Melissa Pollock, M.Div., CHC – The Story of Federal Payment Models in Value-based Care

In this episode we talk to Melissa Pollock, M.Div., CHC, director of ACO Compliance and Regulatory Affairs for CHESS Health Solutions. She shares with us her expertise on the current CMS payment models, as well as the history and what she sees in the future.


Melissa would you provide some background on their precursors leading up to what we now know as value based care?

Sure! as most people probably know in the 1960s Congress you know began passing legislation to create the Centers for Medicare and Medicaid Services which you know provided Medicare for older populations, provided Medicaid for you know lower income populations, but we all know that that’s all based on a fee model right? So you go and see your provider your provider sees you they bill based on the services that they provided you and then you’re reimbursed they’re reimbursed based on those services. So that’s you know kind of the initiation of CMS as we know it Centers for Medicare and Medicaid Services.

In the 1970s and 80s we saw the proliferation of the health maintenance organizations preferred provider organizations where people were trying to better control cost and quality through narrow networks. So in the 1980s to 2000s you really saw capitation become more popular. Capitation models being a perspective amount of money given to providers to take care of a population of patients and then this kind of led to the idea the advent of value based care through the idea of the triple aim the triple aim being better care for individuals better health for populations but at a lower cost for the for the patient and for this health care system. And so that became the foundation of value based care, this idea of the triple aim.

And so in 2010 Congress passed the Affordable Care Act and allotted $10 billion to give to CMS and they created the Innovation Center. And the Innovation Center is basically there how are we going to fix the healthcare system? What can we do to try to stem the tide of rising costs and how can we create better care and better equity of care for patient populations? And that’s really what the Innovation Center was poised to do and that kind of started value based care.

CHESS has been in value for quite some time. Can you explain the timeline of the different CMS payment models using the CHESS journey as a guide?

Yes, happy to do that. So CHESS really was founded out of the organization of Cornerstone Healthcare back in 2012 I think is when we started. And we realized, cornerstone healthcare at that time in in high point NC was making the move to value. The leadership of the organization saw that you know value based care is going to be the wave of the future and we need to go ahead and make that transition, align up our insurance contracts in a way that we know we can be successful in value based care. So in 2012 CMMI which is the Center for Medicare and Medicaid Services their Innovation Center created the Pioneer ACO or accountable care organization and this was the beginning of a total cost of care model for value based care.

We joined actually in I think it was midway through the year of 2012 when they created the Medicare Shared Savings Program and so we participated as Cornerstone Healthcare in 2012 in the Medicare Shared Savings Program and I believe did see savings within the first year or two. So that was kind of the first foray for CHESS. And we realized we’re really good at doing this we’ve been able to generate savings with this group of providers, what if we became an organization that was able to provide this to other healthcare systems in the state of North Carolina? You know could we use what we’ve learned in these years leading up to our transition to value based care to implement this at other places at other hospitals and would this be something that people would be interested in other healthcare systems would be interested in? And so CHESS was created kind of as a consulting organization, another arm of really driving value based care for other healthcare systems that didn’t have a way to do it and needed help in that journey.

So that was kind of 2012 and we were in the Medicare Shared Savings Program for I think 3-4 years three and a half four years and then in 2016 CMMI or the Innovation Center created a brand new model called the Next Generation ACO or the Next Generation accountable care organization and this was again another total cost of care model and CHESS joined in 2016 we were one of I think it was 18 maybe total organizations in the US that took on this new model and started and have been with or was in the next generation ACO from 2016 to 2021. So really kind of start getting our feet wet in the MSSP program and then moving to NextGen and taking on full risk for populations for the past six years.

Well that’s a great segue into my next question can you talk about the MSSP model and the basics of benchmarking along with the levels and tracks.

Yes. So the MSSP model kind of has two main tracks. There’s the basic track and then there’s an enhanced track. Basic has five levels within that track – A through E. So level A new starting at the very you know onset of the program it’s your first year in value based care and then each year CMS progresses you to a higher level within the system until you are five years in you’re at level E and you’re going A through E and walking through those levels. And then after that those five levels are completed you would go into the enhanced track which would be the highest level of risk for that population of patients. And when I say risk I kind of want to explain a little bit of what I mean by risk.

So within the CMS MSSP model, they are looking for providers to be accountable for the care that they’re providing for a population of patients. And so for a provider it’s not every traditional Medicare patient that walks through your doors, they’re going to look at a specific group of the Medicare patients that you’ve seen for the past two years and they want to see if that patient has seen these providers for their primary care services more than they’ve seen anybody else in United States. So they’re looking at historical claims data and they’re saying OK patient X has seen a provider at this hospital for primary care than they’ve seen anybody else so we’re going to make you accountable for their care. Because it’s obvious to us from the historical claims data that these patients are being seen at by this provider at this organization. So we’re going to make you accountable for their care.

