Value-Based Healthcare and Payment Models

Including Frontline Strategies for 20 Clinical Subspecialties

Grace E. Terrell, Jr. Julian ("Bo") D. Bobbitt

• Publisher: American Association for Physician Leadership
• Year: 2019
• ISBN:
  9780984831029
• Topic: Médecine
• Subtopic: Santé publique, administration et soins

NEW GUIDE DECODES VALUE-BASED CARE AND PAYMENT MODELS

As value-based care is coming of age, deciding how to start can be an overwhelming task. Risks are high and success with the new models is challenging and time consuming. This book fills an important need by providing concrete and proven strategies to aid in an organization’s successful transformation.

The book is filled with practical, no-nonsense advice on the shift to value-based care in both the private and public healthcare sectors. This is the time when healthcare stakeholders need to rethink their own added-value strategies in a manner that best serves patients and providers alike.

In the complicated world of payment and delivery system reform, this book deconstructs the most challenging concepts for the novice yet provides sophisticated insights for even the most seasoned executive.

BONUS! The authors also lay out high-value strategies for 20 different subspecialties with specialty-specific changes in the way medicine is practiced and paid for.

Chapter One

Introduction

As value-based integrated population health, headlined by Accountable Care Organizations (ACOs), approaches a decade of evolution, value-based payment will become the dominant form of healthcare payment. Although the move to value will take many forms, ACOs are considered one of the prime vehicles to accomplish this change. With more than 1,000 ACOs in existence today and, at last count, 32.7 million patients enrolled in ACOs, several documented successful strategies have emerged.1 Up to half of the U.S. population may be served by ACOs within the next five years.2

This manual shares many of these successful strategies to help pave the way for your journey to value-based care. It provides a framework for delivery system transformation that will be necessary to make good on the promise of higher-quality, lower-cost care for all Americans.

Before the Internet provided instantaneous information to help physicians practice more safely and effectively, most internists in training did not go anywhere without the Washington Manual, a spiralbound book that fit perfectly in the pocket of their white lab coat. The detailed information in that little gray book helped newly minted physicians take care of complex patients in a quaternary care center and manage conditions as complicated as diabetic ketoacidosis and acute myocardial infarctions.

The manual did not replace the mentorships of upper-level residents and attending physicians nor the wise questions of experienced nurses, but it did provide a framework from which novice physicians could function competently while they gained the necessary experience to practice effective internal medicine on their own. From that context, this manual is intended to provide a framework for primary care physicians, specialists, and health system leaders beginning their own journey in delivery system transformation, based on our experience with successful early movers to a value-based payment system.

The transition that healthcare systems face in the move to value is not unlike the transition that occurs when a medical student becomes an intern. If this manual is half as effective a tool as the Washington Manual was for interns, then we will be satisfied that our efforts to be helpful will have been worthwhile.

How Did We Get Here?

If we stay on the current spending glide path, by 2035, healthcare costs in this country will be more than the total of all tax and other revenues collected, and by 2080, taxpayer-funded healthcare will equal all of our governmental revenues, meaning that everything else—defense, roads, education—must be funded by borrowing. In a 2014 report by the Commonwealth Fund, the United States “ranked last overall among 11 industrialized countries on measures of health system quality, efficiency, access to care, equity, and health lives.” Significantly, the United States was noted to have the highest costs while also displaying the lowest performance.3

The Congressional Budget Office laid the groundwork for accountable care’s “pay-for-value” underpinning when it reported that much of the blame for our runaway healthcare costs should be placed on our fee-for-service payment system where “providers have a financial incentive to provide higher-intensity care in greater volume, which contributes to the fragmented delivery of care that currently exists.”4

The U.S. healthcare delivery system is undergoing a paradigm shift based on payment reform intended to drive value and improve the quality of care. This “volume-to-value revolution” is designed to reward those best able to provide efficient, high-quality services. Value-based business models require providers to undergo transformative organizational change to every facet of their operations. Reimbursement based on outcomes and taking on financial risk necessitates investment in clinical integration, redesign of traditional patient care models, and integrated information technology. Provider organizations that adequately invest in population health management capabilities and successfully shift to value-based contracts and capitated payments will have the greatest likelihood of success in the transformed healthcare market.

