Update On The Medicare Value-Based Care Strategy: Alignment, Growth, Equity

Editor’s Note

This article is the latest in the Health Affairs Forefront series, Accountable Care for Population Health, featuring analysis and discussion of how to understand, design, support, and measure patient-centered, cost-efficient care under the umbrella of accountable care. Additional articles will be published throughout 2024. Readers are encouraged to review the Call for Submissions for this series. We are grateful to Arnold Ventures for their support of this work.

Medicare is responsible for more than one in five dollars spent on health care in the United States. Given its size and mission, Medicare programs and policies have a major role in transitioning the health care system away from fee-for-service payment, which incentivizes the quantity of care, and toward value-based payment, which incentivizes higher-quality care and more efficient spending. In July 2022, in Health Affairs Forefront, the Centers for Medicare and Medicaid Services (CMS) articulated our overall Medicare value-based care strategy of alignment, growth, and equity. Since then, CMS has promulgated several final rules for both traditional Medicare and Medicare Advantage (MA), announced new alternative payment models, and is considering future potential policies with multipayer alignment, growth of accountable care, and promotion of equity in mind.

The selection of these objectives—alignment, growth, and equity—is deliberate to maximize care transformation and improve care for the people we serve. Alignment is important because CMS programs pay for care on behalf of more than 160 million people across the United States, and providers interface with a multitude of payers across CMS’s traditional Medicare, MA, Medicaid and the Children’s Health Insurance Program, and Marketplace programs, as well as commercial insurance. Individual practitioners often don’t check what insurance a patient possesses when they walk into clinic examination rooms, and so without alignment, it can be confusing to reconcile disparate value-based requirements. As such, alignment across payers for value-based care model and program features is critical so that provider organizations can focus their attention and truly transform health care delivery.

CMS is also focused on the growth of accountable care. CMS has defined accountable care as when a person-centered care team takes responsibility for improving quality of care, care coordination, and health outcomes for a defined group of individuals to reduce care fragmentation and avoid unnecessary costs for individuals and the health system. One of the primary ways that accountable care is delivered is through accountable care organizations (ACOs), in which groups of health care professionals, hospitals, and other providers work together on behalf of a defined patient population. Because accountable care has been shown in several contexts to deliver more person-centered care, reduce the cost of care, and promote delivery of high-quality care, CMS has established the goal of having 100 percent of traditional Medicare beneficiaries and the vast majority of Medicaid beneficiaries in an accountable care relationship with their providers by 2030.

Profound health disparities have continued to plague rural and other underserved communities across the US. A person born into one neighborhood can have a life expectancy more than 20 years lower than a person born into an adjacent one, which can be the result of a confluence of individual-level and community-level factors, including access to health care. The design and implementation of value-based models and programs can have a meaningful impact toward addressing these and other disparities and promote value-based practices among providers treating rural and other underserved communities. Here, we report on progress toward these objectives and look forward to the future.

Alignment

Medicare has started to align value-based care programs and models, starting with quality measurement and the delivery of claims data and patient health information from CMS and health insurers to practitioners.

At the start of 2023, CMS established its Universal Foundation of quality measures that CMS intends to implement across as many quality and value programs as is feasible and appropriate. CMS published adult and pediatric Universal Foundation quality measure sets with the long-term goal of implementing quality measures that can be used across a person’s care continuum. Additionally, this year we have finalized add-on sets for maternity care, hospital, and postacute and long-term care. The Universal Foundation quality measures are already reflected in the Medicaid Core Sets and the Marketplace Quality Rating System. In 2024, CMS has added the adult Universal Foundation quality measures into the primary care Merit-Based Incentive Payment System (MIPS) Value Pathway and has solicited comment on further incorporating the Universal Foundation into the Medicare Shared Savings Program and the MA and Part D Star Ratings Program. This alignment across CMS programs allows practitioners to better focus their quality efforts, reduce administrative burden, and drive digital transformation and stratification of a focused quality measure set to assess impact on disparities.

The delivery of data in an aligned way to practitioners across markets is fundamental for successful value-based arrangements. For practitioners to understand the entirety of care delivered to their patients, they often must sign into insurance portals one by one, which prevents easy identification of gaps in care and having a comprehensive picture of patient needs. CMS recently finalized a rule that requires certain health insurers to make specified data readily available to providers in standardized application programming interfaces. This standardization complements existing Medicare Part A, B, and D monthly claims data sharing that CMS provides to ACOs and will help practitioners and ACOs understand the full medical claims history of their patients. We are also focused on sending ACOs more data on specialist performance, consistent with the Innovation Center’s Specialty Strategy. We believe access to this claims data will help lower barriers to participation in value-based arrangements, especially those practitioners who also contract with MA plans, Medicaid managed care plans, and commercial market plans offered on the federally facilitated Marketplaces.

