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Overhaul of Medicare Accountable Care Organization payments




Alex Kacik: Federal regulators have been trying to boost risk based contracting and healthcare. Their latest attempt is to give new Medicare Accountable Care Organizations advanced shared savings payments to jumpstart their operations. What’s been holding these programs back?

Welcome to Modern Healthcare’s Beyond the Byline, which offers behind the scenes look into our reporting. My name is Alex Kacik, senior operations reporter, and I’m joined by Maya Goldman, our rules and regulations reporter. Thanks for coming on Maya.

Maya Goldman: Thanks for having me, Alex.

Alex Kacik: All right Maya. CMS unveiled major changes to the Medicare Shared Savings Program the Primary Accountable Care Organization initiative, as part of its draft Physician Fee Schedule rule for next year. As a little background, ACOs are hospital and physician group partnerships that signed contracts with payers to share financial risk and accountable care organizations splits profits with CMS if profits are made and shares losses if losses occurred. So what did the changes to the program entail?

Read more: CMS releases Shared Savings Program results for 2021

Maya Goldman: So CMS proposed basically an overhaul of the Shared Savings Program, I think the agency actually uses that language itself. So it’s there are a lot of things going on here. But if finalized, ACOs would have more time to transition into performance based risk. So kind of that sharing losses part. And as you mentioned at the top of the episode, certain ACOs would be eligible for upfront payments to help them transition into the Shared Savings Program. There are a slew of other changes to like tweaks to the bent benchmarking methodology, which determines whether ACOs get money back from the federal government each year and risk adjustment. And providers and value-based care advocates are generally excited about the changes and think they’ll lead to positive improvements in the program. But there are some concerns which we can get into in a few minutes.

First, though, to zoom out a bit. Alex, ACOs are a big part of the healthcare industry’s move from paying for the volume of procedures to paying for the outcomes of those procedures. What has been the adoption rate of risk based contracting?

Alex Kacik: So yeah, there’s been a heavy reliance on what’s known as fee-for-service medicine and pays for the volume of care delivered. And there’s been a slow transition to change that payment paradigm because it’s just inherently a little bit more risky. And it’s a change of practices, especially for these legacy organizations. But there is a range of risk based contracts. Many large systems participate in shared savings contracts. There are bundled payments for procedures such as knee and hip replacements, and they’re growing and then specialties those are offers offered as well.

The riskiest bet is full capitation, which provides a lump sum to the providers before treatment. And if they provide care efficiently and effectively, they get to pocket the savings. But if something goes awry, and there’s some sort of complications, readmissions, they have to potentially pay out of their own pocket. So the adoption of so called downside risk has been slow. As a percentage of patient revenue for not-for-profit hospitals, capitation revenue was only 1.1% in 2016. That’s according to Moody’s medians they come out with every year. That’s only crept up to 1.7% by 2020.

As you noted to in your reporting Maya, that other shared savings program participation there has stagnated hovering around 11 million covered lives for at least the last three years. But CMS has a goal, to get 64 million plus Medicare beneficiaries into a value-based care arrangement by 2030. Tweaks to these programs, they hope, are going to make a big difference in adoption rate. But in the meantime, there isn’t enough incentive for health systems to move from fee-for-service. They say they those that have their own insurance arm, it’s a much easier lift, and you’ll see more adoption there. Otherwise, you know, these types of contracts take a lot of coordination between providers and payers, which isn’t the norm.

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Maya Goldman: I want to clarify that these there are risk based contracts across payers. So the Medicare Shared Savings Program is for Medicare in particular, but you sort of alluded to this private payers and Medicaid offer these kinds of arrangements as well. And that in itself makes coordination difficult for participating providers. And I think that that probably has something to do with with uptake as well.

Alex Kacik: Gotcha. So while providers support getting advanced payments to kickstart their ACOs they also asked for eliminating the distinction between high and low revenue accountable care organizations. Could you tell us more about that Maya?

Maya Goldman: Yeah, so in a 2018 rule, CMS divided ACOs into two categories. So you have the high revenue and the low revenue ACOs. In high revenue ACOs, which usually include hospitals, theoretically have more control over their Medicare spending and thus can take on more risk, at least according to CMS’ logic. And low revenue, ACOs are typically physician led and they’re given more time by CMS to transition into risk. And there’s also some data to suggest that low revenue ACOs performed better. Although I think that that’s sort of disputed.

