Last week, I was riveted to the deliberations on the Senate floor, as the fate of the Medicare Access and CHIP Reauthorization Act (MACRA – so far, more commonly called the “SGR fix”) was decided. One amendment after another failed to pass; the legislation ultimately passed by a vote of 92-8, and was signed into law shortly thereafter.

To date, much of the coverage of MACRA has focused on how it has fixed the “doc pay” problems of the last 18 years – rescuing us from a yearly round of negotiations about how to temporary avoid painful cuts in Medicare’s physician reimbursement rates.

It’s true that MACRA wiped out (and only partially paid for) the accumulated burden of postponed pay cuts. But it also took a huge step in ending the volume-based “fee-for service” payment system that the pay cuts were trying to restrain in the first place. In a volume-based health care world, the only way for the government and other payers to control runaway medical inflation is to make it harder for doctors to get paid (through rejected claims, paperwork, and prior authorizations), and to reduce the price they pay for each office visit, test, or medical procedure. Providers, paid less and less for each visit and service, can try to maintain their income by further increasing volume — seeing more and more patients in less and less time — or routing patients through increasingly questionable services, tests, and procedures. That is the dysfunctional state of US health care today, with patients caught in the middle of the arms race between those who pay the bills, and those who bill them– collateral damage.

This bipartisan legislation changes that. It gives teeth to the Administration’s ambitious payment reform goals of January along dual tracks. Doctors who want to continue to be compensated in the fee-for-service system will now be subject to the Merit-Based Incentive Payment System (MIPS, for those who enjoy snappy acronyms), beginning in 2019. The new payment system is a consolidation of three value-focused incentives already active in the Medicare reimbursement formula. Individual doctors will get bonuses (or penalties) based on a complex formula for calculating health care quality and cost scores.

The alternative Medicare track created by MACRA is meant to be more enticing. Doctors who engage in “Alternative Payment Models” like Accountable Care Organizations (ACOs) and bundled payments will become eligible for an additional 5 percent bonus tied to participation in these outcome-focused programs.

To put this in perspective, if a primary care physician who makes $200,000 per year from Medicare joins an ACO that seeks to deliver better care at lower cost, they would receive a bonus check of $10,000 per year – in addition to sharing in the savings they generate. I believe that these additional incentives, plus the opportunity to avoid the compliance-oriented “check the box” paradigm of the MIPS, will drive many physicians into the outcome-oriented Alternative Payment Models.

What does this mean for doctors – and patients?

Consider this simple example: a primary care physician can run a flu shot drive for her Medicare patients, which costs a total of $1,500 to operate. 300 patients participate, and as a result, three avoid hospitalizations during a bad winter. Because it has to cover three fewer hospitalizations, Medicare saves a total of $27,144.

In the old fee-for-service model, the doctor gets a small reimbursement for each flu shot, earning $567 from Medicare for administering these shots. Subtracting her initial investment, that primary care physician carries a $933 loss – even though her actions reduced the risk of disease for 300 of her patients, kept three of them out of the hospital, and saved Medicare thousands of dollars. The flu shot drive is in the best interests of her patients, and how this primary care doctor wants to practice medicine. But doing so is not in her financial interests.

Compare that to the Medicare ACO model – and other payment models elevated by MACRA. The doctor still spends $1,500 administering flu shots to 300 patients, and keeps three out of the hospital. But in this scenario, that primary care physician gets to split the $27,000 in Medicare savings – earning more than $13,500.

There are thousands of other examples just like this, where better care does lead to lower cost.

From a patient perspective, physician participation in ACOs or other outcome-focused systems can mean that doctors are more accessible, and more informed. Physicians will now have incentive to truly manage their patients’ total care. It means that instead of heading to the ER, patients are able to get same-day appointments or after-hours care. In the event a patient is admitted to the hospital, it means his or her doctor is aware of the admission or discharge, and can follow up appropriately to avoid readmission. It means primary care physicians will learn which specialists provide the best evidence-based, and most efficient care.

If they seize this opportunity, doctors who are sick of the current flawed incentives will be able to prosper by practicing medicine they way they’ve always wanted. And those who will benefit will not only be us – as taxpayers – but patients. As the quality of care will rise, the cost of care will come down.

The early results from the ACO program are hopeful, and the Centers for Medicare and Medicaid Services has established their commitment to evolving the program. But these are still uncharted waters. Physicians must not only be encouraged to sign up for alternative payment models, they must also be given the tools to succeed. Policymakers and physicians must protect patients from the risk of stinting as incentives shift. But one thing we know for certain is that the fee for service system is toxic, and previous attempts at cost control within that framework have failed.

We must all work to ensure that this new law will accelerate the ongoing transformation – leading the way towards a health care system that delivers better health at a better cost, to the benefit of us all.

The public comment period for the first changes to the Medicare Shared Savings Program closed last week. According, 275 comments were received. This includes Aledade’s and those from the Health care Transformation Taskforce where we represent independent primary care physicians. Many other organizations such as the National Association of Accountable Care Organizations (NAACOS), the Brookings Institution, and others submitted detailed comments on the first opportunity to improve the Medicare Shared Savings Program since its inception three years ago.

We are pleased to report that every issue we were on the look out for was addressed in the proposed rule.

However, when the rule came out we were quick to note that CMS’s decision to present options for many issues, but no specific proposal would require the ACO stakeholder community to come together behind an option to a level that is difficult to achieve.

We are please to report that everyone is singing the same song on a lot of major issues. Near universal agreement that:

  • Medicare beneficiaries should have the option to choose their primary care provider
  • Two-sided risk must become more attractive if ACOs are to choose it and the proposed Track 3 is a good model
  • Acknowledging the critical role NPs, PAs and CNS play in primary care by moving them to step 1 of the assignment model
  • Getting more timely, accurate and complete data is an ongoing process that CMS should continually work to improve and never settle for yesterday’s solution
  • All ACO formulas and calculations included risk adjustment should be completely transparent (i.e. CMS should provide the code used not details on how someone could recreate the code)

CMS should finalize these policies in their proposed rule. Many commenters even gave CMS specific implementation blueprints for these ideas. For an example, the HTTF comments outline a proposed process for Medicare beneficiaries to choose their primary care provider.

Now to dig into some of the other ideas that have universal support at the concept level, but not the detail level. Everyone supports the option for a benchmark not based on the ACO provider’s historical costs, but rather based on a risk-adjusted regional benchmark. However, some commenters want this to be an individual choice that each ACO makes (i.e. choose a historical cost benchmark or regional benchmark) with no requirement to move to regional. Others believes that all ACOs should move to a regional benchmark, but they are divided between requiring a defined transition path or letting an ACO choose their transition path. We believe the regional benchmark is the future of the MSSP program and that a clearly defined transition path for all ACOs provides the most certainty to CMS, the public and to current/future ACOs.

Risk adjustment is another area where the details see a little divergence. All commenters believe that risk adjustment should be allowed to move up as well as down. However, they debate on how far should it be able to go up – limited to a national average or free floating. There is also debate on should the risk adjustment model look more like Medicare Advantage (MA), move to a true concurrent model or other alternatives. We believe that risk scores should move up, but be capped to prevent rewarding coding practices over excellent care. MSSP is a unique program with distinct differences from MA and we are wary of moves to MA simply due to CMS and provider familiarity with it.

