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Payment and Delivery System Reform in Medicare: A Primer on Medical Homes, Accountable Care Organizations, and Bundled Payments

Executive Summary
  1. Department of Health and Human Services, Press Release: “Better, Smarter, Healthier: In historic announcement, HHS sets clear goals and timeline for shifting Medicare reimbursements from volume to value,” January 26, 2015, http://www.hhs.gov/about/news/2015/01/26/better-smarter-healthier-in-historic-announcement-hhs-sets-clear-goals-and-timeline-for-shifting-medicare-reimbursements-from-volume-to-value.html.

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  2. DHHS, 2015.

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  3. On October 14, 2016, CMS released its final rule defining the health professionals who can qualify for bonuses, and the eligibility criteria for the applicable alternative payment models. See final rule here: https://www.federalregister.gov/documents/2016/11/04/2016-25240/medicare-program-merit-based-incentive-payment-system-mips-and-alternative-payment-model-apm.

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  4. Centers for Medicare and Medicaid Services: Center for Medicare and Medicaid Innovation, Report to Congress, December 2012, cited September 20, 2014, available at http://innovation.cms.gov/Files/reports/RTC-12-2012.pdf.

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  5. Includes programs managed outside of CMMI, such as the Medicare Shared Savings Program. Calculated from data provided on Center for Medicare and Medicaid Innovation sites as of August, 2015, available at https://innovation.cms.gov.

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  6. Blumenthal, D., M. Abrams, and R. Nuzum, “The Affordable Care Act at 5 Years,” N. Engl. J. Med. 2015;372(25):2451-58; Abrams, M. et al., “The Affordable Care Act’s Payment and Delivery System Reforms: A Progress Report at Five Years,” Bipartisan Policy Center, May 2015, http://www.commonwealthfund.org/publications/issue-briefs/2015/may/aca-payment-and-delivery-system-reforms-at-5-years; Korda, H. and Gloria N. Eldridge, “Payment Incentives and Integrated Care Delivery: Levers for Health System Reform and Cost Containment,” Inquiry (Oslo) 2011;48(4):277-87; America’s Health Insurance Plans, “Transforming Care Delivery,” January 2012, available at http://www.ahip.org/HillBriefings/Issue-Brief-Transforming-Care-Delivery/.

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  7. Office of the Legislative Counsel, 2010; Centers for Medicare and Medicaid Services, Report to Congress, 2012.

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  8. Rajkumar, R., M. Press, and P. Conway, “The CMS Innovation Center—A Five-Year Self-Assessment” New England Journal of Medicine 372;21 (May 2015) http://www.nejm.org/doi/full/10.1056/NEJMp1501951.

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  9. Shrank, W., “The Center for Medicare and Medicaid Innovation’s Blueprint for Rapid-Cycle Evaluation of New Care and Payment Models,” Health Aff. (Millwood) 2013;32(4):1-6.

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  10. For further discussion of the evaluation methods for the CMMI models, see: Howell, B., P. Conway, and R. Rajkumar, “Guiding Principles for Center for Medicare & Medicaid Innovation Model Evaluations,” Journal of American Medical Association, 313;23 (June 16, 2015). http://jama.jamanetwork.com/article.aspx?articleid=2278025.

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Report
  1. American College of Physicians, “What is the Patient-Centered Medical Home?” cited June 9, 2014, available at http://www.acponline.org/running_practice/delivery_and_payment_models/pcmh/understanding/what.htm.

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  2. AcademyHealth, “Medical Homes and Accountable Care Organizations: If We Build It, Will they Come?” 2009, available at http://www.academyhealth.org/files/publications/RschInsightMedHomes.pdf.

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  3. Cassidy, A., “Patient-Centered Medical Homes,” Health Affairs and the Robert Wood Johnson Foundation Health Policy Brief, September 14, 2010, available at http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_25.pdf.

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  4. Starting January 1, 2015, Medicare allowed certain physicians and other health professionals to bill a care management code for non-face-to-face care management of eligible Medicare patients with multiple conditions.  For more information, see: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/ChronicCareManagement.pdf.

