Oct 24 2018 | Thought Leadership | By

Beyond ACOs: Why Medicare Advantage Should Drive Your Risk Strategy

This three-part blog post series highlights why Medicare accountable care organization (ACO) participants should evaluate Medicare Advantage as a longer-term strategy. In the first part, we covered the proposed “Pathways to Success” program from CMS, and the effort to push more ACOs into downside risk. In the second post, we discussed the limitations of the current Medicare Shared Shavings Program (MSSP) ACO program. Now Part 3 explores the opportunities in Medicare Advantage, as well as new policy proposals expected to draw in more providers.

As MSSP ACOs evaluate the decision of whether to pursue the proposed “Pathways to Success” model or leave the program altogether, evolving market dynamics are placing pressure on health systems to assume two-sided risk. To respond to these changes, organizations must consider how Medicare Advantage (MA) can be a key component of their long-term success. (Click here for an infographic covering MSSP ACO performance and the options organizations have with Medicare Advantage.)

MA affords opportunities to strengthen value-based care capabilities, control the premium dollar, improve outcomes and forge a strong connection with patients.

Compared to Medicare ACOs, MA offers structural advantages in a number of areas that enable success in value-based care, including:

  • Financial opportunity: MA offers greater potential financial opportunity, including the ability to better fund incentives that change provider behavior, the ability to control more of the premium dollar, performance bonuses for highly rated plans, and Part D coverage. Based on our analysis, the MA opportunity can be as high as 6x—and sometimes higher—than that of an MSSP (but is dependent on a variety of factors such as regional benchmarks, risk adjustment, medical expenses, market penetration rates, etc.)
  • Benchmarks: Through an established cost benchmarking methodology, MA plans bid for government payments and may earn rebates to offer improved benefits that can attract more members.
  • Risk adjustment: Risk adjusted premium enables MA plans to more accurately predict the health expenditures of members by adjusting payments based on demographics and health status.
  • Care delivery: MA offers incentives to innovate around care delivery models.
  • Benefit design and utilization management: Through innovative benefit packages and provider network designs, MA plans can deliver high-value care at lower costs through appropriate utilization in a coordinated network.
  • Data: Timely access to claims data or ownership of claims management enables more immediate programmatic care interventions.


Medicare Advantage as a MACRA Strategy

The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015’s Quality Payment Program (QPP) is helping accelerate the adoption of two-sided risk through the Advanced Alternative Payment Model (Advanced APM) track. Beginning in 2019, providers will have a new path to qualify for the Advanced APM track: The All Payer Combination option.

Under this option, clinicians have two avenues to meet the qualifying participant (QP) threshold: either through FFS Medicare Advanced APMs or in combination with volumes through “Other Payer Advanced APMs.” As it stands, Medicare Advantage is considered an “Other Payer” in the All Payer Combination option and can be counted in the numerator toward QP eligibility, if the MA plan meets certain criteria and applies for inclusion in the All Payer option. Eligible clinicians, through their participation in Advanced APMs, can receive a 5% APM Incentive Payment.

CMS also recently announced it is advancing the Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) Demonstration. The demonstration project provides the same exemptions from MIPS reporting as Advanced APMs, recognizing that many MA plans have developed innovative payment arrangements similar to Advanced APMs. However, they will not be eligible for the 5% bonus as seen in an Advanced APM.

Now is the time for health systems to leverage these favorable payment policies and incentives from the government to get ahead of their Medicare strategy, especially for ACO participants considering whether to continue in the “Pathways” program. When successfully implemented, full risk arrangements align interests, improve population health management and encourage providers to deliver high-value care. Organizations that are ready to make the transition to two-sided risk will realize a significant competitive advantage.

To learn more about these market trends and how they impact your Medicare strategy, our new paper here.

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