Are Federal Health Officials Fed Up With Providers’ Unwillingness to Take on Downside Risk?
Something quite curious has been happening in federal healthcare policy recently, involving comments made by senior federal healthcare officials about the progress—or lack thereof—of the accountable care organizations participating in the various ACO programs sponsored by the Centers for Medicare and Medicaid Services.
To frame this curious set of comments, let’s first look at what Healthcare Informatics Managing Editor Rajiv Leventhal wrote in an article published here on May 7. I’m going to quote the entire article here, both out of fairness, and because the conceptual frame of this is important. Here’s what he wrote:
“At this week’s American Hospital Association (AHA) annual membership meeting, CMS (the Centers for Medicare & Medicaid Services) Administrator Seema Verma asserted that “upside-only” ACOs that do not take on downside risk are not producing good enough results.
Verma delivered a keynote at the Washington, D.C.-based meeting on May 7, where she stated, according to a CMS transcript of the comments, “In addition to developing new models that align with our principles, [HHS Secretary Alex Azar and I] have been reviewing models launched under the prior Administration. We’ve looked at CMS’s accountable care organizations, or ACOs,” Verma said.
More specifically, Verma did note that some ACOs have indeed taken on significant downside risk. “These ‘two-sided ACOs’ have shown significant savings to the Medicare program while advancing quality. And we applaud this success and support the boldness of providers that participate in these models,” she said.
That’s the glass-half-full perspective, however. On the other hand, Verma also remarked in her keynote that “the majority of ACOs, while receiving many waivers of federal rules and requirements, have yet to move to any downside risk. And even more concerning, these ACOs are increasing Medicare spending, and the presence of these ‘upside-only’ tracks may be encouraging consolidation in the market place, reducing competition and choice for our beneficiaries. While we understand that systems need time to adjust, our system cannot afford to continue with models that are not producing results,” Verma said.
When ACOs are in a one-sided risk model, they do not share losses with the government when they overspend past their benchmarks, but they do share in the gains. As such, in these one-sided risk models, CMS is on the hook for the losses all on its own.
To this point, there has been recent analysis of Medicare ACOs—specifically the Medicare Shared Savings Program (MSSP)—that supports Verma’s remarks. A study from Washington, D.C.-based consulting firm Avalere, published in late March, found that downside-risk models in the MSSP model (Tracks 2 and 3) have experienced more positive financial results than upside-only ACOs in this model, indicating the potential for greater savings to CMS over time as the number of downside-risk ACOs increases. Specifically, ACOs in the upside-only model (MSSP Track 1) increased federal spending by $444 million compared to the downside-risk ACOs (MSSP Tracks 2 and 3) that reduced federal spending by $60 million over five years, according to that analysis.
Indeed, as it stands today, MSSP Track 1 remains by far the most popular option for ACOs, representing 82 percent of all MSSP ACOs in 2018. Recently, the National Association of ACOs, the American Medical Association (AMA) and others jointly signed a letter requesting that CMS allow certain ACOs to continue in MSSP Track 1 for a third agreement period before having to move to a two-sided risk model.”
And those comments by Administrator Verma, and published results coming out of Avalere in March, followed on the heels of comments that she herself had made in a keynote address to the World Health Care Congress in Washington, on Monday, April 30, when, as I reported on that day, she said, “A looming healthcare crisis on the horizon. When I say crisis, I’m not engaging in hyperbole. Spending growth higher than overall economy” continues apace, Verma noted in that speech. “By 2026, we will be spending of every five dollars on healthcare. That means healthcare spending will crowd out other priorities,” she noted, such as infrastructure, defense and education. “And for every American citizen, it means that more and more dollars will go to higher premiums, deductibles, and copays. The bottom line is that our system is unsustainable; and there’s no easy solution.”
What’s more, Verma said, healthcare spending inflation is growing at the same time that outcomes are not improving relative to those of other countries. Given the lack of demonstrated value for spending, Verma told her audience two weeks ago today that action is necessary, adding that “President Trump agrees. To that end, he has encouraged us to take bold action to increase quality, improve outcomes, and lower cost. Those are not new concepts,” of course, she said, but the key will be to increase value in healthcare, and use the power of CMS payment to force a march towards that value.
And then, just two days later, on Wednesday, May 2, Health and Human Services Secretary Alex Azar echoed some of the same sentiments that Verma had made, in his speech to the World Health Care Congress, in which he cited accelerating the value-based transformation of the U.S. healthcare system and addressing the cost and quality of U.S. healthcare as two of the top four priorities for his agency, along with addressing the opioid abuse crisis.
Indeed, Secretary Azar said in that speech, “We at HHS know that the idea of value-based transformation is not new. President Bush, in whose administration I served, and President Obama, both worked on this. I personally worked on this under Mike Leavitt,” a Bush Administration HHS Secretary. “HHS has often lagged behind the private sector, where so many of you have made so much progress,” he said. “Everyone here recognizes that the current system will not last,” as it has become unsustainable because of its cost.
What’s more, in that same speech at the World Health Care Congress, Azar emphasized strongly that he was interested in pushing forward existing alternative payment models, while highlighting the CMS announcement from just a week earlier (April23), that CMS was going to try to develop a path to direct provider (physician) contracting under Medicare.
