Should Your Track 1 MSSP ACO Jump to Track 1+?

If you participate in Track 1 of the Medicare Shared Savings Program (MSSP), now is the time to evaluate whether to jump to Track 1+ for 2019.

If your accountable care organization (ACO) is due for renewal (i.e., you joined the program in 2013 or 2016), and you want to explore the Track 1+ opportunity, you must select this option on your Notice of Intent to Apply (NOIA).

Even if your ACO is not up for renewal, you still have the option of submitting an NOIA to participate in Track 1+ next year.

In either case, submitting the NOIA does not commit you to making the switch in 2019; you would not have to make a final decision until the fall.  However, if you do not submit an NOIA indicating interest in Track 1+ for 2019, you will forgo the opportunity until 2020.

So why should a Track 1 ACO consider moving to Track 1+?  According to the National Association of ACOs, 7 out of 10 MSSP ACOs would likely leave the program if required to assume risk.  Track 1+ offers a way to limit downside risk while opening new opportunities for ACOs.

Like their Track 1 counterparts, Track 1+ ACOs may receive up to 50% of savings (assuming the minimum savings rate is met or exceeded), not to exceed 10% of the ACO’s updated historical benchmark.  By comparison, a Track 2 ACO may earn up to 60% of savings, not to exceed 15% of its benchmark, and a Track 3 ACO may earn up to 75%, not to exceed 20% of its benchmark.

Unlike Track 1, Track 1+ qualifies as an Advanced Alternative Payment Program (APM) under the Quality Payment Program, meaning participating physicians are eligible for a 5% bonus on Part B billings.  This is because Track 1+ involves downside risk, albeit significantly less than Tracks 2 and 3 (which is the trade-off for a lower percentage of shared savings).  Track 1+’s limited risk made it relatively popular in its first year, with 55 ACOs electing to participate in the model in 2018.

Like Tracks 2 and 3, Track 1+ includes options that may make it easier for an ACO to earn shared savings.  These include (1) the ability to adjust the ACO’s minimum savings and minimum loss rates, (2) prospective beneficiary assignment, and (3) the availability of the skilled nursing facility (SNF) 3-Day Rule Waiver.

Choose your own MSR/MLR.  In Track 1, an ACO’s minimum savings rate (MSR) is calculated based on the number of attributed beneficiaries.  The lowest possible MSR under this methodology is 2.0% for an ACO with 60,000+ beneficiaries; the highest MSR is 3.9%.  In 2016, one-quarter of all ACOs generated savings, but did not meet their MSR and thus received no distribution.

Track 1+ offers ACOs the opportunity to select their MSR and minimum loss rate (MLR, referring to the percent of benchmark an ACO must exceed before owing any repayment) as part of the application process.  The MSR/MLR can be as small as 0%, symmetrical in 0.5% increments between 0.5% and 2%, or symmetrical based on the number of assigned beneficiaries, as calculated in Track 1.

Because the MSR and MLR must be symmetrical, a lower MSR also means a lower threshold for shared losses.  However, Track 1+ significantly limits potential losses compared to Tracks 2 and 3 because of a key difference in the loss sharing limit.

Benchmark-based or revenue-based loss sharing limits.  In Track 1+ the maximum level of downside risk varies based on the composition of the ACO.  In its application, an ACO must respond to the following questions.  If any response is affirmative, the ACO is subject to benchmark-based loss sharing.  If all responses are negative, or not applicable, the ACO qualifies for revenue-based loss sharing.

  1. Are any of your ACO participants one of the following institutional providers: inpatient prospective payment system (IPPS) hospital, cancer center, or rural hospital with more than 100 beds?
  2. Are any of your ACO participants owned or operated by (in whole or in part) one of the following institutional providers: IPPS hospital, cancer center, or rural hospital with more than 100 beds?
  3. Are any of your ACO participants owned or operated by (in whole or in part) an organization that owns or operates one of the following institutional providers: IPPS hospital, cancer center, or rural hospital with more than 100 beds?
  4. Is your ACO participant rural hospital with 100 or fewer beds owned or operated by (in whole or in part) a health system?
  5. Does a rural hospital with 100 or fewer beds, that is not on your ACO Participant List, own or operate (in whole or in part) an ACO participant?

