It’s been a busy year for healthcare transformation, with CMS introducing two nationwide payment models to advance reforms that we predicted nearly ten years ago in our Healthytown work. The Making Care Primary model is focused on primary care, and it has enormous potential for physician practices that need additional support in moving to value-based care.
Even more ambitious is the AHEAD model (or, in its clunkier, non-acronym form, All-Payer Health Equity Approaches and Development). This is a total cost of care (TCOC) model, meaning it tries to account for all the healthcare costs of a defined population, both inside and outside the hospital.
CMS says AHEAD is designed to build on the success of innovative, state-based models in Maryland, Pennsylvania, and Vermont, but the new effort goes further than anything those states have attempted. With this model, CMS is trying to combine four major reforms that have never been implemented all together:
- Hospital global budgets that are set prospectively and paid bi-weekly in lieu of traditional Medicare claims. According to CMS, each global budget “will be based on historical revenues for eligible services and include adjustments for performance accountability (e.g., reductions in avoidable utilization) and the unique social and medical risks of the population each hospital serves.”
- All-payer participation designed to keep costs down and spread evenly across public and private payers – so that a patient with commercial insurance, for instance, is not subsidizing exactly the same treatment for a Medicare patient. CMS says states are expected to use “regulatory levers” to compel participation.
- Extensive support for primary care at both the state and federal level. In their first year of participation, states are required to “establish a Medicaid primary care APM or patient centered medical home.” Meanwhile, CMS promises that “primary care practices participating in the model … will receive a Medicare care management fee to meet care transformation requirements for person-centered care.”
- Health equity requirements with accountability and “teeth.” Health equity is baked into the name of the new model, so it’s not surprising that CMS mandates go well beyond the regulatory status quo. Under the supervision of a “model governance structure,” states will be required to adopt statewide equity plans while participating hospitals will create their own plans that “align with statewide priorities and activities.” Hospitals and physician practices will be required to gather enhanced demographic data and to offer resources based on health-related social needs. Global budgets and primary care reimbursements will be adjusted for social risk, with a possible bonus for “improved performance on disparity-focused measures.”
What We Learned in Maryland
Personally, I hope CMS finds success with both of the new models unveiled in 2023 because the trajectory of the US healthcare system remains unsustainable, even after decades of tinkering at the margins. We’ve argued for years that payment models need to catch up with trends in demographics, technology, and consumerism.
Much of that change is reflected in Maryland's long-running Medicare waiver, which is the primary inspiration for the AHEAD model. Across Maryland, we’ve worked extensively with hospitals, local health departments, and state agencies, giving us unique insight into the most successful TCOC experiment in America.
For instance, in 2021 the Maryland Health Services Cost Review Commission (HSCRC) engaged Ascendient to create a strategic plan that would “articulate the ideal future position for the HSCRC and the Maryland Model for the next ten years.” Because Maryland state government is admirably transparent, much of that work is publicly available online (pages 29-43).
In addition to data analysis and a national trend scan, we polled and interviewed dozens of stakeholders representing health systems, provider groups, payers, state associations, government agencies, and more. We wanted to know two things: 1) Did stakeholders believe the Maryland model was working; and 2) What changes would they like to see in the model going forward?
Several of our findings may be helpful for other states weighing the option to join AHEAD:
- Maryland generated healthcare savings that far exceeded targets, but Medicare Part A and B spending per beneficiary still exceeded other states.
- The model is most successful at limiting hospital spending growth, thanks largely to global budgets that act as a strong incentive to transform care.
- Outside the hospital setting, the Maryland model lacked the financial and regulatory “teeth” to achieve its goals – particularly with population health.
- The model incentivizes hospitals to move patients to lower-cost outpatient settings, where there is less visibility into costs and health outcomes.
- A strong majority of primary care practices – roughly 80% – participated in the Maryland model through Care Transformation Organizations (CTOs).
All of this is relevant because Maryland’s healthcare stakeholders probably know better than anyone what it takes to have a successful TCOC program. So far, CMS has offered only a high-level view of the AHEAD model, but once full guidelines are released, we recommend that states pay careful attention to details like who sets targets, how much flexibility is offered, and how the program incorporates non-hospital providers. Those details may speak volumes about what CMS has learned from the Maryland model.
I can’t begin to guess how many states will volunteer for the AHEAD model, though Vermont already has signaled its intention. CMS says only eight states will be chosen, but applications could lag that target – or exceed all expectations. For states that are seriously considering the model, my advice would be to take a deep dive into the experience in Maryland. This Higher Thinking paper that we recently republished is a great place to start. For additional questions, feel free to contact us.
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