AHEAD NOFO Final 11.15.2023 508.pdf

U.S. Department of Health and Human Services

Centers for Medicare & Medicaid Services

Center for Medicare and Medicaid Innovation

States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model

Funding Opportunity

Notice of Funding Opportunity Type: New

Funding Opportunity Award Type: Cooperative Agreement

Notice of Funding Opportunity Number: CMS-4S4-24-001

Federal Assistance Listings Number (CFDA): 93.968

Notice of Funding Opportunity Posting Date: November 16, 2023

Applicable Dates:

Letter of Intent to Apply Due Date:

Cohorts 1 and 2: February 5, 2024

Cohort 3: July 26, 2024

Electronic Application Due Date:

Cohorts 1 and 2: March 18, 2024, 3:00 pm Eastern Standard Time

Cohort 3: August 12, 2024, 3:00 pm Eastern Standard Time

Anticipated Issuance Notice(s) of Award:

Cohorts 1 and 2: May 24, 2024

Cohort 3: October 21, 2024

Anticipated Cooperative Agreement Period of Performance:

Cohort 1: 5.5 years (2024-2029)

Cohort 2: 5.5 years (2024-2029)

Cohort 3: 6 years (2025-2030)

Anticipated Model Implementation Period:

Cohort 1: 9 years

Cohort 2: 8 years

Cohort 3: 8 years

Table of Contents

Table of Contents

Executive Summary

A. Program Description

A1. Purpose

A2. Authority

A3. Background

A4. Program Requirements

A4.1. Model Structure

A4.2. Statewide Accountability Targets

A4.3. Statewide Quality and Equity Targets

A4.4. Cooperative Agreement Funding to Support Model Implementation Activities

A4.5. Hospital Global Budgets

A4.6. Primary Care AHEAD

A4.7. Operational Flexibilities under AHEAD

A4.8. Commercial Payer Alignment

A.4.9. Optional Partners

A5. Technical Assistance and Information for Prospective Applicants

B. Federal Award Information

B1. Total Funding

B2. Individual Award Amount

B3. Anticipated Award Dates

B4. Cooperative Agreement Period of Performance, Pre-Implementation Period and Model

Implementation Period

B5. Number of Awards

B6. Type of Award

B7. Type of Competition

C. Eligibility Information

C1. Eligible Applicants

C2. Cost Sharing or Matching

C3. Letter of Intent

C4. Ineligibility Criteria

C5. Single Application Requirement

C6. Continued Eligibility

C7. EIN, UEI, Login.gov and SAM Regulations

D. Application and Submission Information

D1. Address to Request Application Package

D2. Content and Form of Application Submission

a. Application format

b. Standard forms

c. Application cover letter or cover page (optional)

d. Project Narrative (maximum of 60 pages)

e. Budget Narrative (maximum of 15 pages)

f. Business Assessment of applicant organization (maximum of 12 pages)

g. Appendices (maximum of 35 pages)

D3. Unique Entity Identifier and System for Award Management (SAM)

D4. Submission Dates and Times

D5. Intergovernmental Review

D6. Cost Restrictions

D7. Mandatory Disclosures

D8. HHS Form 690

E. Application Review Information

E1. Criteria

E2. Merit Review and Selection Process

E3. Federal Awardee Performance Integrity Information System (FAPIIS)

F. Federal Award Administration Information

F1. Federal Award Notices

F2. Administrative and National Policy Requirements

F3. Terms and Conditions

F4. Cooperative Agreement Terms and Conditions of Award

F5. Health Information Technology (IT) Interoperability Language

F6. Reporting

G. CMS Contacts

G1. Programmatic Questions

G2. Administrative/Budget Questions

H. Other Information

Appendix I. Guidance for Preparing a Budget Request and Narrative

Appendix II. Application and Submission Information

Appendix III. Business Assessment of Applicant Organization

Appendix IV. Accessibility Requirements

Appendix V. Merit Review and Selection Process

Appendix VI. Application Check-off List

Appendix VII. Medicare FFS Hospital Global Budget Financial Methodology

Appendix VIII. Medicaid Alignment Criteria

Appendix IX. Enhanced Primary Care Payment Financial Methodology

Appendix X. Quality and Population Health Strategy

Statewide Quality and Population Health Measures

Primary Care AHEAD Quality Measures

Hospital Measures

Appendix XI. Medicare FFS Total Cost of Care (TCOC) Expenditure Target

Appendix XII. Milestones and Potential Corrective Action

Appendix XIII. Acronym Guide

Executive Summary

This Notice of Funding Opportunity (NOFO) is announcing the opportunity to apply to participate in the States Advancing All-Payer Health Equity Approaches and Development

Model (referred to as “AHEAD” or the “AHEAD Model”), including availability of Cooperative

Agreement funding of up to $12 million per award recipient. State Medicaid agencies, state public health agencies, and other state agencies may apply to participate in AHEAD on behalf of their states.