Benchmark-based loss sharing limit.  Under the benchmark-based loss sharing limit, an ACO’s maximum downside risk is 4% of the ACO’s updated Parts A & B benchmark.  This is lower than both the loss sharing limit in Track 2, which increases each year from 5% to 7.5% to 10%, and Track 3, which has a fixed loss sharing limit of 15%.

Revenue-based loss sharing limitThe revenue-based loss sharing limit is calculated as a percentage of the ACO participants’ total Medicare fee-for-service (FFS) revenue.  This figure, which meets the nominal risk requirement for Advanced APM status, will remain the same in 2019 and 2020.  Thereafter, the amount of risk will increase as necessary to be consistent with the Advanced APM nominal risk requirement.

Should the revenue-based loss sharing limit be greater than the benchmark-based loss sharing limit for an ACO, that ACO’s loss limit will be capped and set at 4% of the updated historical benchmark, regardless of the ACO’s composition.

The revenue-based loss sharing limit is especially attractive for physician practice-based ACOs.  Because the participants in such an ACO would only have revenue from Part B charges, the loss sharing limit will be significantly lower than that of an ACO whose participants also receive Part A revenue.

SNF 3-Day Rule Waiver.  One of the greatest opportunities ACOs have for curbing costs lies in post-acute care.  However, ACOs frequently lack the tools and incentives to create a meaningful relationship with post-acute care providers in their communities.

Under Track 1+, ACOs can apply for the SNF 3-Day Rule Waiver, which otherwise is only available to Track 3 ACOs.  The waiver removes the requirement for a three-day inpatient hospital stay prior to admission to an SNF.  To apply for the waiver, the ACO must submit a list of SNF Affiliates and execute a CMS-approved SNF Affiliate Agreement for each Affiliate.  The ACO must also submit a communication plan, beneficiary evaluation and admission plan, and a care management plan.

SNF Affiliates must maintain an overall rating of three stars or higher under the CMS 5-Star Quality Rating System.  They are not required to be ACO participants.

Prospective attribution. In Track 1, beneficiaries are attributed to ACOs retrospectively, after a preliminary prospective assignment is reconciled.  This means that beneficiaries are initially assigned to the ACO based on prior year data, which is updated at the end of the performance year based on actual utilization during that year.   According to CMS, about 20% of beneficiaries on the prospective attribution list typically do not appear on the final attribution list.  Thus, the ACO never has an accurate list of the beneficiaries for whom it is responsible during the performance year.

In Track 1+, as in Track 3, CMS uses prospective attribution, assigning beneficiaries based on historical claims data.  This allows the ACO to know in advance the population for which it is accountable.  The providers can then be proactive in specifically engaging those beneficiaries in their efficiency efforts.

Coming soon: expanded telehealth opportunities.  Under the Bipartisan Budget Act of 2018, certain barriers to providing telehealth services have been waived for risk-bearing ACOs (but not Track 1 ACOs) beginning in 2020.  Specifically, an ACO Participant will be reimbursed for telehealth services furnished to an attributed beneficiary in his or her home (as opposed to an originating site) regardless of whether the beneficiary is located in a rural or health professional shortage area.

PYA can help.  To say there are several variables to consider in your MSSP strategy is an understatement.  Our experts are available to discuss the strategic and financial implications of transitioning from Track 1 to Track 1+, and other opportunities under the MSSP.  For more information, contact PYA Principal Martie Ross at (800) 270-9629.

Understanding Proposed Changes in Hospital Uncompensated Care Payments

The Centers for Medicare & Medicaid Services (CMS) published the 2019 Inpatient Prospective Payment System (IPPS) Proposed Rule April 24, 2018.  If finalized, many hospitals are likely to experience significant changes to their Medicare reimbursement, specifically their uncompensated care payment.

First, CMS proposes to increase the size of the uncompensated care pool— from $6.77B to $8.25B— to be distributed among qualifying hospitals.  This $1.5 billion increase is based on the expected uptick in the uninsured rate in the coming year.

