New CMS value-based payment model aimed at rural hospitals, ACOs

Dive Brief:

  • CMS on Wednesday announced a new payment model for rural hospitals and accountable care organizations that will use upfront and capitated payments. Participating facilities will be able to waive cost-sharing for Medicare Part B services, provide transportation for beneficiaries and expand telehealth services, among other flexibilities.
  • The Community Health Access and Rural Transformation model has two tracks, one of which is focused on ACOs. In the other track, $75 million will be provided to lead organizations in 15 rural communities, which will be announced early next year with a planned start of the model next summer.
  • The lead organizations, which can be state Medicaid agencies, local health departments or academic medical centers, among others, will receive $2 million after being accepted and another $3 million in upfront funding as the model progresses.

Dive Insight:

Before the COVID-19 pandemic forced CMS, like other organizations, to put business as usual operations on hold, the agency had moved at a relatively rapid pace of value-based alternative payment models in recent years. That includes those focused on primary care, emergency transportation services and treatment of kidney disease.

And many argue the coronavirus crisis has only highlighted the importance of paying for care based on quality rather than volume. Providers forced to halt elective procedures and now facing patient reluctance to come back to an office or hospital have suffered financial hardship with the current mostly fee-for-service based system.

Upfront funding and per person per month payments, as this new model provides, could provide more financial stability.

Rural providers are also among those hit hardest by COVID-19. They tend to have less liquidity and operate on smaller margins. Many were already facing closure, and the disruption from the pandemic has heightened those threats.

But they received less in federal bailout funds intended to help providers stay on their feet. In the community track, hospitals must be acute care, critical access or have a special rural designation. They will receive an annual capitated payment. The state Medicaid agency is a required partner.

Other waivers participating hospitals will receive are the requirement for a three-day inpatient stay prior to admission to skilled nursing facility; the ability for post-discharge and care management home visits; and hospital conditions of participation that allow a rural outpatient department and emergency room to be paid as if classified as a hospital.

In the other track, CMS will select 20 ACOs to participate starting in January 2022 for five years. They will also be required to participated in the Medicare Shared Savings Program.

They will receive a one-time upfront payment of at least $200,000 plus $36 per beneficiary and be able to receive a prospective per member per month payment of at least $8 for two years. The exact payments depend on the amount of risk the ACO takes on.

They will also receive telehealth flexibilities and the waiver of the three-day inpatient stay requirements for skilled nursing admissions.

The model’s announcement follows an executive order President Donald Trump signed a week ago directing CMS to create an action plan for rural healthcare that would improve technology use, access and broadband connectivity.

Group purchasing organization Premier applauded the model.

“By requiring partnerships between health systems, state Medicaid agencies and other providers, the Community Transformation track will help break down the current care silos and enable coordination across the continuum to improve care,” the company said in a statement. “Providers in rural areas will similarly benefit from capitated payments, which will ensure a predictable budget and a focus on innovative care to improve the health of their communities.”