On average it’s usually 40 to 50% of the patients that are coming through the doors of a health care system that are traditional Medicare are actually in the ACO if the health system signs up for the ACO. Right? So you’re not taking on health for the entire population of patients of traditional Medicare patients. You’re only really taking it on 40 to 50%, and of those are the ones who really see you more than they see body else. So once you have that population of patients, CMS looks at the historical claims that have been filed and they say OK based on how they’ve you know what their cost of care looks like we’re going to set a benchmark for you. And that benchmark is going to be based on this historical costs, and I’m just going to ballpark a figure here, we’re going to say that the benchmark is $1000 per patient per month. So CMS is going to come up with this benchmark and they’re going to say we think it’s going to cost you $1000 per patient per month to take care of these patients. If you can do really great lower that cost of care but still do really great on quality right, we’re not just cutting costs of care we’re not stinting on care, but if you can lower the cost of care but really have amazing quality then you’re going to generate a savings between what was expected of you to spend and what you actually ended up spending. But on the other side you might go over that cost right you might have to spend over that because the patient had extra things that happened and there’s more need there. So CMS takes that benchmark and then measures you against that benchmark. And then depending on whether or not you’re able to lower the cost of care or if you overspend, then that generates a savings or could generate losses.

So once you’re in the MSSP model they give you your benchmark you try to perform throughout the year providing great quality for patients you know lowering the cost of care in places that make sense and then at the end of the year they’re going to true it up and for those that are in level A and in level B you’re not taking on downside or risk for these patients. So what do I mean by downside risk? If you are able to lower the cost of care and create that differential between what they thought you were going to spend and what you actually spent, then you get to share in some of that savings and the split of that of what you’ve generated is 40%. So using my model that I came up with $1000 per patient per month you lowered the cost of care to $800 per patient per month you generated $200.00 you keep 40% of that the other savings kind of goes into the pocket of CMS. On the other hand if you overspend in levels A and B you’re not paying anything back you’re not taking on risk for this population. Oh you overspent let’s do better next time. That’s kind of level A and B once you get into C D and E is when you start taking on risk and you’d have to pay back a portion of what those losses that you generated if you went over the benchmark. And then enhanced would be the highest level where you get to keep 75% of the savings that you generated but you’re also having to pay back more losses. So greater risk greater reward as you go up the different levels of the MMSP model

Melissa can you share with us an overview of the NextGen model, how it differs from MSSP, and why it was initiated?

Sure. So the MSP model had been around for a while but there was no way in Medicare for the providers to take on 100% risk. Right? So instead of having only 75% of the savings split or 50% or 40%, if providers knew that they were doing really well with taking care of these population of patients with really under you know lowering the cost of care providing great quality, they wanted more cut of that pie of that general of the savings that they were generating. And so this was a way for providers to choose between taking on 80% of the risk or taking on 100%, meaning first dollar savings and first dollar losses. And really what that means you’ll hear that a lot I have first dollar savings or losses, you know if you generate a dollar savings you keep a dollar if you lose a dollar of savings you pay back a dollar that’s kind of what it means around that that benchmark that’s CMS has set. so very similar to the MSSP model but a little bit more you know you’re taking on greater risk for the population.

They also introduced a lot of new waivers to the Medicare program through the NextGen model so they kind of beta tested the skilled nursing facility three day waiver through that model and a lot telehealth waiver through that model as well. So there are a lot of you know ways that they tested different waivers that have then gone on to become regulation at a later time.

The CMMI models, specifically NextGen, are way more nimble and I don’t know a lot of people probably don’t care about this as much as I do I’m kind of like a policy wonk, so I think it’s very interesting that MSSP is codified through regulation so annually they put out exactly what’s going to happen with MSSP and that’s we you know have to adjust accordingly. Whereas the model with CMMI is more nimble. It’s a contract and we can you know have conversations with CMMI. We kind of have access to the staff, we can talk them through hey this doesn’t make sense and we wanted these are different things that we want to do, or this isn’t working for us or here’s data that we really need to in order to make this model work and it’s more of a collaborative effort with the Innovation Center rather than the MSSP program that’s just here’s the regulation the regulation is what the regulation is.

So now NextGen actually has been sunsetted as of the end of 2021. So that model has come to a close and the determination for most out there that were in that model was do you go into this new model called direct contracting, which was very controversial at the time and still somewhat remains to be controversial. But direct contracting was CMMI’s first foray into a somewhat capitated payment model for traditional Medicare beneficiaries or traditional Medicare patients. So historically they had never really offered any type of capitation model where they would provide you you know with an amount of money up front here’s your money for to take care of this patients, this is the money that you get and you know you you can still send us claims, we’re not really going to reimburse you anything for those claims, but it has to go through some type of you know claims processor. So this was a very innovative and new model which also allowed for entrance of a lot of different companies into the space of traditional Medicare. Some private equity companies that have entered the space of traditional Medicare patients where historically they had kind of been limited to MA plans.