The AHEAD Model is a voluntary, state-based alternative payment and service delivery model designed to curb health care cost growth, improve population health, and advance health equity by reducing disparities in health outcomes. The AHEAD Model will test a flexible framework that includes statewide or sub-state accountability targets for all-payer and Medicare fee-for-service cost growth, primary care investment, and equity and population health outcomes. The

Model will include specific components to help each award recipient to achieve these goals, including an initial investment via the Cooperative Agreement award to support planning and implementation activities, Medicare fee-for-service and Medicaid hospital global budgets for participating hospitals, and a primary care program for participating primary care practices.

The AHEAD Model will operate for 11 years (2024-2034). Applicants must select one of three

Cohorts to participate in based on their stage of readiness to implement the Model. CMS will select, via a competitive process, up to eight award recipients. Up to $12 million in Cooperative

Agreement award funding will be available to each selected award recipient over the course of up to six years. The Model will conclude for all Cohorts on December 31, 2034.

Item Description

HHS Awarding Agency Centers for Medicare & Medicaid Services (CMS)

CMS Awarding Center Center for Medicare & Medicaid Innovation (CMMI)

Notice of Funding

Opportunity Title

States Advancing All-Payer Health Equity Approaches and

Development (AHEAD) Model

Authorization Section 1115A of the Social Security Act (the Act)

Federal Assistance

Listings Number

(CFDA)

93.968

Funding Opportunity

Type

New

Funding Opportunity

Number

CMS-CMS-4S4-24-001

Type of Award Cooperative Agreement

Type of Competition Competitive

Letter of Intent CMS recommends a letter of intent to apply for this funding opportunity. These are optional. See Section C.3, Letter of Intent for more information.

Application Due Date and Time

Cohorts 1 and 2: March 18, 2024, 3:00 pm Eastern Standard

Time

Cohort 3: August 12, 2024, 3:00 pm Eastern Standard Time

Anticipated Issuance

Notice(s) of Award

Cohorts 1 and 2: May 24, 2024

Cohort 3: October 21, 2024

Item Description

Cooperative Agreement

Period of Performance

Start Date

Cohorts 1 and 2: July 1, 2024

Cohort 3: January 1, 2025

Cooperative Agreement

Period of Performance

End Date

Cohorts 1 and 2: 5.5 years, December 31, 2029

Cohort 3: 6 years, December 31, 2030

Anticipated Total

Available Funding

$96,000,000.00 (subject to availability of funds)

Estimated Maximum

Award Amount

$12,000,000.00

Estimated Maximum

Number of Awardees

A. Program Description

A1. Purpose

This Notice of Funding Opportunity (NOFO) describes the States Advancing All-Payer Health

Equity Approaches and Development Model (referred to herein as “AHEAD” or the “AHEAD

Model”) and provides instructions for applicants on how to apply.

CMS, through its Center for Medicare and Medicaid Innovation (“CMMI” or the “Innovation

Center”), seeks applications for the AHEAD Model. The voluntary Model will test the effects that holding states accountable for controlling the growth in health care costs has on improving population health and health equity in a state or sub-state region. The Model relies on specific alternative payment and service delivery models to achieve these goals:

• improve population health;

• advance health equity by reducing disparities in health outcomes; and

• curb health care cost growth and reduce expenditures in the Medicare and Medicaid programs.

CMS will evaluate the impact of the AHEAD Model on health care spending and utilization, quality of care, and health equity.1

1 CMS defines health equity as the attainment of the highest level of health for all people, where everyone has a fair and just opportunity to attain their optimal health regardless of race, ethnicity, disability, sexual orientation, gender identity, socioeconomic status, geography, preferred language, or other factors that affect access to care and health outcomes.

CMS will award, through a competitive process, Cooperative Agreements to up to eight successful applicants (herein referred to as “award recipients” or “recipients”). The Model will operate for 11 years (2024-2034), with Cooperative Agreement funding available for first 5.5 or

6 years (see Section B4, Cooperative Agreement Period of Performance).

Award recipients will select to participate in one of three Cohorts based on their stage of readiness to implement the Model:

• Cohort 1: 18-month Pre-Implementation Period begins July 1, 2024; Implementation

Period begins January 1, 2026

• Cohort 2: 30-month Pre-Implementation Period begins July 1, 2024; Implementation

Period begins January 1, 2027

• Cohort 3: 24-month Pre-Implementation Period begins January 1, 2025; Implementation

Period begins January 1, 2027

Award recipients will be required to recruit hospitals and primary care practices to participate in

AHEAD, including in the Medicare fee-for-service (FFS) and Medicaid hospital global budgets

(see Section A4.5, Hospital Global Budgets) and the primary care program, Primary Care

AHEAD (see Section A4.6, Primary Care AHEAD), respectively.

The parameters for the AHEAD Model are detailed throughout this NOFO. Specific information regarding funding amounts is detailed in Section B, Federal Award Information.

A2. Authority

Section 1115A of the Social Security Act (the Act) authorizes the Secretary of the Department of

Health and Human Services to test innovative payment and service delivery models expected to reduce Medicare, Medicaid, or CHIP expenditures while preserving or enhancing the quality of care.

