Estimates of how the COVID-19 pandemic will financially affect the healthcare sector continue to evolve. Recent attempts to quantify the impact signal the likelihood that, for 2020, the reduction in spending associated with deferred care will outweigh in aggregate the increase in spending required to care for patients with COVID-19. However, at an individual provider entity level, the change in spending will vary based on a multitude of factors such as geography, the nature of services provided, and the demographics of the population served.
What does this mean for the mutual financial responsibilities created through value-based contracts? In short, for any given provider organization, the impact of COVID-19 on its value-based contracts will depend largely on certain actuarial, legal, and strategic aspects of each agreement.
In this paper, Milliman’s Cory Gusland, Anders Larson, and Brian Sweatman discuss 10 key questions that providers should be asking as they assess each of their value-based contracts during this uncertain time.
On January 9, 2018, the Centers for Medicare and Medicaid Services (CMS) announced a new voluntary bundled payment model, Bundled Payments for Care Improvement Advanced (BPCI Advanced). The model started on October 1, 2018, and CMS has indicated that there will be an additional opportunity for new entrants to start on January 1, 2020, with the application period opening in April 2019. BPCI Advanced replaces the current BPCI models, which have been in operation for five years.
The bottom line for organizations interested in pursuing BPCI Advanced is whether the potential rewards for participating offset the risks and costs associated with that participation. The BPCI Advanced program offers proactive industry stakeholders flexibility to develop innovative care and gainsharing models, even if they had not previously participated in BPCI. However, both new entrants and experienced entities in the bundled payment space will need to balance these opportunities with target price and contractual structuring considerations in order to determine how they are best positioned to participate in the program.
In this paper, Milliman’s Daniel Muldoon and Pamela Pelizzari examine several factors, which can influence an organization’s decision to enter BPCI Advanced, and, if appropriate, its decision to share risk with a convening organization.
Ropes & Gray’s Devin Cohen, Evander Williams, and Michael Lampert also co-authored the paper.
There are a variety of reasons why alternative payment models (APMs) can be more difficult to implement and manage in Medicaid, compared to the commercial or Medicare markets. Understanding these nuances and building strategies to address them is critical to the success of Medicaid APMs. An upcoming Milliman webinar hosted by Anders Larson, Rebecca Johnson, and Zach Hunt will focus on the challenges Medicaid payers face when attempting to establish APMs with providers. The webinar is based on their coauthored paper “Seven key challenges for Medicaid states considering alternative payment models.”
Title: Seven key challenges for Medicaid states considering alternative payment models
Date: Wednesday, February 27, 2019
Time: 2:00 p.m. EST
To register, click here.
While the use of alternative payment models (APMs) in the Medicare and commercial markets is prevalent, the use of APMs in the Medicaid market is low. There are several reasons why these models are more difficult to implement in Medicaid. Understanding the nuances of Medicaid APMs and building strategies to address them is critical to their success.
In this paper, Milliman’s Anders Larson, Rebecca Johnson, and Zach Hunt discuss seven key challenges that Medicaid payers face when trying to establish APMs with providers. The paper specifically focuses on shared savings/risk contracts based on total cost of care (TCOC) models. The following excerpt provides some perspective.
One challenge with any total cost of care model is that providers inherently take on some level of insurance risk due to random claims fluctuation that can influence results. This is true in the Medicare ACO models, which is why CMS uses a minimum savings rate (MSR) that varies by population size to limit its payments for “false positives.” This is likely to be more pronounced in Medicaid because of challenges with attribution, beneficiaries moving in and out of Medicaid, and a higher prevalence of zero-dollar claimants.
Population-based payments (PBPs) 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 lower costs 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 the 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 (AIPBPs). They discuss how ACOs can generate additional revenue by strategically employing these mechanisms and provide an example of a PBP arrangement.
Pharmaceutical manufacturers are facing increasing pressure over prices and value. The advantages of pharmaceutical alternative payment models (APMs) may be increasingly attractive to both pharmaceutical manufacturers and insurers. But pharmaceutical APMs are more nuanced and resource-intensive than traditional fee-for-service contracts that pharmaceutical manufacturers negotiate with payers.
Whether pharmaceutical APMs succeed or fail will depend on finding solutions to operational and logistical challenges, some of which are unique to the pharmaceutical industry.
Patient attribution is integral to any APM. In pharmaceutical APMs, patient attribution equates to adherence to a particular medication because patients cannot be expected to benefit from a product they do not use. But adherence metrics are imperfect, and the best way to calculate patient adherence differs by medication. There is also often inaccurate information in claims databases, an issue that plagues provider APMs but could be an even bigger challenge for pharmaceutical APMs.
Pharmaceutical APM targets based on real-world experience can be judged by comparing the targets to historical data. By contrast, clinical trial endpoints may not be well-defined in administrative data, so these should be used only after careful testing with real-world data. Otherwise, the real-world outcomes could be far from those expected.
Although sampling is not a common component of pharmaceutical business operations, measurements based on samples could be crucial for some pharmaceutical APMs, especially when it is impractical to obtain full population data.
Managing APM risk requires real-world data analytics to quantify the financial impact of outcomes. Although pharmaceutical manufacturers have expertise in data analytics for clinical trials and outcome research, successfully managing pharmaceutical APMs requires expertise in different quantitative skills—risk/actuarial analytics.
In this article, Milliman’s Maggie Alston and Bruce Pyenson discuss in more detail the valuable lessons for pharmaceutical manufacturers in provider APMs.