Another key aspect of alignment is scaling effective Innovation Center model tests, or features of these models, into the Medicare program to increase impact. For instance, a service tested in an Innovation Center model that has been shown to have positive impacts on patient health outcomes could be added as a service under the Medicare Physician Fee Schedule to contribute to care transformation within the fee-for-service payment framework. CMS recently finalized new coding and payment for community health integration and principal illness navigation, which describes services typically performed by community health workers, peer-support specialists, and care navigators. Innovation Center models have demonstrated the scalability of care navigation, and findings from extensive external research have demonstrated that these services drive higher-quality care and reduce disparities. As a result, we look forward to improved care from increased use of these services with this new coding and payment policy.

As MA enrollment now represents more than half of the total Medicare population, it plays an increasingly central role in efforts to promote value-based alignment. As a result, CMS is interested in the composition and types of value-based contracts, as well as integration between MA organizations and practitioners. Existing surveys, such as the Health Care Payment Learning and Action Network’s (LAN) annual alternative payment model survey, provide data on the percentage of MA payments moving through value-based arrangements, but more detail in understanding how and whether they facilitate changes in care delivery is warranted. For example, increased MA data and transparency would allow CMS and the public to better understand how payments from MA organizations to providers are promoting high-quality, accessible care, and inform goal setting for accountable care targets. It is especially important to understand how vertical integration and subcapitated arrangements (when MA plans pass financial risk onto contracted provider groups) impact care delivery, payment accuracy, such as through coding behavior or medical loss ratios, and competition among MA plans and health care providers. CMS and the public should have the tools to evaluate MA markets in the same way they are able to evaluate traditional Medicare. Ensuring these tools are available across all parts of the Medicare program facilitates appropriate transparency and will further CMS efforts to foster robust competition, in line with the president’s July 2021 “Executive Order on Promoting Competition in the American Economy.” Thus, CMS has published a Request for Information on MA data (the deadline is May 29, 2024) to gather input on ways CMS could improve current data collection and release methods and collect and release additional data to support these overarching efforts.

Growth

The Shared Savings Program is the largest ACO program in the country, with almost 11 million Medicare beneficiaries receiving care from an ACO in the program. CMS published an update to the accountable care vision outlining many recent changes to the program, and we are starting to see the impact of these changes in driving accountable care. For example, in 2024, to encourage participation in the Shared Savings Program, CMS made advance investment payments available for certain new, smaller ACOs, allowing them to build the infrastructure to succeed in transforming care delivery. Nineteen new ACOs are participating in the Shared Savings Program and receiving these payments, with these ACOs serving a larger number of underserved beneficiaries than other ACOs (29 percent of the beneficiaries receiving care from these ACOs are receiving low-income subsidies or are dually eligible, and 51 percent of the beneficiaries receiving care live in health professional shortage areas). These advance investment payments are a result of scaling certain features of the Innovation Center’s model test of the ACO investment model in the Shared Savings Program.

Going forward, CMS will continue to review the results of the Innovation Center’s ACO model tests to determine if potential inclusion in the Shared Savings Program might be warranted. For example, the Innovation Center is testing a health equity benchmark adjustment in the ACO REACH Model, which increases the benchmark for ACOs serving underserved beneficiaries. In 2024, there are 1,042 federally qualified health centers, rural health clinics, and critical access hospitals participating in the model, which is a 25 percent increase from 2023. CMS will consider the results of this benchmark adjustment to assess whether it would be appropriate to be incorporated through rulemaking to help encourage more participation in ACOs in underserved areas in the Shared Savings Program and increase resources to providers delivering care in areas of historical underinvestment. In addition, we continue to explore a higher-risk track in the Shared Savings Program (meaning an option for ACOs that would allow them to take on more financial risk and potentially receive greater payments of shared savings), while balancing factors to protect beneficiaries, ACOs, and the Medicare trust funds.

Given the foundational importance of primary care for a well-functioning health care system, CMS is committed to finding how to support these providers’ movement into value-based programs and models in three ways. Currently, 45 percent of primary care providers are not participating in any value-based payment program.

First, CMS is further exploring ways to strengthen the primary care infrastructure through increased investment and prospective population-based payments in new models. In 2023, CMS announced the Making Care Primary Model, which offers a runway for primary care practitioners in traditional Medicare to participate in value-based care by gradually adopting prospective, population-based payments while building infrastructure to improve behavioral health, specialty integration, and equitable access to care. Tracks two and three of the Making Care Primary Model are examples of accountable care, given that they represent longitudinal relationships accountable for the total cost and quality of care. For ACO-based practices, CMS is exploring a model test within the Shared Savings Program that would provide increased, prospective payments to primary care providers, to promote innovative care delivery, and to better meet patients’ medical, behavioral, and health-related social needs.

Second, CMS is focused on new codes in the Physician Fee Schedule that provide the flexibility for primary care practices to deliver high-quality and equitable care. We think the availability of new care navigation codes discussed earlier will help people with Medicare get needed services and practitioners get needed experience providing team-based care critical to success as an ACO. CMS is also considering codes for the future that better describe advanced primary care service delivery, allowing practitioners to gain experience in accountable care that can help them reach the next step, should they choose to do so, toward becoming an ACO.

