CMS’s AHEAD Model: The Next Step in Multi-Payor Value-Based Care

What Is the CMS AHEAD Model?

The States Advancing All Payer Health Equity Approaches and Development (“AHEAD”) Model is a new voluntary, state total cost of care (“TCOC”) model announced by the Centers for Medicare & Medicaid Services (“CMS”). The voluntary model is CMS’s most significant effort to date to engage States in multi-payor payment reform aimed at curbing health care cost growth, improving population health, and advancing health equity. CMS will select up to eight states to participate and share in $96 million of grant funding. Participating States, which will act as a value-based care “hub,” will partner with hospitals and primary care providers as well as organizations addressing Health Related Social Needs (“HRSN”).

CMS released the first of two Notice of Funding Opportunities (“NOFO”) on November 16, 2023. Eligible NOFO applicants are state agencies, including state Medicaid agencies, state public health agencies, state insurance agencies, and other entities with budgetary authority. Participating States have not yet been selected, but CMS anticipates notifying state awardees in Spring 2024. As part of their application, states applying to participate in AHEAD will select a cohort based on their level of readiness to implement the model. After they are selected to be a part of AHEAD, participating states will have a pre-implementation period of anywhere from 18 months to 30 months, depending on the cohort they select, to use the grant funding to build partnerships with hospitals and other providers within the state. During that time, states will develop a model governance structure, as described in the NOFO, to address population health disparities, and name appropriate stakeholders to participate in the Model Governance structure. During the pre-implementation period, states will also work with participating hospitals to develop a Hospital Global Budget (see below for more context). Additionally, primary care providers will have the opportunity to contract with states and CMS to participate and be eligible for both shared savings payments and up-front care management payments.

As part of the AHEAD model, CMS has created Statewide Accountability Targets and Statewide Quality and Equity Targets for participating states. The accountability targets include Total Cost of Care spending targets for Medicare fee-for-service. Medicare fee-for-service targets are total spending targets for Medicare beneficiaries, regardless of where the expense is incurred. There are also all-payer accountability targets that set a spending target for all residents, which include individuals covered by private health insurance plans, large employer self-insured plans, uninsured patients and Medicaid and Medicare plans. An additional Accountability Target will be Primary Care Investment Targets, which will require states to set targets for primary care investment as a proportion of their Total Cost of Care.

The quality and equity targets will require participating states to develop a statewide health equity plan. States will be required to identify health disparities and population health focus areas, set measurable goals to reduce disparities, and identify evidence-based strategies to meet those goals. Over the course of the model implementation period, each state will be required to monitor and improve performance on these quality and health equity metrics.

What Does the AHEAD Model Mean for Hospitals?

CMS will set annual hospital global budgets that will provide hospitals with a fixed amount of revenue for the upcoming year for a specific program, such as Medicare fee-for-service. The prospective payments made under these hospital global budgets do not change based on the volume of service, but instead stay consistent with the amount prescribed in the hospital global budget.

Hospital global budgets are calculated based on Medicare and Medicaid payments in previous years, with adjustments made for inflation, changes in populations served, changes in services provided, and performance accountability, e.g., reductions in avoidable utilization. Hospitals on global budgets that invest in community-based initiatives for care coordination, expanded access to and follow-up by PCPs, and early intervention for chronically ill patients may see reduced costs and savings. However, as hospital global budgets shift financial risk from payers to providers, hospitals could face financial hardship from significant variance between actual and historical spending.

In states selected to participate in the AHEAD model, hospitals will be required to enter into individual participation agreements with CMS. Hospitals participating in AHEAD will continue to report through the following national hospital quality programs and promoting interoperability programs:

• Hospital Inpatient Quality Reporting (IQR),
• Hospital Outpatient Quality Reporting (OQR),
• Hospital Value-Based Purchasing Program (VBP),
• Hospital Readmissions Reduction Program (HRRP),
• Hospital-Acquired Condition Reduction Program (HACRP), and
• Medicare Promoting Interoperability Program

No reporting aspects of the CMS national hospital quality programs and promoting interoperability programs will be waived for Participant Hospitals; however, AHEAD will continue to waive applicable requirements for those states that have been operating a state-based hospital quality program pursuant to a waiver under a current state model.

