Industry Orgs Urge CMS to Lower Risk for MACRA’s Advanced APMs

November 29, 2017 - Healthcare stakeholders recently encouraged CMS to reconsider the financial risk requirements for Advanced Alternative Payment Models (Advanced APMs), arguing that the risk criteria limit participation in the models.

Industry groups, including the American Hospital Association (AHA), American College of Physicians (ACP), and America’s Essential Hospitals, used the recent CMS call for feedback on the Innovation Center’s new direction to criticize MACRA’s Advanced APM pathway. The federal agency aims to move more eligible clinicians to alternative payment models by incentivizing participation in risk-based models that reimburse clinicians based on quality measures and certified EHR use.

However, the groups contended that the financial risk requirements are too stringent. Advanced APMs must be part of an expanded medical home or require participants to bear more than nominal financial risk for monetary losses. Nominal financial risk until the 2020 performance period is 8 percent of the average estimated Medicare Parts A and B revenues or 3 percent of the expected expenditures for which a participant is responsible under the alternative payment model.

Under current Advanced APM requirements, CMS projected as few as 10 percent of eligible clinicians to participate in the MACRA pathway in 2018.

To boost participation in the Advanced APM pathway, the AHA suggested that CMS expand their financial risk definition to include investment risk. Providers invest resources, time, and money for care delivery and practice transformations that align with alternative payment models. For example, an AHA study showed that a small accountable care organization (ACO) spends about $11.6 million on start-up costs and a medium ACO spends $26.1 million.

READ MORE: Understanding the Quality Payment Program’s Advanced APM Track

Despite the investment, clinicians in upside-only alternative payment models do not qualify for Advanced APM incentives. Like their peers in downside risk models, clinicians invest and implement the infrastructure for value-based care, such as data analytics, care management, and care redesigns, while attempting to meet financial benchmarks.

The benchmarks may also call on clinicians to reduce utilization of revenue-generating services, such as emergency department visits and hospitalizations. Consequently, clinicians tend to lose revenue until preventative care starts to realize savings.

“Providers participating in APMs accept the risk that they will invest resources to build infrastructure and potentially see reduced revenues from decreased utilization, in exchange for the potential reward of providing care that better meets the needs of their patients and communities and generates shared savings,” the AHA wrote. “This risk is the same even in those models that do not require the provider to repay Medicare if actual spending exceeds projected spending.”

Including investment as part of the risk definition would also allow Innovation Center alternative payment models that are not currently Advanced APMs to qualify.

If CMS does not accept the AHA’s recommendation, then the industry group called on the federal agency to modify existing Innovation Center models for Advanced APM inclusion.

READ MORE: Exploring Two-Sided Financial Risk in Alternative Payment Models

The American College of Rheumatology (ACR) echoed the AHA’s call for investments to be included as financial risk, arguing that the inclusion of investment risk would support small practice participation in Advanced APMs.

“The current nominal risk criterion makes it untenable for smaller practices to attempt the APM track,” the organization wrote. “Smaller groups engaged in physician-focused APMs cannot be expected to assume or be able to manage the same degree of financial risk as large organizations such as ACOs. We continue to urge CMS to allow the set-up cost of physician-focused APMs to serve as the financial risk, at least on an interim basis.”

CMS should also support small practices and clinicians working in rural or health professional shortage areas by reducing nominal financial risk requirements, the ACP contended. Clinicians in these settings should not be held to the same risk requirements as their peers in larger organizations with more resources. Therefore, the clinicians should face separate risk criteria.

The organization also pushed for CMS to qualify other patient-centered medical home pathways to qualify as Advanced APMs, including those that do not require clinicians to assume financial risk.

A flexible risk approach would also help safety-net hospitals join Advanced APMs, America’s Essential Hospitals told CMS.

READ MORE: Impact of Quality Payment Program on Medicare Reimbursement

Safety-net hospitals and other organizations that treat greater proportions of Medicaid and uninsured patients already face tight margins. The start-up funding to participate in alternative payment models should be considered when determining nominal financial risk.

In addition, many of the services required for alternative payment models, such as care coordination, care managers, and chronic disease management programs, are not always reimbursable. CMS should consider healthcare organizations in any alternative payment models with downside financial risk as qualifying Advanced APM participants.

Additionally, healthcare stakeholders emphasized that existing alternative payment models, as well as models for Medicare Advantage and other payers, are opportunities to increase Advanced APM participation.

CMS currently only looks at Medicare fee-for-service payments when determining Advanced APM status. But adding Medicaid and Medicare Advantage payments to the mix would benefit clinicians and the value-based care transition, the ACR stated.

Expanding alternative payment model options beyond Medicare fee-for-service will also create richer databases and reduce skewing of performance measures.

Although, the Federation of American Hospitals (FAH) warned CMS that legislative language in the MACRA implementation rule states that Medicare Advantage should be considered only as an Other Payer Advanced APM. Testing Medicare Advantage models may violate Congressional intent.

Instead, FAH advised CMS to focus on adding or expanding Medicare fee-for-service models. The organization specifically called for a new voluntary bundled payment that builds on the Bundled Payment for Care Improvement (BCPI) initiative.

CMS intended to launch a qualifying BCPI track in the next year. However, the federal agency has yet to release details of the model’s development.

FAH expressed concerns that the delay may slow the transition to Advanced APMs and value-based care as eligible clinicians favor the predictability of the Merit-Based Incentive Payment System. Clinicians may also not have enough time to prepare for the new model.