Many provider and value-based care groups, including the National Association of ACOs have been upset by this distinction since it was proposed. But CMS in this most recent proposal uses the distinction to determine which ACOs are eligible for those upfront kickstarter payments that we talked about. This gets complicated because CMS has stated goal for the investment payments that kickstarter payments is to increase ACO uptake in underserved communities. And provider groups say, well, you know, ACOs with community health centers, rural health clinics, critical access hospitals, the ones who are actually touching those underserved patients, they’re often in high revenue ACOs. So and this isn’t going to touch those groups.

Another criticism of the designation is that if an ACO has, say, multiple physician practices, and one or two hospitals in encompassed in its organization, and those hospitals mean that it gets classified as high revenue, there’s no guardrail to stop the ACO from just removing those hospitals to gain the low revenue status. And then that makes it tricky because we’re not including all these groups that we might want to include in an ACO so providers say.

Read more: Providers urge CMS to change policy for split visit payment

But while we’re on underserved communities. Alex, what are the adoption rates of ACOs among rural counties?

Alex Kacik: So generally, there’s a big gap between rural and urban counties when it comes to risk based contracting. I found one study that looked at these trends across the Ohio primary care market from 2013 and 2015. So the caveat here is this, you know, one state, not a huge sample period. But some of the things we can draw from it are, you know, there was almost a 70% difference in ACO adoption rates between urban and rural communities. And the authors of the study published in 2021, said that, unlike programs that facilitated EHR adoption, there weren’t similar initiatives for ACOs. They also cited a shortage of specialists, a lack of data to coordinate care and the smaller size of these physician groups.

So when you’re small organization, it’s harder to rationalize the upfront capital investment, because it’s just going to eat up more of their operating budget. You know, we’ve talked about many times about this shortage of specialists and in rural communities too, and that can be a hindrance as well. And when it comes to the upfront capital investment, the mean cost per visit, increased by 13.5% amongst primary care clinics that joined a Medicare ACO compared to a 4.4% increase in clinics that did not join an ACO. So there’s a big gap in terms of that upfront expenditure.

Still there are some hopeful notes from the author’s during the time of the study and insurers introduced the Ohio Patient Centered Primary Care Collaborative to educate primary care practices about the potential benefits of ACOs. So they were hopeful that, you know, as more awareness and assistance comes into the foray, they could increase adoption over time.

Read more: 
Senate advances short-term rural Medicare program extensions
New rural hospital model draws interest – and questions

Maya Goldman: Yeah, interesting. And that sort of seems to be what CMS is trying to do with with this latest proposed rule. I want to highlight one issue, especially that’s presented a roadblock for Medicare ACO adoption in rural areas. It’s a problem appropriately known as the “rural glitch.” Basically, ACOs can earn shared savings. That’s the money that they get back from the federal government by meeting a benchmark. And one of the elements that goes into creating this benchmark is a regional adjustment. So ACOs are measured based on how much money they save relative to the peers in their region, their local peers. And this is difficult for all ACOs because as they bring down costs for their patients, average regional costs come down to each year, making benchmarks harder and harder to achieve. This is especially hard for rural ACOs because they care for a larger portion of the local paper patient population than urban ACOs do at least according to the National Association of Accountable Care Organizations.

Alex Kacik: Maya, I’m just curious as you’re looking at this what, as especially in rural areas, what are payers and state and federal regulators urging, how are they trying to help more folks sign up for these types of programs? And what’s their strategy there?

Maya Goldman: Yeah. So in this proposal, CMS actually does make a specific mention of the ‘rural glitch. And industry players said in comment letters that they’re appreciative of the proposed policy change to sort of mitigate that these benchmark challenges are one of the really big roadblocks to participation in ACOs. And so CMS proposed a couple other changes that address these issues as well. The agency made it clear in the proposed rule that these proposed changes are also stepping stones to future bigger changes to ACO benchmarking.

You know, in the comment letters that I’ve read through from provider groups on the proposal. Generally they’re pretty excited about them. They request some pretty technical changes, but overall, they’re excited about the direction that CMS is headed. But there is one big ask from provider groups to allow ACOs already participating in the Shared Savings Program to opt into some of the changes that CMS proposed starting in 2024. So according to NACO’s, the National Association of ACOs, 43% of participating ACOs would not see benefits from this recent proposal until 2027. While new entrants would enjoy the improved benchmarking right away. And so provider groups are like, ‘Hey, wait, that’s not really fair.’ So I’m interested to see if CMS will make that change in the final rule.