The last area with complete conceptual agreement, but some differences in the details is the continuation of a one-sided risk option. Every comment we have read supports the continuation of one-sided risk; however, the details vary. Some commenters representing large, but specific constituencies such as NAACOS support allowing nearly any ACO to continue. Other comments from policy shops like Brookings, where two-sided risk is cherished, suggest tougher requirements such as requiring an ACO to have achieved one year of shared savings in order to continue in one-sided risk. We believe the most important aspect of the continuation of one-sided risk is the recognition that ACOs come in all sizes and forms.

We suggested three policies to encourage ACOs with large institutional partners (hospitals or health plans) to move to two-sided risk. First, require that ACOs with large institutional partners have achieved shared savings in at least one of the three years of the first contract. Second, require that ACOs with large institutional partners explain in their application for their second contract why it is not financially feasible for them to move to two-sided risk. Third, evaluate ACOs for market consolidation and require ACOs that dominate their local health care market to move to two-sided risk. These policies will prevent large institutions and dominate market players from “squatting” in one-sided risk. For other ACOs we would encourage CMS to finalize its proposed requirements for all other ACOs.

Finally, we end on one of those rare opportunities to have your cake and eat it too. ACOs are divided over whether prospective attribution or retrospective attribution is better. Some ACOs crave the certainty of the prospective attribution. Others ACOs balk at the idea that a beneficiary who didn’t receive care from them would be in the ACO or that a beneficiary who did receive care from them would not be. Both are concerned with uncertainty. Few things are more valuable than certainty

However, this is not an either/or situation. The closer the prospective attribution matches the retrospective attribution, the more certainty everyone has.

Therefore, we suggest that the path forward is to refine prospective and retrospective attribution so that the difference between the two disappears. HTTF, Brookings and Aledade included proposals that would improve attribution.

CMS proposed some great changes to the MSSP as evidenced by the quite astounding level of support for many of the changes. We encourage CMS to acknowledge the conceptual support so many policies enjoy and urge them to mine these thoughtful comments for details on how to implement these policies so that they will have the desired effect.

Fair warning these are the comments on a regulation straight up. We will be doing a blog style version on Monday.

February 6, 2015

Marilyn Tavenner, Administrator

Centers for Medicare & Medicaid Services

Department of Health and Human Services

Hubert H. Humphrey Building

200 Independence Avenue, SW

Washington, D.C. 20201

Re: CMS-1461-P Medicare Program; Proposed Rulemaking for the Medicare Shared Savings Program

Dear Administrator Tavenner,

Aledade ( helps independent physicians make the transition to value based purchasing. Value based purchasing is unquestionably the future payment mechanism for health care. The new Medicare is leading the way in the move to value through the Medicare Shared Savings Program. We appreciate the true partnership of CMS with physicians to create a better payment model and ensure safety for all.

Shared savings is a powerful model that aligns incentives for the provider, the beneficiary and society in a way never before achieved on such a scale. However, shared savings may be a bridge to other models that align incentives even more and/or reduce the massive administration effort that fee for service requires. We look forward to participating in the Health Care Payment Learning and Action Network as that future is explored.

As part of that learning, we applaud CMS for outlining proposals to continue to improve and adopt the shared savings program making it more equitable, strengthening the alignment of incentives between providers, beneficiaries and society and potentially providing much needed certainty to the businesses who want to learn how to take risk.

Aledade was created to put primary care doctors at the center of this move to value. It’s good for patients who will find that their trusted primary care doctors are more available and better informed than ever before. It’s good for doctors who want to practice the best medicine possible, the way they have always wanted to. It’s good for businesses and health plans looking for health care partners that deliver the highest possible value and outcomes. It’s good for the country as higher quality; lower cost care will lessen the strain on our budget and our economy.

To this end, Aledade proudly represents small, independent physician practices as part of the Health Care Transformation Task Force ( and is a signatory to its comments to CMS. We offer our brief framing for areas covered by the taskforce and comment in depth on several other issues in the NPRM not covered by the Task Force. Thank you for your partnership in this unprecedented effort in health care.

Program Evolution

ACOs come in all sizes and forms. Some are set up by organizations with a history of taking on risk, others are created by small physician practices banding together. Risk management is not taught in medical school and physician practices do not have actuaries on staff. Acknowledging these differences with different policies when seeking to encourage providers to two-sided risk will ensure a needed diversity of ACOs.

Recent results in the ACO program highlight the need to differentiate particularly when it comes to move to two-sided risk. Many organizations have merely hedged their bets with low-regret moves like buying up practices and forming organizations that are Accountable Care Organizations (ACOs) in name only. These actions consolidate a health system’s referral base, but administrators do not employ strategies to reduce costs, which are their revenues. Put differently, these “ACO squatters” say there are embracing new payment models, but remain stuck in the mentality of the do-more, get-paid-more system.

Unfortunately, this strategy is already too widespread, and likely to grow as long as large organizations are allowed to continue in “one-sided” (upside only) shared savings models. Defensive moves by hospital systems provide a veneer of action, while consolidating regulator-blessed market dominance that can increase costs without improving quality at all.

We suggest three policies to encourage ACOs with large institutional partners (hospitals or health plans) to move to two-sided risk. First, require that ACOs with large institutional partners have achieved shared savings in at least one of the three years of the first contract. Second, require that ACOs with large institutional partners explain in their application for their second contract why it is not financially feasible for them to move to two-sided risk. Second, evaluate ACOs for market consolidation and require ACOs that dominate their local health care market to move to two-sided risk. These policies will prevent large institutions and dominate market players from “squatting” in one-sided risk.

With nearly all ACOs choosing one-sided risk and CMS projections of 90% continuing to do so, small tweaks like floating the MSR/MLR rate in track 2 (something that would have only affected 13 2012/2013 ACOs) or reducing the savings rate for ACOs in their second contract year simply will not change ACO behavior. Only bold actions like the increase in shared savings rate in Track 3 and rewarding quality with higher savings will truly shift the business equation all ACOs must compute when considering two-sided risk. We encourage CMS to finalize these policies with the tweaks presented in the Task Force’s comments.

We recommend that CMS finalize the new track 3 with its enhanced shared savings/losses.

We recommend that CMS account for ACO characteristics of institutional partners and market dominance when considered applications for a second one-sided risk contract.


An accurate benchmark is the single most important number for an ACO. Working against a benchmark that does not reflect the true expected costs of the population makes savings either too hard to achieve or too easy to achieve. Savings should be achieved through successful ACO interventions to improve care, improve health and remove waste. The accuracy of the benchmark determines whether that is true.

Risk adjustment is currently used to predict whether last year’s actual costs or regional costs are a good indicator for the expected costs for a specific ACO population. CMS should itself and with partners make the accuracy of risk adjustment methods a subject of continual study and improvement. One programmatic improvement to MSSP is to allow risk adjustment to adjust the benchmark up or down for all beneficiaries.

We acknowledge that the current model relies on coding that can be subject to manipulation. As with Medicare Advantage (MA), we believe the best solution is to manage the manipulation (through an adjustment or possibly capping upward risk adjustment at the national growth rate) rather than taking upward risk adjustment out of the benchmark and losing the corresponding accuracy.

