Are you ready for New York State Medicaid value-based payment models?

To ensure the long-term sustainability of its Medicaid program, New York State has launched an ambitious payment reform plan promoting use of value-based payment (VBP) models. This paper by Milliman’s Rebecca Johnson and Howard Kahn provides a high-level overview of the New York State VBP models, discusses the opportunities and challenges for providers considering participation in them, and highlights the needs for sophisticated actuarial, financial, and legal expertise to address the inherent business, legal, and operational risks.

Ropes & Gray’s Brett Friedman was also a co-author of this article.

CMS seeks to strengthen MSSP integrity with Pathways to Success

The initial structure of the Medicare Shared Savings Program (MSSP) allowed accountable care organizations (ACOs) to avoid sharing any losses for a limited time, so that ACOs could experiment with the MSSP without facing potentially serious financial outcomes if they were not able to achieve savings. The Centers for Medicare and Medicaid Services (CMS) has since detected several ways it believes ACOs are acting within the letter of the rules of the MSSP but not necessarily within the spirit. As a result, several facets of its proposed “Pathways to Success” rule aims to bolster the integrity of the program.

In this article, Milliman’s Jason Karcher and Brian Sweatman discuss ways in which ACOs have been identified by CMS as weakening the MSSP’s integrity and how it is proposing to address these concerns.

How could the proposed “Pathways to Success” rule affect evaluation and management services in skilled nursing facilities?

In August, the Centers for Medicare and Medicaid Services (CMS) released a sweeping proposed rule that, if enacted, will significantly change the Medicare Shared Savings Program (MSSP).

Under the proposed rule, CMS will change how it determines whether evaluation and management (E&M) services were furnished in a skilled nursing facility (SNF), as opposed to a custodial (non-skilled) nursing facility setting, for purposes of beneficiary assignment to an accountable care organization (ACO). The change will cause minimal impact to physicians who do not primarily practice in a nursing facility setting, but there will be important effects for physicians who do:

• Most nursing facility-based physicians will see a material change in the number of assigned beneficiaries, with roughly one-third seeing an increase or decrease of at least 25%. Office-based physicians will see minimal impacts to the number of beneficiaries assigned to them as a result of this rule change.
• ACOs with nursing facility-based physicians will no longer need to focus attention on how to adjust their place of service coding practices to improve their MSSP performances.
• Nursing facility-based physicians who are in ACOs that have chosen retrospective assignment will be less penalized by the regional cost adjustment to their benchmarks under the proposed rule. However, the penalty will continue to be far greater than if the ACO were to choose prospective assignment.

In this paper, Milliman’s Anders Larson and Jill Herbold discuss the current and proposed rules related to E&M services in nursing facilities and then present an analysis of their findings.

Strategic use of population-based payments to enhance ACO care management

Population-based payments (PBP) provide Next Generation ACO model (NextGen) participants with an alternative funding mechanism that can be used to improve overall care management with the goal of achieving higher savings. Accountable care organizations (ACOs) that are able to negotiate payment structures with participating providers at a lower cost than the fee-for-service rates paid by the Centers for Medicare and Medicare Services (CMS) can generate additional income.

While PBPs are currently restricted to the NextGen program, if the payment method proves successful, CMS could introduce a similar mechanism to Medicare Shared Savings Program (MSSP) or other risk-sharing programs.

In this article, Milliman consultants Noah Champagne and Jason McEwen list the four alternative payment mechanisms that NextGen participants can elect, including PBPs and all-inclusive population-based payments (AIPBP). They discuss how ACOs can generate additional revenue by strategically employing these mechanisms and provide an example of a PBP arrangement.

Which ACOs will have a pathway to success under CMS proposed rule?

If enacted, the proposed rule from the Centers for Medicare and Medicaid Services (CMS) known as “Pathways to Success” will change the Medicare Shared Savings Program (MSSP) and affect all accountable care organizations (ACOs). The effect of the rule change will vary by ACO depending on each one’s current situation and unique characteristics—some ACOs will benefit from the change and others will not.

It is important for individual ACOs to consider their unique situations when assessing the impact this proposed rule will have on their organizations. In this article, Milliman’s Anders Larson and Cory Gusland highlight several key characteristics and considerations that affect most ACOs to identify potential winners and losers.

Medicaid state directed payment overview

In response to the Medicaid managed care final rule, several states have recently received approval from the Centers for Medicare and Medicaid Services (CMS) for state directed payments that support delivery system and provider payment reforms.

These arrangements allow states to require managed care plans to make specified payments to healthcare providers when the payments support overall Medicaid program goals and objectives. These arrangements provide a permissible mechanism for making supplemental payments in managed care programs as an alternative to pass-through programs. While pass-through programs were often opaque and not clearly understood by all affected parties, state directed payments enable states to coordinate value-based purchasing and other delivery system reform initiatives in managed care programs. These arrangements also allow states to coordinate value-based purchasing (VBP) and other delivery system reform initiatives in managed care programs.

As states consider options for state directed payments, it can be helpful to understand the types of programs that have been approved by CMS. In this paper, Milliman’s Jim Pettersson, Ben Mori, Luke Roth, and Jason Clarkson provide background on state directed payment arrangements based on their review of §438.6 (c) “Preprints” and supporting documentation for arrangements approved by CMS as of August 15, 2018.