Third, CMS is focusing on the quality of primary and specialty care to drive value, since quality is fundamental to the very definition of value-based care. Many practitioners participate in MIPS, which is Medicare’s clinician-level quality program that requires performance reporting in four categories: quality, improvement activities, cost, and promoting interoperability. Historically, practitioners have had wide discretion to choose quality measures for reporting, and they have often selected measures on which they were already performing well, or even measures that are of limited pertinence to their specific practice. As such, the reported measures may not be strong enough to drive the care transformation that is needed. CMS is moving forward with changes to MIPS to strengthen reporting of MIPS Value Pathways (MVPs)—which are targeted, aligned, and cohesive measure sets based on a given specialty or medical condition. MVPs include relevant measures that assess the total cost of care, so when MVPs are appropriately reported, the Physician Fee Schedule evolves to increasingly resemble value-based and accountable care instead of a pure fee-for-service methodology. The Innovation Center is also exploring use of MVPs to encourage specialty integration and engagement in accountable care.

Equity

To advance equity, CMS is focusing on improving the flexibilities and incentives of value-based models and programs to address disparities, lower barriers to participation for practitioners treating underserved populations, and promote services that address social needs. CMS recently described new policies that reward quality care delivered to underserved populations in the Shared Savings Program and MA program, and in the hospital and skilled nursing facility value-based purchasing programs. These policies, which tie an upside-only reward to delivery of excellent care for underserved populations, are expected to encourage providers to improve access to care for underserved communities and also help address gaps in care.

Participation by practitioners in underserved communities is especially important since we have seen, especially during the COVID-19 pandemic, that providers in value-based arrangements are more resilient to workforce and service use fluctuations than practitioners paid via a fee-for-service methodology. CMS analyses show that provider organizations not participating in the Shared Savings Program tend to be smaller, and serving more dually eligible, disabled, and rural populations, and so we will continue to explore how to attract these practitioners to value.

CMS has been at the forefront of pushing our health system to consider a patient’s social needs in their overall care plan and to partner with community-based organizations to address unmet needs. For the first time, starting in 2024, CMS will make separate payment to practitioners for assessing patients for unmet social needs, including food, housing, transportation, and utilities. The social determinants of health risk assessment payment and coding under the Physician Fee Schedule were informed by the Innovation Center’s Accountable Health Communities Model, which tested whether systematically identifying and addressing the health-related social needs of Medicare and Medicaid beneficiaries through screening, referral to community resources, and community navigation services impacted health care costs and reduced use.

CMS is also examining flexibilities in value-based care to better promote services that directly address social needs themselves, including healthy meals, housing services, and transportation assistance. ACOs receiving the advance investment payments discussed earlier have indicated that they will allocate more than $5 million of these payments to hire new community health workers, and CMS is further exploring additional ways that advanced shared savings could be leveraged. Additionally, the Innovation Center has set a goal to have 100 percent of models collecting and reporting demographic and social needs data where feasible by 2030. The Innovation Center is also focusing on ways to support providers in making referrals to address unmet needs and closing referral loops in models such as Making Care Primary.

In MA, the types of services addressing social needs are often paid through supplemental benefits, which MA plans have the flexibility to offer, including special supplemental benefits for the chronically ill (SSBCI). As described earlier, MA plans often have value-based arrangements with their providers, and patient access to supplemental benefits can impact health and total cost of care. However, there is a lack of transparency on whether enrollees are accessing these services, what money is being spent on them, and what impact they have. That is why CMS made changes to collect beneficiary-level and plan-level data on spending, out-of-pocket spending, and use of supplemental benefits. Similarly, CMS is collecting more data related to the MA Value-Based Insurance Design Model at the Innovation Center, which tests how MA plans can more fully address the health-related social needs of patients, advance health equity, and improve care coordination for patients with serious illness. For 2025, CMS has also proposed to require MA plans to provide evidence for how proposed SSBCI impacts health through the bid approval process, and to notify enrollees when they are eligible for a supplemental benefit, including SSBCI, that has not been used by midyear. These policies, if finalized, would help to ensure that supplemental benefits are not just a tool to drive MA enrollment but offer meaningful services to those in need, promoting informed decision making among enrollees and robust competition within the MA market.

Looking Ahead

The goals of alignment, growth, and equity are intentionally overlapping and mutually reinforcing. Many of the policy changes discussed here support improvement in all three. As we look toward the future, we maintain these same goals to guide our decision making, to ensure that people with Medicare receive the high-quality, equitable, and accountable care that they deserve. Even so, policy changes are ultimately only successful if every entity in our health care system embraces accountable and value-based care to transform the way that care is delivered for people.

Authors’ Note

All authors are employed by the Centers for Medicare and Medicaid Services.