Second, the proposed rule updates the formula for determining what percentage of the uncompensated care pool each qualifying hospital will receive.  CMS proposes to continue making the uncompensated care cost (UCC) calculation using the unaudited Worksheet S-10 data from each hospital’s Medicare cost report as a portion of the disproportionate share UCC payment mechanism.

Specifically, the proposed methodology to disperse available UCC funds for FY 2019 uses 2013 Medicaid days, 2014 and 2015 Worksheet S-10 data from Medicare cost reports, and 2016 Supplemental Security Income (SSI) ratios.  This change in reimbursement methodology may significantly impact providers dependent upon state Medicaid expansion and other requirements.

The 2019 proposed rule also addresses supporting documentation for the charity care amounts reported on Worksheet S-10 for audit purposes.  CMS proposes that Medicare cost reporting periods beginning on or after October 1, 2018, be rejected if a detailed charity care and/or uninsured discounts listing that supports the amount claimed on Worksheet S-10 is not provided at the time of filing.

To discuss  your hospital’s estimated Medicare reimbursement per discharge using the newly released FFY 2019 IPPS Proposed Rule rates, contact a leader of PYA’s Reimbursement team (Butch Bullock, Jonathan Skaggs, or Lori Foley) at (800) 270-9629.

CMMI’s Next Big Thing: Direct Provider Contracting

Last fall, the Center for Medicare and Medicaid Innovation (CMMI) asked the public to submit recommendations on the agency’s future direction.  On April 23, CMMI made public a 4,643-page document and a 6,380-line Excel spreadsheet containing the responses it received from approximately 1,000 individuals and organizations.  Stay tuned for our high-level summary of these comments.

At the same time, CMMI published a new request for information (RFI) on primary-care-focused direct provider contracting (DPC) models.  Under the model, “CMS could contract directly with participating practices, such as primary care practices or larger multi-specialty groups, to establish the practice as the main source of care for services ranging from solely primary care to a wide range of professional services for beneficiaries that voluntarily elect to enroll with the practice.”

In the RFI, CMMI suggests that a participating practice would receive a fixed per-beneficiary-per-month (PBPM) payment to furnish a defined scope of primary care services for its enrolled beneficiaries.  The practice also would be eligible for performance-based incentives determined by quality and total cost of care.

Of course, the devil is in the details, and CMMI poses several questions for which it seeks the public’s input:

  • What minimum requirements must a practice meet to participate in DPC?
  • What technical assistance would DPC practices require?
  • How should beneficiaries be incentivized to enroll? How should the enrollment and dis-enrollment process work?  What’s needed to prevent lemon-dropping and cherry-picking?
  • What services should be included in the PBPM payment? How should that payment be calculated?  What financial safeguards are needed to protect practices from higher-than-anticipated utilization?
  • How should the practice’s performance on quality measures and/or enrolled beneficiaries’ total cost of care impact the practice’s payments?
  • What safeguards are needed to protect beneficiaries?
  • How should accountable care organization (ACO) models be adapted to support DPC?

Interestingly, CMMI did not address whether the DPC model would qualify as an advanced alternative payment model for participating physicians.  Nor did the agency indicate whether federally qualified health centers and rural health clinics may have an opportunity to participate.

CMMI will accept comments on the DPC model at through May 25, 2018.

Previously, CMMI has relied on RFI responses to inform new initiatives.   For example, the agency solicited comments on new ACO and specialist payment models in 2014, and then announced the NextGen ACO and Oncology Care Models the following year.  It published an RFI on advanced primary care models in 2015, and then announced the Comprehensive Primary Care Plus program in 2016.  It is likely, therefore, CMMI will announce a DPC opportunity later this year or early next.

For providers who may be interested in DPC, there’s more to do than sit and wait.  Explore how  provider groups are implementing DPC now.   Deepen relationships with Medicare beneficiaries; for example, encourage them to designate their primary care providers through the CMS on-line Voluntary Alignment program.

If you have further questions about DPC, this new RFI, or how your practice might consider this opportunity, contact Martie Ross at PYA (, or at (800) 270-9629.

