July 29 2019 Amrita Sehgal

Part I: CMS’ New Payment Models: The Basics

Late last year, CMS overhauled the Medicare Shared Savings Program, re-branding it as “Pathways to Success” and re-designed with a pre-determined path toward downside risk for Medicare ACOs. This spring, CMS followed by unveiling five new payment models with the most advanced opportunities for risk-sharing to date. After a long period of mostly talk, these changes from CMS clearly demonstrate their commitment towards migrating Medicare ACOs as a whole into downside risk. Amidst these bold changes, ACOs need to quickly develop a strategy for payment model participation. But first, it’s important to understand the basics of the models that we do know, and the details that we all still await from CMS.

What is new in Pathways to Success?

Pathways to Success overhauls the legacy Medicare Shared Savings Program:

  • Sets all participating ACOs on a pre-determined path to downside risk-sharing. ACOs must move from upside-only tracks (previously MSSP Track 1) into increasing levels of downside risk with time
    • 1 year for ACOs who were previously in MSSP
    • 2 years for new ACOs
    • 3 years for physician-led or rural ACOs.
  • Creates an opportunity for higher shared savings rates as ACOs take on more risk
  • Expands access to telehealth services in a patient’s place of residence
  • Requires ACOs to provide written documentation explaining their ACO to beneficiaries
  • Allows ACOs to offer incentive payments to beneficiaries for keeping good health
  • Payment benchmark now incorporates regional Medicare spending

What are the new Direct Contracting models?

The five new payment models begin in 2021 and fall under two paths, Direct Contracting and Primary Care First.

Direct Contracting:

  • A similar construct to Medicare Advantage, but with contracting directly between CMS and ACOs.
  • Aimed at larger health systems, and organizations with experience in risk-based contracts.
  • Three capitation payment options:
    • Professional: Primary care capitation equal to 7% of beneficiaries’ risk-adjusted total costs of care, with 50% shared savings / losses. Patients assigned to an ACO by provider.
    • Global: Capitation for total costs of care with 100% of shared savings / losses. Patients assigned to an ACO by provider.
    • Geographic: total cost of care payments for a defined region – Patients assigned to an ACO by geography. CMS is still seeking input to finalize details in this model.
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