Hospices and Accountable Care Organizations have the ability to customize payment contracts within the Realizing Equity, Access and Community Health (ACO REACH) program.
Effective Jan. 1, 2023, the U.S. Centers for Medicare & Medicaid Services (CMS) is replacing the Global and Professional Direct Contracting (GPDC) model with ACO REACH. The agency says the new program reflects its redesigned strategy for payment system demonstrations, with advancing health equity as a key tenet.
Some features of GPDC will continue within the new program, including flexibility on payment arrangements between ACOs and downstream providers.
“We have full financial responsibility for our patients, including all spend that happens within Medicare A and Medicare B. Within that, we have the ability to pay claims for people who wish to enter a relationship with us,” Andrea Osborne, senior vice president of delegated programs for VillageMD, told Hospice News. “When we pay claims in lieu of Medicare, we pay the provider that cares for one of our affiliated patients. Because we’re now becoming the payer, we can change what that payment arrangement looks like.”
Understanding ACO REACH
Within the direct contracting program, providers bear 100% of the risk associated with eligible patients for the global option or 50% risk with the professional option.
Many participating providers anticipate that the transition from direct contracting to ACO REACH will be seamless, but some differences exist between the two programs.
REACH will have a greater focus on addressing health care disparities, as well as a stronger emphasis on screening and monitoring of model participants to foster transparency and prevent inappropriate coding and risk score growth.
The program also institutes a health equity benchmark adjustment for payments to ACOs serving higher numbers of beneficiaries from underserved populations. CMS will identify these providers using statistical manuals such as Area Deprivation Index and Dual Medicaid Status.
Other new features include expansion of the services that nurse practitioners can provide and additional rules to tighten oversight, governance, and compliance.
Designing payment arrangements
The flexibility that providers have to develop customized payment contracts began in earnest with the direct contracting program, though some limited options existed in next generation ACO models, according to Osborne.
VillageMD did have partnerships with a range of other providers in the continuum through those next generation programs, but those did not include hospice until direct contracting emerged. At the time, those relationships were oriented around home health agencies and skilled nursing facilities, Osborne told Hospice News.
“Our participation agreement [with CMS] says that the financial arrangements are between us and that provider, but within that we’re always ensuring that what we’re doing is fair market value,” Osborne said. “We follow all the Medicare rules, but the arrangement itself may look different. It could be a bundled payment. It may be inclusive of things that aren’t always the responsibility of that provider but that really we believe provide overall better care for the patients when they’re coordinated under one payment model.”
The flexibility can apply not only to hospice itself, but also to the upstream services that many of those providers offer, such as palliative care, PACE, and home health, among others. Osborne said that the ability to think holistically about patients’ needs and coordinate care are among the program’s “best benefits.”
However, providers should bear in mind that even in ACO REACH some limitations apply, according to Melody Danko-Holsomback, vice president of education for the National Association of ACOs.
“There are some regulations for certain types of contracts. For example, skilled nursing facilities need to be three stars or greater in order to contract with the ACOs. That’s a CMS directive that has to be followed, but that’s only for utilization of the waivers,” Danko-Holsomback told Hospice News. “It’s up to CMS to give some parameters that you have to follow. With that said, it doesn’t mean that an ACO can’t contract with providers in other ways and create business agreements for accepting certain types of patients, following certain care models or quality metrics.”
These contracts can involve full capitation with a per-patient, per month rate, or they can be fee-for-service. Other possibilities include hybrid models in which the hospice or other post-acute provider will receive a portion of their reimbursement on a fee-for-service basis, as well as additional payments later on determined by performance on quality metrics.
Among those metrics are reductions in hospitalizations, readmissions. and emergency department visits. ACOs in the REACH program will have access to three years worth of claims data to help guide those decisions.
“One of the nice things about getting this data is that when we looked at hospice data, we found out that once our patients entered a hospice company, only 1% of the time did they end up back in the hospital,” Osborne said. “To me, it was a really great statistic that tells me that patients are getting what they requested, which is to be at home. So hospice was a place where we wanted to look at partnership.”
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