A3. Background

The AHEAD Model is the next generation of state-based, multi-payer total cost of care (TCOC) models from the CMS Innovation Center. AHEAD builds on existing state-based models, including the Vermont All-Payer Model (VT APM), Maryland Total Cost of Care Model

(MDTCOC), and the Pennsylvania Rural Health Model (PARHM).2 CMS and states have learned from these efforts to spur statewide and regional transformation. Preliminary evaluation data from these models indicates that these types of models have potential to generate savings, quality and population health improvements, and system-wide care delivery transformation.

AHEAD provides a pathway to scale these initiatives across states with sufficient flexibility to account for each state’s unique health care delivery structures. Scaling these initiatives across multiple states would allow for a greater number of beneficiaries to benefit from these investments in health care transformation.

2 CMMI is also integrating lessons learned from Community Health Access and Rural Transformation Model

(CHART), particularly around 1) financial methodologies and guardrails needed for rural hospital participation and

2) development of a community-led transformation plan to improve outcomes and advance health equity in rural areas. While CHART was terminated in 2023, CMMI is committed to learning from that model.

AHEAD is aligned with the Innovation Center’s strategic priorities to drive accountable care, advance health equity, support care innovations, improve access by addressing affordability, and continue partnering with states to achieve system transformation.3 Of note, AHEAD encourages a multi-sector approach to promoting equity. Resources can be coordinated to drive health improvements across population groups and address the underlying factors that have consistently led to poor health outcomes in underserved communities.

AHEAD is designed as a flexible framework to align accountability and responsibility for improved health outcomes and reduced health care costs for Medicare FFS and Medicaid beneficiaries and all residents of the state or sub-state region. The Model is intended to integrate seamlessly into ongoing state health reform work – especially in those states that have already invested significant time and resources in reorienting their care delivery systems towards greater preventive and high-value care, including in Medicaid. AHEAD will align Medicare FFS with states’ multi-payer efforts to address affordability, cost growth containment, and care delivery

(e.g., establishing cost growth benchmarks, hospital global budgets, primary care minimum spending targets, and Medicaid innovation). This alignment across payers is intended to accelerate transformation across the entire health system.

Innovation Center experience shows that states are well positioned to lead the implementation of the AHEAD Model. States are already able to leverage policy and regulatory levers (e.g., Medicaid policy innovation, commercial market regulation, provider rate setting, incentives, and penalties for exceeding all-payer TCOC spending targets, etc.) to facilitate multi-payer alignment and control TCOC growth. States also have established relationships with provider associations, local governments, communities, and non-profit organizations that can implement interventions to achieve the Model’s goals of improving population health and advancing health equity.

A4. Program Requirements

A4.1. Model Structure

The AHEAD Model tests a flexible framework that includes (Figure 1):

• Agreements (3 types): Each award recipient (i.e., state agency) will partner with CMS to implement the Model through (1) a Cooperative Agreement award for which this NOFO is soliciting applications, and (2) a State Agreement. Award recipients will recruit hospitals and primary care providers that will execute individual (3) Participation

Agreements with CMS.

Each award recipient will be required as a term of the Cooperative Agreement award to enter into a State Agreement with CMS. The State Agreement will memorialize the negotiated accountability targets and other requirements of Model participation. The

State Agreement must be signed by:

▪ the award recipient (e.g., state agency);

▪ the governor;

3 CMS Innovation Center Strategy Refresh, 2023, available here.

https://innovation.cms.gov/strategic-direction-whitepaper

▪ head of the State Medicaid Agency (if different from the award recipient),

▪ head of any agency with hospital rate-setting or budget authority (if applicable); and

▪ head of the agency responsible for public health activities within the state (if distinct from other entities previously listed).

• Participating Providers: The award recipient (e.g., state agencies) will recruit hospitals and primary care practices to participate in hospital global budgets and Primary Care

AHEAD, respectively. Hospitals and primary care practices will enter individual

Participation Agreements with CMS.

• Components:

▪ Statewide or sub-state accountability targets for all-payer and Medicare FFS growth, primary care investment, equity, and population health outcomes;

▪ Cooperative Agreement funding to support Model implementation activities, payment methodology development, and population health activities in the early years of the Model;

▪ Hospital global budgets (for hospitals) to provide stable payment, constrain costs, and improve population health; and

▪ Primary Care AHEAD (for primary care practices) to provide primary care investment and support advanced primary care.

Figure 1. AHEAD Model Structure

A4.1.1 Model Governance Structure

Award recipients will be required under the terms of the Cooperative Agreements to establish a multi-sector Model Governance Structure within the state or sub-state region to inform Model activities. State Medicaid and Health agencies must play a leading role in bringing together this group of individuals representing various entities, interests, and geographies within the state or sub-state region. In addition to these agencies, the Model Governance Structure must include:

• representation from other relevant state agencies (e.g., Departments of Insurance or other state agency with hospital rate or budget setting authority);

• community-based organizations from underserved communities;

• patients and consumers from underserved communities (along with associated advocacy organizations);

• health care payers (including commercial payers);

• clinicians and provider organizations, including those from underserved communities;

and

• other entities whose policies influence population health (e.g., organizations related to transportation, food insecurity, or housing).

If applicable to the participating state or sub-state region, the Model Governance Structure should also include representatives from the state office of rural health and local tribal communities.

