Health Care Matters | August 2, 2024
Changes to ACO REACH Model
On Friday, July 26, CMS announced updates to the ACO REACH financial methodology for 2025 and 2026. CMS noted that the changes were meant to improve model sustainability and respond to stakeholder feedback to improve upon the accuracy of the methodology. A few key policies included:
Maintaining the current blend of 55% historical and 45% regional expenditures to set financial targets for ACOs as opposed to the previous plan of updating to 50/50 in 2025.
Instituting the planned increase to the benchmark discount in the Global risk-sharing track from 3% to 3.5% in 2025 and a (not previously planned) increase to 4% in 2026.
Replacing the National/State blended Area Deprivation Index adjustment with an area-level socioeconomic deprivation measure that accurately captures deprivation in areas with high housing values.
Why It Matters
These changes follow the release of performance year 2022 evaluation results for the precursor model to ACO REACH, which were varied but on the whole showed increases in Medicare spending and are largely intended to increase the likelihood of savings to the Medicare Trust Funds. The changes were announced just as ACOs are finalizing their provider lists for 2025 which were due to CMS yesterday. After August 1, ACOs are no longer able to add providers. This left many organizations scrambling to understand the effect these financial methodology changes would have on their forecasted performance and how, if at all, to adjust their approach. The changes and industry reaction to the changes highlight the inherent tension for CMMI and their model participants: how to balance the requirement to evaluate and evolve a model (especially one that is not showing savings to date) while providing sufficient stability to participants that have made significant investment and business decisions.
North Carolina’s Medical Debt Relief Incentive Program Approved by CMS
On Friday, July 26, CMS approved a plan by NC Department of Health and Human Services to use Medicaid program dollars to incentivize hospitals to wipe out more than a decade of medical debt approximately equal to 4 billion dollars for some of the most vulnerable people in North Carolina and prevent accumulation moving forward.
Hospitals that implement a set of policies for debt relief and mitigation will be eligible for Healthcare Access and Stabilization Program (HASP) payments. The policies include:
Relieving all medical debt deemed uncollectible dating back to January 1, 2014 for any individuals not enrolled in Medicaid with incomes at or below 350% of the federal poverty level (FPL) or for whom total debt exceeds 5% of annual income.
Relieving all unpaid medical debt dating back to January 1, 2014 for individuals who are enrolled in Medicaid.
Providing discounts on medical bills of between 50-100% for patients with incomes at or below 300% FPL, with the amount of the discount varying based on the patient’s income.
Automatically enrolling people into financial assistance, by implementing a policy for presumptively determining individuals eligible for financial assistance through a streamlined screening approach.
Not selling any medical debt for consumers with incomes at or below 300% FPL to debt collectors.
Not reporting a patient’s debt covered by these policies to a credit reporting agency.
Why It Matters
With CMS approval, North Carolina can move forward with their plan to use Medicaid dollars to incentivize hospitals to offer debt forgiveness. This innovative way of supporting individuals and families below the poverty line comes on the heels of other state innovative approaches to using Medicaid dollars including support for housing and other types of services driving health outcomes. Health care debt is one of the leading causes of bankruptcy in the United States. States are surely watching North Carolina carefully to see how this plays out. As has been the case with other types of innovation in state Medicaid programs, once one state successfully implements a new or innovative approach, others follow in short order.
What We Are Writing
Check out Our Blog with Insights from the 2025 Medicare Physician Fee Schedule (PFS) Proposed Rule
This year’s proposed rule covers a lot of ground—pressing full steam ahead on eCQMs for ACOs, introducing new payment codes for advanced primary care, and seeking more open-ended comment on a higher risk track of MSSP.
WHAT WE ARE reading
CMMI Finalizes Mandatory Episode-Based Payment Model
Yesterday, CMS released the FY2025 IPPS Final Rule, in which they finalized proposals to implement the Transforming Episode Accountability Model (TEAM) that will begin January 1, 2026.
Unforeseen Health Care Bills and Coverage Denials by US Insurers
The HCTTF and NAACOS released a resource addressing how policies can be strengthened to improve the patient experience in value-based care arrangements.
What we Are listening to
Relentless Health Value Podcast
Can a primary-care-only practice survive in 2024? This episode features Tom X. Lee, MD, founder of One Medical and most recently, Galileo.
