This Week in Managed Care: March 23, 2018

Unexpected changes cause ACOs to quit a new model, a report finds independent physician practices are disappearing, and CMS finalizes coverage for next-generation sequencing tests.

Welcome to This Week in Managed Care, I’m Laura Joszt.

ACOs Leave Next Generation Model

Seven accountable care organizations (ACOs) have left a new payment model that called them to take on more risk, after CMS made unilateral changes to the program. The Next Generation ACO Model had called for experienced ACOs, known as Pioneers, to try new financial incentives along with patient engagement and management tools.

One of the groups that left, Sharp ACO in California, said CMS changed the risk adjustment formula in December 2017, after Sharp had invested $2 million in the care management program.

Allison Brennan, MPP, of the National Association of Accountable Care Organizations, was disappointed to see the seven groups leave the program, and said, “Some of these ACOs are leaving because of the challenges they faced earning savings and in response to concerns about Innovation Center policy and methodology changes. These departures also illustrate the broader challenges of assuming and managing risk, which continue to be a significant hurdle for ACOs.”

To learn more, join AJMC for a May 11 meeting, The Present and Future of Accountable Care, which will take place in San Diego, California.

To register, visit the meeting page.

Acquisition of Physician Practices

Hospitals have been buying up physician practices in recent years, and a new report shows just how quickly this is happening.

Avalere Health and the Physicians Advocacy Institute (PAI) report that 5000 independent practices were acquired between July 2015 and July 2016. This meant 14,000 more doctors were now employed by hospitals, an increase of 11%. The rate of hospital-owned practices grew in every region of the country.

Said Robert Seligson, MBA, MA, president of PAI, “As payers and hospitals drive consolidation across the healthcare system, it is becoming more and more difficult for a physician to maintain an independent practice.”

Medicare reimbursement rules that pay more for many services in hospital outpatient settings are driving many of these business decisions, the report found.

Coverage for Next-Generation Sequencing

CMS has finalized a National Coverage Determination for diagnostic tests that use Next-Generation Sequencing for patients with advanced cancer. These tests can be used as a companion diagnostic to find which patients will benefit from FDA-approved therapies. And when no known therapy is available, the test can direct a patient to a clinical trial.

Said CMS Administrator Seema Verma, “We want cancer patients to have enhanced access and expanded coverage when it comes to innovative diagnostics that can help them in new and better ways. That is why we are adding clear pathways to coverage, while at the same time supporting laboratories currently furnish tests to the people we serve.”

In November, when FDA approved Foundation Medicine’s Next Generation Sequencing diagnostic, CMS simultaneously approved a national coverage determination, the first approval of its kind.

Read more.

A New Pricing Factor

Should physician payments be tied to value? That’s the idea explored in a new commentary in the current issue of The American Journal of Managed Care^®.

Zirui Song, MD, PhD, and his co-authors introduce the concept of an “appropriateness modifier,” a pricing factor that would tie reimbursement to the value of a procedure or service for a particular patient, based on that person’s health profile and existing guidelines. This idea would connect more health services to value-based insurance design, an idea that is gaining ground to improve quality while holding down cost.

The authors wrote: “Moving American medicine toward value for populations, yet precision for individuals, will require innovations in payment and delivery. Incorporating a clinically nuanced measure of appropriateness into payment and benefit design could offer a meaningful next step.”

Conference Coverage

Finally, AJMC^® is on the road this week bringing you coverage from 2 important meetings:

Leaders in cancer care will gather in Orlando, Florida, for the National Comprehensive Cancer Network annual meeting, to discuss updates to clinical practice guidelines. For coverage of the meeting, visit the conference page.

The Society of Gynecologic Oncology will hold its 49^th meeting on Women’s Cancer in New Orleans, with sessions on PARP inhibitors and the impact of the Affordable Care Act. For more, visit the page.

For all of us at the Managed Markets News Network, I’m Laura Joszt. Thanks for joining us.