Does value-based pay have a future?

September 18, 2019

Value-based care has created a conundrum: pretty much everyone in healthcare likes the idea of paying for outcomes, but no one is sure how to fairly implement it.

Value-based care has created a conundrum: pretty much everyone in healthcare likes the idea of paying for outcomes, but no one is sure how to fairly implement it.

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) introduced a new world of value-based care to many physicians and was a major step away from fee-for-service. Gone was the Sustainable Growth Rate, replaced with a program that was supposed to drive costs down by reimbursing for quality patient outcomes.

“Congress had revised the Sustainable Growth Rate many times over the past 20 years, and everyone was fatigued by it,” says Larry Kocot, JD, head of KPMG’s Center for Healthcare Regulatory Insight and a former CMS official. “Physicians were willing to take something new to not have to go through that exercise again.”

Doctors suddenly found themselves trying to navigate new MACRA acronyms like MIPS and APMs to figure out where they fit as Medicare started moving away from fee-for-service in a bid to contain costs and improve care quality.

At the same time, more private payers began to embrace the possibilities of value-based care, working incentives into contracts that rewarded physicians who could use data to show patients were healthier and avoiding unnecessary hospitalizations. But fee-for-service contracts are still the norm.

Meanwhile, physician organizations began to push back against MACRA as their members rebelled against the cost of the technology needed to comply and the complexity of the reporting measures. CMS responded by exempting hundreds of thousands of physicians, causing some to question the value of the program and if it was improving patient care or saving money.

With MACRA now a few years old, experts are looking at how it might be reformed, and what value-based care might look like in the future.
MACRA: a misstep toward value

MACRA has not worked to the extent policymakers hoped, says Frederick Southwick, MD, a practicing internist and healthcare researcher at University of Florida Health.

“The goal was to drive a significant wedge in payments between those willing to step up and use Alternative Payment Models and those who remained on the sidelines,” says Southwick. “We’ve seen physicians take a shot on some things they might not have done in the past to get a bonus payment, but they have not reached the point where they’ll feel pain if they don’t. The MIPS side of this was supposed to be painful to physicians, but it’s mostly a big nothing-burger because so many have been excluded.”

As a result, there isn’t much money in the budget-neutral program to move from the poor performers to the good performers, eliminating much of the incentive. According to CMS, in the 2019 payment year (based on 2017 performance data), 71 percent of MIPS participants received a positive payment adjustment with a bonus for performance, 22 percent received a positive payment without the bonus, 2 percent didn’t receive a positive or negative adjustment and only 5 percent received a negative adjustment.

“The more physicians that are excluded, the harder it is for those in the program to win,” says Kocot, noting that the maximum payment adjustment anyone received was 1.88 percent, while the maximum penalty was 4 percent.

MIPS was intended to be the incentive to get physicians into some form of risk-sharing APM, but MIPS isn’t accomplishing that and the 5 percent positive payment adjustment APM participants can earn expires in 2024.

“What is the incentive to get people into MIPS and into an APM as we move further down the line?” asks Kocot.

MIPS also faces the problem of how to define “quality”.

“Healthcare is so complicated, that’s hard to do,” says Chris Dawe, vice president of Evolent Health, which helps providers and health plans transition to value-based care, and a former health policy adviser in the Obama administration. “The best way would be through knowledgeable consumers who would ask questions about the cost-benefit and is it worth it to their health and wellbeing. The problem with that is patients don’t go to medical school.”

Even if patients were making decisions, they would still have difficulty determining who the best doctor is because of the lack of objective information, and in many regions, the absence of choices in hospitals or physicians.

MIPS participants have scored well on quality measures, but many doctors argue that the measures don’t have any connection to real-world medicine. The time spent reporting on quality has also proven burdensome for many, who say it takes more time away from patients and redirects money toward IT projects.

“All of these initiatives require a tremendous amount of data accumulation and manipulation,” says William Spratt, Jr., JD, partner in the healthcare practice of Akerman LLP, in Miami. “There are so many different metrics and different ways to modify and manipulate the data in order to determine whether they are meeting various criteria or not, it’s challenging.”

For physicians without the support of a larger organization, the challenges are even greater. “It’s introduced an awful lot of complexity into the practice of medicine,” says Spratt. “It’s hard for them to change their practice administration in order to measure and hit those targets.”
An unintended consequence of that difficulty has been an increase in physicians affiliating with health systems and hospitals so as to shift the reporting burden.

“It’s probably strengthened the hand of the health systems and offers them another carrot for the primary care physician,” says Southwick. “They aren’t necessarily acquiring them, but at least getting them in the network. I don’t think this is what Congress had in mind.”