Meeting New Medicare Requirements for Implantable Cardioverter Defibrillators

Cardiovascular TechnologyOn February 15, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a Decision Memorandum revising the National Coverage Determination (NCD) 20.4 on implantable cardioverter defibrillators (ICDs).  This is the first update to NCD 20.4 since its implementation in 2005.  (As of April 13, 2018, NCD 20.4 has not been updated online and there is no implementation date.)

Specifically, the Decision Memorandum revises patient criteria, exceptions to waiting periods, and registry requirements for NCD 20.4.  These changes significantly impact the billing and documentation required by hospitals and physicians to demonstrate medical necessity and thus receive Medicare reimbursement for ICD implantation.

Most significantly, CMS now requires, in most cases, a “formal shared decision making (SDM) encounter [between the patient and provider] . . . using an evidence-based decision tool on ICDs prior to initial ICD implantation.”  According to CMS, the purpose of these encounters is to provide patients with more information on other treatment options and potential outcomes, thus empowering patients to make the best decisions for their specific conditions.

In its Decision Memorandum, CMS stresses that this requirement is not currently provided through informed consent documentation, which only covers the risks and benefits of the specific procedure. While CMS does not require a specific tool be used for the SDM encounter, the agency has provided an example of an appropriate SDM tool.  Access the tool here.

Other NCD 20.4 provisions include the following:

  • Making changes to the waiting periods for new and replacement ICDs.
  • Adding the use of cardiac MRI testing to the list of modalities that may be used to evaluate left ventricular ejection fraction (LVEF).
  • Clarifying medical necessity support documentation for ICD implantation, stating the “clinicians must have tried for at least three months to optimize medical therapy to the extent tolerated by the patient” for non-ischemic cardiomyopathy with heart failure population. If the patient is unable to tolerate “optimal medical therapy” and the outcomes are documented in the patient’s medical record, then the requirement has been fulfilled.
  • Eliminating the requirement of Class IV heart failure for cardiac resynchronization therapy (CRT) (and noting no other changes impact CRT).

NCD 20.4 is one of the most specific coverage documents provided by CMS, and experience has shown ICDs are a frequent target of CMS audit and recovery efforts.  To withstand such scrutiny, the medical record must contain specific documentation to support medical necessity and include specific diagnoses, timeframes, and measurements.  For more in-depth information and guidance on NCD 20.4 and other CMS billing requirements, contact Lori Foley, Denise Hall-Gaulin, or Joanna Malcolm at PYA (800) 270-9629.

What Congress Did to MIPS (And Why It Matters)

Almost every Merit-Based Incentive Payment System (MIPS) presentation includes a graphic like the one below illustrating upcoming payment adjustments of 4%, 5%, 7%, and eventually 9% on Medicare Part B payments, based on an eligible clinician’s performance on specified measures.

Due to changes enacted as part of the Bipartisan Budget Act of 2018, however, clinicians’ actual payment adjustments for the next few years will likely be a fraction of these amounts.

The Medicare Access and CHIP Reauthorization Act (MACRA) legislation that established MIPS made the program budget neutral:  the total value of bonus payments paid to those clinicians scoring above the performance threshold must equal the total value of penalties assessed against those clinicians scoring below the threshold.  When the threshold is set at average historical performance, there is a significant difference between the top performers’ bonuses and the poorest performers’ penalties.

For the 2017 and 2018 transition years, however, the Centers for Medicare & Medicaid Services (CMS) exercised its authority to set the thresholds significantly below the historical average.  This means fewer clinicians will be penalized (thumbs up), but there will be far fewer dollars available for bonus payments.

In the 2018 Quality Payment Program Final Rule, CMS estimates that the average adjustment across all providers will be 0.9% in 2020 based on 2018 performance, and that no provider will receive more than a 2% bonus payment.  These numbers include payments to clinicians from the $500 million exceptional performance pool, which is not funded by penalties.  These projected bonus payments are merely a fraction of what providers expected to earn from MIPS performance improvement initiatives.

And Along Came the Bipartisan Budget Act of 2018

Under MACRA, CMS’ authority to keep the performance benchmark below the historical average was set to expire after 2018.  However, in the Bipartisan Budget Act of 2018, Congress extended this authority through 2021.  Now, CMS does not have to set the performance benchmark at the historical average until 2022:

“…the Secretary shall increase the performance threshold with respect to each of the third, fourth, and fifth years to which the MIPS applies to ensure a gradual and incremental transition to the performance threshold described in clause (i) (as estimated by the Secretary) with respect to the sixth year to which the MIPS applies.”