Award recipients can leverage an existing council, workgroup, or equivalent to meet this requirement, but must ensure that the individuals and entities described above are able to participate in Model-related activities and decision-making. The Model Governance Structure must include representation from community-based organizations, patients and consumers, provider organizations and payers that serve, are based in, or are drawn from the population residing in the state, or if an award recipient designates a sub-state region as described in Section

C1, Eligible Applicants, the sub-state region. Among other potential roles that award recipients may assign to this entity, the Model Governance Structure is responsible for developing and monitoring implementation of the Statewide Health Equity Plan described in Section A4.3.1, Health Equity. The Model Governance Structure must be established no later than six months after the award is made.

While award recipients remain ultimately accountable for ensuring that obligations and requirements associated with the Cooperative Agreement are met, the award recipient must designate a formal role for the Model Governance Structure. As a requirement of the

Cooperative Agreement, the award recipient is required to work with the Model Governance

Structure to:

• plan for and assist with Model implementation, including by: (1) providing input into the selection of statewide population health and quality measures and equity targets described in Section A4.3, Statewide Quality and Equity Targets; (2) developing the statewide Health Equity Plan described in Section A4.3.1, Health Equity and producing annual reports on progress implementing Health Equity Plan; (3) assisting with the review of Hospital Health Equity Plans described in Section A4.3.1, Health Equity; and

(4) providing input on the use of Cooperative Agreement funding to support Model activities;

• ensure that Model implementation is informed by diverse perspectives and provide input to the award recipient as it plans investments and activities to meet AHEAD’s quality and cost growth objectives described in Sections A4.2, Statewide Accountability Targets and

A4.3, Statewide Quality and Equity Targets. This may include providing input into the establishment of all-payer cost growth and primary care investment targets.

A4.1.2. State Medicaid Agency Requirements

As either the award recipient or subrecipient on the Cooperative Agreement award, the state

Medicaid agency (SMA) must be willing to:

• be a signatory on the State Agreement;

• be a participant in the Model Governance Structure;

• aid in primary care practice recruitment for Primary Care AHEAD (see Section A4.6, Primary Care AHEAD);

• collaborate with CMS to establish, recruit hospitals for, and participate in, Medicaid hospital global budgets; and

• operate a Medicaid Primary Care APM.4

A4.2. Statewide Accountability Targets

Award recipients will be accountable for Medicare FFS and all-payer total cost of care (TCOC) growth and primary care investment targets. Medicare FFS targets include spending for resident

Medicare FFS beneficiaries, regardless of where the expense is incurred. All-payer targets include spending, regardless of where the expense is incurred, for all residents of the state or sub-state region, including those with the following types of insurance:

• Medicare (FFS or Medicare Advantage)

• Medicaid (FFS or managed care)

• Commercial insurance, including employer-based insurance, state employee health plans and Marketplace plans

Total Cost of Care (TCOC) Growth Targets: The AHEAD Model aims to rebalance health care spending across the system, leveraging hospital global budgets and primary care investment targets to shift health care spending and utilization from acute care settings over time to primary care and community-based settings. To ensure this rebalance occurs without simply increasing overall spending, recipients will be accountable for constraining Medicare FFS (Parts A and B) and all-payer TCOC growth.

Under the terms of the State Agreement, each award recipient will be expected to generate savings relative to the counterfactual (e.g., compared to the state’s projected TCOC growth absent the model) during the Model Implementation Period 5. CMS will identify state-specific factors (e.g., historic spending) in considering both the construction of the counterfactual as well as the magnitude of expected savings.

4 A qualified Medicaid Primary Care APM may be a patient-centered medical home (PCMH) program or another primary care value-based payment arrangement that includes increased accountability and care transformation structure for care coordination, health-related social needs, and behavioral health/specialty integration. CMS expects some variation in the format and goals of these programs, but generally must aim to improve and advance coordinated, whole-person and team based primary care for Medicaid beneficiaries.

5 The Implementation Period is the period after Pre-Implementation through the end of the Model (December 31, 2034). This is separate from the Cooperative Agreement Period of Performance. See Section B4, Cooperative

Agreement Period of Performance for more information.

Accountability Targets Description

Medicare FFS TCOC Growth

Targets

Each award recipient will be accountable for meeting a target for resident Medicare FFS beneficiaries’ TCOC growth on an annual basis. CMS will work collaboratively with each award recipient during the pre-implementation period to set the targets building from a common CMS methodology. The state or sub-state specific Medicare FFS cost growth target and calculation methodology will be outlined in each award recipient’s State

Agreement. All Medicare FFS spending (Parts A and B) for beneficiaries in the state or region who meet the eligibility criteria (e.g., residents in the state for a minimum defined timeframe) will be included in the Medicare FFS cost growth target calculation. CMS may adjust Medicare FFS hospital global budgets if the state does not meet established state

Medicare FFS cost growth targets, following an opportunity for state remediation of the issue.

