Hospices See Potential in Value-Based Contracts, but Referrals Not Guaranteed

Shared savings contracts in value-based care programs can generate revenue for hospices that offer upstream services like palliative care, but that does not guarantee that providers will see an increase in referrals.

Hospices nationwide have been developing additional business lines to capitalize on emerging value-based models, including services like PACE, home-based primary care, and palliative care, among others. To secure reimbursement, many of these providers have been entering into contracts with Medicare Advantage plans and Accountable Care Organizations (ACOs).

Often, these agreements involve a shared cost savings component and additional payment for achieving quality benchmarks, but payers and ACOs can’t promise that the contracts will yield referrals, according to Rachel Corbitt, chief operating officer for Florida-based Aegis Medical Group.

“The next thing that we’ve struggled with is the expectations from preferred providers. They think they sign the contract, and they’re going to get an increase in referrals,” Corbitt said at the National Association of Accountable Care Organizations (NAACOS) annual conference. “I would love to say that happens, but we flat out tell them — it’s in the agreement — we can’t guarantee referrals.”

Aegis is a physician network that spearheads an accountable care organization that will participate in the ACO Realizing Equity, Access, and Community Health (ACO REACH) program when it launches next year.

CMS is replacing the Global and Professional Direct Contracting (GPDC) model with ACO REACH effective Jan. 1. 2023. The agency says the new program reflects its redesigned strategy for payment system demonstrations, with advancing health equity as a key tenet.

Two voluntary risk-sharing options exist under the ACO REACH model. Contracted agencies will choose between a global, Total Care Capitation option and a professional, Primary Care Capitation option.

Each of these involves a capitated, risk-adjusted monthly payment for enhanced primary care services. These mirror the parameters for direct contracting, in which providers bore 100% of the risk associated with eligible patients for the global option or 50% risk with the professional option.

Quality is an essential element of the financial methodology underlying the program.

CMS will withhold 2% of the capitation rate until a plan’s performance is consistent with the agency’s quality thresholds. This quality withhold is reduced from the 5% that would have existed in the discontinued direct contracting models. Initially, the agency is focusing on two key metrics, all-cause hospital readmissions and unplanned admissions for patients who have multiple chronic conditions.

The program is designed to allow ACOs to keep more of the savings that they generate and reduce risk based on quality performance, and those entities can contract with preferred providers to help them meet those objectives, including hospices, home health agencies, and skilled nursing facilities, among others.

“[ACOS participating in REACH] have the flexibility to have different payment arrangements with your participating in downstream providers,” David Pittman, senior policy advisor for NAACOS, said at the conference. “And you can use that in all different ways to create networks to incentivize value, to have payment incentives built in during the performance year and not waiting till after [that year] is over and distribute the shared savings payments.” 

ACO REACH, like its direct contracting predecessors, is oriented around primary care. Direct contracting was announced in 2019 as part of the Center for Medicare & Medicaid Innovation’s (CMMI) Primary Care First initiative, designed to test a suite of alternative payment models for seriously ill seniors who had been receiving fragmented care.

The models adapt and integrate concepts from programs such as ACO, the Medicare Shared Savings Program, and Medicare Advantage, as well as strategies used in the private sector.

The ability to partner with hospice and other community-based providers — and to negotiate customized agreements with those organizations — is a key benefit of ACO REACH, according to Andrea Osborne, senior vice president of delegated programs from primary care company VillageMD. This is particularly the case for potential preferred providers who don’t qualify to participate in the program directly. 

“One of the big benefits of this program is the ability to work with those downstream providers and to contract with them, and to be able to move all providers that you’re working with to some type of value-based arrangement,” Osborne said at the conference. “They want that opportunity. They can’t have a relationship with CMS; there isn’t a model that allows them to be in charge … You show me something that you think is fair that’s based on but that’s based on quality, and as long as I can set it up in my system I’m willing to try it. It’s allowing your partners to help to create what the payment model looks like.”