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What’s In Store for Value-Based Reimbursement?

Both Democrats and Republicans recognize the overwhelming need to control healthcare expenses while maintaining and improving quality of care. Under the Obama administration, the Department of Health and Human Services (HHS) pledged that by 2018, half of traditional Medicare payments would be based on value-based payment models that incentivize high quality, low cost care as opposed to payments based upon volume.


Theoretically, value-based payment is a non-partisan issue. But, “ . . . the ways in which Republicans and Democrats seek to attain the goal of high quality and low cost care differ,” wrote Elizabeth Scarola and Gail E. Jankowski in a recent paper for the American Health Lawyers Association. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)


Value-based Reimbursement


The CMS Innovation Center (CMMI) has been a key component in the implementation of President Obama’s Affordable Care Act (ACA). Its stated purpose is to innovate and test new payment models that would lower cost and improve quality for individuals who receive Medicare, Medicaid and Children’s Health Insurance Program (CHIP) benefits. Congress provides the Secretary of HHS with the authority to expand innovative payment models through rulemaking, including the ability to test these models on a national basis. Thus, the ACA allowed the Obama administration to test value-based reimbursement models via rulemaking.


Throughout President Obama’s term, CMMI has implemented several programs including Accountable Care Organizations and episode-based payment initiatives (i.e., bundled payments, gainsharing and comprehensive joint replacement programs). CMMI also plays a key role in the Quality Payment Program, created as part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), through which clinicians may earn incentive payments by participating in Advanced Alternative Payment Models. Payment methodologies that qualify as Advanced Alternative Payment Models under MACRA are determined by CMMI.


Although most CMMI payment models under President Obama have been voluntary, several recent CMMI initiatives mandate participation. One such initiative is the Comprehensive Joint Replacement program, which required certain hospitals to share a single bundled payment to cover the cost of certain joint replacement procedures, including in-patient and post-operative care.


A similar mandatory project is set to take effect soon for certain cardiac care episodes. In both mandatory programs, hospitals are required to assume downside risk, which means they must pay Medicare if costs exceed a set threshold. The implementation of these mandatory value-based payment initiatives has sparked increased criticism of CMMI. Republicans have argued that HHS is overreaching its power by mandating these payment programs. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)


Value-based Reimbursement Under President-elect Trump and Rep. Price


President-elect Donald Trump’s selection of Representative Tom Price (R-GA), an outspoken critic of CMMI, as his nominee for incoming HHS Secretary came on the heels of the CMS release of the much anticipated MACRA final rule, which, as part of its greater effort to advance CMS toward value-based payments, transitions Medicare away from a volume-based fee-for-service system to a value-based system.


Back in September, Price joined fellow GOP lawmakers to ask CMMI to “stop experimenting with Americans’ health, and cease all current and future planned mandatory initiatives . . . CMMI’s mandatory demonstrations could potentially

harm patients and providers because CMMI is making participation in the demonstrations mandatory, rather than voluntary, before we know how they will affect access to care, quality and outcomes. CMMI has overstepped its authority and there are real-life implications—both medical and constitutional. That’s why we’re demanding CMMI cease all current and future mandatory models.” (Letter from U.S. Congressmen Tom Price, MD, Charles W. Boustany, Jr., MD, and Erik Paulsen to Centers for Medicare & Medicaid Services Administrators Andrew Slavitt and Patrick Conway, MD, September 29, 2016),


In addition to Price, the American Hospital Association has noted its disapproval of CMS’s proposal regarding expanding mandatory bundled payment models. And throughout his campaign, President-elect Trump repeatedly pledged to repeal and replace the ACA.


The authors noted a key question: How would repeal of the ACA affect the shift to value-based reimbursement? With Republican control of the presidency, House and Senate, the incoming Trump administration is likely to pursue solutions that decrease the role of the federal government in defining regulatory requirements and mandatory programs, and increase the role of the legislature, states and private sector. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)


Some have speculated that President-elect Trump’s stated intention to “repeal and replace” the ACA, regardless of whether it comes to fruition, is unlikely to fully eliminate the American healthcare system’s steady movement toward value-based payment. However, it is undeniable that the ACA’s full repeal would effectively cripple many of the current value-based payment initiatives and mandatory programs, especially given that CMMI derives both its mission and funding from the ACA. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)


As the transition from one administration to another approaches, health policy experts are making predictions. A fellow at the conservative American Enterprise Institute has observed that under the Obama administration there has been “a fundamental shift from Congress to the executive branch in the ability to set policies for some of our nation’s most important and costly public programs . . . I can’t imagine a Trump administration saying we want the bureaucrats to decide on the healthcare your grandmother is going to get . . . Anything that is that much of a marquee issue absolutely has to go through Congress.” (“GOP May Try to Hobble CMS Innovation Center,” Modern Healthcare, November 7, 2016 and Obamacare’s Test Kitchen For Payment Experiments Faces An Uncertain Future, NPR, November 30, 2016)


However, a policy executive at Premier projected that “calmer heads” would likely prevail when Trump assumes the presidency, and that “CMMI will in the end survive” in order to meet the need of a “mechanism to test and scale new models in fee-for-service Medicare.” (“Will value-based payment initiatives continue under Trump?” Modern Healthcare, November 11, 2016)


In early December, at a summit on population health strategy under the new administration, former HHS Secretary Michael Leavitt stated, “CMMI will be challenged, but the analytics it provides are important to maintain . . . we need to find the balance between provider readiness and the speed to change between providers and payers . . . the GOP is not in lockstep . . . the bottom line is we don’t know.” (Letter from Washington: The Path Forward for Value-based Care, Philips Wellcentive, December 5, 2016)


To date, it is certain that the shift from volume-based payment to value-based payment has taken considerable resources, not only on the part of government, but also on the part of providers. The future of value-based payment is unknown; but a full repeal of the ACA would have dramatic consequences. (The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement Under President-elect Trump and Tom Price, Executive Summary, AHLA, January, 2017)




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