Value-Based Payment: Something We Can All Agree On

Care Coordination

As the healthcare debate continues to divide partisans across the country, one unifying aspect that has received bipartisan support is that of Value-Based Payment (VBH) structures and Alternate Payment Models (APM). People of all political persuasions are joining together to promote ideas designed to improve patient engagement and satisfaction through delivering savings and lowering costs. It is important to understand how the several ways this new approach is being applied will affect the options available to the individuals you serve. In 2017 alone, more than 12.3 million Medicare and/or Medicaid beneficiaries will be served by a professional participating in an APM.

Medicare payment models have been in a state of evolution for decades. The Health Maintenance Organization (HMO) in 1973 was the first major effort to improve the way Medicare patients received their care. It developed networks of providers to provide choice and stability. The 1980s saw various pilot programs tried, and the 1990s produced Medicare+Choice and Medicare Advantage. Participation in many of these programs, however, remains voluntary, and most Medicare beneficiaries still rely on traditional Medicare. Becoming educated on VBH options is the responsibility of managers and directors across the country.

More recently, the Affordable Care Act (ACA) created the Centers for Medicare and Medicaid Services Innovation Center (CMMI) for the sole purpose of creating and testing new value-based payment and delivery methods. It was also hoped that a central organization could bring clarity to ACOs as the number of models grows and creates confusion. Sifting through the various models that have been tried over the past 50 years, and learning from mistakes while building on successes, is a driving mission of CMMI. To accomplish this, they are working hand in hand with the Centers for Medicare & Medicaid Services (CMS). Together, they are driving the shift away from volume-based and fee-for-service reimbursement methodologies.

One specific initiative recently rolled out is the expansion and implementation of major bundled payment initiatives. Although some were concerned that the new administration’s delay of this program signaled a desire to move away from it, the program has received bipartisan support and is still on schedule for implementation, even if delayed. The Cardiac Rehabilitation model, for example, will become effective January 1, 2018, instead of July 1, 2017. This delay was ultimately due to feedback the CMS received regarding increasing its efficiency before rollout rather than partisan politics. Ultimately, the AHCA passed by Republicans continues, rather than eliminates, VBH programs such as bundled payments.

Bundled payments faced early doubts when first rolled out. Concerns included revenue loss and extra administrative headaches, as well as limiting care that could affect patient outcomes. Fortunately, early results from large-scale testing has been positive. The $10 billion Bundled Payments for Care Improvement Initiative (BPCI) has alleviated many concerns and shown that bundled payments are highly effective in connecting providers and providing high quality care for patients. Hospitals and healthcare providers have been encouraged to take a longitudinal and quality-focused approach to the care of their patients.

As organizations implement bundled payments, among other VBH options, they will become more attractive to investors wishing to increase funding to systems yielding measurable and significant improvements for both patients and healthcare providers. To invite investors, ACO’s should promote proactive patient engagement around care planning, and develop a care management team that includes the use of human capital and technological support for patient engagement.

VBH deals with more than just payments. It requires care redesign and coordination throughout the continuum of care. The programs encourage alignment of resources and offer incentives to care providers to coordinate on quality of care, efficiency, accessibility, and cost. VBH benefits drive savings and innovation across the industry, including for pharmaceutical companies and device manufacturers. VBH arrangements remove much of the risk from consumers and place it on providers, pharmaceutical companies and medical device companies. They assume the risk through bundled payments, guarantees, and service fees that are dependent on achieving previously agreed upon quality standards and other measures. If quality metrics are not met, these companies share the financial consequence with the payer.

For executives of ACOs, the need to understand these plans is great. Consumers with complex issues, particularly Medicaid and Medicare patients, are increasingly the target of these initiatives. With 8.9 million Medicare beneficiaries in ACOs, that encompasses 15% of the total Medicare population. Many of these initiatives are focused on treatments and services designed for the older population, such as knee/hip replacements, and the medical devices that accompany these procedures. Future efforts, however, are expanding these initiatives to serve children enrolled in Medicaid or CHIP plans.

APM initiatives may be expanding their targeted demographics, but they all must share the same key ingredients to be successful. A recent American Journal of Accountable Care article identified five key principles that executives should use to develop successful alternative payment models.

  • Alternative payment models should support providers by offering resources for high-value care delivery.
  • Researchers recommend that alternative payment models only hold providers accountable for care quality and cost factors that they can control.
  • More alternative payment models should focus on enhancing reimbursement for specialty care.
  • Researchers suggest that appropriately designed alternative payment models allow for delivery flexibility, especially regional care variations.
  • The best alternative payment models work to minimize administrative burdens imposed on providers.

As CMS and CMMI continue to apply these principles, and broaden the reach of their efforts to provide alternate payment models, innovative programs continue to be developed and rolled out. During 2017 alone, they have rolled out or expanded the following programs:

  • Medicare-Medicaid ACO Model
  • Next Generation ACO Model
  • Medicare Shared Savings Program (MSSP)
  • Comprehensive Primary Care Plus (CPC+)

As we move forward, there is renewed hope for increasing the quality of care while reducing costs. With bipartisan support, value-based payment structures will continue to account for a rapidly growing segment of revenue in healthcare. Already, millions of Medicaid and Medicare recipients are benefitting from the drive to provide alternative payment methods and plans using bundled payment options. United in our efforts, we can help drive participation in these programs that will provide a myriad of benefits for our patients, our own organizations, and others throughout the healthcare industry.

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