Referencing that announcement, Azar said on May 2 that “The final two areas of innovation we are focused on are engaging in new models of payment for Medicare and Medicaid, and removing obstacles to innovation.” In that, he said, “We’re going to think big and bold. Alongside the 1,000-plus comments we released, we’re going to focus on direct provider contracting in Medicare. These can offer the opportunity for seniors to receive convenient, accessible care from the physician they know, at a reasonable cost. We look forward to consulting with all of you on how these arrangements might work,” he said. “The direct provider contracting proposal also reflects our interest in reducing burdens on providers, especially on those that might impede care coordination.”
And then there’s this: last week, at the HLTH Conference in Las Vegas, Bruce Greenstein, HHS’s Chief Technology Officer, answered a question from Rasu Shrestha, M.D., chief innovation officer at the Pittsburgh-based UPMC, in an interesting way.
In the middle of a discussion taking place under the session title, “U.S. Government Investing in Health Innovations,” Dr. Shrestha had questioned Greenstein about Seema Verma’s comments about MSSP ACOs not moving quickly enough, and had referenced a survey just published, which found that 71 percent of the leaders a organizations belonging to NAACOS, the National Association of ACOs, said that they would consider dropping out of the MSSP program if forced into downside risk.
Greenstein’s response to Shrestha’s question? “The government is making the market more fertile, to enhance value. Medicare Advantage plans, second area. Every year, we’re increasing the number of people in MA plans. Large plans, some national, some local, are investing in that area. Large plans buying vertically integrated provider organizations, making investments in the social determinants of health. We’ll continue to see innovation on the payment side and on the delivery side, we don’t’ tell them what to do. And we’re continuing to use our authority at CMMI [the Center for Medicare and Medicaid Innovation] to do innovative delivery models. It’s really about value. In this case, value does not have to equal risk. What do we think about as value? Quality, affordability, and consumer-centricity.”
That means, Greenstein continued, that the federal government is trying to improve choice and quality in healthcare. “So with this, we have the ACO model,” he said. “You just referenced a press release where 71 percent of the ACOs said if there’s downside risk, they’re likely to leave this program. Well, maybe this program is not for you. Because if you only want a little bit of extra money but don’t want to take risk, maybe this isn’t the program for you. There’s no ‘A’ for effort here; you have to produce results.”
What does it all mean?
Now, it’s quite possible that all of these federal healthcare officials were doing a bit of posturing in their statements, particularly Seema Verma. After all, depending on how one views the federal ACO programs, ACOs are either moving forward A) very rapidly, B) at a reasonable pace, or C) altogether. It really depends on one’s perspective.
On the one hand, there were 480 ACOs participating in the MSSP program as of January 1, 2017; that doesn’t include the 51 ACOs in the Next Generation ACO program, or the nine that remained in the Pioneer ACO program until Pioneer was shut down last year. That’s 531 federal ACOs, more than some would have predicted would be operating at this point in time.
On the other hand, as referenced above, the Avalere analysis published in late March found that “ACOs in the upside-only model (MSSP Track 1) increased federal spending by $444 million compared to the downside-risk ACOs (MSSP Tracks 2 and 3) that reduced federal spending by $60 million over five years, according to that analysis.” And that is genuinely concerning.
So here’s where this gets really tricky from a federal healthcare policy perspective, because, really, what is the best way to accelerate providers into a willingness to take on downside risk? It’s clear that they can’t simply force providers to taken on downside risk—certainly not in any explicit way (though they might theoretically be able to figure out some indirect way to do so).
I have the feeling that the proposal for direct contracting between the Medicare program and individual physicians, is one of the levers that HHS and CMS officials are thinking of using to stimulate a rush on the part of hospitals, large medical groups, and integrated health systems, into downside risk, in the near future. The problem with that idea is that the physicians who might already be favorably disposed to taking on downside risk, are already those who are connected, by salary or contract, to integrated health systems, clinically integrated networks, or at least, relatively large multispecialty physician groups.
And the MIPS/MACRA requirements around quality reporting are already in place, with the prospects for them to become more rigorous, already in plain sight.
What won’t work will be any hectoring from HHS or CMS officials, no matter how well-intentioned. Physicians in particular already feel deeply oppressed by all the changes taking place right now on the policy and payment level in U.S. healthcare. Many are describing themselves as burned out and ready to leave the profession.
At the same time, we as a society are facing a massive, massive cost cliff, with, as the Medicare actuaries have pointed out, total U.S. healthcare spending expected to leap from $3.5 trillion in 2017 to $5.7 trillion in 2026—a 62.8-percent growth over nine years—and with total spending going from consuming 17.9 percent to 19.7 percent, of our gross domestic product, during that same time.
Meanwhile, on the Congressional level, this Congress is faced with the reality that massive, straight Medicare reimbursement cuts to providers, are simply not on the table. There is no political will among any federal officials right now for the straight implementation of such provider cuts; and members of both parties know, in a mid-term election year, that any move to enact massive provider pay cuts would only lead to rebellion on all sides.
So, we’re back to the Rubik’s cube-like nature of this dilemma: progress in accountable care at the federal level, while laudable, is simply not moving forward quickly enough to show the results needed, on a policy level, to allow everyone to declare a victory in the constant battle to pull out further “waste” from federal healthcare spending on hospital and physician services.
So the twelve months will be a fascinating time in federal healthcare policy, as senior officials from this administration grapple with the very complex issues facing them, as they attempt to force the U.S. healthcare system forward into value. The ancient Chinese adage about being cursed to live in interesting times certainly comes to mind.
