March 7, 2018

Risking Irrelevance?

Last November, we asked “Is CMS Changing Course on Value-Based Payments?”  We posed this question in response to a New York Times article highlighting how the Trump administration was slowing down and shrinking other Medicare pay-for-performance programs initiated under the Obama administration.  At the time, we offered four compelling reasons why providers should continue their efforts around value-based care, despite these mixed signals

The signals coming from Washington are no longer mixed.  In a speech at the Federation of American Hospitals convention March 5, Health and Human Services Secretary Alex M. Azar II threw down the gauntlet on value-based care:

There is no turning back to an unsustainable system that pays for procedures rather than value.  In fact, the only option is to charge forward — for HHS to take bolder action, and for providers and payers to join with us.  This administration and this President are not interested in incremental steps.  We are unafraid of disrupting existing arrangements simply because they’re backed by powerful special interests.

Secretary Azar introduced the administration’s four-part plan to drive value-based transformation:

  1. Give consumers greater control over their health information.
  2. Encourage transparency from providers and payers.
  3. Leverage Medicare and Medicaid to drive value and quality throughout the system.
  4. Eliminate government regulations that impede value-based transformation.

He acknowledged this transformation will be a “radical reorientation from the way that American healthcare has worked for the past century” and “will require some degree of federal intervention — perhaps even an uncomfortable degree.”

Because federal spending on Medicare and Medicaid amounts to one-third of America’s total health spending, only these programs “have the heft, the market concentration, to drive this kind of change, to be a first mover.”  According to Secretary Azar, the administration “will use these tools to drive real change in our system” in a bold manner:

Simply put, I don’t intend to spend the next several years tinkering with how to build the very best joint-replacement bundle — we want to look at bold measures that will fundamentally reorient how Medicare and Medicaid pay for care and create a true competitive playing field where value is rewarded handsomely.

The Secretary acknowledged the value-based transformation “won’t be the most comfortable process for many entrenched players.”  However, those who participate will reap the rewards of their efforts:

But those who are interested in working with us to build a value-based system will have the chance to take advantage of a market where consumers and patients will be in charge of healthcare.  We believe that is a system that will serve patients first, but it will be fair for providers and payers, too.

Although Secretary Azar did not address the issue directly in his remarks, providers not positioning themselves for the value-based transformation risk irrelevance in this new marketplace.

There are several opportunities available to those seeking first-step strategies to value-based transformation:

  1. Medicare fee-for-service population health services (e.g., preventive services, chronic care management, behavioral health integration services) generate revenue to fund infrastructure investments.
  2. Formal performance improvement initiatives (which include monitoring, reporting, and remedial action) around Medicare value-based purchasing programs (e.g., readmissions, hospital-acquired infections) help avoid or reduce penalties.
  3. Participation in the Medicare Shared Savings Program and similar commercial payer programs builds the tools for managing patients’ total cost of care.
  4. Participation in Bundled Payment for Care Improvement Advanced and other episodic payment models drives coordination of the care continuum.
  5. Actively engaging in clinical practice improvement activities improves MIPS scores and better positions physician practices for new payment models.
  6. Developing local provider networks for providers’ self-insured employee health plans helps control rising costs while promoting clinical integration.
  7. Exploring gainsharing opportunities to reduce operating costs also promotes hospital-physician alignment.

We strongly believe a “wait and see” approach to value-based care implementation is no longer a viable option.  Strong leadership and action are required to avoid becoming irrelevant.

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