CMS should also consider when things outside of an ACO’s control might reduce the accuracy of the benchmark. For example, if there is massive consolidation in a market or within a given specialty in the market that could significantly reduce the accuracy of the benchmark from the historical benchmark. CMS should monitor for these effects and explore possible policy solutions.

We believe that a move to regional benchmarks makes the program more sustainable and appropriately shifts the incentives away from being better than last year to being better than a peer group over time. We recommend the following transition schedule for all ACOs:

Transitioning from ACO historical costs to regional benchmark: Two paths

  1. Below regional benchmark at the end of the first contract
    1. 2nd contract: 50% (Historical Benchmark) / 50% (Regional Benchmark)
    2. 3rd contract: 20% (Historical Benchmark) / 80% (Regional Benchmark)
    3. 4th contract: 100% (Region)
  2. Above the regional benchmark at the end of the first contract
    1. 2nd contract: 80% (Historical Benchmark) / 20% (Regional Benchmark)
    2. 3rd contract: 50% (Historical Benchmark) / 50% (Regional Benchmark)
    3. 4th contract: 20% (Historical Benchmark) / 80% (Regional Benchmark)
    4. 5th contract: 100% (Regional Benchmark)

We recommend that CMS allow for risk scores to go up as well as down for continuously enrolled beneficiaries. To protect against coding related fluctuations, CMS should cap how much a risk score can go up for an ACO at the national rate of growth in risk scores.

We recommend that CMS finalize the transition to a regional benchmark over the course of several contracts (option 5) for all ACOs.

Regulatory Flexibility

We encourage CMS to look at each waiver for its appropriateness for all ACOs individually. While some waivers may only be appropriate for two-sided risk, others (such as tele-medicine) may be more applicable to all.

We recommend that CMS finalize all proposed waivers for all ACOs in two-sided risk.

We recommend that CMS evaluate each waiver individually for appropriateness for some or all ACOs in one-sided risk.

We recommend that CMS explore the possibility of allowing waivers in benefit design (i.e. waiving the co-pay for Chronic Care Management) and beneficiary assistance (air-conditioning, gym/wellness, transportation, home accessibility) for two-sided ACOs.


Currently, CMS only acknowledges primary care physicians when beneficiaries vote with their feet by walking through the practice’s door. However, there are many times where for a particular year that may not be an accurate reflection of the beneficiary’s wishes and normal care pattern. Simple and common examples, such as dealing with an acute illness or condition requiring specialized evaluation and management services, extended time away from primary residence, low health care utilizers where a single service plays a big role in determining the plurality of primary care services, or primary care physician (PCP) switching for a patient when they enter a skilled nursing facility (SNF), etc. all could lead to inaccurate attribution. Beneficiaries should be able to also vote with their voice and declare that despite the data from a single, peculiar year, “this physician, this nurse practitioner, this physician assistant is whom I have a special relationship with, this is who I want to coordinate my care.” Thus we promote patient engagement and make known an active patient and physician relationship.

We present specific suggestions on how to accomplish this in the Task Force Comments.

ACOs are divided over whether prospective attribution or retrospective attribution is better. Some ACOs crave the certainty of the prospective attribution. Others ACOs balk at the idea that a beneficiary who didn’t receive care from them would be in the ACO or that a beneficiary who did receive care from them would not be. Both are concerned with uncertainty. Few things are more valuable than certainty. In a prospective model, the ACO is certain that the resources they expend will be on beneficiaries for whom they are accountable. In a retrospective model, CMS is certain that the beneficiaries on which they pay out savings received services from the ACO and it is on the basis of those services that the savings were generated and not due to beneficiary selection by the ACO. Similarly, the ACO is certain that the beneficiaries on whom savings are based received services from the ACO.

However, this is not an either/or situation. The closer the prospective attribution matches the retrospective attribution, the more certainty everyone has.

Therefore, we suggest that CMS not only institute a prospective option, but also seek to improve prospective attribution. Currently, CMS reports a 24 percent difference between the two. However, that decreases to 17 percent after accounting for eligibility. It is in that 17 percent where the uncertainty lies.

We suggest that the path forward is to refine prospective and retrospective attribution so that the difference between the two disappears. For example, CMS could exclude from the prospective attribution list beneficiaries who move away during the year and those who begin a long-term care arrangement that causes a change in their primary care physician.

We urge CMS to implement a mechanism that will allow beneficiaries to choose their primary care physician and thus their ACO participation.

We recommend that CMS aggressively evaluate refinements to attribution that bring prospective and retrospective attribution closer together.

We recommend that CMS establishment prospective attribution for ACOs updated annually even as it works to bring the two methods together.


In summary more of it, delivered more timely and more transparently. Data powers the interventions that make a difference in care, health and costs in a timely fashion.

We urge CMS to make open source its actual code for all formulations in the ACO program.

CMS should work with the Office of the National Coordinator for Health Information Technology (ONC) and industry to reduce the cost and burden for providers to access, aggregate, and exchange clinical information from their certified electronic health record. In particular, the certification criteria 45 CFR 170.314(b)(7) – Data Portability seems to hold a lot of promise for population health, but in reality has not proven to be a reliable gateway to the information contained in the certified electronic health record.

The other very promising technology is reliable admission, discharge and transfer feeds. Supporting technology for ADT feeds is established and the purpose they serve should not be underestimated. By serving as a trigger for transition of care management, a simple alert from an ADT triggers a cascade of action that can prevent readmissions, coordinate care and prevent future inappropriate emergency department use. This cascade requires a trigger and that trigger is ADT feeds. CMS should work with ONC to encourage ADT feeds in every state. CMS should also explore other opportunities such as the State Innovation Models to support this simple, yet very powerful tool.


