Biden HHS Downplays Medicare Payment Models Touted by Trump Team


September 30, 2021 4:36 pm

A Biden administration push to make federal health programs more equitable for marginalized populations will likely result in fewer payment models in which providers assume direct financial risk, a top Centers for Medicare & Medicaid Services administrator said.

Speaking at a conference of the National Association of Accountable Care Organizations on Thursday, Jonathan Blum, principal deputy administrator of the CMS, said that as the agency “defines it’s new strategic vision going forward, I would be surprised if CMS defines one of our core measures for outcome being more populations being in full risk-based models.”

Last year, 192 accountable care organizations took “downside” financial risk for cost increases, meaning they would lose revenue and have to reimburse Medicare if their cost of care exceeded agreed-upon thresholds.

Blum’s remarks signal a significant change of direction for the CMS as it moves to reverse or scrap policy directives championed by former CMS Administrator Seema Verma, who served under President Donald Trump. The announcement follows a strategic review of Medicare payment models by the Centers for Medicare and Medicaid Innovation. 

Verma had made made a priority of requiring providers to take more financial risk in order to improve the performance of alternative payment models in traditional Medicare. Alternative payment models provide incentive payments to providers for high-quality, cost-efficient care. They’re designed to move fee-for-service Medicare more toward value-based care, in which payments are determined by patient outcomes and cost savings rather than volume of services provided.

‘Skin in the Game’

Verma argued in 2020 that payment models that provide only incentive payments without the downside “risk” of reduced payment for poor-quality care don’t go far enough to avoid losses for taxpayers.

“Models must incorporate design elements that require participants to have skin in the game,” Verma told the Health Care Payment Learning & Action Network Virtual Summit. 

But Blum said “having more beneficiaries in total cost-of-care, fully risk-based models, to us, should not be the end goal. The end goal should be better care, better experience, better life and better overall care system.”

As the CMS focused more on risk-based payment models, quality measures and providing “accountable care,” over the years, it had “collectively lost sight” of its broader purpose of improving patient care, Blum said.

Accountable care organizations, the groups of doctors and hospitals that provide coordinated care through traditional fee-for-service Medicare, saved Medicare nearly $1.9 billion in 2020, the Biden administration reported. ACOs are a major component of traditional Medicare’s move to value-based care. 

More than 12.1 million fee-for-service Medicare beneficiaries are now served by providers in ACOs. That’s up from 11.2 million in 2020, according to the CMS, part of the Department of Health and Human Services.

The Centers for Medicare and Medicaid Innovation, which develops Medicare payment models, has told agency leadership that the current roster of alternative payment models “tend to involve those communities that are higher income” and “disproportionately white,” Blum said Thursday.

Liz Fowler, director of the innovation center, has already moved to eliminate some ineffective and overlapping payment models. 

Blum said Fowler and her team are working to make sure that future payment models “reflect and better serve, not just those parts of the country that have more resources, that can afford to put in place risk models,” but also those areas that “don’t necessarily have access to the care and support that all of us here today have.”

Addressing Disparities

Current CMS Administrator Chiquita Brooks-LaSure has challenged the agency to reduce health inequities among Medicare and Medicaid populations by expanding opportunities for quality care regardless of personal characteristics like ethnicity, race, gender, geographic location, and economic status. Covid-19 took a disproportionate toll on minority groups, and that experience is helping to guide the Biden administration’s efforts to ensure that those disparities are addressed.

While some research has shown that more provider risk can lead to better patient outcomes, Blum said the increased financial stake also has downsides, like leading to more exaggerated patient diagnoses, or “upcoding.” 

He said the risk-based payment models also favor “better capitalized” providers who can afford more risk. That takes away from the agency’s goal of “better serving all beneficiaries equally,” Blum said.

“For models that have more risk, where we truly get better experience, better value, more equity, we’ll celebrate that,” he said. “But where we see risk that brings in some of the downsides of harm, payments that are inappropriate, of skewing the participation towards those that can afford it, that’s a challenge for us.” 

“And so I don’t think that CMS will be promoting models that have more risk just for the sake of really having more risk,” he said.