Assuming CMS keeps the benchmark low – and there’s no reason to believe the agency will do otherwise – the financial incentive to be a MIPS top performer will remain meager for the next several years.

Congress also clarified that MIPS adjustments apply only to Medicare Part B “covered professional services.”  That means, most prominently, no MIPS payment adjustment for Part B drugs.  Again, this lessens MIPS’ financial impact on eligible clinicians, both good and bad.  It also means more clinicians will qualify for the low-volume exception, which further reduces the MIPS bonus pool.

Given this limited upside, as well as a number of competing priorities, clinicians may be tempted to ignore MIPS for now.  However, there are two compelling reasons not to do so.  First, a clinician who fails to meet minimum MIPS reporting requirements (which will become more demanding each year of the transition period) will be subject to the maximum penalty.

Second, CMS still is required to publish eligible clinicians’ performance scores on Physician Compare, and thus the potential reputational impact of MIPS remains intact.  More than half-a-million clinicians’ scores will be publicly reported during 4Q 2018 for the 2017 performance year.

Finally, keep in mind the 5% bonus for qualifying participants in an advanced alternative payment model (APM) remains in place.  For example, eligible clinicians participating in a Track 1+ Medicare Shared Savings Program ACO, which involves a relatively small level of risk, qualify for this bonus payment.  Advanced APM participants also avoid MIPS reporting requirements and publication of their performance scores.

Given the ever-changing MIPS landscape, developing and executing a MIPS strategy can be frustrating, to say the least.  PYA can assist your organization in understanding and evaluating options to be successful under pay-for-performance and other value-based reimbursement models.

Proving the Financial Impact of Chronic Care Management Services

Over the last four years, the Centers for Medicare & Medicaid Services (CMS) has expanded Medicare reimbursement for chronic care management (CCM) services based on the agency’s belief these services can lower the total cost of care.  While the clinical case for care management is compelling, the evidence supporting CMS’ conclusion has been limited to the results of a handful of pilot projects – until now.

An analysis of the impact of Medicare CCM services recently completed by Mathematica’s Policy Research Group provides compelling evidence of the financial value of care management.  In the study, the firm analyzed complete 2014 to 2016 Medicare enrollment and claims data, as opposed to a representative sample.

Mathematica’s analysis showed that per-beneficiary-per-month (PBPM) cost for patients who received CCM services was less than the costs for comparable non-CCM beneficiaries after just 12 months.  PBPM expenditures for CCM beneficiaries decreased by $74 in the 18-month follow- up period.

Source: Medicare 2014-2016 enrollment and FFS claims data as analyzed by Mathematica Policy Research.

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Risking Irrelevance?

Last November, we asked “Is CMS Changing Course on Value-Based Payments?”  We posed this question in response to a New York Times article highlighting how the Trump administration was slowing down and shrinking other Medicare pay-for-performance programs initiated under the Obama administration.  At the time, we offered four compelling reasons why providers should continue their efforts around value-based care, despite these mixed signals

The signals coming from Washington are no longer mixed.  In a speech at the Federation of American Hospitals convention March 5, Health and Human Services Secretary Alex M. Azar II threw down the gauntlet on value-based care:

There is no turning back to an unsustainable system that pays for procedures rather than value.  In fact, the only option is to charge forward — for HHS to take bolder action, and for providers and payers to join with us.  This administration and this President are not interested in incremental steps.  We are unafraid of disrupting existing arrangements simply because they’re backed by powerful special interests.

Secretary Azar introduced the administration’s four-part plan to drive value-based transformation:

  1. Give consumers greater control over their health information.
  2. Encourage transparency from providers and payers.
  3. Leverage Medicare and Medicaid to drive value and quality throughout the system.
  4. Eliminate government regulations that impede value-based transformation.

He acknowledged this transformation will be a “radical reorientation from the way that American healthcare has worked for the past century” and “will require some degree of federal intervention — perhaps even an uncomfortable degree.”