So it’s been very interesting so direct contracting is going on right now and they have recently announced the new ACO REACH program which is on the chassis of direct contracting but some added elements to make it more equitable. So those are kind of the those are the choices that you have out there you can go to MSSP or you can kind of dip your foot in the water of very limited capitation through currently direct contracting, soon to be called ACO REACH

Is there a recommendation about what types of entities should participate in each of these models?

Yes that’s a great question. I think that really no health care system should jump into value based care blindly. There’s a there’s a big shift in mentality and a big shift in culture that has to take place. When you start saying that you’re going to reimburse providers differently than they’ve been used to for the past many many years um there has to be kind of that top down trickle effect of this is a different culture of how we’re going to address patient care. It’s not going to be about seeing 35 patients in a day in 10 minute time slots, but it’s going to be about spending the time with the patient that needs to be spent and addressing more than just symptoms and problems. Maybe we need to talk about you know multiple things related to social determinants. Maybe we need to talk about just wholeness wellness in general.

And I think 2. they would have to be prepared to invest in value based care. I mean there is a cost to doing value based care as far as infrastructure for the services that value based care provides that wraps around the provider so you’ll hear that a lot that services are wrapped around the provider. So it’s not just a provider trying to do this. There are health navigators on the back end, there are pharmacists that are looking at medications there are, you know, data analytics teams that are reviewing the claims information that we get from the insurers to get a better holistic care or picture of care for these patients. So there is there is a cost to doing value based care. But are we striving for better care for the patient. 100%. That’s what we’re looking for. We want to make sure that each patient is treated as a patient and not another number of a 10 minute time slot office visit let’s work through to the next patient. So for a lot of systems I think value based care automatically is hands off and cost prohibitive. It’s risky and a lot of health systems don’t want to go that route. and I think that’s really where CHESS comes into help. Right? We want to help you make that transition. We’ve done it successfully so let us help you use what we already know since we’re down that road farther than you are to set you up for success and like in your value based care journey.

This is great information. I just wonder from your lens in the work that you do what is the benefit of moving to value?

That’s a great question. So I think part of the benefit is that specifically I personally think we’re going to see this being mandated from the government or from CMS specifically in years to come and it behooves you to start now. You know to look from those perspectives, but I think, too, it really puts the focus on a patient. I think we really want to make sure that a patient is heard and seen, they are understood, they’re being reached out to on a regular basis if they need help for things that are outside the normal scope of an office visit. So they need help for you know they they don’t have access to food They have COPD and need an air conditioning unit. Like these are the types of things that value based care is geared towards helping that is different than coming into a provider’s office, seeing that patient, addressing the symptoms, addressing medication, addressing the problems, and then they’re on their way and you don’t see them again for another year. Because we know that there are so many things outside of just medication and you know what’s going on in that 10 minute 15 minute office visit that affect a patient’s care and a lot of times providers don’t have insight into that. So I think value based care provides that lens to help see the holistic picture

That’s powerful. So Melissa, what’s next? what’s in the immediate future and what do you see on the horizon?

So, I did mention a little bit about this but I do think you’re going to see more and more health systems addressing social determinants of health. You know what are those outside influencers that are affecting care for patients that aren’t always what can be seen in an office visit. I heard one of our providers say you know before the pandemic I didn’t know what this patient’s house looked like. I didn’t know what kind of living conditions they were in and then all of a sudden everyone switching to telehealth really quickly and the pandemic provided me a lens into their house. And all of a sudden I could see, oh my goodness, these are the conditions they are living in, how can I help this patient outside of just the medicine they need and the care that I usually provide. And I thought it was insightful that, you know, yes, we went through a pandemic. It’s been awful. It’s continuing, but there have been some really interesting and insightful things that have happened that have come out of it, you know, specifically like he was saying, I get to see where my patients are. So I think we’re going to see a lot more of these models addressing social determinants of health and trying to collect that type of data too. I think they’re going to want to collect the social determinants of health data and data related to Health Equity.

I think health equity is a buzzword that you’re hearing a lot around the circles and I don’t think anybody really knows what it means right now. I think everybody is a little bit like we realize that the pandemic exacerbated the issues with Health Equity that we didn’t know we had, so in how do we address them? What do we do about that? And I think CMS’s first foray into that is through the ACO REACH program and they’re going to start trying to collect data on health equity and then try to use that data to further develop models to kind of help in that space. And then I mentioned this too I really think a lot of this is going to become mandatory CMS has kind of hinted at using the MSSP program as a chassis for all of their future models and so I think total cost of care models may become something that you don’t get to volunteer for anymore. They could become mandated.