Listen to this post

The Centers for Medicare & Medicaid Services (CMS) Innovation Center continues to move forward with its “strategic refresh” initiative. CMS’s strategic refresh initiative aims to meet five objectives: drive accountable care, advance health equity, support care innovations, improve access and affordability, and establish partnerships to achieve these objectives.

To drive accountable care, CMS announced in 2021 its goal to transition 100% of Medicare beneficiaries and the vast majority of Medicaid beneficiaries into accountable care organization (ACO) relationships by 2030. Through this shift, CMS aims to examine and enhance payments for specialty care provided to Medicare beneficiaries.

Value-Based Care and ACOs

Value-based care is a healthcare reimbursement payment methodology based on health outcomes and the quality of care rendered to the patient. In value-based models, CMS pays for health services and items based on quality measures rather than on the volume of services or items delivered. This payment reform has demonstrated the ability to improve the quality of care provided to beneficiaries and reduce program costs.

One type of value-based model is CMS’s Bundled Payments for Care Improvement Initiative (BPCI). The BPCI model encourages providers to work together to improve the quality and coordination of care for Medicare beneficiaries. Under a BPCI model, CMS makes a single payment to a provider group for all services related to a particular episode of care. This payment is then shared among the providers in the group based on their performance on quality measures.

CMS’s ACO model is another value-based reimbursement model where groups of providers come together to provide coordinated, high-quality care to their Medicare patients. ACOs are held accountable for meeting quality standards and reducing the overall cost of care for their patients.

Value-based models have the potential to improve the quality of care delivered to Medicare beneficiaries and reduce costs. These models encourage providers to work together to coordinate care with a focus on quality.

Challenges presented by specialty care in value-based care

CMS’s push for this transition is due to Medicare beneficiaries experiencing fragmented and costly care. CMS’s 2021 report explained that “[i]n 2019, Medicare beneficiaries saw an average of 50 percent more specialists in the outpatient setting than in 2000, doubling the number of physicians with whom primary care providers must coordinate care. A 2022 study examining fragmentation of ambulatory care for Medicare fee-for-service beneficiaries found that four in ten beneficiaries experience highly fragmented care, with a mean of 13 ambulatory visits across seven practitioners in one year.” CMS also cited Medicare beneficiaries’ barriers and challenges in scheduling specialist visits as an additional reason for this transition.

Why align specialty care with value-based models?

CMS data shows that shifting beneficiaries into accountable care relationships could help eliminate barriers by promoting access to and coordination of primary and specialty care. Accordingly, the Innovation Center developed a four-element strategy to guide the initiative’s short and long-term goals based on key learnings it identified through testing various payment models and discussions with industry experts.

1. Enhance Specialty Care Performance Data Transparency.

CMS intends to enhance the transparency of specialist data and performance measures by sharing data across practices. CMS recognized that data sharing would increase access to high-quality, accountable specialty care and integration with primary care.

In the short term, CMS plans to enhance specialty care performance data and dashboards to give population-based model participants the ability to compare the quality and costs of procedural or acute episodes of care, as well as better information on specialist performance. In the long term, CMS will develop and distribute industry-standard definitions of condition-based episodes for ACOs to improve specialist contracting for condition management.

CMS will work with stakeholders and experts to provide feedback on this element’s development and explore and test ways to make data available in population-based models.

2. Maintain Momentum on Acute Episode Payment Models and Condition-Based Models.

The second element aims to maintain the momentum established by episode payment models, which can be designed to align incentives between specialists and ACO initiatives. To meet this element, CMS plans to extend BCPI payments, with some technical revisions, through 2025 and to launch a new model focused on cancer treatment, the Enhancing Oncology Model. Further, CMS will test a new mandatory acute episode payment model that improves acute care and care transitions while supporting the goals of longitudinal, accountable care. CMS stated that mandatory models could improve and standardize care for beneficiaries while avoiding risk selection in participation decisions.

3. Create Financial Incentives within Primary Care for Specialist Engagement.

The initiative’s third element will create innovations to improve coordination and collaboration to benefit beneficiaries with complex conditions, including at the point of referral between primary care and specialty care physicians.

In the short term, CMS plans to explore the use of electronic consults with specialists to improve access to and reduce wait times for specialty visits. In the long term, CMS will test the potential to establish financial targets for costly specialty care within population-based models.

In its reasoning for this shift, CMS referred to the increase in specialist referrals over the past two decades, which has led to fragmented outpatient specialty care. The negative impact of fragmentation required CMS to propose a solution that engages specialists in value-based payment models to enhance the efficiency and coordination of specialty care.

4. Create Financial Incentives for Specialists to Affiliate with Population-based Models and Move to Value-Based Care.

Finally, the fourth element creates a targeted set of financial incentives for ACOs to manage specialty care actively. CMS explained that to reduce unnecessary hospital admissions, emergency room visits, and low-value imaging and ancillary services, ACO incentives “need to be stronger, given competing incentives to increase volume for some ACOs.”

CMS established two long-term proposals to address this element. First, CMS plans to explore sub-population conditions and procedure-based spending targets for hospital-affiliated ACOs to manage high-volume and costly conditions better. Second, CMS will encourage specialists to meet sub-population conditions and procedure-based spending targets for physician-affiliated ACOs.

Final Thoughts

As CMS continues to develop its Innovation Center’s strategy and application for healthcare delivery models, we will continue to share the latest information. In addition, more information about the Innovation Center and details about Innovation Center models can be found at