Despite White House shake-up, value-based pay is here to stay

April 10, 2017

Commercial payers, large employers and leading provider systems across the nation have fully embraced this transformation and they will not simply revert back to the fee-for-service system of healthcare delivery and reimbursement.

While campaigning for president, Donald Trump consistently promised to repeal the Affordable Care Act (ACA). 

This raises the question of whether the trend toward value-based payment (VBP)-using healthcare quality outcomes and cost efficiency as a basis for reimbursement for healthcare services-will continue regardless of the future of the ACA.

Commercial payers, large employers and leading provider systems across the nation have fully embraced this transformation and they will not simply revert back to the fee-for-service system of healthcare delivery and reimbursement. 

In addition, if the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) regulations are not substantially altered or the underlying statute amended, quality-based payments will soon be implemented in some form for nearly all Medicare reimbursements, regardless of what happens to the ACA.  

VBP has been broadly adopted in the private market by both commercial insurance payers and employers. According to the Catalyst for Payment Reform’s 2014 national scorecard, about 40% of payments by private plans to healthcare providers were based on quality measure performance. This represented a significant increase in adoption from 2013, when the same scorecard found that only 11% of payments were value-based. 

These initiatives often involve partnerships between health systems and employers. Importantly, none of these initiatives are dependent upon elements of the ACA. These payers have pursued VBP because they have experienced improved quality and cost savings.

MACRA has two payment tracks for physicians to choose from: the Merit-based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (APMs). Both tracks meet the broad definition applied here for VBP, meaning that by the end of 2017-absent regulatory changes by the new administration or Congressional action-almost all Medicare Part B services will be reimbursed through VBP of some sort.  

 

However, a full repeal of the ACA will slow MACRA’s implementation. The Center for Medicare & Medicaid Innovation, created by the ACA, plays a critical role in implementing the Advanced APMs. Medicare reform gives preferential treatment to the Advanced APMs created by the innovation center and CMS has already made changes to these models to allow more participants to qualify as Advanced APMs.  

As such, a full repeal of the ACA that includes eliminating the innovation center will result in fewer providers operating under the Advanced APM track, with its increased payments, savings and emphasis on quality performance.   

Although a full repeal of the ACA would likely slow implementation, the trend toward greater adoption of VBP will almost certainly continue unabated. Going back to the fee-for-service reimbursement system would require a major reversal of most of the market. Absent major changes by the Trump administration, most importantly MACRA, VBP will continue to be a major factor in the Medicare and Medicaid programs. 

The ACA has served as a major catalyst for payment reform, continuing an irreversible process toward VBP that will live on even once it is long gone.  

Herschman serves on the board of directors and is a member of the firm Epstein Becker Green. Malone is an associate at Epstein Becker Green. Do you think Trump will get rid of value-based pay? Tell us at medec@ubm.com.