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  5. Mathematica Policy Research, “Coordinating Care for Adults with Complex Care Needs in the Patient-Centered Medical Home: Challenges and Solutions,” prepared for Department of Health and Human Services: Agency for Healthcare Research and Quality, January 2012, available at https://pcmh.ahrq.gov/sites/default/files/attachments/Coordinating%20Care%20for%20Adults%20with%20Complex%20Care%20Needs.pdf; “Patient-Centered Medical Homes,” 2010.

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  6. Curnow, R.J., “The Patient Centered Medical Home: Opportunity and Challenges” [presentation], cited June 7, 2014, available at http://www.pcpcc.org/sites/default/files/media/curnow_cmd_12-07-10.pdf.

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  7. Centers for Medicare and Medicaid Services, “Affordable Care Act payment model saves more than $25 million in first performance year,” June 18, 2015, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2015-Press-releases-items/2015-06-18.html; Centers for Medicare and Medicaid Services, “Affordable Care Act payment model continues to improve care, lower costs,” August 2016, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-08-09.html.

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  8. Centers for Medicare and Medicaid Services: Center for Medicare and Medicaid Innovation, “Accountable Care Organizations (ACOs): General Information,” cited November 23, 2015, available at https://innovation.cms.gov/initiatives/ACO/.

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  9. Centers for Medicare and Medicaid Services, “Next Generation Accountable Care Organization Model (NGACO Model),” January 11, 2016, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-01-11.html.

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  10. McWilliams, M, et al, “Early Performance of Accountable Care Organizations in Medicare,” N Engl J Med 374:2357-2366 (June 2016). Nyweide, D., et al, “Association of Pioneer Accountable Care Organizations vs Traditional Medicare Fee for Service with Spending Utilization, and Patient Experience,” JAMA 313(21), (May 2015).

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  11. Cutler, D.M. and F.S. Morton, “Hospitals, Market Share, and Consolidation,” JAMA 2013;310(18):1964-70; Baicker, K., “Coordination versus Competition in Health Care Reform, N Engl. J. Med. 2013;369(9):789-91.

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  12. Medicare Payment Advisory Commission, “Accountable Care Organizations Payment Systems,” revised October  2016, available at http://medpac.gov/docs/default-source/payment-basics/medpac_payment_basics_16_aco_final.pdf?sfvrsn=0; Muhlestein, D., Saunders, R., and McClellan M., “Medicare Accountable Care Organization Results for 2015: The Journey to Better Quality and Lower Costs Continues,” Health Affairs Blog September 2016, http://healthaffairs.org/blog/2016/09/09/medicare-accountable-care-organization-results-for-2015-the-journey-to-better-quality-and-lower-costs-continues/.

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  13. On balance, the CMS Office of the Actuary certified the Pioneer ACO model as cost-saving. Nyweide, D., et al, “Association of Pioneer Accountable Care Organizations vs Traditional Medicare Fee for Service with Spending Utilization, and Patient Experience,” JAMA 313(21), May 2015.

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  14. Centers for Medicare and Medicaid Services, “Medicare ACOs Provide Improved Care While Slowing Cost Growth in 2014,” August 25, 2015, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-08-25.html;  Medicare Payment Advisory Commission, 2015.

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  15. Centers for Medicare and Medicaid Services, August 2015; U.S. General Accounting Office, “Results from the First Two Years of the Pioneer Accountable Care Organization Model,” April, 2015.

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  16. Bertko, J. and Rachel Effros, “Increase the Use of ‘Bundled’ Payment Approaches,” RAND Corporation, 2010, http://www.rand.org/pubs/technical_reports/TR562z20.html.

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  17. Established by the Affordable Care Act, the Hospital Value-Based Purchasing program adjusts Medicare payments to hospitals based on their performance on selected quality measures. For more information, see: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/hospital-value-based-purchasing/index.html.

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  18. Miller, H. and Strategic Initiatives Consultant, [Working Draft] “From Concept to Reality: Implementing Fundamental Reforms in Health Care Payment Systems to Support Value-Drive Health Care,” July 21, 2008, available at http://amcp.org/WorkArea/DownloadAsset.aspx?id=13445.

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  19. Fisher, E.S., “Medicare’s Bundled Payment Program for Joint Replacement: Promise or Peril?” JAMA 2016;316(12):1262-64.

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