in 2019.

Under the proposed rule:

  • MA organizations would be required to demonstrate, through relevant and acceptable evidence, that an item or service offered as SSBCI has a reasonable likelihood of improving or maintaining the health or overall function of chronically ill beneficiaries. MA plans also must, by the date on which they submit a bid to CMS, include a bibliography of evidence supporting this position. According to CMS, this expectation would shift the burden of proof from the agency to MA organizations, requiring plans to demonstrate compliance with this standard and that SSBCI items and services are evidence-based.
  • MA plans must follow their written policies based on objective criteria for determining enrollee eligibility for SSBCI when making determinations.
  • Require that MA plans document denials of SSBCI eligibility rather than its approvals.
  • CMS would codify its authority to review and deny approval of an MA organization’s bid if the plan cannot demonstrate, through relevant and acceptable evidence, that its proposed SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee.
  • CMS also would codify its authority to review SSBCI offerings annually for compliance and in light of the available evidence.

According to CMS, these proposals, if implemented, would better ensure that the benefits offered as SSBCI are reasonably expected to positively affect the health and well-being of chronically ill beneficiaries and guard against the use of MA rebate dollars for SSBCI that unsubstantiated.

In addition, CMS is proposing new policies to improve transparency regarding SSBCI so that beneficiaries are aware that SSBCI are only available to enrollees who meet the eligibility criteria. More specifically, CMS proposes to:

  • Modify the current requirements for the SSBCI disclaimer that MA organizations must use whenever SSBCI are mentioned. The SSBCI disclaimer would have to list the relevant chronic condition(s) that qualify for the benefits that MA organizations offer.
  • Establish specific font and reading pace parameters for the SSBCI disclaimer in print, television, online, social media, radio, other voice-based ads, and outdoor advertising, including billboards. Finally, it would clarify that MA organizations must include the disclaimer in all marketing and communications materials that mention SSBCI.

Requiring Mid-Year Enrollee Notification of Available Supplemental Benefits

As noted previously, over the past several years, the number of MA plans offering supplemental benefits has increased. The benefits offered are broader in scope and variety, and an increasing amount of MA rebate dollars are being directed toward these benefits. At the same time, plans have reported that the number of enrollees who use many of these benefits is low.

  • CMS proposes requiring MA plans to notify enrollees mid-year of the unused supplemental benefits available to them. The notice would list any supplemental benefits that a beneficiary does not use during the first six months of the year (January 1−June 30).
  • At present, MA plans are not required to send any communication specific to an enrollee’s usage of supplemental benefits. This policy is intended to educate enrollees on their access to supplemental benefits and encourage greater use of these benefits.

Enhancing “Guardrails” for Agent and Broker Compensation

For many years, CMS has set upper limits on the compensation that agents and brokers can receive for enrolling Medicare beneficiaries in MA and Part D plans. CMS believes that many MA and prescription drug payment plans, as well as third-party entities with which they contract, make structured payments to agents and brokers that circumvent these compensation caps.

  • In this regulation, CMS proposes to generally prohibit contract terms between MA organizations and agents, brokers, or other third party marketing organizations (TPMOs) that may interfere with the agent’s or broker’s ability to objectively assess and recommend the plan that best-suited to a beneficiary’s healthcare needs; to set a single reimbursement rate for all plans; to revise the scope of items and services included within agent and broker compensation; and to eliminate the regulatory framework that currently allows for separate payment to agents and brokers for administrative services.
  • The agency would make conforming changes to the Part D agent broker compensation rules.

Requiring an Annual Health Equity Analysis of Utilization Management Policies and Procedures

CMS proposes several regulatory changes to the composition and responsibilities of an MA organization’s utilization management (UM) committee.

  • The new rules would require that a member of the UM committee have expertise in health equity and that the UM committee conduct an annual health equity analysis of the use of prior authorization.
  • The proposed analysis would examine the impact of prior authorization on enrollees with one or both of the following social risk factors (SRFs): receipt of the low-income subsidy, dual eligibility for Medicare and Medicaid (LIS/DE), or a disability.
  • The proposed analysis must compare metrics related to the use of prior authorization for enrollees with the specified SRFs with enrollees without the specified SRFs. The results of the analysis must be made publicly available on the MA organization’s website in an easily accessed manner.