Attachment 1: Table of Comments on CMS Proposals

Rule Section Proposed Change in the Regulations Aledade Comments
II.A.2 Corrections to ACO participant, professional, provider/supplier, assignment, and hospital definitions. Other definitions have their changes in their own sections. Concur
II.B.1 Agreement Requirements: List of required elements, emphasis on the one year term Concur
II.B.2 5000 Bene Min: Allowing for the corrective action plan to be in a year specified by CMS rather than it having to be the next performance year. Not necessarily requiring a CAP if the ACO has already submitted participant additions We applaud CMS’s efforts to work with smaller ACOs to maintain their participation in the MSSP program.
II.B.3 This puts into regulation text the previous sub-regulatory guidance that CMS will not remove a terminated ACO participant from the calculations and reporting requirements. This provides an opportunity to make the case that such a participant should be excluded especially if they terminate early in the year. We understand the desire of CMS to not allow ACOs to use participate removal as a financial tool. However, we see no reason why a participant that has left the ACO should be included in quality reporting. The ACO has lost its influence and access to the practice and its information. Including them in quality reporting distorts the true quality performance of the ACO.
II.B.3 Considering delaying the addition of ACO providers/suppliers to conduct program integrity screening which only happens twice a year. Physicians change positions just like other professionals. Delaying the addition of ACO providers/suppliers would hamper an ACO in terms of data and practice transformation.
II.B.4 Defining significant change as change in ACO ownership, turnover of 50 percent or more of ACO participants and any change that prevents the ACO from meeting the eligibility requirements of MSSP. Concur
II.B.4 Seeking comment on whether to require 45 to 60 days of advance notice. Impossible to know whether a given situation will be known in advance. For example, should an ACO provide advance notice if they are getting close to the 50 percent turnover. How close is needed to trigger notification. Ownership changes might be subject to non-disclosure requirements. Request, but don’t require advance notice. 30 days after the fact can be a requirement
II.B.5 Merged and Acquired TINs: While the proposed solution works for one instance (all providers in a TIN are acquired), it does not address situations where some a TIN splits. Physicians change jobs/opportunities just like anyone else. Having no mechanism for physicians to keep their patient history if they don’t also keep their group tax accounting history is an inaccurate way to group care. CMS should implement a process where for attribution and historical benchmarking can account for NPI/TIN combinations so that all situations can be addressed as opposed to the singular situation CMS covers in the proposed rule.
II.B.6 Legal Structure and Governance: Board of the ACO must be the same as the board of the legal entity that is the ACO. The board of a multi-participant ACO must not be identical to the board of one of the participants Concur
II.B.6 Remove flexibility for ACOs to deviate from the requirement that 75% of the ACO’s governing body must be held by ACO participants Concur
II.B.6 Beneficiary representative can not be an ACO provider/supplier Concur
II.B.7 Leadership and Management Structure: Revising the regulation to not require the medical director to be an ACO supplier/provider. Three reqs are Board-certified, licensed in a state in which the ACO operates, physically present on a regular basis of the location of the ACO or ACO provider. Concur. This provides the flexibility for ACOs to select the best medical director possible, as a medical director’s skill set is not completely analogous to that of a full time practicing physician.
II.B.8 Required Process to Coordinate Care: Additional application requirement to describe how it will encourage and promote the use of enabling technologies for improving care coordination for beneficiaries. Concur. In addition we urge CMS to continue to work with ONC to ensure that the data available in health it (particularly certified EHR technologies) is available to ACO participants and providers/suppliers on a population level. ACOs are uniquely positioned to combine information from health it and the information from CMS to create a complete picture of health. The biggest barrier to this is not analytics or tools to use the analytical results, but access to data itself whether it is locked at CMS, another payer, an EHR or a practice management system. Everything CMS and ONC can do to free that data will contribute to ACO success.
II.B.8 App requirement to describe partnerships with long-term and post acute care providers to improve care coordination, milestone based timeline for all capabilities and use of tele health. Coordination with all health care providers in critical for the long-term success of any ACO. We do agree that every ACO should have a plan to form these partnerships. CMS should allow submission of these plans as-is. It is an unnecessary administrative burden to re-write the ACO’s plan into CMS application format for this one particular health care segment. CMS should consider that re-formatting especially of a graphical timeline is an exercise measured in hours and not minutes. Multiplied by all applicants this could add up to a thousand hours or more.
II.B.9 Condensed application for a Pioneer switching to MSSP Concur
II.B.9 Former Pioneer ACOs would not be permitted to enter MSSP under Track 1. Concur. The eligibility requirements for the Pioneer program are indicative of the type of institutional capabilities that support two-sided risk.
II.C.3 Renewal of Participation Agreements: Whether the ACO satisfies the criteria for operating under the selected risk model.
The ACO’s history of compliance with the requirements of the Shared Savings Program.
Whether the ACO has established that it is in compliance with the eligibility and other requirements of the Shared Savings Program, including the ability to repay losses, if applicable.
Whether the ACO met the quality performance standards during at least 1 of the first 2 years of the previous agreement period.
Whether an ACO under a two-sided model has repaid losses owed to the program that it generated during the first 2 years of the previous agreement period.
The results of a program integrity screening of the ACO, its ACO participants, and its ACO providers/suppliers (conducted in accordance with § 425.304(b)).
As discussed in our narrative, we think special consideration should be given to institutional partnerships and market consolidation in renewals of one-sided risk.We agree with CMS that compliance is a given and quality performance is a good standard for renewal.
II.C.4 Changes to regulation changes that affect beneficiary assignment (they now would) in the current contract year Concur
II.D.2 Expand beneficiary identification to any beneficiary that has a primary care service in the most recent 12-month period We agree that this would make ACOs more aware of patients who may see an ACO participant as their primary care provider, but through oddities of that year not be assigned to the ACO. We recommend that CMS expand the look back period to 2 years for beneficiaries without an address change to further ensure that beneficiaries do not miss out on the opportunities available from ACO providers
II.D.3 Replacing the letter process with 1-800-Medicare Concur. This is major administrative burden on the ACO over which the ACO has no control. With CMS providing the current letter verbatim, it only makes sense that CMS communicate directly to the beneficiaries.
II.D.3 Continuation of the requirement for the ACO participants to notify the beneficiaries in writing at the point of care utilizing the poster notification instead of the letter. We agree with CMS’s proposed focus on the poster as opposed to giving every patient a written form. ACO providers have indicated a very strong preference to not provide the form to every beneficiary at the first office visit of the year. A practice some ACOs were doing out of an abundance of compliance caution. The language in the proposed rule is quite clear. We recommend that it be included in the finalization of this proposal.
II.D.3 Opt-out data consequences When a beneficiary opts out of data sharing, the beneficiary should no longer be included in ACO assignment. We simply do not foresee a situation where a beneficiary would say I want a physician to coordinate my care, but I don’t want that same physician to have access to the data needed to do that.
II.D.3 Suppression of information related to the diagnosis and treatment of alcohol or substance abuse. We refer CMS to the Task Force comments.
II.E.3 Definition of Primary Care Services: Inclusion of TCM and CCM codes in assignment methodology We agree with the inclusion of these codes and with moving this determination to the annual PFS rulemaking process. We recommend to CMS that they monitor CCM as this code can be used up to 12 times a year. If assignment changes for many providers based on CCM (i.e. absent CCM inclusion the beneficiary would have been assigned to another provider), that raises questions for both ACO assignment and for the use of CCM that should be explored by CMS.
II.E.4 Physician Specialties and Non-Physician Practitioners in Assignment: Inclusion of NP, PA and CNS in step one of assignment. We applaud CMS’s proposal as an innovative way to both honor the statute while supporting the critical role these providers play in primary care. We suggest that CMS finalize as proposed. We would encourage CMS to work with NP, PA and CNS community on ways to begin to recognize that these providers also specialize. For example, if they have a supervising physician they could inherit the specialty of that physician. Alternatively, CMS could begin to collect specialization information from NP, PA and CNS themselves.
II.E.4 Physician Specialties and Non-Physician Practitioners in Assignment: Limitation of some physician specialties from being included in the assignment process. We agree that some specialties do not provide primary care, but due to an acute event in a given year (such as a surgery) may achieve plurality of services. We would like to see CMS give further thought to the following specialties to hospice. We suggest CMS look at the distribution of this specialty. For example, it could be a positive to have beneficiaries move out of ACOs when they start hospice, as most savings opportunities from keeping the patient healthier are no longer applicable. For the same reason it would be strange for an ACO to pick up beneficiaries as they enter hospice. The inclusion or exclusion of this specialty should not serve as a proxy for inclusion/exclusion of hospice services from the ACO model. That should be done directly.
II.E.4 Physician Specialties and Non-Physician Practitioners in Assignment: Combining step 1 and step 2 We strongly oppose the combination of step 1 and step 2. We believe this would create a decided shift away from primary care in the ACO model. Assignment would be based on the plurality of evaluation and management services not the plurality of primary care services if the steps were to be combined. Table 2 is still a wide variety of specialists. An allergist is not well positioned to coordinate care for beneficiary recently diagnosed with diabetes for example.
II.E.5 Assignment of Beneficiaries to ACOs That Include FQHCs, RHCs, CAHs, or ETA Hospitals: Any physician for initial population and any provider for attribution. Concur
II.E.6 Effective Date for Finalization of Proposals Affecting Beneficiary Assignment: Changes not applicable until the next performance year While we believe that many of the changes to assignment are needed enhancements to the assignment process, we agree that it would be tumultuous to apply these changes in the middle of a performance year.
II.F.2 Modifications to the Existing Payment Tracks Our comments on changes to payment tracks are covered in detail in our narrative and in the Task Force comments. Top tier ACOs in quality should be rewarding with better sharing rates than currently available in any track. Performance Year 2 and 3 should not see such a dramatic fall (analysis indicates to an average of 37%) in the shared savings rate.
II.F.3 Creating Options for ACOs That Participate in Risk-Based Arrangements: New Track 3 Our comments on and endorsement of the proposed Track 3 are covered in detail in our narrative and in the Task Force comments.
II.F.4 Seeking Comment on Ways To Encourage ACO Participation in Performance-Based Risk Arrangements: General As discussed in our narrative, the best ways to encourage ACO participation in risk are:
– Increase the shared savings rate
– Reward top tier quality with better rates
– Finalize waivers for two-sided risk
– Acknowledge differences in ACOs ability to take on risk
II.F.4 Seeking Comment on Ways To Encourage ACO Participation in Performance-Based Risk Arrangements: Waivers Our comments on and endorsement of the proposed waivers are covered in our narrative and in the Task Force comments.
II.F.4 Seeking Comment on Ways To Encourage ACO Participation in Performance-Based Risk Arrangements: Beneficiary Attestation We do not believe there is any reason to limit beneficiary attestation to ACOs in two-sided risk. We urge CMS to finalize beneficiary attestation. More comments on the details of such a mechanism can be found in our narrative and the Task Force comments.
II.F.4 Seeking Comment on Ways To Encourage ACO Participation in Performance-Based Risk Arrangements: Beneficiary Attestation: Step-Wise Progression As stated at the beginning of our review of this section, we believe strongly that it is the lack of a compelling case for ACOs to take on two-sided risk that is holding them back not the lack of an “on-ramp” or other such bridge mechanism between one-sided and two-sided risk.
II.F.5 Modifications to Repayment Mechanism Requirements: Streamlining the Repayment Mechanism While we understand CMS desire to protect the Trust Fund, the setting aside of 1 percent could essentially double the cost of setting up an ACO. Many ACOs struggle to develop the capital to fund the operations of the ACOs. To have to come up with twice as much capital up front is a major deterrent to two-sided risk. By CMS tying up twice as much capital it essentially halves the possible rate of return on that capital. CMS should expand the principles of the ACO Investment Model while not funding the ACO directly for operations, but subsiding or otherwise assisting targeted ACOs with the repayment mechanism.
II.F.6 Seeking Comment on Methodology for Establishing, Updating, and Resetting the Benchmark: Resetting Our comments on and endorsement of the proposed option 5 (and downstream effects if option 5 is not adopted) are covered in detail in our narrative and in the Task Force comments.
II.F.6 Seeking Comment on Methodology for Establishing, Updating, and Resetting the Benchmark: Updating Our comments on and endorsement over using a regional update factor are covered in detail in the Task Force comments.
II.G.2 Public Reporting and Transparency: Format We agree that 30 days is a reasonable update timeframe. The CMS policy of requiring ACOs to submit screen shots to CMS has generated near uniformity in design for public reporting. Use of a template would just formalize what has occurred due to the submission requirements.
II.G.2 Public Reporting and Transparency: Additional Information We do not have any concerns conceptually with the greater disclosure of data. In particular, we wholeheartedly agree that disclosing the makeup of ACO participants would add a lot of value to beneficiaries and the public at large. In combining this additional information with CMS’s desire to create a standard format puts a lot of pressure on the design of the template. The utility of the information particularly to beneficiaries is going to hinge not just on disclosure, but design of the template so we urge CMS to be very selective in how they get to design the template. Possibly even opening it up for outside submissions.
II.G.2 Public Reporting and Transparency: Reporting on CMS Websites We have no objection to posting detailed information about ACOs on CMS’s website. We applaud the recent data releases on the characteristics of 2012/2013 starts and eagerly await such information on 2014 and 2015 starts.
II.G.3 Terminating Program Participation: Reconsideration Review Process We do not disagree with the proposed changes in this area. However, we urge CMS to begin the timeliness clock once informal work has ended. We believe that alternative is clearer to all parties and encourages the great partnership between CMS and ACOs.

