Author: Kelly Conroy


Author: Zach Maher, MBA


Author: Daniela Bolivar, MHA
Senior Consultant


(303) 801-0111

Our healthcare industry is undergoing a major transformation, with a focus on shifting from a fee-for-service model to a value-based model that prioritizes quality and outcomes over volume and cost. CMS Administrator Chiquita Brooks-LaSure, stated “Through the CMS accountable care initiatives and working with our partners, we have made significant progress in addressing our greatest healthcare challenges.” Administration is looking to further the engagement and participation in various payment models by planning to release three to four new payment models, including more key stakeholders in healthcare. These models will be centered around advancing primary care, engaging specialists in value-based care, and enabling states to assume the total cost of care. As healthcare organizations look to adopt new payment and delivery models, two key options have emerged: value-based care and statewide total-cost-of-care (TCOC) models.


Value-Based Care

Value-based care (VBC) is a payment and delivery model that ties reimbursement to the quality and outcomes of care, rather than the volume of services provided. In a value-based care model, healthcare providers work together to coordinate care, share information, and track outcomes, with the goal of improving patient health and reducing costs. VBC models can take many forms, including accountable care organizations (ACOs) and bundled payment arrangements. The key commonality is that they all incentivize providers to focus on quality and value, rather than volume.

Medicare Shared Savings Program (MSSP) ACOs: An Increase in Participation

An ACO in the MSSP program has a mission and agrees to meet a series of quality targets, which also correlate with financial targets, for the year to generate shared savings. If the ACO misses those targets and becomes more costly, it must repay Medicare the difference. Participation in the MSSP ACO program has increased this year, which is believed to be a direct result of the start of a new advanced model and the smoothing of the transition from upside-only to performance-based risk. In performance year (PY) 2023, there are 456 ACOs serving 10.9 million beneficiaries. There are also 132 REACH ACOs serving 2.1 million beneficiaries.


Statewide Total-Cost-of-Care (TCOC) Models

Statewide TCOC models are similar to value-based care models, but with a wider scope. In a TCOC model, a single entity, such as a government agency or payor, assumes responsibility for paying for all the healthcare services a patient receives, regardless of where or how they are delivered. The entity sets an overall budget for each patient based on their healthcare needs and expected utilization, and then works with providers to coordinate and manage the patient’s care. Similar to a VBC model, TCOC models incentivize providers to work together and coordinate care in order to achieve better health outcomes and reduce costs. This is done by paying providers based on the quality and efficiency of care they deliver, rather than the volume of services they provide.

Maryland’s Success with Statewide Total-Cost-of-Care Model

Maryland has been a leader in implementing statewide their TCOC model and has seen significant success in generating savings through this approach. In fact, Maryland’s success has caught the attention of the Center for Medicare and Medicaid Innovation (CMMI), which has been working to create additional value-based care models that can be implemented on a larger scale. Recently,  Deputy Administrator & Director of CMMI, Elizabeth Fowler announced their plans to release an additional three to four new payment models that will be announced at a later date in 2023.


Advance Investment Payments (AIP): Centers for Medicare & Medicaid Services (CMS) Will Provide Funding to New ACOs

The Advance Investment Payments (AIP) program from CMS is a program that provides upfront funding to rural Accountable Care Organizations (ACOs) to encourage their participation in the Medicare Shared Savings Program. The goal of the program is to help ensure rural communities have access to high-quality, coordinated care that improves health outcomes and reduces costs. Therefore, creating a win-win for both Medicare and rural communities. AIM invests up to $250,000 upfront and $36 per beneficiary to each participating ACO and $8 per beneficiary per month for 2 performance years. According to an NIH study of 41 ACOs that participated in the AIM program and were compared to non-ACO providers in the same geographic region using Medicare claims data, there was a reduction of $28.21 per beneficiary per month and a net reduction of $48.6 million in total Medicare spending, with decreased hospitalizations and use of institutional post-acute care as contributing factors.


Navigating the Options – Pinnacle Healthcare Consulting Can Help

As healthcare organizations look to adopt new payment and delivery models, it can be challenging and overwhelming to understand and navigate the available options. That’s where the VBC team at Pinnacle Healthcare Consulting (PHC) can help.

We are a leading expert in value-based care, with extensive experience helping healthcare organizations adopt and implement value-based models. Our deep understanding of the different models of value-based care helps organizations understand the pros and cons of each option and make informed decisions about which model is right for them. Our team offers a range of services to help organizations implement value-based care, including strategy development, implementation support, data analysis, and ongoing performance monitoring. With a focus on quality, efficiency, and patient outcomes, PHC is well-equipped to help any organization navigate the rapidly evolving landscape of value-based care and achieve success in this new era of healthcare.


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