CMS attempt to replicate Medicare Advantage's popularity appears to miss mark

The CMS is trying to create a Medicare Advantage-like alternative payment model that bypasses insurers, but it’s an uphill battle because the agency is hemmed in by Medicare’s benefit structure.

As a part of that, the Center for Medicare and Medicaid Innovation is prioritizing voluntary alignment—its term for when a Medicare beneficiary chooses a primary-care provider for attribution in a risk-based payment model—above claims-based, prospective assignment in its new Direct Contracting Model. The Innovation Center is doing that in an attempt to increase beneficiary engagement and help providers better manage risk through their relationships with patients.

The Innovation Center has “been interested in trying to get some of the outcomes of Medicare Advantage but not have the insurance company as the primary entity that they’re working with,” said Michael Hales, senior director of government healthcare programs for University of Utah Health. “They’re trying to work directly with provider communities.”

But without considerable prodding from providers, the vast majority of fee-for-service Medicare beneficiaries won’t voluntarily align themselves with a primary-care provider under direct contracting because there’s nothing in it for them, since they don’t get additional benefits or reduced cost-sharing.

There aren’t even any concrete negative implications for beneficiaries, like the need to get a referral from their primary-care physician to see a specialist, said Dr. Amol Navathe, a Medicare Payment Advisory Commission member and associate director of the Center for Health Incentives & Behavioral Economics at the University of Pennsylvania.

“It’s pretty well-accepted at this point that patients have to have some incentives and disincentives in order to change behavior,” said Dr. Nirav Vakharia, associate chief of value-based operations at the Cleveland Clinic. Voluntary alignment has been part of the CMS’ Medicare Shared Savings Program since 2018, and the Innovation Center included it in the Pioneer and Next Generation ACO models. But in each instance, “uptake has been disappointingly low,” the National Association of ACOs said.

“A tiny fraction of ACO-assigned patients actually go online to MyMedicare.gov to select their primary provider,” according to an email from NAACOS.

Yet despite its lack of success, the Innovation Center is betting that voluntary alignment will succeed under direct contracting because the agency is giving providers new flexibility to market and promote it to consumers. The soon-to-be-released rules should be similar to the ones for Medicare Advantage plans.

ACOs couldn’t effectively market or promote voluntary alignment under the Medicare Shared Savings Program. And while there was an option for consumers to fill out paper forms during an office visit under the Pioneer and Next Generation ACO models, it was too much work for providers, so they didn’t use it.

The Innovation Center also won’t finance voluntary alignment marketing and promotion for direct-contracting entities, so providers might view it as an “unfunded mandate” unless the agency eases the benchmark discounts, said Aisha Pittman, vice president of policy for consultancy and group purchasing organization Premier.

Experts say that voluntary alignment is a tool that providers can use to engage Medicare beneficiaries and manage their populations under risk-based contracting, which could help those models succeed long term by ensuring provider participation.

“The last thing we want is medical practices to be surprised, in an alternative payment model, as to who the population they’re caring for is,” said Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association. “This allows choice on the consumer side, but also much more clarity on the practice side.”

Providers that participate in the Next Generation ACO model or Medicaid managed-care organizations with a dual-eligible population might be especially interested in direct contracting because it’s a relatively smooth transition for them since they have existing relationships with beneficiaries. But new entrants with limited experience face an uphill battle because they don’t have an existing pool of beneficiaries to tap into.

Policymakers and healthcare experts worry that providers might try to game the system. Organizations could attempt to improve their performance by changing their patient case mix through favorable referral partners and avoiding patients who they think might be high-risk or costly. For instance, they might selectively participate through clinical locations with the wealthiest and healthiest patients.

And unlike prior ACO models that had standardized rules and tracks for providers, the CMS plans to review and approve direct-contracting plans from interested providers. This flexible approach could lead to more innovation and participation. But it’s also more susceptible to abuse because providers probably won’t suggest a plan unless they’re confident that it would be beneficial for them.

If providers are going to invest significant time, money and effort in direct contracting, “Why are they going to pick patients that are going to hurt their benchmark?” Navathe said.

On top of that, some traditional Medicare beneficiaries might find it easier than others to choose a provider, which could disproportionately impact specific populations such as enrollees with low socio-economic status.

The CMS acknowledges that the flexibilities of direct contracting could make it vulnerable to manipulation, saying that it will monitor the rollout “to ensure that beneficiaries’ access to care is not adversely affected as a result of the model.” The Innovation Center will also update its risk-adjustment methodology and benchmarks to make sure that providers with high-cost and chronically ill patients can participate, but critical details are unknown.

Still, the Innovation Center might not have to worry too much about providers gaming voluntary alignment under direct contracting because many industry insiders are skeptical that they will invest in it, despite the extra flexibility around marketing and promotion. It’s expensive, time-consuming and requires a lot of administrative work.

“The process of determining voluntary alignment has been quite clunky,” Vakharia said. The new model probably doesn’t make enough changes to move the needle because it still requires too much legwork from beneficiaries.

Likewise, ACOs didn’t see much benefit from voluntary alignment under the Medicare Shared Savings Program because “only a very small fraction of beneficiaries aligned by voluntary alignment wouldn’t have otherwise been aligned to the ACO through claims-based alignment,” NAACOS said.

If that’s the case under direct contracting, the costs of voluntary alignment marketing and promotion will outweigh the benefits for most organizations.

The Innovation Center is trying to maintain the flexibility of fee-for-service Medicare but add in some of the elements of accountability inherent to Medicare Advantage. But unlike private insurance plans, ACOs can’t create closed networks or significantly affect cost-sharing.

Ultimately, traditional Medicare’s open network and benefits structure limits the Innovation Center’s options.

“I can see why CMS would want to do something else,” said Andrew Ryan, director of the Center for Evaluating Health Reform at the University of Michigan. “What’s nice about MA is that everyone is signing up … but that’s a much more significant relationship than a contract. This just seems like MA lite.”

The Innovation Center could make it easier for traditional Medicare enrollees to voluntarily align by reaching out to beneficiaries who are assigned to ACOs and informing them that they can continue working with the same provider, according to Hale. Under direct contracting, ACOs from other models like Medicare Shared Savings Program or NextGen can keep the beneficiaries who voluntarily aligned with them previously.

Medicare beneficiaries could also voluntarily align with a primary-care provider if the CMS collected that information from each of them. For example, the agency might ask people to choose their primary-care provider when they initially enroll in traditional Medicare or switch from a Medicare Advantage plan. Beneficiaries would be more likely to provide Medicare with information about their provider because it wouldn’t require them to do more work.

“If you tie it to ACOs, then it relies on a voluntary mechanism on the provider side,” Navathe said.

The CMS could then share that information with direct- contracting entities to help them reach out to and manage their patients.

“Right now, you don’t have that until (patients) show up on an attribution list,” Navathe said.

With some exceptions, consumers have been shielded from the transition from volume- to value-based care under traditional Medicare. Most of the efforts to date focus on provider payments and quality measures, neither of which really involves patients. But it’s going to be hard to transform the healthcare delivery system if patients are mostly uninvolved in the transition.

COVID-19’s disruption to normal patterns of healthcare utilization “could be a golden opportunity to get (providers and patients) better oriented to the benefits of voluntary attribution for the coming year,” Vakharia said.

But even if it doesn’t, the CMS’ emphasis on voluntary alignment could get the industry to think about more ways to engage beneficiaries in the transition to value-based care.