Medicare Hits Payment Target

Medicare has achieved its goal of tying 30 percent of all Medicare payments to alternative payment models a year early, the Centers for Medicare & Medicaid Services has announced.

As of January of 2016, 30 percent of Medicare payments are tied to alternative payment models. In January of 2015, Health and Human Services Secretary Sylvia Mathews Burwell announced the target but said she hoped Medicare could achieve it by 2017.

Among the alternative care models to which Medicare payments are now tied are:

  • Medicare Shared Savings Program (MSSP)
  • Pioneer ACOs
  • Next Generation ACOs
  • Comprehensive End Stage Renal Disease (ESRD) Care Model
  • Comprehensive Primary Care Model
  • Multi-Payer Advanced Primary Care Practice
  • End Stage Renal Disease Prospective Payment System
  • Maryland All-Payer Model
  • Medicare Care Choices Model
  • Bundled Payment Care Improvement

Learn more about these alternative payment models here.

Another new alternative payment model, which mandates bundled payments for hip and knee replacements, begins in about 25 percent of the country on April 1.

To learn more about how Medicare achieved this goal and why federal officials believe moving in this direction is so important, see the CMS fact sheet “Better Care. Smarter Spending. Healthier People: Improving Quality and Paying for What Works.”

CMS Proposes Changes in Medicare ACO Benchmarking

The Centers for Medicare & Medicaid Services has proposed a major change in how performance benchmarking is done for participants in its Medicare shared savings program.

According to a CMS news release announcing the newly proposed regulation that includes this change,

cmsKey proposals include:

  • Recognizing that health cost trends vary in communities across the country by using regional, rather than national, spending growth trends when establishing and updating an ACO’s rebased benchmark.
  • Adjusting an ACO’s rebased benchmark when it enters a second or subsequent agreement period by a percentage (increased over time) of the difference between fee-for-service
  • spending in the ACO’s regional service area and the ACO’s historical spending, which will provide a greater incentive for continued ACO participation and improvement.
  • Giving ACOs time to prepare for benchmarks that incorporate regional expenditures by using a phased-in approach to implementation.  

Other changes would include:

  • Adding a participation option to facilitate an ACO’s transition to performance-based risk arrangements by allowing eligible ACOs to elect a fourth year under their existing first agreement and defer by one year entering a second agreement period under a performance-based risk track.
  • Streamlining the methodology for adjusting an ACO’s benchmark when its composition changes.
  • Clarifying the timeline and other criteria for reopening determinations of ACO shared savings and shared losses for good cause or fraud or similar fault.

CMS hopes the changes will produce $120 million in federal savings between 2017 and 2019 and foster the creation of more ACOs to serve Medicare patients.

To learn more about what CMS is proposing to improve the Medicare shared savings program, see CMS’s news release announcing the proposal and CMS’s fact sheet describing the proposal in greater detail.

Medicare Expands ACO Participation

121 new organizations will be participating in Medicare accountable care organization programs, the Centers for Medicare & Medicaid Services announced this week.

100 new ACOs will join the 150 already participating in the Medicare Shared Savings Program, which rewards organizations that reduce their growth in health care costs while meeting quality performance standards. Of the 250 overall participants, 39 will also participate in a new ACO Investment Model that will provide pre-paid shared savings to encourage the formation of new ACOs in rural and underserved areas.

cmsAnother 21 ACOs will participate in the Next Generation ACO Model, a new initiative that features prospectively set benchmarks and enables participating providers to take on greater financial risk, with the opportunity for greater shared rewards as an incentive for doing so. Nearly half of these new ACOs will be led by doctors.

Once these new programs are launched, nearly nine million Medicare beneficiaries will be served through ACOs.

For further information about CMS’s expansion of ACO programs, see this New York Times article and this CMS news release.

OIG Reveals 2016 Plans

The U.S. Department of Health and Human Services’ Office of the Inspector General (OIG) has published its work plan for the 2016 fiscal year.

In 2016, the OIG will continue to examine all aspects of HHS endeavor, including Medicare, Medicaid, hospital services, public health activities, and more. In the coming year it will continue a number of hospital-focused projects while also focusing more on health care delivery, health care reform, alternative payment methodologies, and value-based purchasing initiatives.

hhsOIGAmong the OIG’s planned Medicare projects in 2016 – some of them continued from the past and some of them new, quoted directly from the work plan – are:

