Alert

See updated details in the alert, AHEAD Model: Six States to Participate in Hospital Global Payments Model, published
Nov. 18, 2024.

The Centers for Medicare and Medicaid Services (CMS) announced the States Advancing All-Payer Health Equity Approaches and Development Model (AHEAD Model) on September 5, 2023. The model aims to empower states to better address chronic disease, behavioral health, and other medical conditions. This model builds upon the prior work of the CMS Innovation Center’s state-based total cost of care models in Vermont and Maryland.

Primary care is the foundation of a high-performing health system and is an essential component to improving health outcomes and lowering health care costs. The intent of the AHEAD Model is to:

• Strengthen primary care
• Improve care coordination
• Decrease disparities in health outcomes
• Drive regional health transformation and multi-payer alignment
• Lower the cost of care

By providing eligible hospitals with a hospital global budget (HGB) and enhanced payments to participating primary care providers, the model allows states to invest in their primary care infrastructure while holding providers accountable for curbing health care costs among their patient populations.

Participants and Eligibility

There are three main participants in the AHEAD Model:

• States
• Hospitals
• Primary care providers

States

CMS will select eight states or sub-state regions to participate in the AHEAD Model. Applicants can include state Medicaid agencies, state public health agencies, state insurance agencies, or another entity with rate-setting or budget authority. The selected states or sub-state regions will be responsible for overseeing the model implementation, including ensuring participating hospitals, payers, and primary care providers meet agreed-upon targets and metrics. The state agencies will work closely with CMS throughout the life of the model.

To be eligible, states or sub-state regions must have at least 10,000 Medicare fee-for-service (FFS) Part A and Part B beneficiaries.

Given that one of the key focus areas of this model is health equity, participants in this model will be required to establish a model governance structure to guide implementation of the model, as well as develop a statewide health equity plan to define and guide activities aimed at reducing disparities and improving population health.

Hospitals and Primary Care Providers

Once CMS selects the eight states, these states or sub-state regions will need to encourage hospitals and primary care providers located in their area to enroll in the AHEAD Model.

Acute care hospitals, critical access hospitals (CAHs), and rural emergency hospitals (REHs) that are enrolled in Medicare and are in good standing with CMS are eligible to participate in the hospital portion of the model, wherein they’ll receive an HGB for the duration of the model. Participating hospitals will be required to create hospital health equity plans that align with statewide priorities and activities.

Eligible providers include primary care practices, Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) that are currently participating in the state’s Medicaid Primary Care Alternative Payment Model (APM) or Patient-Centered Medical Home (PCMH).

Model Overlap

States or regions with participants in the following programs are eligible for the AHEAD Model:

• Medicare Shared Savings Program (MSSP)
• Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) Model
• Primary Care First (PCF)
• Innovation in Behavioral Health (IBH) Model
• Guiding an Improved Dementia Experience (GUIDE) Model

The state or region can’t have entities participating in the Making Care Primary (MCP) Model or the Transforming Maternal Health (TMaH) Model running concurrently within the same area. 

Therefore, the following MCP participant states and regions won’t be eligible for the AHEAD Model:

• Colorado
• New Jersey
• New Mexico
• Upstate New York
• North Carolina
• Massachusetts
• Minnesota
• Washington

The program overlap rules for hospitals and other participants in ACO REACH and IBH Models are complex and should be reviewed carefully if applicable, given that CMS won’t provide simultaneous capitated payments.

Funding

There are three main funding components to the AHEAD model:

• Cooperative agreement funding
• Hospital global budget
• Enhanced primary care payment

Cooperative Agreement Funding

The cooperative agreement funding is an up-front amount provided by CMS to the state agency to support investments during the pre-implementation period and the model’s initial performance years.

CMS is providing this initial investment as it understands that recruiting hospitals and primary care providers as well as establishing the necessary infrastructure before the implementation period is crucial to the overall success of the model.

States will be eligible to receive up to $12 million. The funding can be applied toward activities such as:

• Recruiting primary care providers and hospitals to participate in the model 
• Setting statewide total cost of care (TCOC) cost growth targets and primary care investment targets
• Building behavioral health infrastructure and capacity
• Supporting Medicaid and commercial payer alignment
• Hiring new staff to support the model
• Investing in new technology
• Supporting demographic data collection
• Developing the Medicaid HGB methodology

The cooperative agreement funding payments will be distributed over the course of five and a half to six years, depending on the cohort the state joins. In other words, CMS will provide initial funding through 2028 or 2029. The table below shows the cadence of these funding distributions.