Enhancing Enrollees’ Right to Appeal an MA Plan’s Decision to Terminate Coverage for Non-Hospital Provider Services

Beneficiaries enrolled in traditional Medicare and MA plans have the right to a fast-track appeal by an independent review entity (IRE) when their covered skilled nursing facility (SNF), home health agency (HHA), or comprehensive outpatient rehabilitation facility (CORF) services are being terminated. At present, quality improvement organizations (QIOs) function as IREs and conduct these reviews.

Furthermore, MA enrollees do not have the same access to QIO review of a fast-track appeal as traditional Medicare beneficiaries.

CMS proposes to:

  • Require that QIOs, instead of MA plans, review untimely fast-track appeals of an MA plan’s decision to terminate HHA, CORF, or SNF services
  • Fully eliminate the provision requiring the forfeiture of an enrollee’s right to appeal a termination of services decision when they leave the facility

According to CMS, these proposals would align MA regulations with the parallel reviews available to beneficiaries in traditional Medicare and expand the rights of MA beneficiaries to access the fast-track appeals process.

Increasing the Percentage of Dually Eligible Managed Care Enrollees Who Receive Medicare and Medicaid Services from the Same Organization

In the proposed rule, CMS expresses concern that a significant number of dually eligible enrollees receive Medicare services through one managed care entity and Medicaid services through another (misaligned enrollment), rather than from one organization (aligned enrollment. The proposed rule states that in the long run, “for dually eligible individuals who are in Medicare and Medicaid managed care, we believe that we should continue to drive toward increasing aligned enrollment until it is the normative, if not only, managed care enrollment scenario…. For dually eligible individuals that elect MA plans, we are focused on increasing enrollment in integrated D-SNPs: fully integrated dual eligible special needs plans (FIDE SNPs), highly integrated dual eligible special needs plans (HIDE SNPs), and applicable integrated plans (AIPs) [pages 286-287].”

To move in this direction, CMS offers several interconnected proposals as follows:

  • Replace the current quarterly special enrollment period (SEP) with a monthly SEP for dually eligible individuals and others enrolled in the Part D low-income subsidy program to elect a standalone PDP
  • Create a new integrated care SEP to allow dually eligible individuals to elect an integrated D-SNP on a monthly basis
  • Limit enrollment in certain D-SNPs to individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO)
  • Limit the number of D-SNP plan benefit packages an MA organization, its parent organization, or an entity that shares a parent company with the MA organization, can offer in the same service area as an affiliated Medicaid MCO

According to CMS, these initiatives would increase the percentage of dually eligible MA enrollees who are in plans that are also contracted to cover Medicaid benefits, thereby expanding access to integrated materials, unified appeal processes across Medicare and Medicaid, and continued Medicare services during an appeal.

Impose New Contracting Standards for Dual Eligible Special Needs Plan (D-SNP) Look-Alikes

Under existing regulations, CMS does not contract with and will not renew the contract of a D-SNP look-alike; that is, an MA plan that is not a SNP but in which dually eligible enrollees account for 80 percent or more of total enrollment. CMS proposes to lower the D-SNP look-alike threshold from 80 percent to 70 percent in 2025 and to 60 percent in 2026. CMS states that this proposal is intended to help address the continued proliferation of MA plans that serve high percentages of dually eligible individuals without meeting D-SNP requirements.

Other Topics in the Proposed Rule

In addition, the proposed rule calls for:  

  • Providing greater flexibility for Part D plan sponsors to substitute biosimilar products during the plan year
  • Limiting out-of-network cost sharing for D-SNP PPOs
  • Standardizing the MA risk adjustment data validation appeals process
  • Expanding permissible data use and data disclosure for MA encounter data including for support for Medicaid and state Medicaid agencies to better coordinate care for dually eligible individuals

The Health Management Associates Medicare team will continue to analyze these proposed changes. We have the depth and breadth of expertise to assist with tailored analysis, to model policy impacts, and to support the drafting of comment letters to this rule. For more information or questions about the policies described, contact our experts below.

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