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By Sweta Kannepalli, Associate Analyst

CMS continues to evolve its alternative payment model strategy to include downside risk, where providers assume financial risk for quality and cost of care.  Approximately 36 percent of U.S. healthcare payments were tied to alternative payment models in 2018 per the Health Care Payment Learning & Action Network. CMS announced three shared-risk APMs earlier this year that focus on rural health and specialty care for oncology and renal disease.

Community Health Access and Rural Transformation Model

  • Approximately 57 million rural Americans lack access to healthcare services.  The Community Health Access and Rural Transformation model aims to improve access to quality healthcare for rural population and requires participants meet quality and financial benchmarks. Operational and regulatory flexibilities include waivers for Medicare requirements, cost-sharing for Part B services, and incentives for disease management programs. The two program tracks are:

Community Transformation Track

  • 15 “Lead Organizations” represent rural communities
    • e. Medicaid agencies, rural health offices, health departments, IPAs, or academic medical centers
  • Communities will receive up to $5 million over 18 months to implement transformation plans
  • Hospitals will receive capitated payments
  • Launches Summer 2021

ACO Transformation Track

  • 20 rural ACOs participate in this track and a shared-risk Medicare Shared Savings Program for up to 10,000 beneficiaries
  • Will receive a single upfront payment of at least $200,000 and $36 per beneficiary
  • Will receive prospective per-beneficiary-per-month payment, depending on the ACO’s risk level
  • Launches January 2022

End-Stage Renal Disease Treatment Choices Model
End-Stage Renal Disease Treatment Choices model determines if cost and quality improve with home dialysis and kidney transplants for Medicare ESRD patients. Both treatment options tested in this model are preferred by patients and providers.

  • Mandatory participation for selected dialysis clinics and providers
  • Home Dialysis Payment Adjustment: Reimburses ESRD facilities through prospective payment and providers receive monthly capitated payments. Providers share in savings.
  • Performance Payment Adjustment: Reimburses providers for both in-home and in-center dialysis and dialysis-related claims. Providers share in both savings and losses.
  • Runs January 2021 through June 2027

Radiation Oncology Model

The payment model aims to reduce the Medicare expenditure for radiation therapy episodes of care, while improving quality of care for cancer patients. CMS delayed the start of the model to July 2021 after receiving opposition from the providers because of excessive payment cuts and mandated participation. Payments will be aligned to a single episode-based payment, incentivizing providers regardless of site of care.

  • Mandatory participation for physician groups, hospital outpatient clinics, and freestanding radiology clinics in select markets
  • Prospective payments covering 90-day episodes for 16 types of cancer
  • Providers receive half of the payment at the onset of the episode and the remaining half is paid at the end of the episode
  • Runs July 2021 through December 2025

It is important to understand the nuances of each initiative and targeted therapy areas, which will impact stakeholders to varying degrees. New APMs should positively impact the healthcare industry, enhancing quality of care for rural or chronically ill beneficiaries. Innovative payment models involving financial accountability should incentivize providers to deliver high quality care at a lower cost, which will benefit both providers and patients. Providers could collaborate with the larger organizations to access innovative technologies and telehealth services. APMs present drug companies with opportunities to expand their reach, and preach adherence to prescription drugs managing chronic diseases. However, manufacturers might face challenges with branded drug penetration, as these models could encourage utilization of generics or most efficacious treatments.