Here is a letter I wrote to Aledade Partner Practices prior to the holidays. – Farzad

Happy Holidays!
Farzad Mostashari, CEO

Dear Aledade ACO Partner Practices,

Last winter, my mom, who is generally healthy, was home in Boston alone when she got hit by an acute gastroenteritis – likely norovirus. When I called her she was in bed – vomiting, unable to keep anything down, feeling weak and complaining of severe leg cramps. She was clearly unable to get to the pharmacy by herself, and I had that dreaded feeling – of being 400 miles away and powerless to help. I could see the whole sequence unfolding. The ambulance crew carrying her down the stairs. The overnight sleepless stay in the ED for a liter of fluid. God forbid they should decide she’s not safe to go home by herself and admit her. Fortunately, I was able to get her an appointment at her primary care practice for that afternoon, and a family friend to take her soup and hold her arm. It all ended well. She avoided a horrendous experience, and Medicare avoided several thousand dollars in unnecessary cost.

This incident drove home to me how important the work is that we are doing together.

We are about to enter 2015, and the beginning of our “performance period.” We will be working with you over the next three years on a whole host of improvement efforts, from better referral management and medication adherence to post-acute care and social supports. But let’s be clear on what our #1 priority is for the new year: reducing unnecessary emergency department visits and hospital admissions.


As always, let’s start with the patient. For most elderly patients, being seen in an emergency department is an uncomfortable ordeal, and any hospital admission carries with it significant risks and hazards. Fully one-in-three Medicare patients suffer a health care-acquired condition during their admission – from infections to falls, medication mishaps, and delirium. Many never regain their former level of functioning. Elderly patients without the means to purchase supplemental insurance can be hit with hundreds to thousands of dollars in unexpected costs.

We never want to stint on needed care, and we won’t, because many, if not most of these visits are avoidable. As our Delaware Medical Director, Dr. Horatio “Rash” Jones (who moonlights in emergency departments in addition to his primary care practice) recounted at our December ACO board meeting, 90 percent of the patients he sees could have been taken care of in a lower-acuity setting.

Now we don’t need to reduce these admissions by 90 percent! However, if we can just take out one of every 10 ED visits and admissions, our ACO would share in savings. Each unnecessary admission you prevent is worth on average $3,000 to your practice. How many 99213 visits is that?