  • Hospitals’ use of outpatient and inpatient stays under Medicare’s two-midnight rule. We will determine how hospitals’ use of outpatient and inpatient stays changed under Medicare’s two-midnight rule, as well as how Medicare and beneficiary payments for these stays changed, by comparing claims for hospital stays in the year prior to the effective date of the two-midnight rule to stays in the year following the effective date of that rule. We will also determine the extent to which the use of outpatient and inpatient stays varied among hospitals.
  • Analysis of salaries included in hospital cost reports. We will review data from Medicare cost reports and hospitals to identify salary amounts included in operating costs reported to and reimbursed by Medicare. Employee compensation may be included in allowable provider costs only to the extent that it represents reasonable remuneration for managerial, administrative, professional, and other services related to the operation of the facility and furnished in connection with patient care.
  • Medicare oversight of provider-based status. We will determine the number of provider-based facilities that hospitals own and the extent to which CMS has methods to oversee provider-based billing. We will also determine the extent to which provider-based facilities meet requirements described in 42 CFR Sec. 413.65 and CMS Transmittal A-03-030, and whether there were any challenges associated with the provider-based attestation review process. Provider-based status allows facilities owned and operated by hospitals to bill as hospital outpatient departments. Provider-based status can result in higher Medicare payments for services furnished at provider-based facilities and may increase beneficiaries’ coinsurance liabilities. The Medicare Payment Advisory Commission (MedPAC) has expressed concerns about the financial incentives presented by provider-based status and stated that Medicare should seek to pay similar amounts for similar services.
  • Comparison of provider-based and freestanding clinics. We will review and compare Medicare payments for physician office visits in provider-based clinics and freestanding clinics to determine the difference in payments made to the clinics for similar procedures and assess the potential impact on Medicare of hospitals’ claiming provider-based status for such facilities. Provider-based facilities often receive higher payments for some services than do freestanding clinics.
  • Review of hospital wage data used to calculate Medicare payments. We will review hospital controls over the reporting of wage data used to calculate wage indexes for Medicare payments. Prior OIG wage index work identified hundreds of millions of dollars in incorrectly reported wage data and resulted in policy changes by CMS with regard to how hospitals reported deferred compensation costs.
  • Inpatient rehabilitation facilities—adverse events in postacute care for Medicare beneficiaries. We will estimate the national incidence of adverse and temporary harm events for Medicare beneficiaries receiving postacute care in inpatient rehabilitation facilities (IRFs). We will also identify factors contributing to these events, determine the extent to which the events were preventable, and estimate the associated costs to Medicare.
  • CMS validation of hospital-submitted quality reporting data. We will determine the extent to which CMS validated hospital inpatient quality reporting data.
  • Ambulatory surgical centers—payment system. We will review the appropriateness of Medicare’s methodology for setting ambulatory surgical center (ASC) payment rates under the revised payment system. We will also determine whether a payment disparity exists between the ASC and hospital outpatient department payment rates for similar surgical procedures provided in both settings.
  • Use of electronic health records to support care coordination through ACOs. We will review the extent to which providers participating in ACOs in the Medicare Shared Savings Program use electronic health records (EHRs) to exchange health information to achieve their care coordination goals. We will also assess providers’ use of EHRs to identify best practices and possible challenges to the exchange and use of health data, such as degree of interoperability, financial barriers, or information blocking.
  • Accountable Care Organizations: Strategies and Promising Practices. We will review ACOs that participate in the Medicare Shared Savings Program (established by section 3022 of the Affordable Care Act). We will describe their performance on the quality measures and cost savings over the first three years of the program and describe the characteristics of those ACOs that performed well on measures and achieved savings. In addition, we will identify ACOs’ strategies for and challenges to achieving quality and cost savings.

Among the Medicaid projects the OIG will undertake, again presented in language taken directly from its work plan, are:

  • Transportation services—compliance with Federal and State requirements. We will determine the appropriateness of Medicaid payments by States to providers for transportation services.
  • Health-care-acquired conditions—prohibition on Federal reimbursements. We will determine whether selected States made Medicaid payments for hospital care associated with health-care-acquired conditions and provider-preventable conditions and quantify the amount of Medicaid payments for such conditions.
  • State use of provider taxes to generate Federal funding. We will review State health-care-related taxes imposed on various Medicaid providers to determine whether the taxes comply with applicable Federal requirements. Our work will focus on the mechanism States use to raise revenue through provider taxes and determine the amount of Federal funding generated.
  • State compliance with Federal Certified Public Expenditures regulations. We will determine whether States are complying with Federal regulations for claiming Certified Public Expenditures (CPEs), which are normally generated by local governments as part of their contribution to the coverage of Medicaid services.
  • Reviews of State Medicaid Fraud Control Units. We will continue to conduct in-depth onsite reviews of the management, operations, and performance of a sample of MFCUs. We will identify effective practices and areas for improvement in MFCU management and operations.
  • Medicaid managed care reimbursement. We will review States’ managed care plan reimbursements to determine whether MCOs are appropriately and correctly reimbursed for services provided.
  • Medicaid managed care entities’ identification of fraud and abuse. We will determine whether Medicaid MCOs identified and addressed incidents of potential fraud and abuse. We will also describe how States oversee MCOs’ efforts to identify and address fraud and abuse.
  • HRSA—duplicate discounts for 340B-purchased drugs. We will assess the risk of duplicate discounts for 340B-purchased drugs paid through Medicaid MCOs and describe States’ efforts to prevent them.