Alex Kacik: And I know there’s a lot of attention placed on the solvency of the Medicare program. So I’m wondering how that plays into it. If the Medicare program runs out of funding, and I know there’s just like every year there’s these patchwork solutions to keep the program going. But I guess how does that factor into all this? If Medicare as the funding for that wanes.

Maya Goldman: Yeah, so I think at the root of this whole value-based care conversation is this fact that Medicare has been at the edge of financial crisis for years now. The latest projections say that the Medicare Hospital Trust Fund, which is Medicare Part A, will run out of money in 2028. And ACOs have been a key facet of the government’s movement away from that fee-for-service system over the past 10 years. But you know, there’s just been a real sort of plateau in participation and in the efforts of the federal government to sort of get these programs to take off. And I know providers are also concerned about a 5% bonus for participating in Advanced Alternative Payment Models that could expire soon if Congress doesn’t act.

So, you know, I think there’s a lot of reasons to be watching this value-based care space to see if this, you know, 10 year experiment is actually helping or if there’s something that the government needs to do to sort of kickstart this, what’s going on? Because there are some very passionate advocates in the government in provider circles, but there are also some people that are like, ‘I just don’t want to take that risk’, or ‘I can’t afford to take that risk.’ And if Medicare wants to stay solvent, which, you know, I think it’s the goal, there’s gonna have to be some kind of change.

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Alex Kacik: Maya, thanks for taking us down this rabbit hole of healthcare payments. I think it’s an interesting place to watch and appreciate your expertise, because it’s definitely complicated. So thanks so much for walking us through it.

Maya Goldman: Thanks, Alex. Always good to talk about these these wonky subjects with you.

Alex Kacik: All right. Thank you all for listening. You can subscribe to Beyond the Byline on Spotify, Apple podcasts or wherever you choose to listen. You can support the reporting of Maya, myself and our team of reporters by subscribing to Modern Healthcare, and giving us a follow us on Twitter and LinkedIn. Thank you for your support.


A Look at Waiting lists for Home and Community-Based Services from 2016 to 2021




Home and community-based services (HCBS) waivers allow states to offer a wide range of benefits and to choose—and limit—how many people receive services. The only HCBS that states are required to cover is home health, but states may choose to cover personal care and other services such as private duty nursing. Those benefits are generally available to all Medicaid enrollees who need them. States may use HCBS waivers to offer expanded personal care benefits or to provide additional services such as adult day care, supported employment, and non-medical transportation. Because waivers may only be offered to specific populations, states often provide specialized benefits through waivers that are specific to the population covered. For example, states might use an HCBS waiver to provide supported employment only to people under age 65.

States’ ability to cap the number of people enrolled in HCBS waivers can result in waiting lists when the number of people seeking services exceeds the number of waiver slots available. Waiting lists reflect the populations a state chooses to serve, the services it decides to provide, and the resources it commits. In addition, states’ waiting list management approaches differ with regard to prioritization and eligibility screening processes, making comparisons across states difficult. States are only able to use waiting lists for optional services so the number of people on waiting lists can increase when states offer a new waiver or make new services available within existing waivers; in these cases, the number of people receiving services increases, but so does the number of people on a waiting list. In many cases, people may need additional services, but the state doesn’t offer them to anyone or only offers them to people with certain types of disabilities. The unmet needs of those people would not be reflected in the waiting list numbers. Finally, although people may wait a long time to receive waiver services—45 months on average—many of the people waiting for services receive other types of HCBS while they wait.

Even though HCBS waiting lists are an imperfect measure of unmet need, there are no other measures available.  Therefore, waiting lists remain a source of concern to policymakers and proposals to eliminate them have been put forth by both Republicans and Democrats. This data note provides new information about waiting lists from KFF’s most recent survey of state Medicaid HCBS programs, highlighting why waiting lists are an incomplete measure of unmet need and why they are not comparable across states or over time.. KFF also recently provided new waiting list indicators on State Health Facts to help people better understand who is on waiting lists and what those waiting lists mean.

How did the number of states with waiting lists change between 2016 and 2021?

Between 2016 and 2021 the number of states with waiting lists has fluctuated and is currently at a low of 37 states in 2021 (out of the 50 states and DC, Figure 1). While some Affordable Care Act (ACA) opponents have cited waiver waiting lists to argue that expanding Medicaid diverts funds from seniors and people with disabilities, research shows that ACA Medicaid expansion has led to gains in coverage for people with disabilities and chronic illnesses. Waiting lists for HCBS predate the ACA Medicaid expansion, which became effective in most states in 2014, and both expansion and non-expansion states have waiting lists. Waiver enrollment caps have existed since HCBS waiver authority was added to federal Medicaid law in the early 1980s.

