On July 16, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule for the Ambulatory Specialty Model (ASM), a mandatory, five-year alternative payment model for select specialists who regularly treat heart failure or low back pain. ASM is a product of the Center for Medicare and Medicaid Innovation (Innovation Center) that would test whether holding these specialists financially accountable under a two-sided risk model—with Medicare Part B payment adjustments of up to 9-12%, depending on the performance year (PY)—would improve quality of care and reduce costs through more effective chronic condition management.
If finalized as proposed, a substantial number of physicians—whose specialties include general cardiology, anesthesiology, neurosurgery, orthopedic surgery, pain management, and physical medicine and rehabilitation—would be required to participate in the model beginning in 2027. CMS estimates that each year ASM would include approximately 8,600 specialists from one-quarter of core-based statistical areas (CBSA) and metropolitan divisions, treating over 600,000 heart failure and low back episodes for over 550,000 Medicare FFS beneficiaries, totaling $2.8 billion in episode spending under the model. Interested parties have until September 12 to comment on the proposed rule.
Overview of the Ambulatory Specialty Model
Model Design
ASM would be a mandatory alternative payment model designed to put specialists at the center of value-based care by holding them financially accountable for the quality and cost of heart failure and low back pain, two high-volume, high-cost chronic conditions. The model would have a seven-year test period, with a five-year performance period running 2027-2031 and a five-year payment adjustment period running 2029-2033.
ASM would extensively use the existing Merit-based Incentive Payment System (MIPS) framework. Like MIPS, ASM would have four performance categories—quality, cost, improvement activities, and promoting interoperability—against which ASM participants' performance would be assessed. But ASM would be a more targeted program, in that it requires ASM participants to report specific measures tailored to the chronic conditions they manage (rather than allowing physicians to choose the measures they report) and would assess their performance against their ASM participant peers (rather than assessing them against all reporting clinicians).
Again, like MIPS, ASM participants would continue to bill Medicare FFS, and payment adjustments would be made in the second calendar year after each PY. For the first two ASM PYs, the ASM risk level for upward and downward payment adjustments would be the same as MIPS, up to 9%. In the later years, ASM risk levels would increase, with up to 10% for PY 2029, 11% for PY 2030, and 12% for 2031. The Innovation Center believes that these greater payment adjustments, coupled with the more targeted nature of ASM, will incentivize ASM participants to more effectively engage in preventive care and chronic condition management. Given the overlap with MIPS, ASM participants who satisfy the ASM eligibility criteria and data submission requirements during a PY would be exempt from MIPS.
Model Participation
A mandatory ASM participant would be any physician who: (1) submits claims under the Medicare Physician Fee Schedule; (2) is identified by tax identification number (TIN) and National Provider Identifier (NPI) as being in an eligible specialty; (3) meets the episode-based cost measure (EBCM) threshold; and (4) is located in one of the designated geographic areas.
The eligible specialties for ASM—general cardiology for heart disease, and anesthesiology, neurosurgery, orthopedic surgery, pain management, and physical medicine and rehabilitation—were chosen because they commonly treat these conditions in the ambulatory setting, develop longitudinal relationships with these patients, and co-manage these patients with primary care providers (PCPs). A physician's specialty would be determined based on a plurality of their Medicare Part B claims, as assigned by the Medicare Administrative Contractor (MAC) and derived from physician-reported specialty designations in the Provider Enrollment, Chain, and Ownership System (PECOS), as with MIPS.
The EBCM threshold would be satisfied if, during any calendar year two years prior to an ASM PY, the physician treated at least 20 episodes of heart failure or low back pain for Medicare FFS beneficiaries. Again using MIPS, ASM would determine eligible treatment episodes based on the MIPS Value Pathways (MVP) EBCMs for heart failure and low back pain.
Although a physician who meets the ASM eligibility criteria for any ASM PY would be considered an ASM participant for the duration of the model, physicians who do not meet all ASM eligibility criteria for a given ASM PY (e.g., failing short of the 20-episode volume threshold) would not be able to meet the minimum data submission requirements, which would result in no payment adjustment under ASM (and no exemption from MIPS).
Performance Measures
ASM would use MVP measures, claims data, and self-reported data to measure performance across four areas to determine an ASM participant's final score:
1. Quality of Care. Quality would be assessed across three domains—excess utilization, evidence-based care and outcomes, and patient-reported outcomes and experience—using claims data and MIPS measures. Heart failure quality measures, for example, would include MVP measures for controlling high blood pressure and functional status assessments. Those for low back pain include MVP measures for use of high-risk medication and functional status change. CMS would also use claims-based data to measure admission rates for unplanned cardiovascular-related admissions for patients with heart failure and MRI lumbar spine for patients with low back pain.
2. Cost of Care. Cost and efficiency of care would be assessed through the MVP heart failure and low back pain EBCMs. These EBCMs are risk-adjusted and specialty-adjusted measures based on Medicare Parts A, B, and D data that are used to evaluate a clinician's cost to Medicare to manage and treat heart failure (and they exclude services that are clinically unrelated to the targeted condition of the measure).
3. Improvement Activities. Care improvement activities would be assessed by whether ASM participants engage in care coordination activities with PCPs, including satisfying requirements to have collaborative care arrangements with PCPs (as described immediately below), engaging in preventive care screening in partnership with PCPs, supporting lifestyle changes and health-related social needs (HRSN) screening in partnership with PCPs, and bi-directionally exchanging data with PCPs. Improvement activities would be reported through an attestation process.
