AHIP, Other Stakeholders Support Medicare Value-Based Care Bill

In a joint letter to the four representatives who introduced the bill in the House of Representatives, payer and provider organizations have thrown their support behind the Value in Health Care Act of 2021 which seeks to bolster Medicare value-based care.

Signees included AHIP, Premier, and the National Association of Accountable Care Organizations (ACOs).

The organizations viewed this Act as a step forward in furthering the uptake of value-based care in Medicare. 

“With estimates showing almost 40 percent of healthcare dollars are tied to value-based payment and goals to increase that percent moving forward, the value-based care movement is at a critical juncture,” the signees stressed.

The letter noted that, while accountable care organizations and alternative payment model participants successfully leveraged value-based care to manage the coronavirus pandemic, the prevalence of racial care disparities underscored the need for improvements in Medicare.

The organizations expressed their approval of the shared savings rates laid out in the bill, the changes to risk adjustment methodologies, and other alterations that aimed to boost ACO participation and advanced alternative payment model adoption.

“Thank you for your leadership on these important issues,” the letter concluded. “This bill is a comprehensive approach that will strengthen our country’s value-based care program and ensure high quality, lower cost care for our nation’s patients.”

The Value in Health Care Act of 2021 would make significant changes compared to the current model.

As it currently stands according to the National Association of ACOs (NAACOs), the baseline shared savings rate for shared savings-only models is to 40 percent. Risk adjustment levels are capped at three percent over a five-year contract. 

Additionally, there are currently two categories of ACOs: high revenue and low revenue. ACOs that are considered high revenue are placed on a more aggressive track to assuming risk, which could pose barriers to ACOs engaging in value-based care.

The present benchmarking methodology pulls on data from beneficiaries in the ACO’s region to establish a benchmark. This can pit the ACO against itself. Medicare Advantage plans use a different metric.

The bill, which was reintroduced in the House of Representatives on July 20, 2021, seeks to change many of the issues that the current model can cause. 

The bill boosted the percent of shared savings that goes toward new participants in the Medicare ACO program. Under the Value in Health Care Act of 2021, however, the basic level of shared savings would be increased to at least 50 percent.

Policymakers also made changes to the risk adjustment methodology. They shifted the risk adjustment level cap from three percent to five percent, providing a further incentive for ACOs to enter into value-based, risk-adjusted models. It also capped negative risk adjustments at negative five percent.

The bill would eradicate the ACO categories of high revenue and low revenue, would allow ACOs to participate in a shared savings-only model for three years or more before taking on responsibility for risk.

The Act would also create more nuance in regional data to avoid setting up ACOs to compete with their own organizations. It would take the ACO’s beneficiary population out of the regional reference population.

Although the letter addressed the coronavirus pandemic frequently, the issues that this bill addresses were not strictly a result of the coronavirus pandemic. 

In 2019, about a year before the pandemic struck, ACOs expressed their opposition to taking on more downside risk. Nearly a third of ACO participants in a Health Affairs study stated that they were very likely or extremely likely to leave the Medicare Shared Savings Program if they were forced to take on more downside risk.

Still, the coronavirus pandemic intensified ACOs hesitancy to take on more risk, as over 56 percent of accountable care organizations with downside risk were considering leaving the Medicare Shared Savings Program due to coronavirus-related financial concerns.

Apart from the Medicare Shared Savings Program, some payers and other stakeholders are exploring ways to leverage shared savings and shared risk models to improve behavioral and mental healthcare parity.