He adds that a lack of vision has hampered the success of programs like MACRA, because no one understands the end goal.

“I’ve never heard anyone from the White House articulate what this should look like in five to 10 years,” says Southwick. “Doing so would help the market work toward that and be ready for this new world. Instead, we are just going from one program to the next. It would be a benefit if CMS would say what this would look like at the end.”

The future of value-based care

Still, while MACRA may not be working out as envisioned, many experts say it is an important first step toward implementing value-based care. “MACRA started the conversation,” says Spratt. “It has started moving medicine toward more value-based payment and away from the traditional fee-for-service model, which I think most policymakers realize is a good approach.”

Despite the struggles of MACRA, experts say physicians should understand that their revenue from fee-for-service will continue to decline.
“From what I have seen, the transition to value-based care is a given,” says Andrei Gonzalez, MD, assistant vice president at Change Healthcare, a company that helps payers and providers move to value-based care. “It’s more about what are the right models and how are we going to get there?”

With CMS rolling out its new Primary Care First initiative, Gonzalez says their intent is clear. “They want to blow up fee-for-service, and the primary care initiative is a big step in that direction.”

The initiative encompasses a variety of models. It is expected to cover about 25 percent of Medicare beneficiaries, and include removing coding requirements for primary care physicians by paying a monthly per-patient fee or a flat per-visit fee. 

Private payers are creating similar programs, and large employers are asking commercial plans to use some of CMS’s strategies to save money. As a result, more private payer contracts are including value-based incentives.

“I do think the private sector push will make it easier as clinicians see value-based care as the new normal and are subject to quality and cost targets that are not fee-for-service,” says Kocot. “That’s absolutely essential to the transition.”

Both public and private payers realize they need multiple plans in order to succeed, says Gonzalez.

“Our research has shown that different models work for different conditions and different regions,” he says. In areas where there is a lot of consolidation among providers and health systems, ACOs or full capitation-where physicians receive a flat monthly fee for each patient- will make the most sense. In less-consolidated areas, models like the Patient-Centered Medical Home may be the primary option.

While capitation was tried in the early days of HMOs, Gonzalez says the industry is a lot savvier on how  to do it now. Payers and providers both are going in with more caution. Physicians are managing a patient population, but understand they will need to meet quality and cost metrics, although not the full risk burden like in the past.

Spratt says smaller practices may need to affiliate with a hospital or health system, because payers see value in partnering with organizations with large numbers of physicians, ancillary services and even urgent care centers, because it gives them more control over the insured and better management of the premium dollar.

“At the end of the day, it’s all about integration and the coordination of care,” says Spratt.

Care coordination includes practices being more proactive with helping patients to lead healthier lifestyles and not just waiting for the patients to reach out to them.

“A lot of practices already have this mentality, but it creates the need for a different set of aptitudes within the practice,” says Gonzalez. This could include, for example,  having a nurse monitor COPD patients and ensuring they come in for regular visits.

Future value-based care models will also have a greater focus on the social determinants of health.

“One thing value-based care leads us toward is a sort of untethering of the physician from historical medical tools and allowing them to think more holistically,” says Spratt.

“Physicians will need to start figuring out how to help patients manage their conditions, how to navigate the health system and manage the social determinants of health,” says Gonzalez. “It’s not as big of a change as it seems, because not every patient requires assistance, but practices need the ability to identify who needs extra help.”

The role of the primary care doctor

No matter what models emerge, experts see the primary care physician as the team leader. Dawe says the patient-centered medical home, with a primary care physician working with one or two NPs or PAs, a nursing staff and someone that goes into the community to help educate patients on how to manage their diseases is a good model, as is an ACO.

“I think the basic structures for a good model are already in place,” says Southwick. “You can go a long way to creating a new payment ecosystem just on the basis of a primary-care based model, which is basically an ACO.” If that is combined with bundled payments for specialists, Southwick says, those two models work very nicely together.

“The primary care physician has to be central to any aligned payment and care coordination working with the patient from start to finish,” says Kocot.

But primary care doctors should also expect to take on more risk-sharing with payers, whether it’s through an ACO or some other payment model. He warns the transition must come with assistance.

“There’s a lot happening that primary care physicians have to process on a daily basis,” he says. “The transition needs to be moderated so we don’t lose them in the process. The CMS burden reduction program is very positive, but we have to strike the right balance of incentives and push, and I don’t know that we have yet.”

Experts say that value-based care will continue to become more prominent in contracts, even though programs like MIPS might be revised or replaced in the future. But one thing is for sure: there is no hiding from it.

“The move to value is alive and well,” says Kocot.

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