How did the number of people on waiting lists change between 2016 and 2021?

The number of people on waiting lists fluctuated between 2016 and 2021, from 656,000 in 2016 to 820,000 in 2018, and back to 656,000 in 2021. A contributing factor to those fluctuations—and a reason that waiting list numbers are not comparable across states—is that not all states screen for Medicaid eligibility prior to adding people to waiting lists. In 2021, most states (28) with waiting lists screened individuals for waiver eligibility among at least one waiver, but even among those states, 7 did not screen for all waivers. There were 9 states that do not screen for eligibility among any waivers and those 9 states account for over half of all people on waiting lists. Changes in total waiting lists over time may reflect changes in states’ policies towards eligibility screening (Figure 2).

In all years since 2016, over half of people on HCBS waiting lists lived in states that did not screen people on waiting lists for eligibility. One reason waiting lists provide an incomplete picture of need is that not all people on waiting lists will be eligible for services. Stakeholder interviews about HCBS waiting lists found that when waiver services are provided on a first-come, first-served basis, people enrolled in waiting lists in anticipation of future need. That study found that in some states, families would add their children to waiting lists for people with intellectual or developmental disabilities (I/DD) at a young age, assuming that by the time they reached the top of the waiting list, their children would have developed the immediate need for services. Many of those waivers offer comprehensive HCBS packages that include supported employment, supportive housing, or round-the-clock services.

When states change their eligibility screening policies, that may cause large fluctuations in waiting lists. Between 2018 and 2020, the total number of people on waiting lists decreased by 155,000 or 19%. However, that change was driven by a decrease in the number of people on waiting lists in states that did not screen for eligibility (110,000 people or 22%). The number of people on waiting lists in states that did screen for eligibility decreased by 45,000 or 14%. Nearly all the change in the national waiting list numbers between 2018 and 2020 can be explained by policy changes in two states:

  • Louisiana had nearly 30,000 people on their waiting lists for I/DD services in 2018. That year, the state implemented a new system, Screening for Urgency of Need (SUN) to determine if individuals required services soon to avoid institutionalization. Those that met the criterion of urgent or emergent need were provided with services. Those that did not remain on a registry and are screened at regular intervals or upon request, but the state does not consider the registry to be a waiting list. By 2020, the waiting list was eliminated.
  • Ohio had nearly 69,000 people on their waiting list for I/DD services in 2018. In 2019, they developed a new waiting list assessment. Using that assessment, the state was able to remove people from the waiting list who did not meet the waiver criteria and provide them with other Medicaid or state resources to meet their needs when appropriate. In 2020 and 2021, the waiting list was only about 2,000 people.

Between 2020 and 2021, waiting list enrollment declined by one percent. Overall, 19 states reported a decline in waiting list enrollment, while the remainder reported an increase (17) or no change (1).

Several states no longer operate waiting lists for certain waivers, including:

  • Minnesota and New Hampshire for people with I/DD;
  • Missouri for people with physical disabilities;
  • West Virginia and Wisconsin for seniors and people with disabilities;
  • Connecticut and Louisiana for people with mental health needs; and
  • Indiana and Kentucky for people with traumatic brain or spinal cord injuries.

A smaller number of states established new waiting lists, including:

  • Connecticut and Oregon established a waiting list for people with I/DD;
  • South Carolina established a waiting list for people with mental health needs; and
  • North Carolina established a waiting list for people with traumatic brain or spinal cord injuries.

Who is on waiting lists for HCBS?

Most people on waiting lists have I/DD, particularly in states that do not screen for waiver eligibility before placing someone on a waiting list. People with I/DD comprise 84% of waiting lists in states that do not screen for waiver eligibility, compared with 60% in states that do determine waiver eligibility before placing someone on a waiting list (Figure 3). People with I/DD comprise almost three-quarters (73%) of the total waiver waiting list population. Seniors and adults with physical disabilities account for about one-quarter (24%), while the remaining share (2%) includes children who are medically fragile or technology dependent, people with traumatic brain or spinal cord injuries, and people with mental illness. In 2021, there were no waiting lists for people with HIV/AIDS.

People who are on HCBS waiting lists are generally not representative of the Medicaid population or the population that uses HCBS. Most people on waiting lists have I/DD, but KFF analysis shows that people with I/DD comprise fewer than half of the people served through 1915(c) waivers (the largest source of Medicaid HCBS spending).