So what works in reducing these harmful and expensive visits and admissions?

1) Let patients know that you want to hear from them before they go the ED. The number one reason patients don’t call their PCP is “I didn’t want to bother the doctor”. Let them know that you want to hear from them, and that you mean it.

2) Make sure that your after-hours and weekend system works for the patient.
Do patients know what number to call? What does the answering service say? How hard is it to speak to a doctor? We will explore together whether there are weekend and after-hours options other than the ED for patients who don’t need to be there.

3) Make it easy for them to get care in the right place.
During business hours, that would be your office. Dr. William Funk of Newark, DE pioneered the use of same-day open scheduling for sick visits long before NCQA made it a PCMH requirement. It works. Other pioneering practices have implemented services like IV fluids and nebulizer treatments to help patients who need a little extra care right then and there, instead of having to go to the ED.

4) Communicate with the ED docs.
One out of every seven admissions is due to missing information. Is that right bundle branch block present on an old EKG? Did Mr. Williams have a clean cath report last fall? Was there a full workup for that isolated hematuria done already? Does the patient have a pattern of narcotic-seeking behavior?

5) Assure the ED docs of timely follow up.
There are many common conditions with high variability in whether they get admitted to the hospital or not: skin infections, UTIs, COPD, mood disorders, non-specific chest pain. The deciding factor is often whether the ED physician is confident that there will be outpatient follow up. Can you see the patient in the office tomorrow to check on that cellulitis (which is actually venostasis)?

Over the next month, we will be working with you to identify where there are opportunities to improve your current procedures, and how we can help in implementing those changes. I am sure that in your daily work and experience you will find many more valuable insights for how we can prevent unnecessary ED visits and hospital admissions. We are very much looking forward to hearing about the ideas from you and testing and spreading them. And because of the work you do, there will be a son or daughter somewhere who will rest easier that their parent, miles away, won’t end up in the ED, but will be cared for.

Yours in health,


We launched Aledade on June 18th, and by the end of July we had recruited 80 primary care physicians in 4 states to join us in creating the very first Aledade ACOs. We have been work together ever since- but haven’t been able to talk about our wonderful practices until the official notification from CMS that came today.

We are thrilled to announce that beginning January 1, our two new Aledade ACOs will be taking accountability for the care of over 20,000 attributed Medicare patients, and stewardship of nearly a quarter of a billion dollars of health care expenditures each year. We’re building a new delivery system on the foundation of trust between patients and the physicians who have been caring for them in their communities for decades, and enabled and accelerated with cutting-edge technology and analytics.

One ACO will operate in the state of Delaware, in close collaboration with our physician partners and our field team, Quality Insights of Delaware. Our second ACO, the Primary Care ACO, will take the same model spanning three states — New York, Maryland, and Arkansas, where we are also working with local partners like the Arkansas Foundation for Medical Care. Our hand-picked ACOs physician partners are some of the most capable and inspiring primary care physicians in the country. They are leaders in their local, state and national physician associations; they are pioneers of Meaningful Use and Patient Centered Medical Homes; they are much-decorated top doctors in quality; but most of all, they are the pillars of their communities.

Our regional Medical Directors and local field teams in each state have already been busy helping our partner practices:

  • Extracting practice management data and establishing interfaces to EHR data and Admission-Discharge-Transfer notifications.
  • Identifying individuals with multiple chronic conditions at high risk of complications
  • Working with practices on initiating workflows for patient recall, and rolling out lightweight apps to help prioritize and track the outreach
  • Customizing EHR templates and tracking wellness visits
  • Implementing an influenza and pneumonia vaccination program for high-risk seniors
  • Reviewing after-hours and weekend patient access protocols, and working together to make it easier for Medicare beneficiaries to reach their primary care doctors and schedule same-day appointments.

Our performance year for these ACOs will start on January 1, and we are excited to begin the work of delivering the best care possible for our entire population of patients.

We are also looking towards the future. We are looking to grow our base of top physicians in our existing four states, and expand into several new states (likely to include Virginia, West Virginia, Tennessee, and Louisiana). We’re recruiting the leading primary care providers in the country and field partners in these regions, as we continue to refine the customized applications and platforms that will help our doctors thrive.

Alongside this growth, our Aledade team has been growing apace. We’ve assembled a dynamic team with deep expertise in provider engagement and practice transformation, data analytics, technology, and health care policy. As we continue to scale quickly in 2015, we will further expand our team in the coming months. We are looking for talented individuals who are passionate about making a big impact on health care in the United States, who will cherish their colleagues and our primary care physician partners, who are data-driven and tech-savvy, and who are relentless in their pursuit of a better world.

You can learn more about the positions we are hiring for here.

2014 has been a really exciting year for the future of health care, and for Aledade. Far away from the political finger-pointing and ideologically-charged debates, real change is happening in American health care, and momentum is building around what matters most — the health of patients.

Especially at this time of year, I am grateful to be able to contribute to this transformation, and I’m so appreciative of the chance to be working with such a phenomenal team of doctors and colleagues committed to this movement.

– Farzad

Dr. Farzad Mostashari and Travis Broome, MPH

Late Monday afternoon, the Thanksgiving fog finally lifted by a full day back in the office, CMS delivered our dessert: 429 pages of proposed regulations, the first updates to the Medicare Shared Savings Program (MSSP) in three years.  For those interested in brevity, CMS also produced a fact sheet summarizing the proposed changes.   The week before the holiday, wehighlighted four key areas we hoped CMS would address in the new regs.  After Travis finished celebrating his victory in our (non-monetary) office pool on the timing of the regulation, we began to dig into its substance.  A string of our immediate reactions (via Twitter) can be found here.   But in the last 36 hours, we’ve also had the opportunity to examine the proposals in the four areas we identified a few weeks ago.  Here are our first impressions of how CMS did in addressing those areas:

  • Patient Attribution

  Our hope was that CMS would empower beneficiaries to take active control over whether they were included in an ACO – we believe beneficiary choice is the best way for patients to demonstrate their approval or displeasure with their care arrangement. A beneficiary should be able to choose their ACO if they want to – and if they want to opt-out, do that as well.   Unfortunately, the proposed regulations were not very proactive in this space.  CMS clearly created the opportunity for beneficiaries to choose their ACO via “logical outgrowth” in the final rule, but did not make an explicit proposal.   In our comments and with other stakeholders, we’ll advocate strongly for beneficiaries to be able to choose their ACO – again, we believe this is a critical strategy to strengthen the stability of participating ACOs, empower beneficiaries, and allow ACOs who deliver the best care to their patient to further succeed.

  •  Patient Engagement

  One of our biggest hopes for the proposed reg was a loosening of the restrictions on how ACOs could communicate with their beneficiaries.  Allowing ACOs to market the benefits of accountable care to beneficiaries has the potential to deepen engagement with patients, and make them more active participants in their own care, and take ownership over their own health.   CMS did not address this area at all.  While there may be legislative constraints on things like permitting variable co-pays for ACO and non-ACO patients within a practice, we do hope to see CMS not open more avenues for communications between ACOs and patients.  This is another area we’ll address in our comments, while also looking for programmatic and sub-regulatory guidance on ACO-patient communication.

