Today we have the first in a series of conversations about ACO REACH with Melissa Pollock, Director of ACO Compliance and Regulatory Affairs at CHESS Health Solutions, who was instrumental in navigating all of the processes for acceptance into the newest CMS payment model.
I want to talk about the new ACO REACH model. Before we dig into the nuts and bolts of how it works, can you tell us briefly what has been happening at CMS and how we got here?
Yeah, that’s a great question. So, you know, historically beginning with the Affordable Care Act, really CMS has been focusing a lot on how do we fix the healthcare system, what can we do. We know the Medicare Trust Fund is going to run out of money eventually. So, you know, how are we going to fix this? And over the course of the past 10 to 12 years, have been looking at so many different models of what’s going to work and most of those models are coming out of the Innovation Center at CMS. So, what’s going to work and how do we fix these different problems? And then that, you know, kind of birthed the value movement as we know it today. And then you see kind of the models that we know that have been kind of tried and true, which is the Medicare Shared Savings Program model which has you know multiple tracks and different levels of participation for different health care systems. Again, all focused on traditional Medicare patients.
And then in I think it was 2016, 2017 I can’t remember exactly they started the Next Generation ACO model, which was kind of the precursor to ACO REACH. So, Next Gen was really kind of a way for healthcare systems to take on 100% shared savings, upside, downside shared savings. And what that means is that they’re completely accountable for the care that they provide for these patients. And that’s slowly morphed into, we’ll probably talk about this later, but direct contracting is morphed into this direct contracting which then was renamed and revamped into ACO REACH.
Can you tell me why did they sunset NextGen? Was it not working or was it just not fulfilling the need?
Yeah, that’s a good question too. So, I think part of the issue was that you know these models have to go through the process of being certified if they’re going to be put into regulation. So, all the models that the Innovation Center does are kind of like testing grounds. Let’s see what’s going to work and are we actually going to save money with this model. And then, after they’ve run their course, they go through a process where they are looked at under scrutiny trying to determine “hey did this model actually save us money or is the money that we paid out to the health system, did we really not save a whole lot of money for the for the Medicare trust fund?” And so there was, you know, they have like the OMB and different arms of the government that are looking specifically at the model to figure out did we save money or did we not.
So, that certification process came back saying we did not save as much money in this model as we thought we would. Now I will say that there are a lot of people that say that there are some issues with the underlying methodology of how they went through the process of determining whether savings were there or not. And a lot would say there is savings, you’re measuring the savings in an incorrect manner or there’s intangible ways to measure value being created in these health systems that you can’t really put a price tag on. So, there was a lot of back and forth in that arena, but it kind of came down to CMS as a whole does not believe that this model saved as much as it should have. So we need to go ahead and sunset it and come up with another model that is going to advance care and value and really kind of do a little bit more to save the Medicare Trust Fund money.
Is ACO REACH an acronym?
It is an acronym. So ACO, obviously accountable care organization. REACH standing for realizing equity, access, and community health. So really kind of a turn towards let’s look at the communities, let’s look at health equity with a greater lens, let’s look at you know accessibility of care for populations of traditional Medicare patients.
So then, what is this new payment model trying to achieve? Can you tell us why they feel there is a need for a new model?
It’s kind of interesting what happened. So, with the sunset of Next Gen, everybody was like ok what do we do next? What’s the next round of innovative, cutting-edge models from the Innovation Center? And they stood up this direct contracting model, and then eventually kind of steered it towards more of a health equity lens and renamed it ACO REACH.
What’s really different in this model is that it has, kind of, a quasi-capitated payment model. And that’s really something that CMS has never done. So, when we talk about capitation in an insurance plan or program, you think per cap. Right? It’s per head. So, you’re getting paid kind of a, you know, a specific amount of money per patient. That’s the money that you get, the money goes into your bank account. This is obviously way oversimplified, but the money goes into your bank account once a month. Here’s the amount of money we’re going to pay for you to take care of these patients. You can pull from this money, but when you run out of money, there’s no more money. We’re not going to give you any more money for these patients. So, it’s a capped amount of money that they’re giving you.
I think what’s interesting is that really ACO REACH is disrupting the payment flow for the provider directly from Medicare. And so, the provider submits the claims to Medicare and then depending on the structure of Medicare can return either a percentage of that money directly to the provider or none of it if you decide to take 100% capitation. And then instead, that money will come to the ACO as a payment directly from Medicare and then we downstream pay the providers based on these contracts that we put in place. So, that really drives incentive for us, as an ACO how can we take the money that we’re getting from CMS and become really innovative and creative to come up with different ways to incentivize providers. You know, what are the levers that we can use to pay them in different ways than maybe traditional Medicare would have ever paid them. And drive value through that payment process rather than a fee-for-service structure, which we know is just you’re getting paid per, you know, widget and widget out type thing you’re just getting paid whatever you bill.
How did we get the autonomy to do that? That seems like there’s, I don’t know, an accreditation or a lot of trust that’s involved that there’s not waste, fraud, or abuse of some sort because we’re getting big checks and then it’s up to us. I mean I’m sure that there’s a bad apple there, how do they determine who’s worthy or who’s respectable?