Because federal spending on Medicare and Medicaid amounts to one-third of America’s total health spending, only these programs “have the heft, the market concentration, to drive this kind of change, to be a first mover.”  According to Secretary Azar, the administration “will use these tools to drive real change in our system” in a bold manner:

Simply put, I don’t intend to spend the next several years tinkering with how to build the very best joint-replacement bundle — we want to look at bold measures that will fundamentally reorient how Medicare and Medicaid pay for care and create a true competitive playing field where value is rewarded handsomely.

The Secretary acknowledged the value-based transformation “won’t be the most comfortable process for many entrenched players.”  However, those who participate will reap the rewards of their efforts:

But those who are interested in working with us to build a value-based system will have the chance to take advantage of a market where consumers and patients will be in charge of healthcare.  We believe that is a system that will serve patients first, but it will be fair for providers and payers, too.

Although Secretary Azar did not address the issue directly in his remarks, providers not positioning themselves for the value-based transformation risk irrelevance in this new marketplace.

There are several opportunities available to those seeking first-step strategies to value-based transformation:

  1. Medicare fee-for-service population health services (e.g., preventive services, chronic care management, behavioral health integration services) generate revenue to fund infrastructure investments.
  2. Formal performance improvement initiatives (which include monitoring, reporting, and remedial action) around Medicare value-based purchasing programs (e.g., readmissions, hospital-acquired infections) help avoid or reduce penalties.
  3. Participation in the Medicare Shared Savings Program and similar commercial payer programs builds the tools for managing patients’ total cost of care.
  4. Participation in Bundled Payment for Care Improvement Advanced and other episodic payment models drives coordination of the care continuum.
  5. Actively engaging in clinical practice improvement activities improves MIPS scores and better positions physician practices for new payment models.
  6. Developing local provider networks for providers’ self-insured employee health plans helps control rising costs while promoting clinical integration.
  7. Exploring gainsharing opportunities to reduce operating costs also promotes hospital-physician alignment.

We strongly believe a “wait and see” approach to value-based care implementation is no longer a viable option.  Strong leadership and action are required to avoid becoming irrelevant.

Why All the Fuss About BPCI Advanced?

On January 9, 2018, the Center for Medicare and Medicaid Innovation (CMMI) announced a new voluntary episodic payment model, Bundled Payment for Care Improvement Advanced (BPCI-A).  In addition to new revenue, BPCI-A offers providers the opportunity to gain experience with, and develop necessary infrastructure for, value-based payments.

Like other episodic payment models, BPCI-A participants will assume the risk for the total cost of care for a 90-day episode of care anchored by an inpatient admission or outpatient procedure.  If the actual cost is less than a pre-determined target price, CMMI will pay the difference to the participant.  If the actual cost is higher, however, the participant must pay the difference to CMMI.  The amount of both payments – from CMMI and to CMMI – is subject to an upper limit.

A BPCI-A participant may select from 29 inpatient and 3 outpatient clinical episodes.  These 32 episodes fall into 6 categories:  cardiology; gastrointestinal; pulmonary and infectious disease; kidney; spine, bone, and joint; and neurology.

An acute care hospital or physician practice group may participate as a non-convener or a convener.   As a non-convener, a hospital or group is responsible only for the episodes it initiates.  For a hospital, this would include its inpatient admissions; for a group, this would include inpatient admissions or outpatient procedures for which a physician in the group is the attending or operating physician.

As a convener, a hospital or practice also is responsible for those episodes attributed to those hospitals or practices with which the convener has entered into formal arrangements.  Other types of entities – such as a management company or a post-acute care provider – also can participate as conveners.

Although CMMI will contract only with a participant – either as a convener or a non-convener – participants may enter into arrangements with other providers to share the risks and rewards, subject to specific requirements.  These arrangements are intended to incentivize providers to participate in one or more of the pathways to success identified by CMMI:  patient education, data and dashboards, care navigation, multidisciplinary steering committees, standardized care protocols, and post-acute care preferred provider networks.

