Value Based Payment

Feb 4-8: CMS Developing ESRD, Cancer Models

February 1, 2019 8:54 am

CMS Administrator Seema Verma also confirmed earlier reports that the agency waslooking to adjust its wage index formula used to annually adjust Medicare hospital payments to reflect labor prices in local labor markets.

Jan. 31—Changes coming in 2019 to federal healthcare payment models slowly emerged this week, as leaders prepare to address a national policy meeting in Washington D.C.

Alex Azar, secretary of the U.S. Department of Health and Human Services (HHS), plans to address Academy Health’s National Health Policy Conference next week on healthcare policy changes the Trump administration is undertaking.

But this week, another senior health policy leader, Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), indicated some of those new directions, which include coming payment models focused on end-stage renal disease (ESRD) and cancer.

“The new financing arrangements will be applied to primary care as well as different disease states and types of providers,” Verma said at the 2019 CMS Quality Conference. “It will focus on preventing the progression of disease and increasing quality of life.”

Verma said CMS’s shift to value-based payment “has been slow and it needs to speed up.” Specifically, she worried that only 14 percent of providers in Medicare are in value-based agreements.

“CMS has spent the last year developing a new cadre of models and a strategy to increase provider participation,” Verma said.

The new models recognize that not every provider is comfortable taking full risk and aim to create incentives to deliver low-cost and high-quality outcomes.

“CMS will be offering new opportunities for providers to accept higher levels of risk, and also new financial models that ease providers into value-based agreements,” Verma said.

Verma cited the effort to deliver additional “regulatory flexibility” to providers to get them to take on additional “accountability.” An example of that flexibility, she said, was the recent CMS overhaul of the Medicare accountable care organization (ACO) program.

But providers’ responses to that initiative were mixed, at best.

For instance, the new rules will require high-revenue ACOs to move to risk-bearing models faster than low-revenue ACOs. CMS said the distinction was designed to put more responsibility on hospital-run ACOs because they theoretically have more control over beneficiary spending than do physician-led ACOs. But a new analysis by the National Association of ACOs (NAACOS) concluded 16 of 134 physician-affiliated ACOs and 13 of 58 federally qualified health center-led ACOs would fall under the high-revenue category.

“The majority of ACOs are hospital affiliated (N=226) and for the most part these ACOs are designated ‘high revenue,’” the analysis stated. “For the physician-affiliated ACOs, on the other hand, about 12 percent (N=16) are designated ‘high revenue’ even though we would expect most providers in this category to be ‘low revenue.’”

NAACOS has raised concerns that inaccurately classified ACOs would lack the resources to take on financial risk and has urged CMS to scrap the distinction and the higher levels of risk that go with it.  

Other CMS Steps

Verma said CMS plans to spur participation in value-based payment models by developing templates for states and other payers to use its models to drive value in their own programs.

“Because, ideally, providers that are participating in models are doing so not only for their Medicare patients, but for all of their payers,” Verma said.

New CMS payment models focused on dual-eligible beneficiaries and rural Americans also are coming. The need for models specifically designed for the 12 million Americans dually eligible for Medicaid and Medicare was evident in the finding that 26 percent of their hospitalizations were potentially avoidable, according to Verma.

“Between CMS and the states, we spend over $300 billion each year on this population, but the financial incentives between the two programs are often misaligned,” Verma said. “And as a result, we continue to see poor outcomes and poor customer experiences.”

Among the one in six Americans who live in a rural area, one of the biggest challenges is access to adequate health care, she said.

“And it’s no secret that many rural hospitals are struggling to keep their doors open,” Verma said about the 40 percent of rural hospitals with negative operating margins.

Due to those concerns, CMS is looking to adjust its wage index formula “to avoid exacerbating the already stark disparities between urban and rural providers.”

The administration’s plans to change Medicare’s approach to the wage index system—used to annually adjust Medicare hospital payments to reflect labor prices in local labor markets—were previously revealed in correspondence with the Office of the Inspector General of HHS.

CMS also aims to incentivize more efficient delivery of health care in rural areas, such as through greater use of telehealth.

“We are exploring a new rural demonstration that will assist local communities in designing a better system of care while improving access, quality, and sustainability through more value-based payment design,” Verma said. 

Monday, Feb. 4

Academy Health National Health Policy Conference in Washington, D.C. (through Feb. 5). Learn more.

Public workshop of the National Academies of Sciences, Engineering, and Medicine Committee on Evidence-based Clinical Practice Guidelines for Prescribing Opioids for Acute Pain. Learn more.

Tuesday, Feb. 5

NRHA’s Rural Health Policy Institute in Washington, D.C. (through Feb. 7). Learn more.

Webinar by the Centers for Medicare & Medicaid Services (CMS) titled “MIPS Quality Performance Category in Year 3 (2019).” Learn more.

Webinar by CMS titled “2019 MIPS Call for Promoting Interoperability Measures and Improvement Activities.” Learn more.

Conference call by CMS titled “New Electronic System for Provider Reimbursement Review Board Appeals.” Learn more.

Webinar by America’s Health Insurance Plans (AHIP) titled “Opportunities to Impact Social Determinants of Health through Wellness Programs.” Learn more.

Webinar by the Medical Group Management Association titled “Coding Essentials for the Non-Coder.” Learn more.

Wednesday, Feb. 6

Webinar by HFMA titled “Evaluating Operations and Optimizing Revenue Cycle Management for Health Systems.” Learn more.

Hearing by the House Education and Labor Committee titled “Examining Threats to Workers with Preexisting Conditions.” Learn more.

Conference call by CMS titled “New Medicare Card Open Door Forum.” Learn more.

Webinar by CMS titled “A basic overview of the Part D Payment Modernization Model.” Learn more.

Webinar by AHIP titled “Strategies for Improving Opioid Management.” Learn more.

Thursday, Feb. 7

Webinar by CMS titled “Hospital IQR Program FY 2021 Chart-Abstracted Validation Overview for Randomly Selected Hospitals.” Learn more.

Webinar by AHIP titled “Virtual Care Takes Center Stage for Health Plans.” Learn more.


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