Accountability Targets Description

State All-Payer TCOC Growth

Targets

Each award recipient will be accountable for meeting a target for all-payer TCOC growth, comprising Medicare, Medicaid, and commercial payers, on an annual basis. For all award recipients, all-payer cost growth targets (or, at minimum, the process to determine such a target) must be memorialized in state

Executive Order, statute, or regulatory change 90 days before the start of PY1 and must subsequently be sustained throughout the duration of the Implementation Period. The state or sub-state specific all-payer cost growth target and calculation methodology will be defined and described in each award recipient’s State Agreement once enacted and specified (at minimum, 90 days before the start of PY2). If the state targets are memorialized by Executive Order, statute, or regulation prior to execution of the State Agreement, the methodology and targets will be included in the State Agreement at that time;

otherwise, the State Agreement will be amended to reflect these targets at least 90 days before the start of PY2. If the state misses its all-payer TCOC target, CMS may require corrective action and/or adjust Enhanced Primary Care Payments (EPCPs). Data collection and reporting on all-payer cost growth should be coordinated with data collection for the primary care investment target, described below. Award recipients can use existing all-payer cost growth target legislation or regulations to meet requirements for this component of the AHEAD model;

however, a state may need to update the applicable legislation or regulation to sustain the targets during the duration of the

Implementation Period. Award recipients beginning Model participation without all-payer cost growth targets will be encouraged to leverage the experience of early adopters and build on methodologies used in other existing state cost growth benchmarking programs.6

See Appendix XI. Medicare FFS Total Cost of Care (TCOC) Expenditure Targets for more detailed information on how the expenditure targets will be calculated, including the expected range.

Primary Care Investment Targets: Award recipients will be accountable for all-payer and

Medicare FFS primary care investment targets.

6 The Peterson-Milbank Program for Sustainable Healthcare Costs has been tracking these efforts and has additional resources for states. Information on the Peterson-Milbank Program available here.

https://www.milbank.org/focus-areas/total-cost-of-care/peterson-milbank/

Investment Targets Description

Medicare FFS Primary Care

Investment Targets

Each award recipient will be accountable for meeting both annual improvement targets throughout the duration of the Implementation Period and a final primary care investment target by the end of the Implementation

Period for resident Medicare FFS beneficiaries. These targets will be set by CMS on a state-by-state basis during the pre-implementation period and will be set forth in the award recipient’s State Agreement. CMS anticipates that each award recipient’s final primary care target will be between 6-7% of Medicare TCOC, depending on current

Medicare primary care spend in the state or sub-state region.

CMS will set a standard definition of primary care for the purpose of measuring Medicare FFS primary care spending, consisting of designated provider specialty codes, Healthcare Common Procedure Coding System

(HCPCS) codes, and non-claims-based payments

(measurement specifics available upon request).

Annually, CMS will produce and share Medicare FFS primary care spending measurement data with award recipients.

All-Payer Primary Care

Investment Targets

Each award recipient will be accountable for meeting an all-payer primary care investment target that will be set by

CMS on a state-by-state basis and in collaboration with existing state efforts on all-payer primary care investment.

The state or sub-state region specific all-payer primary care investment target and calculation methodology will be outlined in each recipient’s State Agreement. The process and authorities for setting All-Payer Primary Care

Investment Targets must be memorialized in state

Executive Order, statute, or regulatory change at least 90 days prior to the start of PY1; recipients that have existing primary care investment legislation or regulatory activities may leverage that to achieve targets under AHEAD. As with the all-payer cost growth target, the methodology and defined target will be included and described in the State

Agreement once defined, no later than 90 days prior to the start of PY2.

If a state has an existing all-payer primary care investment target, the state may use their current definition of primary care for measurement, subject to CMS approval. All measurement data must be shared with CMS. If a state

Investment Targets Description does not have an existing definition of primary care for all-payer measurement, they may use the CMS AHEAD definition. This flexibility is included given variations in state primary care priorities, definitions already established in primary care statute or regulation, and the unique population health needs of each state or designated sub-state region. Recipients will be expected to use all tools available at their disposal to increase primary care investment as a proportion of their TCOC, including increasing primary care practice participation in Primary

Care AHEAD (see Section A4.6, Primary Care AHEAD) and decreasing TCOC. The award recipient must appoint one state agency or entity that will have overarching responsibility for the coordination of all-payer primary care investment reporting; this should be coordinated with state reporting of TCOC for all payers. Award recipients will be required to obtain primary care spending information for each year from Medicaid and commercial payers.

Primary Care Investment

Measurement

During the Pre-Implementation Period, CMS will work with award recipients to identify additional gaps in primary care spend reporting and to establish reporting templates and methodology to be used throughout the Model to support complete data. Award recipients will need to consider non-claims-based payments as part of their calculation of primary care spending and reporting. This data must include all payers to facilitate accurate measurement and tracking of primary care investment as a percentage of the TCOC. To facilitate reporting and minimize burden, CMS will provide award recipients with a reporting template.

A4.3. Statewide Quality and Equity Targets

In collaboration with CMS, award recipients will set statewide or sub-statewide quality and equity targets for driving population health and quality improvement efforts throughout the

Model duration (see Appendix X. Quality and Population Health Strategy). The targets will be reflected in each award recipient’s State Agreement, and award recipients will be accountable for performance on selected measures over time and will be required to monitor and improve measure performance for identified subpopulations experiencing disparities over the course of the Model. The Model Governance Structure will report performance on these targets to CMS and describe progress in meeting these targets as part of annual Statewide Health Equity Plan updates (see Section A4.3.1, Health Equity).