Applications for BPCI-A are due March 12, 2018.  Unlike its predecessors, BPCI-A does not require an applicant to identify specific episodes and propose target prices based on historical experience.  Instead, the applicant must detail its experience with, and commitment to, value-based care, including practitioner engagement, care re-design, quality assurance and improvement, and organizational capacity and readiness.  The applicant also must provide information regarding proposed financial arrangements with other providers.

Following receipt of applications, CMMI will calculate and distribute in May, to each qualifying applicant, its target prices for relevant episodes.  Target prices will be based on the applicant’s specific benchmark, less a 3% discount.  CMMI has not made available the specific formula for calculating benchmarks, but instead has provided broad parameters.

A hospital’s benchmarks will be based on (1) patient case mix, (2) patterns of spending relevant to the hospital’s peer group (e.g., an academic medical center will be compared to other AMCs), and (3) the hospital’s historic Medicare fee-for-service expenditures and resource use.

A physician practice group’s benchmarks will be anchored on the hospital at which episodes occur, but adjusted for the group’s historical experience.  This adjustment is intended to account for differences in groups’ practice patterns, thus encouraging greater physician participation.

In June, CMS will offer participant agreements to qualifying applicants.  An applicant will have until August to return the signed agreement with its selected episodes.  The applicant is under no obligation unless, and until, it signs this formal agreement with CMMI.

The initial performance period will start October 1, 2018.  Participants will not be allowed to leave the program prior to the end of 2019, meaning an applicant must be prepared to accept risk for a minimum of 15 months.  BPCI-A will continue through the end of 2023.  Providers that do not join the program this year will have at least one more opportunity to do so in 2020.

PYA’s experienced consultants can assist your organization in analyzing the BPCI-A opportunity, exploring financial arrangements with other providers, completing the formal application, and analyzing benchmarks to identify the episodes with the greatest likelihood for success.

Even if your organization is not wholly committed to participation, the opportunity to receive and review data relating to benchmark pricing for key episodes of care makes the application process worthwhile.  To discuss your BPCI-Advanced opportunity, please contact David McMillan ( or Martie Ross (

Is Your Productivity-Based Physician Comp Model Undercutting Your Value-Based Contracting Strategy?

Many health systems now are making enormous financial investments in population health infrastructure, including IT solutions and care management infrastructure, to succeed under emerging alternative payment models (APMs).  And consolidation continues at a brisk pace, as systems look for cost synergy and capacity to manage risk.

As systems position themselves for value-based contracting with these high-dollar investments and business deals, they risk undermining their efforts by continuing to compensate employed physicians based almost exclusively on productivity.  Under fee-for-service (FFS) reimbursement, such a compensation plan aligns hospital and physician incentives.  Under emerging APMs, however, these productivity-based plans place a health system and its physicians at odds.

Today, most physician compensation plans focus almost exclusively on generating volume: the more services a doctor personally performs, the bigger his or her paycheck.  Some systems now are putting a small percentage of compensation (typically 2-5%) at risk, based on a physician’s scores on specified performance measures.  The impact on physician behavior, however, is limited; physicians may master the measure, but remain focused on volume, not value.

Consider the findings of a recent nationwide survey regarding physicians’ perceptions of the prevalence, causes, and implications of overtreatment.  Respondent physicians represented a variety of specialties and practice environments: primary care providers and specialists, non-profit and for-profit entities, urban and rural, and academic and non-academic.  Collectively, this cross-section of physicians offered reliable, first-hand knowledge of healthcare utilization patterns.

According to the survey, physicians believe 20% of overall medical care is unnecessary.  More than 70% of those surveyed believe physicians are more likely to perform unnecessary procedures when they profit from those services.  And most physicians believe that de-emphasizing the FFS model would drive behavior change and limit overutilization.

If a system desires to deliver the right care at the right place at the right time—the key to success under value-based contracts—it cannot afford to reward physicians for simply delivering more care.  New compensation models should incentivize physicians to improve quality by reducing variation, to coordinate care with other providers, to more actively manage patients with chronic conditions, and to promote healthy lifestyles.

As we’ve heard many times, the most expensive piece of equipment in any hospital is the “physician’s pen.”  Success under value-based contracting also demands a high degree of operational efficiency, and physicians can play a key role in reducing costs.  Thus, in addition to incentivizing high-value care, new compensation plans also should reward physicians for helping lower overhead, such as labor and supply costs.