So, I mean first of all we had to apply for being in the model and the application process was not a small feat. They’re going to look at ok, historically, CMS is going to look at have we participated in these models before? Did we perform well in these models before? You know, what kind of integrity is there? There’s a lot of checks and balances in place for that. And then at the same time, you know, we as the ACO are contracted with Medicare to do this process. We then contract with all the different value partners or health systems that are in the model to say, “hey this is exactly how we’re going to reimburse you, and this is exactly what you’re agreeing to,” and make sure that contractually that’s all tight. So that, you know, when we start getting money as CHESS, we know exactly how we’re going to reimburse it downstream so that everybody is getting what they thought they would be getting.
Recap what’s been happening and explain some of the main differences between the MSSP, NextGen model and the new ACO REACH model?
Sure yeah. So, I think I mentioned this earlier, but Medicare Shared Savings Program (MSSP) is still fee-for-service. It’s kind of fee-for-service with a shared savings portion layered on top. You know, at a very high level, it’s a benchmark. You get paid. CMS is expecting that you will spend this amount of money on the patients in the performance year. If you go over that amount of money that they thought you were going to spend, that target benchmark, then depending on which track you are in, you have to pay it back. But all the while, fee-for-service is still underlying everything. Right? So, the provider is still seeing the patient, submitting claims to Medicare, Medicare’s still reimbursing them normally. And this is kind of like a second layer on top of fee-for-service. Ok, let’s see if you actually saved money compared to what we thought you were going to save, etc. The thing with MSSP is that it only goes up to 75% shared savings on the upside. Meaning that whatever savings you generate, you only get to keep 75% of it.
Next Gen was 100% risk, and that meant that whatever you saved, you get to keep all that you saved. So, you know, if you saved $3 on your entire patient population for the whole year, you get to keep those $3. Right? But, if you lost $3, you have to pay $3 back. So, that’s what they call first dollar savings and first dollar losses. But, you know, same with if you were able to generate $14 million in savings, you didn’t have to pay a cut of that back to CMS. You got to keep the full amount of savings that you generated. So, that was kind of what Next Gen was. Next Gen also provided some really, kind of, interesting waivers that hadn’t been tested before. So, they were trying to test some of the new waivers with Next Gen, so Skilled Nursing Facility Waiver (SNF) kind of started the Next Gen program before it moved to MSSP.
So, with the ACO REACH model, you still have providers that are submitting claims to CMS as you would in fee-for-service, but they have the ability to take out that reimbursement on fee-for-service. So, MSSP and Next Gen, they were still getting paid fee-for-service under everything. There is the ability, based on how you structure your ACO REACH model, to say, “Hey. You’re not going to get, the provider’s not going to get any money from Medicare at all.” And instead, that payment’s going to come through come through the ACO, the ACO will get that money, and they’re going to reimburse you based on how they decide to do it. It’s almost like putting a small, mini contract inside of a larger contract. Right? So, you almost like a Medicare Advantage, not in its entirety, but you’re putting a smaller contract within this larger ACO REACH process. And, you’re saying, “OK. We’re going to make you accountable for these quality measures, or for annual Wellness visits, and you can earn some of this money back based on how you perform on these metrics.” Or some just say, “hey we’re just going to pay you a straight PMPM, a per member per month. You have 10,000 patients in the model, we’re going to pay, you know, whatever PMPM, and that’s your pot of money that you get. We’re not going to process claims at all. We’re just going to know that you’re doing what you should be doing to send that claims data to Medicare.” Because, you know, I mean, I think they’re thinking that these the providers that are in these have been doing value-based care for a long time. And so, the quality measures that are required in MSSP that we’re so used to, the web interface quality measures, you know, your colonoscopy screenings, your mammogram, all those things, we should be doing that for all patients. So, by the time you get to something as sophisticated as ACO REACH, they’re saying “OK now you guys come up with the quality measures. What do you think is going to drive care and lower cost of care?”
Would it be typical for, in this new model, is it an upfront payment where the entity would receive the $14 million and then, oops you’re out, now you have to absorb the cost of care for if you go over? Or at the end of the of the year, do they make the accounting decisions and then send you a check of what the savings would be?
So, it kind of depends on how they structure, how you decide to structure your ACO REACH. So, we as the ACO, are getting weekly payments from Medicare based on the claims that were submitted the week before. So, we get a weekly claims file from Medicare that says, “hey in the last week, here’s the claims that were processed, and here’s the pot of money you can use to pay that.” But, at the end of the year, it’s all going to be reconciled. Right? As you were saying, they’re going to look at that benchmark that they’ve set, that target amount, at the end of the year and they’re going to look at all the payments they gave us throughout the year, and they’re going to determine was there any savings generated based on those payments that we gave you. And if so, you know, what do we need to claw back from you guys or what do what do what do you actually get in payment.
