MedPAC to HHS: Reduce Number of Alternative Payment Models

To advance value-based care, the Medicare Payment Advisory Commission (MedPAC) has suggested that HHS reduce its number of alternative payment models (APMs) now that it has lessons learned from a wide range of previous demonstrations.

“Operating a smaller portfolio of more harmonized models, with more consistent parameters and clearer and more aligned incentives, should more successfully encourage providers to furnish care efficiently across the continuum of care, which could, in turn, decrease Medicare spending,” the advisory group said in its June 2021 Report to Congress.

“Beneficiaries could also benefit from a streamlined, more harmonized suite of models if this approach causes providers to better manage their care and results in improved quality and health outcomes,” the report continued.

CMS has implemented dozens of alternative payment models primarily through the Innovation Center (CMMI), which operated a total of 54 APMs in its first decade of existence to test a variety of methods for reducing costs and improving quality of care.

CMMI’s general approach has been to test an APM for five years and to either abandon it or relaunch it as a revised version under a new name, depending on its impact on Medicare spending and quality of care. To date, few APMs have met Medicare spending and quality goals.

However, the APMs have “have yielded sufficiently promising results or sufficiently actionable lessons learned that they have been refined and relaunched as successor models under new names,” MedPAC stated. For example, after the Advance Payment Accountable Care Organization (ACO) Model produced net losses for Medicare, CMMI launched a successor model called the ACO Investment Model that went on to yield some of the largest net savings per beneficiary of any CMMI-operated APMs to date.

But factors, such as APM incentive complexity, bonuses layered on fee-for-service payments, and unaligned provider and beneficiary, may be limiting the success of CMMI-run APMs. Additionally, there have been unintended consequences of running concurrent APM, MedPAC said.

“CMS’s model-testing approach usually treats each model as independent of other models being implemented at the same time, yet CMS also allows providers and beneficiaries to be in multiple Medicare APMs at once,” the group wrote in the report. “Although allowing overlapping participation maximizes participation in APMs, it can lead to some problematic interactive effects.”

APM overlap has been a major challenge for providers looking to expand their value-based care portfolio. Stakeholders have contended that CMS has addressed overlap issues on a per-program basis, rather than taking a coordinated, strategic approach.

MedPAC also found that allowing providers to participate in multiple APMs can dilute each model’s incentives, while attributing beneficiaries to multiple APMs can also weaken incentives. Furthermore, allowing providers and beneficiaries to participate across models can make accurate evaluations difficult to complete, which can impact a model’s future.

Reducing the number of APMs run by CMMI could solve these challenges and help successful APMs live up to their full potential, according to MedPAC.

“Addressing this situation will require a change in the way Medicare approaches APM design and implementation. Instead of operating a series of APMs that are effectively developed independent of one another, the agency should seek to deploy a more parsimonious portfolio of models that are designed to work together,” the group advised.

“It is especially important to ensure that financial incentives presented by different models are complementary and do not weaken one another when combined.”

MedPAC said HHS can carry out their recommendation by focusing on a single population-based model with different tracks for provider types or beneficiary populations with episode-based models tacked on as extensions of the single model. Alternatively, the department could take a geographic approach, the group suggested.

“CMMI could limit all of its models to particular geographic areas of the country, to more actively control how many models are operating in any given region at once,” the report stated.

Harmonizing a portfolio of just a couple APMs could attract more independent physicians, which have historically faced more barriers with value-based care implementation because of their size.

In 2021, CMMI will operate 12 APMs that offer 25 distinctive tracks.