A4.3.1. Health Equity

AHEAD relies on a multi-sector approach that promotes health equity at the state level to drive population health improvement and coordinate resources to address the underlying factors that have led to poorer health outcomes in historically underserved communities. AHEAD’s equity approach is modeled after accountable health initiatives that integrate non-clinical population health priorities into health systems to transform health care delivery, promote healthy communities, and build community partnerships under a shared commitment to health.7 In addition to payment innovations for hospitals and primary care practices and infrastructure funding provided via the Cooperative Agreement, AHEAD’s health equity strategy includes the development of health equity plans at the state- and hospital-levels, enhanced demographic data collection, and health-related social needs screening and referrals.

Statewide Health Equity Plan: As required by both the Cooperative Agreement and State

Agreement, award recipients must develop a Statewide Health Equity Plan (herein referred to as

“State HEP”) to define and guide Model activities aimed at reducing disparities and improving population health (through the Model Governance Structure). With the understanding that states face different gaps and have prioritized different areas for action, State HEPs represent an opportunity to share the state’s vision for health equity with CMS, the state hospital community, primary care practices, and other stakeholders.

To create the State HEP, the Model Governance Structure, under the direction of the award recipient, will use a guiding template provided by CMS to:

• identify health disparities and population health focus areas; and

• set measurable goals to reduce disparities and improve population health, including optimizing performance on population health and quality measures and primary care investment targets; and

• identify evidence-based strategies to advance toward those goals; and

• inform plans for allocating resources (e.g., Cooperative Agreement award funding) to support progress toward goals; and

• develop processes to involve a wide range of stakeholders in State HEP implementation.

The State HEP can be informed by existing State Health Improvement Plans, Community Health

Needs Assessments, Model Governance Structure perspectives, and other sources of health data, including new sources of data collected over the course of the Model (e.g., prevalence of health-related social needs identified through hospital and primary care screening and referral practices). As required by the Cooperative Agreement and State Agreement, the State HEP must be established by the end of the Pre-Implementation Period and periodically updated thereafter.

CMS will hold states accountable for meeting State HEP goals as reported to CMS via their annual updates.

If an award recipient designates a sub-state region to implement AHEAD, as described in

Section C1, Eligible Applicants, the Health Equity Plan for the sub-state region must include the same elements described above, with goals and strategies that are tailored to the sub-state region.

As with statewide HEPs, the HEP for the sub-state region may be informed by existing statewide health equity initiatives and activities. Award recipients will be held accountable for making

7 Demonstrating Success with Accountable Communities for Health. CA Accountable Communities for Health

Initiative.

https://static1.squarespace.com/static/632be03c30bc581b81337668/t/63990314f6c4346710cfa8b7/1670972180703/CACHI_Evidence_legislative-fact-sheet_10-23-19_w-Citations.pdf progress toward health equity goals that are specific to the sub-state region. Health equity efforts and activities described in HEPs or otherwise connected to AHEAD must not discriminate against any individual on the basis of race, ethnicity, national origin, religion, sex, or gender.

Hospital Health Equity Plan: Participating hospitals (herein referred to as “Participant

Hospitals”, as defined in Section A4.5, Hospital Global Budgets) in AHEAD will also be required to develop Health Equity Plans (herein referred to as “Hospital HEPs”) to detail observed disparities and identify the approaches and resources they will use to advance equitable outcomes within their patient populations.

As described in the State Agreement, through the Model Governance Structure, award recipients will be required to collect and assess Hospital HEPs. Beginning in PY1, Participant Hospitals will be required to use a guiding template provided by CMS to develop Hospital HEPs and will be required to submit short annual reports to the state on progress toward meeting HEP goals.

The Model Governance Structure will be required to review each Hospital HEP, utilizing assessment guidance provided by CMS, based on its robustness and alignment with the State

HEP. States will be required to collect annual updates to Hospital HEPs and include these updates as a required component of annual progress reports that the State must submit to CMS.

Enhanced Demographic Data Collection: Under AHEAD, Participant Hospitals and participating Primary Care Practices (herein referred to as “Participant Primary Care Practices”) will be required to collect and report standardized self-reported patient demographic data to

CMS. Demographic data can be used to monitor impacts on health disparities and patient outcomes. Technical assistance will be available to all Participant Hospitals and Participant

Primary Care Practices, particularly for smaller practices and clinics that may be constrained by limited resources and the technology needed for patient-level data collection and reporting.

Health Related Social Needs Screening and Referral: In addition to collecting demographic data, Participant Hospitals and Participant Primary Care Practices will also be required to screen patients for health-related social needs (HRSN) related to housing, food, and transportation, and make referrals or take other responsive actions to address those needs. These requirements recognize, support, and aim to accelerate the efforts many states are making to use existing or new authorities to identify HRSNs and, in some cases, directly fund HRSN services. CMS will work with states in providing technical assistance to Participant Hospitals and Participant

Primary Care Practices on these tools.