Payers, including Medicare, are pushing providers for increased accountability for the quality and cost of care delivered. Ongoing governmental policy changes since 2015 have greatly accelerated the healthcare market’s move from pure fee-for-service to value-based reimbursement. In 2015, Department of Health and Human Services Secretary Burwell announced the department’s goal was to move 50% of Medicare payments to value-based payment models by 2018; this goal was accomplished prior to the transition from the Obama to the Trump administration.

The Medicare Access and CHIP Reauthorization Act (MACRA) legislation further accelerated the broad move of the U.S. healthcare industry toward paying for medical services based on value rather that volume. The sustainable growth rate formula for physician payments was replaced with a fundamental shift to performance-based payments, with fee-for-service payments adjusted based on quality and cost through the Merit-based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (APMs) focused on population-level quality and outcomes performance that involve significant financial risk, but provide substantial bonus payments for those physicians who are in APMs rather than the modified MIPS fee-for-service based payment system.

Providers participating in qualified APMs will have a 5% basic bonus in Medicare fee rates from 2019 to 2024 and will not be subject to the penalties for poor performance in MIPS, which will increase over a five-year period to 9% reduction in fees. Furthermore, organizations can qualify under MACRA for APM bonus payments by moving their non-Medicare patients to APMs, not just by changing how they receive payment for Medicare patients.

Over the next few years, these policy changes will greatly accelerate the transition of the healthcare delivery system to one differentiated by performance at the global system level. The ACO-covered lives are projected to increase from the current 37 million lives to 177 million lives by 2020—a more than 600% increase.5

The 21st Century Cures Act enacted by Congress in December 2016 further accelerated federal healthcare payment reform via its emphasis on reducing administrative burden for providers addressing health information technology barriers, such as information blocking, interoperability, and the expansion of telehealth services. Current CMS Administrator Seema Verma continues to emphasize the reduction in regulatory burden and flexibility while also focusing policy on increasing incentives for providers to assume more risk in value-based payment models. In January 2019, she announced CMS is exploring ways to apply value-based payment models beyond Medicare and encourage more providers to buy into the programs and work with additional payers.

The Trump administration, like the Obama administration before it, is committed to the transition to value-based care. The administration is pushing the envelope to accelerate the progression of contracts from shared savings to full capitation with market-based reforms emphasizing individual choice, decreased regulatory burden, and increased competition.6

Healthcare providers need a new set of skills and tools to successfully navigate this accelerating transition. As reimbursement moves from volume-based to value-based, the department-centered organizational model of most legacy healthcare providers must be re-organized around specific populations, conditions, and focused asset capabilities. Efficiency on a population level rather than volume-based unit level will become increasingly important for financial viability, with chronic condition management, “focused-factory” capabilities for bundled payments, and service offerings organized around specific patient populations driving profitability more significantly than investment solely in capacity. Strategic alliances across the continuum of care and investment in clinical and information integration will become increasingly important drivers of profitability.

The resources and capabilities necessary in the reforming healthcare delivery system are inadequate for the demand as the fee-for-service system shifts to value-based payment models. Proven models for success and adequate infrastructure are in short supply because the capabilities involving strategy, people, process, and technology required for the new delivery system paradigm are not intrinsic in current healthcare organizations’ structural framework, which has been built to maximize success in the fee-for-service payment system.

Given that governmental and commercial payers are moving to a value-based model of reimbursement over the next two to five years, it is remarkable that 95% of health provider organizations in the United States have no specific strategy for moving to that model. Even though physician reimbursement will increasingly be based on quality outcomes and patient satisfaction, there are few holistic, physician-inspired solutions that will support the people, process, and technology transitions required to lower operating costs and increase the quality of care.

The solution is to change the culture of the care team through innovative and proven care model redesign, reduce healthcare operating costs by providing process and technology tools to dramatically increase productivity and efficiency, and increase healthcare operating margins by providing process and technology tools to manage contracts and risk.

Because most patient populations require a full suite of healthcare services, providers must be able to enter into strategic partnerships with internal and external stakeholders across the entire spectrum of the healthcare delivery system network. Future integrated delivery networks will be focused around care models that operate at the intersection of the population segments and health conditions. New structures, such as internal care coordination and condition management hubs, Clinically Integrated Networks (CINs), and high-performance networks (HPNs) will be required to provide the quality, breadth, and efficiency of healthcare services being demanded by the new para...

Table of contents

• Acknowledgments
• About the Authors
• Foreword
• Chapter One
• Chapter Two
• Chapter Three
• Chapter Four
• Chapter Five
• Chapter Six
• Chapter Seven
• Chapter Eight
• References