Funding Distribution by Cohort

Hospital Global Budget

Hospitals that are eligible to participate and voluntarily enroll into the AHEAD Model will receive an HGB, which is a pre-determined, fixed annual budget for hospital inpatient and outpatient facility services. This will benefit hospitals by providing increased financial stability, allowing them to worry less about variable, volume-based reimbursement.

Hospitals can focus on opportunities to innovate and implement efficient care delivery methods, reduce overall health care utilization and cost, and improve population health and equity.

Hospitals will receive HGBs by-payer:

• Medicare FFS
• Medicaid
• Medicare Advantage and commercial payers

The budgets for each type of payer will be determined using the following methodology.

Medicare Fee-For-Service

The HGB for Medicare FFS can be developed in one of two ways:

The first way is states with statewide rate-setting authority or hospital budget authority may develop their own Medicare HGB methodology, which will be subject to CMS approval.

The second way is states without this authority will use a CMS-designed Medicare FFS methodology that will be based on net patient revenue from the past three years that will be adjusted each performance year to arrive at an annual HGB payment amount, which will be remitted bi-weekly. The historical net revenue amount will be weighted so the more recent years’ values will take greater precedence. Various adjustment factors will be applied.

Medicaid

The methodology for Medicaid HGB will be developed by the state Medicaid agency, with technical assistance, guidance, and review from the CMS Innovation Center and the Center for Medicaid and CHIP Services (CMCS).

Medicare Advantage & Commercial Payers

States will design commercial HGB methodologies in alignment with CMS principles.

Enhanced Primary Care Payment

The primary care portion of the AHEAD Model, also known as Primary Care AHEAD, is an advanced primary care program intended to increase overall capacity for care coordination and connection to community resources, improve quality, offer whole person-centered care, and reduce provider burden.

Participants in the Primary Care AHEAD portion of the model will receive Enhanced Primary Care Payments (EPCP) to support primary care transformation activities that will improve behavioral health integration, care management and specialty coordination, as well as address health-related social needs.

EPCP payments will be paid quarterly to participating providers. The anticipated statewide average for the EPCP payment is $17 per beneficiary per month (PBPM) but could be as low as $15 or as high as $21, depending on the state’s total cost of care performance and recruitment of hospitals. The baseline amount will be adjusted as follows:

• Risk adjustment: CMS will apply a beneficiary risk adjustment based on social and medical risk.
• Quality adjustment: A small portion of the EPCP—5% to start, scaled up to 10% by PY8 or PY9—will be tied to performance on select quality measures and utilization each year.

Data Collection and Performance Metrics

CMS will evaluate each state’s performance based on the following:

The State’s Total Cost of Care and Cost Growth

Health care savings relative to the state’s projected total cost of care absent the AHEAD Model. 

All-Payer and Medicare FFS Primary Care Investment Targets

These are targets set by CMS, which will measure primary care expenditures for beneficiaries residing in the state or region as a percent of total cost of care for those beneficiaries.

Timeline

While the application period for states to join Cohorts 1 and 2 has passed, applications for Cohort 3 are due August 12, 2024. States that apply in Cohort 3 will have a 24-month pre-implementation period tentatively beginning January 2025 and running through December 2026. The implementation period will start in 2027, aligning with Cohort 2, and continue through 2034.

States accepted into Cohorts 1 and 2 will be notified by May 2024, while states accepted into Cohort 3 will be notified in October 2024.

The pre-implementation phase activities will include establishing and bolstering primary care infrastructure, and holding educational sessions and outreach to hospitals and primary care practices who may be interested in participating. Primary care providers in selected states may begin to hear from the relevant state agency in Summer 2024.

Program Timeline

Stay tuned for future announcements regarding the states and regions selected for the AHEAD Model, which will determine hospitals’ and primary care providers’ eligibility to participate.

We’re Here to Help

Your Moss Adams professional can help you navigate the program successfully, including planning for receiving HGBs and EPCP, as well as operational planning, quality reporting, and other compliance requirements.

Contact Georgia Green, Senior Manager, at Georgia.Green@mossadams.com or (916) 503-8251.

Additional Resources

• Health Care Practice
• Health Care Consulting Practice