How long do people on HCBS waiting lists wait to access services and do they have access to HCBS while waiting?

In 2021, people on the waiting lists waited an average of 45 months to receive HCBS waiver services (29 of 37 states responding), up from 44 months in 2020. People with I/DD waited the longest for services, 67 months on average. The average waiting period for other waiver populations ranged from 2 months for waivers targeting seniors to 30 months for waivers that serve medically fragile children. People with I/DD residing in states that do not screen for eligibility wait longer for services than people with I/DD residing in states that do screen for waiver eligibility (81 months versus 57 months, on average). Almost all (98%) individuals currently on a waiting list are living in the community (26 of 37 states responding).

All 37 states with waiting lists prioritize certain individuals to receive waiver services when a slot becomes available. Twenty-eight states offer waivers that prioritize length of time on the waiting lists, and twenty-three states give priority to individuals in crisis/emergency status. Additionally, twenty-one states give priority to people who are moving from an institution to the community. Some states also prioritize based on risk of institutionalization (17), by degree of functional need (11), and age (3). Thirteen states report other prioritization criteria including COVID-related situations, homelessness, and instances of abuse/neglect. Most states (31 of 36 responding) use more than one priority group. Nationally, states report that over 79,000 individuals on a waiting list were offered waivers services in the past year (28 of 37 states responding).

Many people on HCBS waiting lists are receiving other HCBS while they wait. Most Medicaid benefits are provided through the state plan. States offer a variety of HCBS—such as personal care to help with bathing or preparing meals, therapies to help people regain or acquire independent living skills, and assistive technology—through their state plans. States are not allowed to use waiting lists to restrict the number of people eligible to use such services. If people on waiting lists are eligible for Medicaid HCBS, they are likely to be receiving state plan HCBS while they wait, which include home health and, in many states, personal care. They would not, however, have access to more specialized services such as supported employment or adult day care and the state plan HCBS may be more limited than what would be available through a waiver. Specifically, not all states offer personal care and among those that do, many states choose to limit services to specific sites or provider types; or to apply utilization controls on the number of hours received or costs incurred.

Of 36 states that responded to the question in 2021, all but 5 (FL, IL, IN, ND, PA) reported that individuals on a waiting list were receiving state plan HCBS. States also have other authorities to provide HCBS to people on waiting lists, including offering waiver services to children through the Early Periodic Screening, Diagnosis, and Treatment authority or using multiple, tiered waivers that provide different types and intensities of services. Medicaid enrollees can receive waiver services from one waiver while they are on a waiting list for another.

Looking ahead, shortages of direct care workers may continue to create problems for states seeking to reduce the number of people on waiting lists. States reported workforce shortages of direct care workers as the primary impact of the COVID-19 pandemic across all HCBS settings in KFF’s most recent survey of state HCBS programs. Waiting lists may reflect both shortages of workers and insufficient state funds. As the pandemic persisted, an increasing number of states reported provider closures with nearly all (44) states reporting that a provider had closed as of 2022. Although states responded to that challenge by increasing provider payment rates and increasing opportunities for people to self-direct their services, workforce challenges persist. It remains to be seen how policy changes enacted during the pandemic will affect the provision of HCBS in future years and whether the investments in HCBS through the American Rescue Plan Act will result in capacity increases even after the federal funding ends.

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RNSA22: CloudWave Acquires Sensato Cybersecurity




RNSA22: CloudWave acquires Sensato Cybersecurity

What you should know:

CloudWavethe healthcare data security expert announced today at RNSA22 that this is the case acquired Sensato cybersecuritya managed cybersecurity services company focused on protecting healthcare providers from ransomware events and other cybersecurity threats.

– The Sensato Cybersecurity Suite fits perfectly with CloudWave’s OpSus Cloud Services. The acquisition will bring together leading cloud hosting services and managed cybersecurity-as-a-service to provide hospitals and healthcare organizations with a seamless, enhanced experience.

As part of the acquisition, John Gomez, founder of Sensato and longtime healthcare information technology visionary, will join CloudWave as Chief Security and Engineering Officer. Financial details were not disclosed.

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Aestique Begins Construction On Ambulatory Surgical Center In Pennsylvania




aestheticsa Pittsburgh-based cosmetic and reconstructive surgery provider, broke ground on a new outpatient surgical center in Greensburg, Pennsylvania.

The 14,500-square-foot outpatient facility will offer expanded services, including orthopedics and major spine surgeries.

earthman (Madison, Wisconsin) is the design office for the project, which is scheduled for completion in late 2023.

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