  •  Year Four Benchmarks

One of the biggest questions in the MSSP is what will happen once ACOs mature beyond the third year of their first contract.  We had hoped to see a blended benchmark for savings in year four, or a longer contract period for MSSP ACOs. Again, CMS floated a several ideas, but took a pass on proposing a specific one.  The proposed regulations did not include a single solution for how ACOs that achieved shared savings in years one through three should do in year four.  This is a potentially big problem.   We’ll write more on this specific issue soon, but we feel strongly that this problem needs to be addressed – at the very least, to create incentives for successful ACOs to remain in the program beyond the third year.  In the coming weeks and months, we will work with policy experts and other stakeholders to build a consensus about the best way forward on this issue.

  •  Beyond Two-Sided Risk

  In our previous post, we expressed our hope that CMS would provide additional incentives for ACOs to move from the one- to two-sided risk model, either through a better savings ratio or other benefits.  At the very least, we hoped that CMS would a clear course for maturing ACOs to move to the two-sided model.  We also wondered what the next phase of maturity would be for ACOs that succeeded in the two-sided model.   The way CMS addressed this issue was perhaps the most perplexing part of the proposed regulations.

CMS has been adamant that encouraging movement towards two-sided risk was a major policy goal.   But instead of increasing the savings rate for “Track Two” ACOs, CMS addressed this need by creating an entirely new category for ACOs – the so-designated “Track Three.”  Track Three does offer greater savings potential, but CMS coupled these inducements with a prospective attribution system – which maybe an inducement for some ACOs, but a deterrent for others. Prospective attribution provides a level of certainty to the ACO about who their people are; however, if a person decides to switch to physicians outside the ACO the ACO is still responsible for their cost. A prospective determination without the ability to add new patients also creates the temptation to provide two-tier health care or to treat the people assigned to the ACO differently than those that are not. Retrospective determination ensures that patients assigned the ACO actually received their care from the ACO; however, it creates uncertainty for the ACO that may deter some ACOs from taking on risk.

It is puzzling why the greater savings rate of the new Track 3 wasn’t applied to Track 2. CMS should apply the greater savings rate to Track 2. If beneficiary choice in ACO is combined with retrospective assignment (allow the person to vote with their voice and if they don’t, see how they footed with their feet), we believe that is the more accurate representation of who should be assigned to the ACO.

CMS did posit some incentive for ACOs to move from one- to two-sided risk by lowering the reimbursement ratio to 40 percent in Track One – but simultaneously calculated that 90 percent of current participants will remain in Track One, despite this change.

Frankly, leaving this challenge unaddressed would be a policy failure for CMS. CMS’s proposed changes recognize the pressing need; they simply don’t address the problem fully.  We hope they do so more comprehensively in the final rule, and our comments will reflect that.  

Quick Takes

In addition to the four areas we identified in our previous post, there were some interesting pieces that we’ll address more fully in a subsequent post, but wanted to highlight:

Data Sharing – Kudos to CMS for making more data available on more ACO beneficiaries. Our doctors want to provide care transformation to everyone they care for, and the more data they have, the closer they are to that goal. We also are excited to see CMS streamlining the data opt-out process for beneficiaries and ACOs alike.

Attribution – CMS really listened to the provider community, and has made an excellent proposal to recognize the critical role nurse practitioner and physician assistants occupy in primary care settings, while ensuring that patients get medical care from the proper health care professional.

Flexibility in Providing Care – Over the past several decades, CMS has created several policies that make sense in a fee-for-service world – such as three day hospital stay before moving to a skilled nursing facility – but don’t make sense in the ACO world. To the credit of CMS, several of the proposals in the regulations (the inclusion of skilled nursing facilities; the expansion of tele-health care) adapt policies for the emerging realities of today’s health care system.

Dr. Farzad Mostashari and Travis Broome, MPH

Later this month – perhaps as early as this week – the Center for Medicare and Medicaid Services (CMS) is poised to release a proposed rule to update to the Medicare Shared Savings Program (MSSP). MSSP is the national program which allows providers to create ACOs, and it is the program under which Aledade ACOs operate. This will be the first update to the program in three years, and we expect there will be a great deal to unwrap once the rule is public (we also acknowledge that we are among the few who await publications of CMS rules with the anticipation of children on Christmas morning). I’m sure we’ll spend the day of the release tweeting our initial reactions — be sure to follow @Farzad_MD, @Travis_Broome, and@Aledade_ACO for those updates.

The new rule will contain a lot to unpack; but we believe that the decisions that CMS makes in 4 key areas will play a large role in whether participation in the program continues to be robust and whether the program succeeds in being the flag-bearer for new payment models.

1) Patient Attribution

We will be looking to see if CMS gives beneficiaries more active control over whether they are included in an ACO. We hope that the new rule leaves the door open to Medicare beneficiaries being able to affirmatively, prospectively assign their care to an ACO – and to affirmatively opt out of being included in the ACO attribution.

Currently, Medicare beneficiaries are assigned to an ACO based on the primary care physician they visit during the year. Essentially, these patients ‘vote with their feet’ when they walk into a primary care physician’s office. But this “retrospective attribution” introduces a lot of uncertainty and “churn” in the patient population for an ACO. While patients can opt out of their claims data, they can’t opt out of being included in an ACO, short of switching primary care providers.

We also expect CMS to continue to assess – and hopefully expand – options beneficiaries have to receive primary care from a nurse practitioner or physician assistant, giving latitude to practices that want to experiment with different ways to deliver care.

2) Patient Engagement

Next, we will be looking to see if CMS can open additional avenues for beneficiary engagement, such as variable co-payments and expanded communication avenues between the ACO and beneficiaries.

There are currently lots of restrictions and controls over how practices can implement financial and non-financial incentives to help engage patients as partners in the ACO. Current rules also place restrictions around the ACO marketing itself to beneficiaries, so ACOs typically don’t put a lot of effort into informing beneficiaries that they are now part of the program, or the benefits that ACO participation can bring to patients.

3) Year 4 Benchmarks

The current contract period for an ACO is three years, and to date, CMS has provided little guidance on what happens for an ACO in year four. For ACOs that have achieved cost savings, a downward adjustment to the benchmark that captures all of the savings for CMS will likely lead many ACOs to exit the program.

We will be looking to see if CMS proposes a blended benchmark during subsequent contract years, which would recognize the difficult foundational work ACOs had to do in years one through three, while creating incentives for continued improvements across successful ACOs. An alternative would be to simply lengthen the contract period to five years, which would be aligned with commercial plan standards,

4)Two-sided Risk – and Beyond

Nearly all of the current ACOs have signed up for the 1-sided risk model, with no penalties for ACOs that experience cost increases. We are interested to see what the updated MSSP rules will say about ACOs that fail to generate savings after prolonged participation – will they be allowed to participate indefinitely? (We hope not.)

Will CMS create additional incentives for ACOs to move towards the two-sided risk model, with that program’s more generous savings rate? Will there be a push to move hospital-led ACOs into two-sided risk as they mature? We believe that a one-sided risk option must exist for less mature or smaller, physician-led ACOs, but are hopeful that CMS plots a clearer course to moving to the two-sided model.

Finally, the new rule is likely to renew questions about what comes after two-sided risk for a mature ACO. Will CMS address population-based payment for segments of service? Integrating bundled payments with shared savings? Will they go so far to address full-risk adjust capitation?

