Episode Payment Models Comments

December 2, 2020

By Travis Broome

While Aledade focuses on total cost of care savings models or accountable care, there are other models moving us towards value ever day. Bundled payments (or set payment of a grouping of related services) is one of the most prominent of these other models. Medicare has several initiatives around bundle payments and just yesterday the comment period closed on the latest: a mandatory program around cardiac care. Our comments focus on the importance of quality and the interaction between ACOs and bundles. Both important areas as we all work together to achieve greater value in health care.

Andrew M. Slavitt, Acting Administrator

Centers for Medicare & Medicaid Services

7500 Security Blvd

Baltimore, MD 21244


Re: CMS–5519–P:  Medicare Program: Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model


Dear Administrator Slavitt:


Aledade partners with 205 primary care physician practices, FQHCs and RHCs in value-based health care. Organized into sixteen accountable care organizations across 18 states these primary care physicians are accountable for over 200,000 Medicare beneficiaries. More than half of our primary care providers are in practices with fewer than ten clinicians. We are committed to outcome based approaches to determine the value of health care. We are committed to using technology, data, practice transformation expertise and most importantly the relationship between a person and their primary care physician to improve the value of health care.

To create the most value from the episode payment model (EPM) savings must come from the efforts of those participating and from quality as well as cost. There is considerable concern that bundles create opportunity for arbitrage. While this concern is somewhat alleviated by mandatory bundles, CMS must closely monitor for when savings are derived from value creation versus arbitrage. Increasing the data transparency in BCPI and mandatory bundles is an excellent first step here.

Value is not just defined as lower costs. Lower costs coupled with lower quality does not equal value creation. We support CMS’s efforts to introduce a robust quality component to EPM. We encourage CMS to include quality as a fundamental factor in the financial performance of all advanced alternative payment models.

The overlap between the episode payment models (EPM) and accountable care models (ACO) is a challenging issue in the movement to value based health care. We encourage CMS to adopt three principles as they address overlap between these models.

  1. “Do no harm” – Create absolute protection from the cost of one episode registering as savings in one model and the same episode cost registering as losses in another model
  2. Reward risk taking – Medicare beneficiaries who could be attributed to multiple models should be attributed to the model with the most risk
  3. Encourage collaboration – Remove real and perceived barriers to health care providers participating in EPMs and ACOs collaborating financially as well as clinically. Lead efforts to design attribution models that can successfully assign savings to actions of those in EPMs to those in ACOs.

Regarding the particular details of the proposed EPM itself, Aledade, Inc. is a signatory to the Health Care Transformation Taskforce’s comments and we refer you to those comments.

Principle 1: Do No Harm

The need for this principle came to light in the Bundled Care Payment Initiative or BCPI. ACOs were assigned the target price of the BCPI and this was billed as creating built in savings for the ACO; however, the ACO’s savings were capped. The reality was much different. Since the target price for BCPI was based on a blend of historic and regional costs, while the benchmark for the ACO was based on historical costs for that ACO situations arose where the target price was considerably higher, in some cases 20-30% higher, than what the episode historically cost in the ACO. This created the perverse situation where the BCPI participant would receive savings simply for not screwing up the ACOs past good work and the ACO would incur losses directly proportional to those savings. This situation created unneeded animosity between some ACOs and some BCPI participants.

It appears that the changes in CJR and the proposed EBM rule will eliminate this situation. We believe it is absolutely crucial for the transition to value based care that CMS do everything it can to prevent this situation from happening again and to monitor with extraordinary vigilance to ensure this situation does not reoccur. At the risk of hyperbole, fee for service is the enemy; however, arbitrage between the two programs creates conflicts between the programs when we should all be moving towards value.

 Principle 2: Reward Risk Taking

As we will discuss in principle 3, ideally savings would be directly attributable to either the EPM participant or the ACO participant. However, that is a very difficult task prone to error. This creates a need to establish precedent for beneficiaries who are attributable to multiple models. We believe the guiding principle for the precedent should be whoever is taking the most risk should have precedent. Two-sided total cost of care risk is more than two-sided episode based risk. Two-sided episode based risk is more than one-sided total cost of care. One-sided total cost of care is more than one-sided episode based. This does not exclude collaboration between EPM participants and ACO participants. The financial incentives remain the same. Precedent simply puts the participant with the most lose in the best position to succeed.

CMS proposes to apply this principle and give precedence to the Next Generation ACO model. The exact same logic leads to the obvious conclusion that Track 3 with its prospective attribution and two-sided risk should also be show precedence. Track 2 meets the risk criteria; however, we recognize the operational difficulties of retrospective attribution. CMS should seek to overcome them and put a placeholder in the regulation that indicates that principally Track 2 should be given precedence once attribution timing can be overcome. By implementing these proposals CMS sends a very clear signal that they are rewarding risk taking. Many ACOs have publicly expressed concern over going to two-sided risk due to the uncertainty of the interaction between the ACO and the EPM. Adopting this proposal would eliminate that uncertainty.

Principle 3: Encourage Collaboration

The most powerful tool available to create value is for EPM participants and ACO participants to come together in ways that match their local health care environment, each bringing their own strengths and creating the maximum value possible. These private collaborations should be encouraged and celebrated. CMS can encourage such collaboration in two ways. First, removing both real and perceived barriers to collaboration. The perception that a collaboration might run afoul with law or regulation is just as paralyzing as the reality that it does. Second, CMS can lead research and demonstration efforts to attribute savings across models. The most immediate step CMS can take is to open up the data on BCPI and CJR as it has on the ACO side. An ACO style public use file on BCPI participants and CJR participants would be immensely beneficial to researchers seeking to accurately attribute savings across models. As long as CMS keeps the financial and quality information about individual participants in the BCPI and CJR programs secret, cross model research will remain very difficult and ACOs and others will, rightly or wrongly, wonder whether the secrecy is hurting them financially.

Specifically, we support the Taskforce’s recommendation for CMS to finalize its proposal to make all APM entities potential EPM collaborators.

Thank you very much for your consideration as we move together through this exciting time in healthcare. Please feel free to follow up with me or Travis Broome ([email protected]) if you or your staff have questions or would like to explore these positions further.