Collaborative care arrangements must include at least three of the following five collaborative elements: (1) data sharing (e.g., ensuring updates, test results, treatment plans, and follow-up recommendations are communicated timely and bi-directionally); (2) co-management (e.g., processes and practices through which both the specialist and PCP actively participate in managing the patient's care with clearly defined roles and responsibilities, such as shared decision-making and treatment planning); (3) transitions in care planning (e.g., processes and protocols for seamlessly transitioning a patient's care between the specialist and PCP or different care settings); (4) closed-loop communication (e.g., structured and coordinated processes for referrals between the specialist and PCP); and (5) care coordination integration (e.g., establishment of workflows between the specialist and PCP and outcome measures to assess performance).
4. Promoting Interoperability. ASM participants must be meaningful electronic health record (EHR) users, meaning that they use certified EHR technology (CEHRT), report on certain objectives and measures specified (e.g., e-prescribing, querying of prescription drug monitoring programs, providing patients access to their health information), and engage in activities related to supporting providers with the performance of CEHRT. Promoting interoperability would be reported through an attestation process.
CMS believes that performance on quality and cost measures is key to achieving the model's goals. For this reason, and to create payment adjustments of a higher magnitude, the final score is calculated based on the performance on quality and cost performance categories (each of which would be weighted at 50%), with the possibility of only negative scoring adjustments if the ASM participant does not satisfy all requirements of the improvement activities and promoting interoperability categories.
To level the playing field, CMS also proposes to make scoring adjustments for complex patients using two risk indicators (i.e., Hierarchical Condition Category (HCC) risk scores and the proportion of patients with dual eligible status) and for small practices (i.e., those with 15 or fewer clinicians).
Financial Risk
ASM participants would be subject to two-sided financial risk based on their performance, as measured by their final score. CMS would not withhold any portion of Medicare FFS payments during PYs to fund the payment adjustments. Instead, it would effectively use the negative adjustments in the payment year to fund the positive adjustments. To ensure financial savings for CMS under the model, CMS would retain a portion of the payments, which it proposes to be 15%.
Like MIPS, an ASM payment year would occur two calendar years following the ASM PY that determines the ASM participant's payment adjustment factor. For instance, PY 2027 would result in payments adjustments for 2029. As proposed, the risk levels for these adjustments would start at the same level as MIPS, with PYs 2027 and 2028 being at 9%. But later years of the model would have greater risk levels, with PY 2029 at 10%, PY 2030 at 11%, and PY 2031 at 12%.
Model Flexibilities
To give ASM participants greater flexibility in negotiating collaborative care arrangements with PCPs and incentivizing patients to actively participate in the management of their chronic conditions, CMS proposes to apply the Anti-Kickback Statute safe harbor for CMS-sponsored model arrangements and patient incentives to protect certain collaborative care arrangements and patient incentive furnished under the model. Also, as with many Innovation Center models, CMS proposes to waive certain telehealth restrictions to encourage greater flexibility with the use of telehealth services by ASM participants.
Takeaways
If finalized as proposed, ASM could fundamentally shift how ASM participants manage—and get paid for managing—chronic conditions for Medicare FFS beneficiaries during the model test period. Although ASM resembles and borrows from MIPS in substantial respects, ASM would be a more targeted program with greater payment adjustments.
To perform well, ASM participants may find it necessary to create a value-based enterprise (VBE) to enter into value-based arrangements with PCPs and other providers, similar to what we discussed here with the Transforming Episode Accountability Model (TEAM), another Innovation Center model. Although CMS proposes making available for certain ASM arrangements the Anti-Kickback Statute's safe harbor for CMS-sponsored models, ASM participants may also need to satisfy an exception to the federal physician self-referral law (Stark Law, as it is commonly known), if they enter into a compensation arrangement with a physician or an entity that furnishes designated health services.
A cardiologist, for instance, may want to pool a portion of her upward payment adjustments and use those funds to pay a PCP for screening patients, co-managing patients, implementing care protocols, or engaging in other value-based activities that constitute improvement activities under ASM or that otherwise further value-based purposes (e.g., coordinating and managing patients with or at risk of having these chronic conditions, improving the quality of care for these patients, or approximately reducing costs to or growth in expenditures of payors for these patients). If the PCP refers designated health services to the specialist and the compensation arrangement is one that, by definition, takes into account the PCP's referrals for designated health services to the specialist (as would be the case if the PCP receives a percentage of the cardiologist's payment adjustments, including those on designated health services furnished by the cardiologist and referred by the PCP), the arrangement would be unable to satisfy the traditional exceptions (e.g., those for personal service arrangements and fair market value compensation) and therefore would need to satisfy an exception for value-based arrangements. To protect this arrangement, the parties could create a VBE and act as VBE participants under a value-based arrangement that compensates one or both parties for engaging in value-based activities that further the VBE's value-based purposes.
Although some ASM participants might build out the infrastructure they believe necessary to perform well in ASM, others may may not have the resources or appetite to put themselves in the best position to perform well. These specialists could be driven towards consolidation, whether with a health system or large physician group. On the flip side, some specialists may conclude that they would be best served by acquiring the primary care resources necessary to effectively co-manage patients. In these respects, ASM could influence transaction activity.
ASM could also be expanded beyond its initial two chronic conditions. By design, ASM would establish a ready framework for rolling out additional covered chronic conditions for other specialists. As with TEAM, with ASM the Innovation Center is focusing on high-volume, high-cost conditions or procedures. For ASM, CMS's goal of creating additional MVPs for 80% of eligible clinicians would create additional opportunities for the Innovation Center to add new conditions and new specialists using the ASM architecture.
Stakeholders—which include not only those specialists in the proposed model but also those who could be included in future iterations—have until September 12 to comment on the proposed model. CMS's decision whether to finalize the model and, if so, in what manner is expected before the end of this year.
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