May 17, 2021
By Mitchell Kaminski, MD, MBA, editor-in-chief, Population Health Learning Network
The move to value-based care—where payment for volume of services is being supplanted by payment for outcomes of care—has proceeded with remarkable speed since the Affordable Care Act (ACA) went into law a mere ten years ago. Payment for outcomes increasingly focuses on holding providers of healthcare responsible for total costs of care.
Accountable Care Organizations (ACOs) began in 2014 under the direction of the Centers for Medicare and Medicaid Services’ (CMS) Shared Savings Program (MSSP). Four years later in 2018, population-based, at-risk payment was applied to only 5.1% of Alternative Payment Model (APM) program participants1. In 2019, the ACO payment structure underwent a first major revision as outlined in Pathways to Success, moving from Alternative Payment Models (APMs) to Advanced Alternative Payment Models (AAPMs), which promoted greater financial risk. Pathways to Success (labeled in the diagram below as “ACO 2.0”) represents a faster move to value by forcing participating ACOs into risk models on a mandatory annual glide path.
Contracts for voluntary participation extended from three to five years, and a mandatory move to risk-bearing was shortened from six years to two (three years for physician-owned, usually smaller ACOs). Shared savings rates in the highest risk “enhanced” track increased to 75%, while at-risk was increased to a significant maximum of 15% of total benchmark.
Meanwhile, the Centers for Medicare and Medicaid Innovation (CMMI) proceeded to develop pilot models in value-based care through initiatives that promoted:
- responsibility for the total cost of care (such as Pathways to Success),
- “episode” based payments, such as “bundle-based” payment programs for specific acute conditions or procedures, which held providers accountable for the total 90-day cost of care around the event, and
- capitation programs for primary care, such as “Primary Care First.”
As with most operations in and outside of medicine during the COVID-19 pandemic, we are seeing a “pandemic pause” in the advancement of many of these programs in 2021. The upheaval in clinical care that we have all experienced in 2020, and the difficulty with measuring and rewarding trends in performance during such an aberrant year, has led to this pause. In addition, the new Biden administration is reassessing program success and value.
For example, a freeze in the glide path along Pathways to Success has been proposed by CMS, as outlined in this figure. Although ACOs will be allowed to maintain their “Levels” through 2022, they will be expected to “catch up” to the advanced level by 2023.
In addition, many of the CMMI pilots are being reviewed, paused, and in a few cases, suspended.3
The new CMMI Director, Liz Fowler, has stated that some value-based care models are at a crossroads.4 Failure of some programs is an inevitable and perhaps necessary outcome of innovation. It provides learning and guidance for future success. The pandemic pause provides an opportunity to reconsider the move to value, and better ways forward.
The Penn Leonard Davis Institute published a white paper in February 2021 entitled, “The Future of Value-Based Payment: A Roadmap to 2030.”1 In it, they suggest that CMS:
- simplify the value-based payment landscape—retaining fewer, and non-overlapping models;
- promote value-based payment models across more payers, including all governmental and partnered private payers;
- simplify the administrative burden for participation by providers;
- move from voluntary to mandatory participation; incentivize APM participation by reducing the rewards for volume-based payments in the fee-for-service payment structure; and
- increase the focus on health equity and on populations with greater social risk factors.
Population-based payment is coalescing around capitated payment for providers in advanced primary care models, with episode-based models applied to acute and specialty care. Fee-for-service payment will continue, although constrained by requirements to manage episode total-cost-of care, while capitation will allow flexibility for primary care to apply principles advancing population health. The critical role for primary care in healthcare system futures will require adequate recognition and resources.
The unplanned pause of the pandemic, along with a change in administration, is proving to be an opportunity to step back, re-assess, and move forward with renewed confidence and purpose as we promote a healthier population.
Disclaimer: The views and opinions expressed are those of the author(s) and do not necessarily reflect the official policy or position of the Population Health Learning Network or HMP Global, their employees, and affiliates. Any content provided by our bloggers or authors are of their opinion and are not intended to malign any religion, ethnic group, club, association, organization, company, individual, or anyone or anything.
- Werner, RM, Emanuel, E, Pham, HH, and Navathe, AS. “The Future of Value-Based Payment: A Roadmap to 2030.” White Paper. Leonard Davis Institute. https://ldi.upenn.edu/brief/future-value-based-payment-road-map-2030. February, 2021.
- NAACOS Member Alert. “CMS Proposes to 'Freeze' Pathways Glidepath Advancement in 2022.” firstname.lastname@example.org April, 2021. Accessed April 28, 2021.
- Fierce Healthcare. New CMMI director says value-based care models at 'crossroads.' https://www.fiercehealthcare.com/payer/new-cmmi-director-says-value-based-care-models-at-crossroads. Accessed April 28, 2021.
- Fierce Healthcare. Here are the payment models the Biden administration has pulled for review or delayed. https://www.fiercehealthcare.com/payer/here-are-payment-models-cms-has-either-pulled-for-review-or-delayed. Accessed April 28, 2021.