A4.4. Cooperative Agreement Funding to Support Model Implementation Activities

Cooperative Agreement funds are intended to support the award recipient’s Model implementation broadly, including:

• recruiting primary care providers and hospitals to participate

• setting statewide TCOC cost growth targets and primary care investment targets

• building behavioral health infrastructure and capacity

• supporting Medicaid and commercial payer alignment across the Model8

Applicants must submit a budget narrative (see Section D2.e, Budget Narrative) as part of their applications. All proposed activities and use of funds are subject to CMS approval. Examples of how funds might be used include, but are not limited to:

• state agency staffing to implement the Model

• new technology (e.g., implementing, acquiring, or upgrading health IT)9

• integration of community services referrals

• supporting demographic data collection

• bolstering health information exchange and creation of provider dashboards

• supporting population health activities

• implementing health-related social needs screening and referral processes

• development of Medicaid and/or commercial hospital global budget methodology

• all other aspects that align with building a population health agenda

After the initial award for Budget Period 1, continuation of the Cooperative Agreement and participation in the Model will be contingent on meeting the following Model milestones:

• Execution of State Agreement at least six months prior to the start of Performance Year

(PY) 1. 10

• Implementation of Medicaid Primary Care APM by the beginning of PY1.

• Implementation of Medicaid hospital global budget(s) by the end of PY1.

• Execution of hospital Participation Agreements at least 90 days prior to the start of PY1, such that at least 10% of a state or sub-state region’s Medicare FFS hospital net patient revenue (NPR) will be under a hospital global budget in PY1.11

If an award recipient does not meet these milestones in the indicated timeframe, CMS will terminate the award recipient’s Cooperative Agreement award and Model participation.

CMS may restrict an award recipient’s Cooperative Agreement award funding if the following milestones are not met:

• Memorialized process in state Executive Order, statute, or regulatory change for setting an all-payer cost growth target and all-payer primary care investment target at minimum

90 days prior to the start of PY1.

• All-payer TCOC and primary care investment targets established following the process memorialized in state Executive Order, statute, or regulatory change are reflected in the

8 Note: any states that receive Cooperative Agreement funds to support Model Implementation activities cannot also claim federal financial participation for Medicaid administrative costs for the same Model Implementation activities.

9 Recipients and subrecipients are required to use health IT that meets standards and Implementation specifications adopted in 45 CFR part 170, Subpart B, if such standards and Implementation specifications can support the activity.

Visit https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-D/part-170/subpart-B to learn more. See also F5 of this NOFO, Health Information Technology (IT) Interoperability Language.

10 Performance Years or “PYs” refer to the Implementation Period. See Section B4, Cooperative Agreement Period of Performance for specific PY dates.

11 Medicare FFS hospital net patient revenue (NPR) is defined as the revenue generated from inpatient and outpatient facility services delivered at acute care and critical access hospitals.

https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-D/part-170/subpart-B

State Agreement, or amendment to the State Agreement, at least 90 days prior to the start of PY2.

• Participation of at least one commercial payer in hospital global budgets by the start of

PY2.

• Execution of hospital Participation Agreements at least 90 days prior to the start of PY4, such that at least 30% of a state or sub-state region’s Medicare FFS hospital NPR will be under a hospital global budget in PY4 and all subsequent PYs. Award recipients must maintain at least 10% of Medicare FFS hospital NPR under a hospital global budget prior to this milestone.

If an award recipient does not meet these milestones in the indicated timeframe, in addition to having its Cooperative Agreement funds restricted, they also may be subject to corrective action, which may include termination of the award recipient’s Cooperative Agreement and Model participation, including termination of the State and Participation Agreements. See also the description in Section C6, Continued Eligibility as well as Appendix XII. Milestones and

Potential Corrective Action for a complete list of milestones and deadlines.

A4.5. Hospital Global Budgets

Hospital global budgets will be a critical mechanism for achieving all-payer and Medicare FFS

TCOC growth targets, improving hospital quality, and generating spending reductions to offset increased spending on population health, primary care, behavioral health, and health equity. The prospective payments made under a hospital global budget do not change based on volume of services and, therefore, provide hospitals financial stability and flexibility while incentivizing the identification and reduction of potentially avoidable utilization.

Acute care hospitals, critical access hospitals (CAHs), and Rural Emergency Hospitals (REHs) that operate in award recipient states and sub-state regions that elect to participate in the Model and receive Medicare FFS hospital global budgets are referred to as “Participant Hospitals.”

REHs will only be able to participate in states that enact enabling legislation regarding REHs prior to or during the performance period. States and other payers can choose to offer Medicaid and/or commercial hospital global budgets to other hospital types not eligible to receive

Medicare FFS hospital global budgets.

Overlaps with other Innovation Center models12:

• Hospitals may simultaneously participate in AHEAD and Shared Savings Program

ACOs.

• Hospitals may not simultaneously participate in the ACO Realizing Equity Access, and

Community Health Model (ACO REACH) and AHEAD. Providers practicing at hospitals participating in AHEAD may still participate in ACO REACH.

• CMS will make model-by-model determinations as to whether hospitals that participate in episode-based models are eligible for AHEAD. These decisions will be made based on an assessment of the operational complexity of potential payment overlaps.

