CMMI’s pause on direct contracting a turning point for value-based care

CMS’ Center for Medicaid and Medicare Innovation’s decision to pause applications for the Global and Professional Direct Contracting Model could have important consequences for both the model and the future of value-based care.

Some experts feared that canceling or pausing alternative payment models like the GPDC Model would cause healthcare executives to question the Biden administration’s commitment to value-based care and curb their investment in it. Providers may hesitate to invest in specific models since they might change or go away, which could undermine their success—and the transition from volume to value.

Healthcare transformation requires long-term investment from the healthcare delivery system, making it crucial for providers to trust and believe in CMS’ long-run support for value-based care, said Medicare Payment Advisory Commission member Dr. Amol Navathe, a physician and economics professor at the University of Pennsylvania.

Experts have called for greater participation in value-based care from a broader range of entities in recent years. The Geo and GPDC models were supposed to be a step in the right direction, but CMMI’s seeming about-face on both models threatens to hamper progress, Navathe said. In addition, the agency’s decision has been highly disruptive, especially for new organizations that invested significant resources to participate in the model.

But it’s probably a necessary trade-off for the Biden administration to ensure that CMMI’s policies and programs fit its healthcare agenda.

In addition, the pandemic has made it difficult for regulators to roll out value-based payment models because there’s no clear means to set benchmarks, define baseline periods and other crucial requirements. That makes it difficult for CMMI to move forward with the GPDC Model and other demonstrations, Navathe said.

Still, future CMMI models could fail to deliver on their promises if healthcare organizations are less willing to invest in them, as underinvestment could curb participation, cost savings, quality improvements and beneficiary satisfaction. And even if it makes sense for them, healthcare organizations might have a tough time committing if they feel like the agency has burned them before, said former CMMI official Valinda Rutledge, executive vice president of federal affairs at America’s Physician Groups.

The pause could also make it difficult for CMMI to evaluate the GPDC Model because the only participants may be first movers. They tend to be smaller, more progressive organizations with a greater appetite for risk than other providers, Rutledge said. That could exclude many larger healthcare organizations since they’re usually more conservative and risk-averse than first movers. If CMMI went forward with applications for 2022, the agency would be able to test the model among a more diverse group of providers, Rutledge argued.

Not everyone sees it that way, though.

Coastal Carolina Health Care CEO Stephen Nuckolls supported CMMI’s decision to pause applications for the GPDC Model, arguing that the model already has enough participants to test it.

“Having a smaller number of participants in it is probably the right thing to do because it’s uncertain how this is really going to work out. Let’s test it. Let’s not lose a ton of money for the trust fund during the process,” he said.

But limiting participation in the GPDC Model might have the opposite effect on the Medicare Hospital Insurance Trust Fund, a former senior Trump administration official argued.

“There’s really no clear policy rationale not to move forward with this—the program’s running out of money. And everybody agrees that value-based care is what’s going to improve quality and lower costs,” the official said.

Pausing applications for 2022 could inadvertently increase the market power of organizations that applied early for the GPDC Model because they could sign up providers that had planned to join it before CMMI stopped accepting new applications, said former CMMI official David Ault, an attorney at Faegre Drinker Biddle & Reath. That could make it tougher for the model to lower healthcare costs and spending. And if the GPDC Model doesn’t save money, CMMI could kill it after the second performance year.

“Politically, that would be really hard for them to do,” Ault said.

Those concerns haven’t escaped new CMMI Director Liz Fowler, who tried to put the healthcare industry at ease during the National Association of ACOs’ spring conference last month.

“Our commitment to value-based care has never been stronger,” she said.

But the agency wants to make evidence-based decisions to ensure its models improve quality and lower costs, which could mean pulling back at times, Fowler added.

“Not everything is going to be a home run. Some things will work, others won’t,” she said. “I’m asking for your patience as we take time to review the portfolio (of) models, make adjustments where necessary, and make sure that our path forward is sustainable and meaningful.”

Fowler said that CMMI and the healthcare industry have been too focused on whether value-based care models lower costs and spending. She suggested that quality improvement would have a greater role in the Biden administration’s value-based care evaluations and strategy, hinting that the agency could take a step back from models that rely on providers accepting more risk.

In the next few years, the agency will focus on big picture issues like transforming the healthcare delivery system rather than ensuring a model becomes a permanent part of the Medicare program. Insiders have often criticized CMMI because just four of its models were permanent.

Health equity is a top priority for the Biden administration and key to the agency’s value-based care agenda, Fowler said. In addition, CMMI will likely focus more on creating alternative payment models that address the Medicaid program, multi-payer alignment and drug pricing.

“I plan to consider health equity in every stage of our models from model development to participant recruitment through model evaluation,” she said.

CMMI will try to create a smaller, better-coordinated portfolio of models, said Fowler. It’s something that experts have recommended for years. And now that the agency has been around for more than a decade, it’s time to move beyond establishing proofs of concept, according to some insiders.

“But that’s easier said than done,” Fowler said.

The agency can’t retool its approach to value-based care overnight because there’s a massive amount of investment in existing models, and stopping them early would make it difficult, if not impossible, to learn from them.

Ault said the agency would likely test specific policies or components in as few models as reasonably possible, but limiting the number of models won’t be the main goal.

“They’re going to do the number of models they think they need to do to carry out their policy objectives,” he said.

The Biden administration hasn’t shared many details about its plans for the future or the reasoning behind them, leading to widespread frustration throughout the healthcare industry.

That’s likely because Biden’s team is still rounding into shape. His pick to head CMS, Chiquita Brooks-LaSure, has had her confirmation held up following the agency’s decision to revoke Texas’ Medicaid waiver, which outraged some GOP lawmakers. And the leadership vacuum seems to have left the agency without a clear communications strategy, leaving no one to sign off on major policy announcements, said Dr. Mai Pham, a consultant. She formerly served as CMS’ chief innovation officer.

“The secretary and the White House are trying to fight a pandemic. It’s not realistic to put day-to-day CMS communications in front of them for approval,” Pham said.

That offers little comfort to healthcare executives asking for more guidance from CMMI—and CMS in general—to guide their investment decisions. But it’s something they’ll have to live with for now.

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Marie Maynes
Marie Maynes is a Sports enthusiast and writes for the Sports section of ANH.