So, it just depends on how the ACO decides that they want to downstream pay their providers. I think one of the benefits of ACO REACH is that there is a lot of upfront money. Right? With MSSP, you had to wait you know a year, eight months after the performance year was over to actually see did we save anything, did we not, are we going to get a big payment. And I think REACH provides that kind of comfort in the days of COVID, when people are very low on cash, and you know scrambling for money for some of these places to stay open, REACH was very attractive because the ACOs could provide that upfront cash during each month or even on a weekly basis depending on how they wanted to structure things. And that, you know, gives them a little bit of a peace of mind. Now again, it’ll all be reconciled on the back end, but that was a little bit of the of the upside to ACO REACH was that upfront cash flow for a lot of these smaller practices that were struggling.
I think that would be a huge benefit because then you could invest in the equipment, you could invest in the staffing, rather than trying to make do with you know everybody working three times as hard to make it happen. You could go ahead and get different things that you need.
Well, there was conversation in 2021/2022 about direct contracting. Where does that or where did direct contracting fit into this transition?
Yeah, so direct contracting was kind of the next iteration of what Next Gen was supposed to be. So, when Next Gen started sunsetting, they said OK the next thing is going to be direct contracting. And basically, that idea of the ACO is directly contracting with the providers. Which is what we see in REACH. This kind of idea of like setting a smaller plan, so to speak, inside of a larger framework. But what they noticed was, when they put out applicants for direct contracting, there were a lot of private equity firms that decided, “Hey. We’ve been in the MA market for a very long time. We’ve been able to, you know, approach or have a lot of patients via Medicare Advantage Plans. We’ve never really had a crack at traditional Medicare patients. The only way we get to the accountable for the patients cost of care is if they convert to an MA plan. And so, a lot of private equity firms spun up organizations in order to enter direct contracting. Because this was a new piece of the pie that they hadn’t previously had access to, because it was just CMS, and the patient, right, and the provider. And there was no, you know, commercialization so to speak. I don’t know if that’s the best term to use, but it’s a way to think about it.
So, there’s a lot of private equity that entered the space, and then there was a lot of pushback on the hill from different senators who had heard that direct contracting was taking the rights of the traditional Medicare patient. You know, one of a patients’ rights is to be able to go anywhere. They can see whoever they want to see. There’s no restriction like there is in other plans, where you have narrow network and things like that. A traditional Medicare patient should be able to see whatever provider they wanted to see. And there were some groups that were very vocal in their disagreement with the direct contracting plan, and really thought that this was kind of the death to traditional Medicare, is that it was you know bringing in this these new elements. Which is not true. There’s a lot of misinformation out there, but it was heard at higher levels. And so, in an effort to make sure that the program, direct contracting, wasn’t scrapped altogether, CMS really put together some efforts to try to put protections around the patient, put a lot of transparency in the companies that were trying to come in and be in direct contracting. They wanted to look at governing bodies, who owns what company in this scenario, and they wanted that transparency in governance structure. And then, they also set up this kind of health equity lens, which is kind of one of their main goals for the next 10 years for the Innovation Center is to start to put health equity components in all of their models.
So, there was a really big focus on OK, lets make sure first of all we have transparency, second of all we’re protecting the rights of the patients, but third we need to make sure that the patients are being treated equitably. And if anything, COVID really exposed the inequity in healthcare, right? It really did. And so, I think they realized this. We all realized that as well. And so, this is the first foray into really, OK, how do we how do we address this? And I don’t think anybody has the right answer. You know, we hear the adage, if you see one ACO, you’ve seen one ACO. And so, all the populations are going to be different. So, how do we do this? I don’t think anybody has the magic golden ticket of what to do, but we’ve got to start somewhere.
Well as, I’m going to put a spotlight on you for a moment, as someone who has been doing this for quite some time and who I consider you know one of the leading experts in this in the nation. What’s your take on direct contracting?
That’s a really great question. Personally, I really felt like, it did, you did see some very odd companies trying to come into the traditional Medicare space. And then, kind of use the population of patients to convert them to their traditional MA plans. So, they were using direct contracting, and I will say this is what I’ve heard, but they were using some of those patients lists to do some things that they should not be doing with patient lists, like marketing them for MA plans or getting them to convert to MA plans, those types of things. So, you saw some kind of nefarious things happening that we heard whispers about. I think it’s an interesting concept to allow this to happen, and I think if it’s going to actually drive change in health populations, then let’s do it. But if it’s going to drive everyone to the all-mighty dollar, then I don’t know if I’m a fan of it. Personally, I want to see what’s best for the patient. I want to see, if this is going to help a patient population, OK then let’s help a patient population. But what are the motives behind that? So, I don’t know. We’ll see what happens. It was a little, I think there was a little bit of both sides. There was some misinformation at the congressional level, the senate level, of really the understand of what direct contracting was. And so there was a large effort from advocacy groups to try to combat that misinformation and help them understand how the patient is being protected. But at the same time, you have others coming in who just see, my goodness, this is a brand new market of people that I haven’t been able to reach yet, so let me see if I can get in there and pull them to some of my own plans that I can make more money off of than I can traditional Medicare.