12 See ACO REACH information available here and Medicare Shared Savings Program information available here.

https://www.cms.gov/priorities/innovation/innovation-models/aco-reach https://www.cms.gov/medicare/payment/fee-for-service-providers/shared-savings-program-ssp-acos

Medicare FFS Methodology for Hospital Global Budgets: CMS will develop and maintain a

Medicare FFS hospital global budget methodology, which will be standardized across Participant

Hospitals. A detailed financial methodology for calculating and adjusting Medicare FFS hospital global budgets will be provided prior to a Participant Hospital’s signing of their Participation

Agreement. However, CMS understands the importance of sharing a financial methodology as early as possible to aid in states’ hospital recruitment efforts. As such, CMS has provided a high-level overview of the methodology as part of this NOFO (see Appendix VII. Medicare FFS

Hospital Global Budget Financial Methodology) and intends to host at least one payment webinar shortly following the publication of this NOFO.

CMS will allow award recipients with statewide hospital rate setting authority or hospital budget setting authority and prior experience with population-based payments or global budgets to develop a state-designed Medicare FFS global budget methodology, subject to CMS approval.

States may develop the authority and capacity to create their own Medicare FFS global budget methodology over time. States with hospital rate- or budget-setting authority may submit a state-designed methodology for CMS approval, at least eighteen months in advance of the PY for which it would be effective. Any state-designed methodology must align with CMS methodology on general principles, which will be detailed in the financial specifications of the

CMS methodology.

State oversight of hospital transformation is critical, as the state is ultimately accountable for

TCOC, population health, and equity outcomes under the Model. To that end, each award recipient will establish a process for review of individual hospital requests for adjustments to their global budgets pertaining to service line changes (e.g., upward adjustment for service line additions or retaining revenue if a service line is removed). CMS’ determinations on whether to approve or deny a proposed adjustment to a hospital’s global budget pertaining to a service line change will consider alignment with the statewide health equity plan and population health goals, the potential to achieve savings or budget neutrality for Medicare, input from the Model

Governance Structure (MGS), impact on beneficiary access to care, and fulfillment of existing obligations under Medicare and Medicaid. Award recipients will work with CMS during the Pre-

Implementation Period to develop this process, which will be defined and described in each award recipient’s State Agreement.

Medicaid Methodology for Hospital Global Budgets: CMS will support award recipients in developing a Medicaid hospital global budget methodology. As part of their application, applicants must include a proposed timeline of activities for constructing and implementing a

Medicaid hospital global budget methodology (see Section D2.d, Project Narrative). The CMS

Center for Medicaid and CHIP Services (CMCS) will review the proposed methodologies for award recipients, as well as any state requests for approval of Medicaid authorities required to implement hospital global budgets for Medicaid. The proposed timeline for implementation should include:

• The proposed pathway that offers the most streamlined approach in the context of the applicant’s state Medicaid program structure.

• The steps required of the SMA and legislature/various other state entities developing the necessary Medicaid authorities, which could include state plan amendment(s), Medicaid managed care contract amendments (including implications for rate development and state directed payment prior approval) among others depending on the state’s model and existing program structure and authorities.

• The anticipated timeline for each step, such that the Medicaid hospital global budget payment is implemented in time for required Medicaid alignment to AHEAD hospital global budgets (see Appendix VIII. Medicaid Alignment Criteria for Medicaid hospital global budget related deadlines).

• List of major stakeholder groups that need to be engaged in developing the payment change, with high-level plans on how and when the state plans to engage these groups throughout the Pre-Implementation process. This should include the proposed process for gathering sufficient Medicaid Managed Care Organization (MCO) buy-in and other contingencies for implementing global budgets in a managed care space.

• Process for contract negotiations with MCOs, if applicable.

Hospital Recruitment: Award recipients are responsible for recruiting hospitals to voluntarily participate in the hospital global budget payment arrangement. As part of their application, applicants must detail their plans for recruiting hospitals (see Section D, Application and

Submission Information). The value proposition for hospitals joining the Model is focused on:

• stable and predictable funding;

• upfront funding in the first two years of the model to support enhanced care management for Medicare beneficiaries through the Transformation Incentive Adjustment;

• ability to reorient activities to population health management;

• technical assistance and learning resources to aid transformation activities; and

• opportunity to use benefit enhancements available under the Model to support care redesign efforts.

This business case for hospital transformation is strengthened when multiple payers implement global budgets, which is why Medicaid is a required payer beginning in PY1. Participant

Hospitals can also realize financial savings from reduced avoidable utilization (e.g., avoidable admissions and emergency visits). Additionally, Participant Hospitals will be rewarded for improvements in quality and health equity, and for controlling TCOC for beneficiaries within their service area. While hospitals may join the Model in any PY, only hospitals joining the

Model in PY1 or PY2 of the applicable Cohort will be eligible to receive an upfront adjustment to their Medicare FFS global budgets to invest in the care transformation activities needed to achieve success operating under a global budget (more information on the Transformation

Incentive Adjustment can be found in Appendix VII. Medicare FFS Hospital Global Budget

Financial Methodology). These upfront adjustments must be repaid if a hospital…