New bill seeks to boost participation in advanced payment models, ACOs via several reforms

Washington, D.C. National Capitol Building
A new bipartisan bill seeks to boost participation in advance payment models by increasing payments and adopting several reforms. (Getty/tupungato)

New bipartisan legislation aims to create more accountable care organizations by boosting the percentage of shared savings for new entrants and making a series of other reforms.

The Value in Health Care Act introduced on July 24 proposes several changes to Medicare’s alternative payment models. It would boost payments for not only ACOs but also extend bonus payments to clinicians working in advanced APMs.

“To increase the quality of care across the country we need to encourage value, not volume,” said Rep. Peter Welch, D-Vermont, one of the co-sponsors, in a statement Friday. “These commonsense changes will reward providers for delivering the value that patients need and expect.”

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One of the biggest changes would affect shared savings rates for newer ACOs. An organization agrees to take on financial risk and repay Medicare for not meeting savings targets, but gets a share of any savings.

That share increases the longer the ACO stays in the program.

“The vast majority of ACOs began in shared savings-only models before advancing on the path to risk-bearing models, and models need to remain attractive enough to create a pipeline for ACOs to assume risk,” a fact sheet on the bill said.

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In 2018, the Trump administration lowered the shared savings rate for newer ACOs in the basic track from 50% to 40%. The goal was to get ACOs to take on risk at a faster rate.

But the bill would return the shared savings rates to 50%. It would also raise the shared savings rates for ACOs that take on more risk in the basic track to 55% and 60%. Currently the rates for such ACOs are 50%.

The legislation comes as ACO advocates are worried about whether changes that the Centers for Medicare & Medicaid Services made in 2018 are causing a decline in participation.

The shared savings program had a dip in participation in 2019 for the first time since the program’s inception in 2012, according to an article in the journal Health Affairs from the National Association of ACOs.

Other reforms for ACOs and APMs proposed in the bill include:

  • Changing the benchmarking methodology to make it more fair. The current method would measure an ACOs spending against data for the region. But regional costs are from all beneficiaries in an ACOs region, “which essentially means that the ACO is being measured against its own performance,” according to a fact sheet on the bill. The bill would remove ACO beneficiaries from the regional benchmark.
  • Providing advance funds to new ACOs to help them get started. A major barrier to participation is high startup costs in clinical and care management. CMS previously would give money to ACOs up front and then recoup it from shared savings in the future. The bill would reinstate that program.
  • Extending a bonus payment for clinicians in advance APMs. Such clinicians get a 5% annual bonus on performance from 2017 to 2022, but after 2024, those bonuses expire and physicians would only get a 0.75% increase to their Medicare Part B payments. When the bonus expires, fewer healthcare providers will participate in the advance models so the bill would extend the 5% bonus for another six years.
  • Eliminating a distinction between a high and low-revenue ACO. CMS’ new “Pathways to Success” program, which governs ACOs, created a new distinction between the two but the lawmakers said that it is arbitrary and “create an inequitable path, and present disincentives for ACOs who are voluntarily working together to ensure that value-based care succeeds,” the fact sheet said.

Rep. Suzan Delbene, D-Washington, and Darin LaHood, R-Illinois, are the other co-sponsors of the legislation.

The bill got major support from 13 provider groups such as NAACOS, American Hospital Association, American Medical Association and Federation of American Hospitals.

"The policies in this bipartisan bill are more important than ever given the acute needs of our nation’s health care system as we navigate the COVID-19 pandemic," according to a letter from the groups to the bill's sponsors. "ACOs and other APM participants have been on the front lines supporting clinicians and patients throughout this crisis."

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