HHS Endorses Alternative Payment Model for Emergency Medicine

October 21, 2019 - ACEP, an association representing 40,000 emergency physician members, developed and submitted the Acute Unscheduled Care Model (AUCM) to HHS’ Physician-Focused Payment Model Technical Advisory Committee (PTAC).

Represented as a bundled payment model, AUCM would allow emergency physicians to play a leading role in managing the transition towards value-based care for Medicare and other payers. It would also improve quality and reduce costs by allowing emergency physicians to accept some financial risk for the decisions they make around discharge for certain episodes of acute unscheduled care. 

HHS Secretary Alex Azar agreed with ACEP. In a public comment letter, the head of HHS called the alternative payment model a “creative proposal… that focuses on the safe discharge of patients, follow-up care for 30 days post-ED visit, and hospitalizations or other avoidable post-ED visit events and their associated costs.” 

Azar also noted that he is “encouraged by submitters like ACEP who continue to help drive transformative innovation in American health care toward a value-based delivery system.” In light of his support, the HHS Secretary asked CMS’ Innovation Center (CMMI) to look into incorporating core concepts of AUCM into the APMs it is developing. 

Value-based care in emergency medicine paves the way for emergency physicians to finally be in a Medicare APM that is both meaningful to them and their patients. ACEP looks forward to working with CMMI as it carries out the HHS Secretary’s request.

A 2016 American Journal of Managed Care report stated that healthcare costs and hospital bills pile up faster in emergency departments because providers are acting as quickly as possible to diagnose patients. Therefore, providers tend to perform a wide range of tests, resulting in costs rising faster than in other care settings.

Researchers from Leavitt Partners emphasized that CMS should create alternative payment models for specialists. In 2017, the consulting firm found that emergency medicine providers had few Medicare alternative payment models available to them.

Developing Medicare value-based reimbursement arrangements will be a critical first step, as private payers tend to model their alternative payment models on CMS demonstrations.

The healthcare industry is moving to value-based care and reimbursement. The Healthcare Payment and Learning Action Network recently found that 34 percent of healthcare payments in 2017 were tied to an alternative payment model. CMS and other payers are moving more payments to value-based reimbursement arrangements, especially those with financial risk.

There is a major financial risk when transitioning from fee-for-service models to value-based payment. Unlike fee-for-service models, alternative payment models require providers to assume some level of financial risk as a way to emphasize the need to deliver efficient quality care.

In upside financial risk models, providers share in the savings generated under the model without the risk of paying back potential financial losses, while providers must refund the payer for the incurred losses if they exceed financial benchmarks under models with downside risk.

Two-sided risk combines both the upside and downside risk models. While upside risk structures are more popular for providers, CMS has begun implementing limitations on several of their value-based programs to encourage more downside risk. For example, the agency recently revamped its largest accountable care organization (ACO) model to push providers to assume downside financial risk sooner.

Downside financial risk is a risk for providers, but the rewards can be worth the trade-off. A group of 31 medical practices across eastern Massachusetts recently reported that it finished 2018 with a 2.1 percent operating margin on revenues of $1.89 billion, adding to the $24.4 million operating surplus from the previous year.

According to a May 2019 press release from the health system, Atrius Health Inc, risk-based payments are the reason why.

Risk-based payments have helped Atrius fund innovation from a robust analytics program and non-face-to-face encounters to a patient navigator initiative and a VNA home health care organization.

“Value-based care in an independent physician practice allows for innovation because we’re able to take a whole budget and think about how we’re going to move resources,” says Marci Sindell, senior vice president of external affairs.

This option has been limited for emergency medicine providers, but the new alternative payment model from ACEP can help providers in the specialty reap the rewards of value-based care.