Why Rural Providers Aren’t Transitioning to Alternative Payment Models

December 02, 2021 - A smaller percentage of providers in rural or health professional shortage areas eligible to participate in Advanced Alternative Payment Models (APMs) did partake in the Quality Payment Program track compared to providers not located in these areas, according to a recent federal report.

The report written by the Government Accountability Office (GAO) found that only about 12 percent—52,592 of the 442,927 eligible providers in rural or shortage areas—participated in an Advanced APM in 2019. In comparison, 15 percent—174,140 of the 1,173,792 eligible providers—not located in these areas participated in the track during that year.

The trend has been going on since 2017, when the Quality Payment Program started and the year for which GAO started its investigation’s period. Rural healthcare providers are not participating as robustly as other providers in Advanced APMs despite the potential to earn a higher payout compared to the Quality Payment Program’s other track, the Merit-Based Incentive Payment System (MIPS).

The goal of the Quality Payment Program is to transition providers to Advanced APMs that hold them accountable for patient outcomes and total cost of care. Eligible providers who participate in the track are currently eligible for a 5 percent incentive payment if they sufficiently participate in the model according to program thresholds for that year. In 2019, for example, the threshold was at least 50 percent of their Medicare Part B payments or seen at least 35 percent of their Medicare beneficiaries through an Advanced APM entity.

Rural providers and those located in shortage areas have started the transition to Advanced APMs, GAO reported. About 109 percent more eligible providers have joined in Advanced APM between 2017 and 2019.

Additionally, most providers, regardless of where they were located, met program thresholds during the three-year GAO review and 88 percent of those in rural or shortage areas received the 5 percent incentive payment in 2017. That percentage increased to 92 percent by 2018.

However, overall participation is still low, causing concern for the success of the Quality Payment Program.

GAO performed a literature review and interviewed rural providers and rural healthcare stakeholders to uncover why the transition to alternative payment models has been a challenge for these providers. The challenges identified had to do with financial resources and risk management, data and health IT, staff resources and capabilities, and design and availability of models.

Financial resources and risk management

Most stakeholders (over half) agreed that providers in rural, shortage, or underserved areas lack the capital to finance the upfront costs of transitioning to APMs. Upfront costs include hiring additional staff, developing new care management strategies, and performing analyses to estimate a provider’s performance in an APM before joining one. Tight margins, however, have made it difficult for providers to shift away from fee-for-service, the report stated.

Relatedly, providers in rural, shortage, or underserved areas are more risk averse or do not have the reserves to cover potential financial losses from APMs. They also have smaller patient populations and limited control over referrals, and therefore total cost of care, compared to other providers. Both of these issues make achieving APM success a challenge, the report indicated.

Data and health IT

Rural providers and others in similar situations also lack the data analysis capabilities necessary for transitioning to APMs, most stakeholders said. This includes data analytics and financial modeling, both of which are necessary to assess performance in an APM.

EHRs also continue to be an issue for resource-strapped rural providers. EHRs “efficiently capture and share patient data in a structured format, which allows them to easily retrieve and transfer patient information to aid care,” GAO stated. However, EHR complexity and cost are challenges for rural providers, half of stakeholders stated.

Additionally, some rural providers lack access to high-speed internet, making EHR access in general a difficulty.

Staff resources and capabilities

Some stakeholders (less than half) told GAO that staffing has hindered the transition to APMs, too. Many practices in rural, shortage, or underserved areas do not have the staff members needed to manage the transition to APMs, let alone participation. Research also suggested that existing staff may already be overburdened with administrative tasks.

Similarly, GAO found that some of these providers may lack education and awareness about APMs.

“These providers may not have an understanding of the structure of individual APMs, are too busy treating patients or handling administrative issues to learn about them, or may not see APMs as relevant to them, some stakeholders said,” the report stated.

Design and availability of models

Rural providers and others in similar situations do not have the same access to APMs as other providers, according to some stakeholders interviewed for the report. APMs are simply not available everywhere because of geographic or participation limitations. In the Medicare Shared Savings Program, for example, an accountable care organization (ACO) must have at least 5,000 Medicare fee-for-service beneficiaries assigned to the ACO. The threshold is unattainable for many rural providers, one stakeholder pointed out.

Additionally, there are not many APMs designed specifically for providers in rural, shortage, or underserved areas. These providers also face challenges with changing model requirements when they do participate in an APM, GAO stated.

How to support the transition to APMs

GAO identified several ways that the federal government has or can support rural providers as they transition to APMs.

First, CMS has provided, or plans to provide, upfront funding to some participants in certain APMs. One example is reimbursing providers “predictable, upfront payments through global budgets,” GAO stated. Rural ACOs will also be eligible for upfront funding through the Shared Savings Program and the Community Health Access and Rural Transformation Model’s ACO Transformation Track.

Technical assistance has also been made available to some rural providers. The Pennsylvania Rural Health Model, for example, provides data analysis capabilities for rural hospitals. CMS also plans to offer technical assistance through the Community Health and Rural Transformation Model’s Community Transformation Track for up to 15 lead organizations.

GAO pointed out that features of certain APMs can also support rural providers. These features include all-payer ACOs, care transformation organizations (Maryland Total Cost of Care Model), care coordination assistance (Vermont All-Payer ACO Model), and non-EHR tracks (Radiation Oncology Model).