CMS Announces the AHEAD State Total Cost of Care Model

September 13, 2023

On September 5th, the Centers for Medicare and Medicaid Services (CMS) announced a new demonstration opportunity for states to implement new, all-payer total cost of care (TCOC) delivery models that will establish global budgets for hospitals in the region. The AHEAD model is based on existing TCOC pilots in Maryland, Pennsylvania, and Vermont, but will expand their reach to up to eight new states.

Under this model, called the States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model, selected states will conduct a 10-year demonstration to manage health care quality and costs across all payers—Medicare, Medicaid, and private—on a statewide or regional basis. The participating states will be held responsible for meeting performance benchmarks including: 

  • TCOC for Medicare fee-for-service (FFS);
  • TCOC across all payers;
  • Primary care investment targets; and
  • Quality and equity targets across the region’s entire population.

CMS intends to hold an event to provide an overview of AHEAD on September 18th at 3pm. Registration will be forthcoming.

Below is a summary of what we know so far about AHEAD and the most important takeaways going forward. This is CMS’s  most ambitious model yet – we believe AHEAD will be a major inflection point in care delivery in selected states, which are likely to include New York. As such, we encourage clients with questions to reach out to SPG to discuss.

Model Implementation

States may choose to participate in AHEAD at the state level or to designate a subregion (subject to CMS approval) with at least 10,000 Medicare FFS beneficiaries eligible for alignment. Within each selected region, the AHEAD model will have three components: 

  • Hospital Global Budgets: Under AHEAD, hospitals will receive a fixed, prospective amount of revenue annually that will cover inpatient and outpatient services provided to each segment of their patient population. CMS will provide a budget for the Medicare FFS segment, and states will be expected to establish aligned budgets across Medicaid and private payer segments.
  • Primary Care AHEAD: Primary care practices located in an AHEAD region may choose to join the AHEAD’s advanced primary care model, which will be aligned in each state with their Medicaid program’s efforts.
  • Cooperative Agreement Funding: CMS will provide upfront funding for participating states of up to $12 million over six years. States may use these funds for various purposes, including: 
    • Supporting state infrastructure and model implementation;
    • Design and implementation of global budgets or Primary Care AHEAD; and
    • Benefit enhancements to expand coverage of post-acute care, behavioral health care, and educational services as part of the model.

Like other recent CMS models, AHEAD will include a variety of new health equity features, such as: 

  • Social risk adjustment for global budgets and Primary Care AHEAD;
  • Bonuses for improved performance on reducing health disparities;
  • Enhanced requirements for social risk screening and demographic data collection;
  • Development of formal Health Equity Plans, both statewide and by each participating hospital.

Application and Timeline

All interested states must designate a single State agency to submit an application to CMS through Grants.gov, where CMS has posted a Forecasted Opportunity announcement for AHEAD (available here). States may apply for one of three options, depending on their readiness to implement the model: 

  • Cohort 1: 18-month implementation period starting in July 2024, with model launch in 2026.
  • Cohort 2: 30-month implementation period starting in July 2024, with model launch in 2027.
  • Cohort 3: 24-month implementation period starting in January 2025, with model launch in 2027.

Regardless of cohort, the AHEAD model’s performance period is planned to run through 2034. The current estimated application timeline is: 

  • December 7th: Release of the AHEAD funding opportunity for states, with two application periods
  • March 6, 2024: Applications due for Cohorts 1 and 2
  • Spring 2024: CMS notification of selected applicants in Cohorts 1 and 2
  • July 23, 2024: Applications due for Cohort 3

Major Takeaways

The AHEAD model is CMS’s most ambitious delivery reform initiative yet under the Biden Administration. Here are five important takeaways from the AHEAD announcement: 

  1. Although all-payer participation cannot be mandated, all AHEAD states will need to include Medicare FFS and Medicaid in the global budget, and CMS is likely to select for participation only those states that can show commitment by significant private payers as well.
     
  2. Because of the all-payer design, almost all—or at least a significant part—of each participating hospital’s patient service revenue will be included in advance, meaning these hospitals will have a more predictable and stable revenue flow. This creates the opportunity to make real and substantive changes to operational patterns, including shifting bed capacity, moving service lines to more appropriate settings, and reducing administrative and billing burdens.
     
  3. Unlike the Maryland and Pennsylvania antecedent models, CMS is requiring a primary care component to be included from the outset. Although the primary care component will vary from state to state based on the state’s Medicaid program, the format is likely to be broadly similar to the Maryland Primary Care Program, which provides a supplemental Care Management Fee (between $9-100 per beneficiary per month) to practices. The practices required to meet five “transformation requirements,” similar to advanced primary care models like the Patient-Centered Medical Home.
     
  4. State leadership on these models will be crucial. To be successful, interested states will need to develop an inclusive and transparent governance structure, including providers, payers, and the community. CMS will also choose states based on their selection of statewide/regional accountability targets, recruitment plans, global budget methodology, vision for primary care transformation, and other factors.
     
  5. Although applications are six to nine months away, there are still many things to be decided and a lot of work to be done. As a result, stakeholders should start thinking now about their opportunities to help shape how the model will be implemented in their state. We encourage anyone interested in this model to contact us to discuss further.