Five Tips to Transition Your Organization Toward Value-Based Care

A previous version of this article ran in the November 2019 edition of Healthcare News.

Value-based care continues to be an important and prevalent model and is likely impacting your market.

With increased pressure from the Centers for Medicare and Medicaid Services (CMS) to move from fee-for-service to value-based care reimbursement, more health care organizations are starting to consider alternative payment models and risk-based options. As of July 2019, there are 559 Medicare accountable care organizations (ACOs) serving more than 12.3 million beneficiaries, with hundreds more commercial and Medicaid ACOs serving millions of additional patients.

Results from the September 2019 published data reveal 2018 Medicare Shared Savings Program (MSSP) participants performed well and saved $739.4 million in health care costs. Many organizations are realizing the benefits of participating in ACOs, irrespective of earning a shared savings payment from CMS.

To shift toward value-based care, organizations need to understand the program options offered by Medicare and other payers. They also need to create financial models to understand investments and potential best-case, worst-case, and likely outcomes.

Below, we outline tips and steps your organization should consider to work toward implementing value-based care.


In the MSSP, CMS calculates a benchmark per-capita cost for the assigned population for a historic three-year period, then compares that cost to the per-capita cost during the program year. If the ACO is able to reduce the per-capita cost past a statistically significant level, CMS will share a portion of the savings with the ACO—which can pass along this reward to its providers. If an ACO is in a risk-bearing agreement, and if per-capita costs increase past a predetermined level, the ACO would be required to repay CMS for a portion of the loss.

CMS applies various factors to their per-capita cost calculation, such as:

  • Weighted calculations by enrollment type
  • Truncation at the 99th percentile to prevent a few expensive patients from disproportionately affecting the calculation
  • Illness severity in the population, based on coding
  • National and regional growth adjustments

CMS’ overhaul of the MSSP in 2019, dubbed Pathways to Success, reduced some of the program’s incentives and introduced a few conditions. These include a requirement to take on risk after two years, with the ACO automatically taking an increasing amount of risk each year.

2018 MSSP Performance Results

The 2018 MSSP performance demonstrates promising results for ACOs, including the following:

  • 66% saved Medicare money
  • 37% saved enough money to earn shared-savings bonuses
  • $1.7 billion in aggregate saved for Medicare
  • $739 million saved after accounting for shared savings and shared losses that were paid or collected
  • 93% average quality score

ACOs in their second agreement period saved nearly twice as much as those in their first agreement period, indicating that the benefit of the program and ability to earn shared savings increases with experience.

CMS is pleased with these results and enthusiastic about adding participants to the program.


The MSSP, like other alternative payment models, requires expertise as well as substantial investments of finances and time to plan and implement new programs and tools.

Upon releasing results, CMS Administrator Seema Verma underscored that provider-led and risk-bearing ACOs are more successful at reducing costs compared to hospital-led or nonrisk-bearing ACOs. This is a natural result of the program design and shouldn’t necessarily sway a health system or provider’s decision to participate or not, or how they choose to operate.

CMS’ worldview is oriented toward itself—namely, saving itself money. Most care providers, however, are more concerned with the MSSP’s potential financial impact on their health system or practice and how to get the most benefit out of the program for themselves and their patients.

Tips to Help You Succeed at Value-Based Care

1. Evaluate your options.

CMS and other payers have been transitioning away from fee-for-service payments and moving toward alternative payment models such as shared savings, bundled payments, and population-based payments or capitation.

In addition to the MSSP, there are many new voluntary models and program options to consider, including:

  • Kidney Cares models
  • Primary Care First model
  • Direct Contracting model
  • Opioid Treatment program
  • Diabetes Prevention program

There are also proposed mandatory models that will be critical to understand and prepare for, such as the End-Stage Renal Disease (ESRD) Treatment Choices model and the Radiation Oncology model, if your location is selected.

For those new to care management, it’s important to join programs or contract with payers that allow room to learn and develop new systems in a risk-free environment for as long as possible. It’s also important that the program or contract provides meaningful benefits such as:

  • Complete claims data
  • Legal waivers
  • Program design flexibility
  • High likelihood of financial rewards

Be mindful of the medical neighborhood in which you operate and consider:

  • Adequacy of your network
  • Alliances that may currently exist between the hospital and independent providers
  • Competition level of the tertiary and post-acute care market
  • Value-based care contracts offered by other payers in your market
  • Structure of your ideal network and what it strives to achieve

2. Prioritize population health.

The Affordable Care Act and its continued evolution is fundamentally shifting Medicare and Medicaid’s focus to reward prevention and primary care. Each year, CMS updates and expands the list of billable preventive care services. Many organizations leave money on the table by not systematically documenting and billing for these services with standardized workflows.

There are many opportunities to increase revenue and patient loyalty through a population health campaign. Whether or not you participate in an alternative payment model, such as an ACO, you can provide billable services, such as:

  • Annual wellness visits
  • Chronic care management
  • Transitional care management
  • Advanced care planning
  • A suite of behavioral health support services

A population health revenue analysis and optimization campaign is a recommended starting-point.

3. Invest in coding.

The merit-based incentive payment system (MIPS) adjustments, the MSSP, and many other alternative payment models rely on hierarchical category condition (HCC) coding. Even minor undercoding can have a large effect on reimbursement because scores are additive—CMS sums the scores of every condition in a unique family—and include additional interaction factors. Due to this additive and multiplicative effect, it’s important to document every condition, not just the most severe condition or the one causal to the visit.

Accurately coding to the highest level of specificity is essential for long-term success in the new payment landscape.

4. Reduce risk, capitalize on benefits.

In the case of the MSSP, joining at Level A is likely your best bet so you can participate in the program for two years risk-free. Admittedly, the likelihood of earning a shared savings payment is still somewhat low, especially in the first year. However, ACOs immediately benefit from favorable MIPS category weights and a simplified quality reporting process, resulting in higher part B payment adjustments for ACO participants.

Additionally, strategic and financial benefits can be capitalized on such as:

  • Using the ACO as a framework for a clinically integrated network with legal waivers to bring independent providers in alignment with the health system
  • Onboarding new performance improvement programs and processes, such as analytics, during the initial risk-free period to support success in later, risk-bearing levels
  • Utilizing complete claims data to support care coordination, detect and close care gaps, identify and prevent leakage, and create a narrow, high-value network of post-acute care providers and specialists
  • Generating revenue through preventive, behavioral health, and ancillary services
  • Increasing prestige on consumer-facing websites such as Physician Compare
  • Reducing physician burden through team-based care and care coordination
  • Improving patient satisfaction and loyalty from coordinated population health and quality improvement initiatives

5. The time is right to start now.

Early MSSP adopters have already reaped rewards thanks to the ability to participate for six years risk-free with a 50% sharing rate. That’s compared to the Pathways to Success overhaul that allows only two years risk-free with a 40% sharing rate. That said, CMS has clearly indicated that value-based care is the future of reimbursement, so it’s better to prepare now than to continue a wait-and-see approach.

Fortunately, the vast majority of the MSSP’s benefits still exist, and there’s still the opportunity to exit the program penalty-free after two and a half years of participation.

The MSSP is often a strategic first step to take for health systems preparing for the future of reimbursement in alternative payment models, as well as those seeking stronger alignment with primary care providers in their service area.

We’re Here to Help

Updating your operations can be a complex and time-consuming process. To learn more about value-based care or for help taking first steps for your organization to participate in the Medicare Shared Savings Program or other alternative payment models, contact your Moss Adams professional.

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