What Does the AHEAD Model Mean for States?

After being selected to participate in the AHEAD model, states will enter into Cooperative Agreements with CMS and will receive up to $12 million in funding. The allocation of these funds will be outlined in the Cooperative Agreements. Some of the uses of these funds include recruiting primary care providers and hospitals to participate in the AHEAD model, setting statewide total cost of care targets, and supporting Medicaid and commercial payer alignment. The funding will be dependent on the total proposed budget, reasonableness of costs, need demonstrated in the state’s application, and availability of funds.

Participating states will also sign a separate agreement that will memorialize TCOC growth targets and primary care investment targets and with the participating states accountable for these targets. Each state agreement will also require that at least one of the commercial payers operating in the state participates in hospital global budgets. State Agreements will also include statewide quality and population performance metrics, and states will be instructed to select six population-level measures to adhere to.

What Does the AHEAD Model Mean for Providers?

The AHEAD model further highlights the Administration’s focus on centering care around primary care providers, with the belief that primary care is the foundation of a high-performing health system and is essential to lowering costs. Notably, a sub-component of the AHEAD model, Primary Care AHEAD, provides for a voluntary program for primary care providers, including Federally Qualified Health Centers (“FQHC”), Rural Health Centers (“RHC”), and practices with primary care specialties.

There are three main components of Primary Care AHEAD: prospective care management payment, adjusted to beneficiary social and medical risk; (2) care transformation requirements for integrating behavioral health into primary care, enhanced care management, and addressing HSRNs; and (3) alignment of Medicaid and Medicare care priorities, including diabetes management, behavioral health integration, and industry accreditation or certification.

Providers electing to participate in Primary Care AHEAD will enter into individual participation agreements with both the state and CMS. An eligible practice selected for participation must sign a participation agreement with CMS in advance of the first PY they plan to participate in Primary Care AHEAD. Any alternative measures or measure replacements that states prescribe based on individual state needs will be reflected in these participation agreements. These alternative measures will be evaluated by CMS on whether the proposed measure aligns with the goal of the model, facilitates improvement over time, furthers the overall provision of advanced primary care services, and is feasible to implement. If CMS approves the alternative measure, it will be memorialized in the individual agreement.

Overlap

CMS has developed guidelines to provide for overlap between the AHEAD model and other CMS programs.

• Practices may simultaneously participate in the Medicare Shared Savings Program or ACO REACH and Primary Care AHEAD.
• Practices that participate in Primary Care First (“PCF”), Making Care Primary (“MCP”), or any other CMS model with a no-overlaps policy are ineligible to participate.
• Hospitals may simultaneously participate in AHEAD and Shared Savings Program ACOs.
• Hospitals may not simultaneously participate in the ACO REACH model and AHEAD. Providers practicing at hospitals participating in AHEAD may still participate in ACO REACH.

Key Considerations and Unknowns

Despite the extensive NOFO released by CMS, there still are certain questions that remain around the AHEAD model that are relevant for participating states, hospitals, and providers. Some of the questions that remain are:

• What comprises the global budget methodology, and, in particular, how will this methodology be applied to hospitals that deviate from the national average of Medicare spending per beneficiary?
• What will the interplay be between ACO Reach and hospital global budgets, given that providers can participate in both?
• Will participating primary care practices continue to receive traditional fee-for-service Medicare payments during the implementation period of the model?
• How will CMS conduct beneficiary alignment and calculate payments for non-hospital providers? CMS has not released details on the requirements for practice groups to partner with participating states. How much risk can providers assume? Will providers be able to participate in multiple shared-savings initiatives (like ACO REACH and AHEAD)?
• Will there be any opportunities for “convenor or facilitator” and other value-based supporter organizations (care coordination vendors) as there have been in prior ACO and bundled payment initiatives?
• How will states manage the additional administrative burdens associated with operationalizing the program, and what role may external organizations play to support these efforts?

Ropes & Gray will issue additional alerts to track additional CMS updates and publications from CMS regarding this innovative new model.