Of course, physicians are unlikely to embrace changes to a compensation model that has treated them well over the years.  The first step, therefore, is making the case for change by explaining the transition from volume to value and the opportunities it presents for physicians.

Physicians know well the value they can provide, and thus their participation in model design should be solicited and welcomed.  To the fullest extent possible, the process should be transparent, an essential ingredient in building trust.  The new model’s implementation should be phased in over time, with routine re-evaluation to identify and address unintended consequences.

Successfully managing the re-design of a system’s physician compensation plan will be challenging, requiring significant investments of time and effort from senior leadership.  There are few proven models one can simply replicate; each value-based comp model is a custom-build.  However, aligning physicians’ interests with the system’s goals will define the success of your value-based strategy, more than any IT solution, data analytics capabilities, care management infrastructure, or other business deal.

Mid-January Deadline for Initial Comments on CMS-Proposed Key Changes to Medicare Advantage for 2019

The Centers for Medicare & Medicaid Services (CMS) has set a mid-January 2018 deadline for public comments regarding recently published proposed policy and technical changes to Medicare Advantage (MA) for Contract Year 2019 (CY19).  Beneficiary enrollment in MA plans has grown steadily over the last several years, up to 19 million this year.  According to the Kaiser Family Foundation, one-third of all Medicare beneficiaries now are enrolled in an MA plan.

CMS is proposing changes that will significantly impact both MA organizations and beneficiaries:

MLR calculation change.  Under the Medical Loss Ratio (MLR) rule, an MA organization must spend at least 85% of its revenue on healthcare services (including covered benefits and quality improvement activities), or face significant financial penalties.  CMS proposes to include two additional types of expenses in the numerator of the MLR calculation, thus making it easier for MA organizations to meet the 85% threshold: (1) costs associated with fraud prevention, detection, and recovery; and (2) Medication Therapy Management program expenses.

Reducing MLR reporting requirements.  Noting the burden placed on MA organizations by the current MLR data reporting requirements, CMS proposes to require only the bare minimum:  organization name, contract number, adjusted MLR, and remittance amount.  CMS estimates this will generate $1 million in savings to MA organizations and $500,000 in savings to the federal government.  CMS, however, is not ceding its authority to audit the data submitted, meaning MA organizations still will need to retain supporting documentation.

Updated marketing material definition.  Current regulations require MA organizations to receive CMS approval prior to sending any marketing materials to eligible beneficiaries.  CMS proposes to narrow the definition of marketing materials, thus reducing the number of materials that MA organizations must submit to the agency for review and approval.

New MA open enrollment period.  Under current law, a beneficiary may disenroll from an MA plan and return to traditional Medicare during the MA Disenrollment Period (MADP) which runs from January 1 to February 14 each year.  The 21st Century Cures Act, signed into law in late 2016, directs CMS to replace the MADP in 2019 with a three-month open enrollment period (January 1 to March 31), during which an MA-eligible beneficiary can make a one-time change to another MA plan, or elect traditional Medicare.  The proposed rule details how CMS plans to implement this change.

Elimination of Quality Improvement Projects (QIP).  CMS proposes to discontinue QIP requirements, noting the regulatory guidance has become overwhelmingly complex.  CMS sees more value in CCIPs—chronic care improvement projects—and expects MA organizations to remain focused on those requirements.

Updated Star Rating methodology.  This is always an important subject, as CMS payments to MA organizations vary based on these ratings.  CMS proposes to place a greater emphasis on data integrity by assigning lower star ratings, including scaled reductions, to plans that submit data that is incomplete, biased, or inaccurate.  CMS also proposes to apply a weighted-average Star Rating to consolidated contracts, replacing the current practice of applying the Star Rating of the surviving contract.

CMS will accept public comment on these and other proposed changes to the Medicare Advantage program for CY19 through January 16, 2018.  CMS is expected to release a Call Letter to Medicare Advantage Organizations (and other interested parties) around February 1, 2018, with planned changes to MA rates for CY19.  CMS will then open an additional 60-day comment period prior to releasing a final Call Letter for CY19 around April 1, 2018.