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Transform Care January 13, 2015

ACO Buzz: CMS Can Keep Innovators in the Game With Strong MSSP

CFO, Mount Sinai Health System

This latest installment in our ACO Buzz series is contributed by Oliver Wyman Partner Niyum Gandhi, who has worked on more than 20 healthcare transformation projects. Among them, he helped a Blue Cross Blue Shield create its strategy for accountable care organizations and recently guided a large physician group in a renegotiation of its contracts to align financial incentives with patient interests before redesigning its care delivery models. In this post, he continues with his analysis of the recent changes proposed by the Centers for Medicare & Medicaid Services (CMS) to the Medicare Shared Savings Program (MSSP):

If you’re a value-based healthcare provider, you need to be able to tap into the Medicare system. For one thing, it’s a huge part of the market, accounting for 20 percent of U.S. healthcare spending and more than a quarter of the average hospital’s revenue. For another, it consists disproportionately of the right sort of patients for improving population health—high-risk, potentially high-cost seniors. If you’re playing that game, looking to make your money by reducing the risk-adjusted cost of care, you need them.

The problem? Until recently, a healthcare provider could move to value-based care contracts with patients covered by commercial insurance or Medicare Advantage but not with patients covered by traditional Medicare. As a result, some key elements of value-based care models weren’t available under traditional Medicare. CareMore, for example, famously gives seniors strength training and helps fall-proof their homes to reduce hip fractures. That’s great, smart care, but those services aren’t covered by fee-for-service Medicare. Some of them can’t even be provided free of charge, because under the law, many freebies are considered inducements to consume care and are strictly prohibited. Even waiving copays on treatment for chronic disease—an important element of many patient-centered care programs—is out.

That’s why Medicare Advantage has been such a boon for innovative population health managers. Because MA places a risk-bearing entity, typically an insurance company, between CMS and the practitioner, it has relieved CMS of much of the responsibility for policing the kind of care patients receive. It makes it possible for providers to use the most effective population management techniques on patient populations that benefit most. It gives them access to at least part of the Medicare market.

Small wonder that CMS now wants to build population health management into “original” Medicare through its ACO programs. But as we’ve discussed here and here, CMS’s largest and most accessible ACO program, MSSP, has had a hard time striking a balance between attracting less-experienced ACOs and appropriately rewarding well-established ones. What has worked successfully in a private insurance product like MA turns out to be much trickier in a straight government program. The result: When I talk with the best, most advanced ACOs, I hear a lot of discouragement and an increasing inclination to bail out of MSSP and maybe even stop accepting any patients under original Medicare.

How bad would that be? You can make a case that it really makes little difference at all. Patients who understand the value of ACOs will mostly continue to have access to them through MA, and if ACOs truly provide value, the patients will follow.

But there’s more to it than that. A more viable MSSP means that providers can more effectively move to risk across all of their populations. This may not be relevant for pure-play MA providers like CareMore, but it matters immensely for traditional health systems looking to migrate.  They need to be able to flip their largest single payer to risk.

And think what happens if they can’t move Medicare patients to risk: As they develop new care models that rely on services Medicare doesn’t reimburse, they’ll have three choices: (1) provide services they legally can to Medicare beneficiaries even if fees they receive don’t adequately cover costs, (2) stop providing additional services to Medicare beneficiaries and create a tier of less effective care, or (3) stop seeing Medicare patients. My sense is many will choose option three. That would be very bad news.

CMS can’t force beneficiaries to use higher value care delivery providers; it has to create a market where the best, most valuable care will prevail. But that means we need the best value-based players to remain in traditional Medicare. CMS, to its credit, seems to understand that. Its latest proposed changes to MSSP mostly go in the right direction—toward the MA model. If CMS goes with the strongest of the proposals, it may be enough to keep the innovators in the game. If it goes with the weaker version, we might start to see the exodus begin. That won’t be the end of Medicare reform, but it will be a setback. Let’s hope CMS hangs tough.

A more viable MSSP means that providers can more effectively move to risk across all of their populations. This may not be relevant for pure-play MA providers like CareMore, but it matters immensely for traditional health systems looking to migrate.  They need to be able to flip their largest single payer to risk. – Niyum Gandhi, Oliver Wyman

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