Wellvana CEO dishes on CVS deal, Medicare Advantage, ACO REACH

Wellvana took a big swing when it acquired accountable care organization assets from CVS Health, and CEO Kyle Wailes sees the deal as critical to the physician enablement company's plans to spread risk-based payment models throughout the healthcare system.

“The ultimate goal over time is to graduate every provider into global risk contracts, where we take 100% of the upside and the downside based on performance,” Wailes said. “But we don't do that day one, right? We take a very methodical approach.”

Related: Shared savings ACOs laud new prepaid savings option

This month, Wellvana paid an undisclosed sum to buy CVS Health's Medicare Shared Savings Program ACO operations in a transaction that also made the Aetna parent company a minority shareholder in Wellvana.

Under the Medicare Shared Savings Program, providers form groups of ACOs and take on risk for fee-for-service Medicare beneficiaries. These partnerships often contract with companies such Wellvana, which can pocket savings they help generate.

Wellvana already works with providers assuming risk under the fee-for-service Medicare ACO Realizing Equity, Access and Community Health, or ACO REACH, model and contracts with Medicare Advantage insurers such as Humana and Centene.

The interview has been edited for length and clarity.

Why did you make the Medicare Shared Savings Program deal?

We've been going very deep in supporting practices and providing a lot of tech-enabled services. That could be scheduling, value-based care, education and medical management for patients, whereas CVS built scale and has a lighter-touch model. These models make a great marriage and give providers flexibility. Not all providers are going to want the same type of service or the same level of service.

Scale also brings predictability. Predictability enables us to invest more in our provider relationships. It allows us to invest in medical management, invest in documentation, and invest in services and education.

The combined company has about $12.5 billion in medical spending under management and we have approximately 1 million patient lives associated with that medical spend. We have 500 accountable care organization clients. Those clients are a combination of large hospitals, primary care providers or independent physician practices. We now have 300-plus team members and brought about 150 CVS employees into the company through the acquisition.

Are you eyeing additional acquisitions?

We certainly want to continue to partner with additional health systems, primary care and independent providers, and also Medicare Advantage payers. As we look at our network, there is a significant opportunity to expand within our existing provider partners into Medicare Advantage.

What is your outlook for Medicare Advantage under President Donald Trump?

We're bullish long-term. If you look at the growth within the program over the past decade, it's hard to deny the value proposition that patients are seeing in the program. We expect it to continue to grow.

Patients need to have optionality. We're pretty diversified between traditional Medicare programs, like ACO REACH or Medicare Shared Savings Program, and the Medicare Advantage side. That diversification is important. We want our business to look like the panel of our providers.

Regardless of the administration, we do think the Medicare Advantage industry has good tailwinds.

ACO REACH is scheduled to sunset in 2026. How do you feel about its future?

We're optimistic about the program. Medicare set a goal for 100% of patients to be tied to value by 2030. ACO REACH is a key part of that. It's up to 2.5 million lives in the program. It's a pretty significant scale in a pretty short period.

Whether the ACO REACH program becomes permanent, or whether there are higher levels of risk incorporated into the Medicare Shared Savings Program, we feel optimistic that higher levels of risk in traditional Medicare will continue to happen.

Do you assume risk for pharmacy and supplemental benefit costs in your contracts with Medicare Advantage insurers?

We do not take risk on Part D prescription drug benefits today. We're not taking pharmaceutical risk unless it's hitting under Part B for provider-infused drugs, which is only a small percentage of pharmaceutical costs. We do assume risk today on supplemental benefits. It's something that we will continue to evaluate and see if that makes sense for us.

We used to take risk in pharmacy. But with the changes in the Inflation Reduction Act and the uncertainty associated with that in terms of the cost, that is something that we moved away from.