To learn more about the OIG’s plans in 2016, go here to see the document Work Plan Fiscal Year 2016.

Are Medicare ACOs Living Up to the Hype?

Not yet.

At least that’s the conclusion to be drawn based on a report recently released by the Centers for Medicare & Medicaid Services (CMS).

cmsAccording to a CMS fact sheet,

…the 20 ACOs [accountable care organizations]in the Pioneer ACO Model and 333 Medicare Shared Shavings Program ACOs generated more than $411 million in total savings in 2014, which includes all ACOs’ savings and losses. At the same time, 97 ACOs qualified for shared savings payments of more than $422 million by meeting quality standards and their savings threshold. The results also show that ACOs with more experience in the program tend to perform better over time.

Kaiser Health News, however, took the analysis a step further:

In August, Medicare officials released 2014 financial details showing that the so far the ACOs have not saved the government money. The 20 ACOs in the Pioneer program and the 333 in the shared savings program reported total savings of $411 million. But after paying bonuses, the ACOs recorded a net loss of $2.6 million to the Medicare trust fund, a fraction of the half a trillion dollars Medicare spends on the elderly and disabled each year.

Find the CMS fact sheet and a link to the financial reports here.

In addition to reporting on ACOs’ financial performance, Kaiser Health News solicited the views of several experts on ACOs. Find that article and commentaries by those experts here.

State Uses Innovation Funding to Improve Care for Urban Poor

New York’s Medicaid program is taking advantage of federal innovation money to explore new approaches to serving low-income urban Medicaid patients.

With the help of Delivery System Reform Incentive Payments (DSRIP), special Medicaid funding from the federal government, caregivers serving Medicaid patients are organizing into accountable care organizations (ACOs) in New York City.

Stock PhotoUnder the experiment, doctors and hospitals join together to serve populations of Medicaid patients. While the doctors are currently paid on a fee-for-service basis, the program’s goal is to move them toward outcomes-based reimbursement, with bonuses paid to providers who achieve specific goals for improving the health of their patients.

The state plans to spend $1 billion over the next five years on this aspect of its innovation program.

Learn more about how New York seeks to use DSRIP funding to improve the delivery of care to its Medicaid population in this New York Times report.

Medicare Unveils New ACO Program

The federal Center for Medicare and Medicaid Innovation is launching a new accountable care organization (ACO) model through which providers can join together to serve Medicare patients.

The “Next Generation ACO” seeks to build on the experience, insight, and feedback gained through the Medicare Shared Savings Program and the Pioneer ACO model and give providers more tools for managing care and resources while also enabling them to take on more financial risk and earn greater financial rewards for doing so successfully.

A broader objective is to move Medicare closer to its stated goal of paying most providers based on the quality of care they deliver rather than on the quantity of services they provide.

The new model will have two risk tracks, one of which will be close to 100 percent risk, and a choice of four payment methodologies that will seek to facilitate a transition from fee-for-service to capitated reimbursement.  Those four payment systems are fee-for-service, fee-for-service with a monthly infrastructure payment, population-based payments, and capitated payments.

The Center for Medicare and Medicaid Innovation has created a number of resources through which interested parties can learn more about the new model:  a news release, a post on the blog of the Centers for Medicare & Medicaid Services (CMS), and a new web page devoted to the Next Generation ACO.

Parties interested in applying to become a Next Generation ACO must submit a letter of intent to the innovation center by May 1.

ACOs Show Encouraging Signs

Provider groups that just completed their first year in Medicare’s ACO programs are showing encouraging signs of producing health care savings.

Medical EquipmentIn all, the Centers for Medicare & Medicaid Services (CMS) reports $380 million in savings for first-year participants.  Nearly half of the ACOs participating  in the Shared Savings Program had lower spending than projected but less than half of those  saved enough to qualify to keep any of their savings – one of the program’s main incentives for participants.

Pioneer ACOs, which take greater risks, generated $147 million in savings, with nine of the 23 participating groups spending less than projected.

To learn more about the first-year performance of ACOs and the different types of program participants, see this Kaiser Health News report and this CMS news release.

Medical Homes Model Showing Potential

The “medical homes” model for providing health care is showing promise as a way of reducing the cost of care, reducing utilization of unnecessary medical services, improving access to care, and improving population health.

patient careThese are among the findings in a meta-study by the Patient-Centered Primary Care Collaborative.  The study brings together findings from 21 studies published between August of 2012 and last December.

Medical homes are a major component of accountable care organizations, which are viewed as another important tool in addressing rising health care costs and improving the quality of care delivered.  Many private safety-net hospitals are pursuing accountable care organization opportunities.

Read about the study and download it here, on the web site of the Patient-Centered Primary Care Collaborative.