Value-Based Care: HHS Sets Timeline for Transition

The Health & Human Services Department (HHS) recently announced an accelerated time frame with regards to its efforts to transition the Medicare Fee-for-Service (FFS) payment system over to alternative reimbursement models. Not to be outdone and following on the heels of the HHS announcement where a private coalition of some of the nation’s largest healthcare systems and payers announced an initiative to move from FFS payments to so-called value-based payment by 2020. This coalition, called the Health Care Transformation Task Force, was proposed by Richard Gilfallin, a former Medicare official and Chief Executive of Trinity Health, a Catholic system that operates in 21 states.

While there is widespread agreement amongst healthcare leaders and policy makers that the U.S. healthcare system needs to see a significant shift away from volume-based reimbursement to one that incentivizes providers for meeting quality measures, clinical outcomes, and financial savings, the announcement can also leave us shaking our collective heads and wondering how to meet a goal when, to date, it has been so randomly undefined. As stated by Dr. Timothy G. Ferris, who is leading the effort on behalf of Partners Healthcare, “It is really easy to agree on the big-picture stuff, but it gets more complicated when you get into the details.” And therein lies the challenge. To repeat a well-worn phrase, the devil is in the detail.

Providers have been willing participants in the various CMS and CMMI initiatives; some willing, some dragged kicking and screaming, have stepped up to the plate to join the bandwagon. While we have made progress, we have fallen short of expectations. Roughly, 3%, 220 of approximately 6,690, of entities that were approved to participate in bundled payments moved forward to implement the new payments. Medicare Shared Savings Program (MSSP) participants have shown some quality improvements and saved Medicare approximately $417 million year one with the first 220 Accountable Care Organizations (ACOs); but this number is under 1% of the Medicare’s FFS budget. Several of the original Pioneer ACOs have dropped out to pursue programs, such as MSSP, that offer less risk. A red flag in the new time line, and one that has affected the above initiatives, is poorly defined quality indicators and what truly constitutes value. With an accelerated time line to achieve a shift to volume-based payments, we should focus on lessons learned and steps needed to provide a roadmap to success.

Presently, alternative payment models account for approximately 20% of Medicare payments, and HHS expects to see that percentage rise to 30% by 2016 and to 50% by 2018. This same shift is already taking place within our commercial counterparts. The Blue Cross trade association reported last summer that 20% of their providers had contracts that prioritized quality over quantity, and Aetna reports that 28% of its reimbursements are now in value-based agreements and expects that number to rise to 75% by 2020. What steps do Medicare providers need to start thinking about to promote a similar shift?

  1. Partnerships: Some of the greatest partnerships in history, Batman & Robin, Abbot & Costello, Laverne & Shirley, have achieved much more together than on their own. As we look around for partners for ACOs, bundled payments, etc., we want to find providers that share our philosophy, geography, goals, and ideas. We need to do our due diligence and ensure we have established, clear-cut terms, methodologies in care, investments, and cost-savings; we also need to establish accountability up front.
  2. Consistent focus on the value of the opportunity: Involves understanding the change is not the flavor-of-the-month strategy, there will be expenses, and that collaboration is required to succeed.
  3. Strong leadership and governance: The shift to value-based reimbursement is dependent upon fostering a cultural change from the top down. Culture has its roots in the governance and leadership of the organization. There must be a unified approach around transparency, accountability, and effective outcomes. The key is to balance the upfront expenses and short-term impact to reach long-term success.

Furthermore, much speculation has been given on the change being provider-driven in order to meet the goals. With consumer savvy, newly aged-in Medicare beneficiaries, there is also a shift in patient expectations and what is available for their health care dollar. The new beneficiary is aging in from a world of patient engagement, incentive, and rewards programs, and will expect the same level of service. As HHS promotes “Better Care, Smarter Spending. Healthier People. Why It Matters?”, an idealist would say it matters because we are all in this together….a realist would say, “Thanks HHS…but what are the quality measures, and how soon can I have them?” Additionally, the realist will also operate from the belief that there is no one perfect model but that different payment models apply to different treatment pricing scenarios.


Here at Gorman Health Group, we can help you decide what payment models are appropriate to your unique circumstance and support your implementation efforts. Contact us today.

Registration for the Gorman Health Group 2015 Forum is now open! Attendees can expect timely, actionable advice on the trends shaping health care from notable speakers, including Barclay’s analyst, Joshua Raskin, and regulatory guidance directly from Jennifer Smith, a Director in the Medicare Parts C and D Enforcement Group at the Centers for Medicare & Medicaid Services (CMS). Register your team for The Gorman Health Group 2015 Forum today!

Elena Martin
Elena Martin

Elena Martin is Senior Director of Provider Strategies at Gorman Health Group (GHG). In this role, she has acted as Project Manager for numerous network expansion projects on a national level and has been a key consultant in Accountable Care Organization (ACO) and End-Stage Renal Disease Seamless Care Organizations (ESCO) application and development.

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