CMS has an opportunity here to designate a clear, attractive path for ACOs to evolve – from one- to two-sided risk, and from two-sided risk to the next phase of value-based payments. We’re hopeful the organization will take it – and until then, we await the rule with bated breath.

CMS is offering $114 million in what amounts to no-interest starter loans for up to 75 ACOs. The Investment Model, out of the Centers for Medicare & Medicaid Services Innovation Center, replaces the advanced pay model. It is also a down payment on a move to physician-led ACOs and two-sided risk.

ACOs that apply can’t:

  • Have a hospital with over 100 beds as an ACO participant
  • Be even partially owned or operated by a health plan
  • Have a preliminary size of more than 10,000 assigned beneficiaries

ACOS that apply must:

  • Make a commitment to two-sided risk

Other selection factors for 2012, 2013, 2014 ACOs are:

  • Spend plan quality
  • Quality and financial performance from last year
  • Need for the investment

Selection factors for the 2016 ACOs are:

  • Spend plan quality
  • Serving a rural area
  • Serving a low ACO penetration area
  • Need for the investment

No, the missing 2015 isn’t a typo. According to CMS, “the model will not begin in time to allow the initial round of the ACO Investment Model to be available for ACOs starting the Shared Savings Program in 2015. Moreover, 2015 starters will not have a year of reconciled financial and quality performance results until after the second application period for the ACO Investment Model. CMS may consider funding for 2015 starters at a later date.” This is a pretty glaring gap so let’s hope that later date is sooner rather than later.

So how much money are we talking about?

No surprise there is a formula.

2012, 2013, 2014 starters get $36 per assigned beneficiary up front and $6 per assigned beneficiary each month.  So a 2013 starter with 7,000 beneficiaries looks like this:

Oct/Nov 2014 1st Qtr 2015 2nd Qtr 2015 Monthly Payments
Apply Award Decision $252,000 $42,000

2016 starters get $250,000 plus $36 per assigned beneficiary up front and $8 per assigned beneficiary each month. So a 2016 starter with 7,000 beneficiaries looks like:

Summer 2015 4th Qtr 2015* 1st Qtr 2016* Monthly Payments
Apply Award Decision $502,000 $56,000

*Projected dates not CMS announced dates

Paying it back

First and foremost the idea is to pay it back through earned shared savings. As mentioned at the beginning there is no interest.

What happens if you don’t have shared savings or get out of the program before you do?

As with other aspects of the model the rules are different for 2016 folks and everyone else.

2016: If an ACO makes it through a full contract period (3 years), but does not have enough shared savings to cover the loan then CMS will not pursue the difference essentially forgiving the balance.

2012, 2013 and 2014: These established ACOs get a little less of a deal. There is no loan forgiveness and ACOs must repay the entire loan either through shared savings or out of their pocket. They are required to obtain a financial guarantee for at least 50% of the payments.

This investment model provides a great opportunity to those ACOs that struggle with capital and meet the characteristics laid out by CMS. Not all ACOs, including some successful ACOs, match this type and one has to wonder whether there are 75 ACOs that match the profile.

CMS appears to be recognizing the value of small, physician led ACOs. Just the type of ACOs that Aledade was founded to support with capital, IT management, change management and data analytics. The biggest elephant in the room is whether this direction towards physician-led and two-sided risk will carry into the impending proposed rule for the Medicare Shared Savings Program as a whole.

Survey Says: Value-Based Health Care is Coming

The shift from fee-for-service health care – paying doctors for every test, procedure, or visit – to a value based system – in which doctors are compensated based on outcomes – is arguably the most significant transformation taking place in the American health care system today.

Last year, 90 percent of commercial health care plans were operating on the traditional fee-for-service model. To help spur the transition away from this model, the Catalyst for Payment Reform (a non-profit organization led by influential health care purchasers) set a goal of having 20 percent of these plans offer “value-oriented” payment structure by 2020.

Catalyst’s 2014 survey was released at the beginning of the month, and it turned out that the 2020 goal wasn’t nearly ambitious enough. In just one year, value-oriented payment systems grew to 40 percent of all commercial health care contract dollars – a promising sign that the U.S. health care system is finally realizing that we should promote better outcomes instead of simply just providing more services.

To be sure, digging a little deeper into the numbers, the results are not as transformational as the headline might suggest. Catalyst defines “value-oriented” as any payment influenced by a quality program not just one solely based on a quality measure. Nevertheless, it’s still clear that the march towards value-based health care is accelerating.

Catalyst’s 2014 survey found the following adoption rates for value-oriented models:

— 12.8 percent of commercial health plans are now using “Pay for Performance” (P4P), a free-for-service (FFS) payment structure that includes quality payments or adjustments – a first step in moving from volume to value.

— 1 percent of plans have shifted to “Shared Risk” arrangements.  These arrangements reward the provider for innovations that keep people healthier, while moving risk to both the insurer and the provider if quality and cost measures are not met.  We expect this portion to grow rapidly as it creates financial incentives for preventative medicine and population health that have long eluded U.S. health care.

— 2 percent of health plans use Shared Savings arrangements.  Shared Savings arrangements have all of the quality components of shared-risk arrangements and much of the financial incentive, yet without the risk of financial ruin due to poor risk adjustment.  Shared Savings arrangements allow independent providers of any size to work towards better value for their patients.

— 15 percent of plans have moved to “Full Capitation” – a structure that pays a group of providers a fixed amount for each patient, without becoming a health insurance company themselves.  The move towards full capitation relies on the explosion of available health care data to better predict costs. This number may be high as the data source for the scorecard focuses on the commercial market.  But make no mistake that as more data becomes available – and analytics catches up – the ability to identify insurance risk (and leave it will insurance companies) facilitates the move towards the ultimate opportunity in population health.

We will continue to look at the march towards value based payment, but for now, the headline is clear: the shift from volume to value in U.S. health care is coming – and is happening more quickly than anyone (even the most optimistic among us) thought.

One of the big questions since the inception of the Medicare Shared Savings Program has been whether the model would only work in regions with extremely high baseline costs.  Farzad’s state-level analysis of earlier MSSP results suggested that ACOs in higher-cost areas were more likely to receive shared savings. It’s one of the questions that Bob Kocher and Farzad received in the wake of the op-ed on Rio Grande Valley Health Providers last week.

So we decided to dig into the data.

We’re still waiting for CMS to make baseline costs for ACOs – and the local areas they serve – public. But in the meantime, we linked each ACO to a Hospital Referral Region using the main ACO address provided by CMS – and took a look at the region’s per capita Medicare costs as a predictor of ACO success.

What we found is that baseline (2012) per capita costs were not a predictor of ACO success in achieving shared savings. Several ACOs had considerably lower costs than their risk would have projected, and they still achieved savings. ACOs with higher costs than their risk would suggest failed to achieve savings.

As we build the first Aledade ACOs, we’re focusing on finding the right doctors, identifying which of their best practices can be exported to our other providers, and finding ways we can make workflow in their offices smoother and more efficient.

That’s why this is encouraging news – the evidence confirms that the single biggest factor in ACO success are the actions of the affiliated doctors – not simply starting from a high cost baseline.