Future of Medicare and Medicaid Innovation in Value-Based Health Care
By Travis Broome
As the new administration continues to chart their course in value-based health care they have formally asked for the public’s input. We shared with CMS what we and our partner physician practices have learned in the transition to value and our views on how to continue moving forward. Below is a summary of our full letter which can be found here.
We believe there are three main drivers to increase value in health care:
- Aligned incentives
First, competition increases value; however, it must be encouraged and even protected. Unlike professionalism and aligned incentives, competition puts downward pressure on health care provider’s margins. This creates an incentive for health care providers to find ways to reduce competition. Due to this, CMS should evaluate the competitive effects of new models. Second, aligning incentives creates the greatest opportunity for value creation; however, it is a challenging task and our primary subject today. Third, medicine has always been blessed with a high level of professionalism. As we align incentives and increase competition, we should do everything we can to ensure we do not lose value that is created by professionalism.
Choice and Competition in the Market and in Models
Congress has taken initial steps to reduce regulatory incentives encouraging the merger of hospitals and physician practices, but more needs to be done. New models should further eliminate payments for physician practices to merge with hospital systems such as facility fees creating higher payment for the same services and the 340B program making drug pricing uncompetitive in private practice.
Competition is also key to success in value-based health care. The administration should prohibit anticompetitive behaviors such as data blocking non-compete clauses in physician contracts and anti-tiering provisions that prevent the creation of financial incentives for using high-value health care providers.
Provider Choice and Incentives – Increasing AAPM Participation
A model that provides a business case for improving care will attract voluntary enrollment by physician practices. Principally, these models should, over time, put physician practices at financial risk that is proportional to the finances of independent physician practice and not so large as to favor consolidation of practices. Models should move over time to a financial and evaluation structure focused on analysis of their local market. Physician practices should be able to accelerate the move to a difference-in-difference approach by taking on risk. These principles will increase advanced alternative payment model (AAPM) participation.
For physicians the decision of whether to participate in an advanced versus a regular APM revolves around the phrase “more than nominal financial risk.” One of the first questions we get from our physicians is will the ACO qualify as an AAPM? Whether the answer should be “yes” is decided by how well the model benchmark separates risk due to the effective delivery of health care services and population health services versus risk that is due to uncontrollable circumstances or insurance risk. Aledade now partners with over 1000 primary care physicians who believe in population health and their role in it. However, they do not feel responsibility for events they can neither control nor influence. We have seen physicians and their staffs make great efforts to get someone into the office and out of the emergency department, on their medications and working towards their own health. However, no primary care efforts will influence whether that person develops unavoidable cancer. Nor will any primary care initiative account for regional differences in cost structures that have developed over decades. All models should use risk scoring methodologies that accurately set targets, particularly advanced alternative payment models where the participant is taking risk. Models should acknowledge that changes in health will vary between model participants. This means that for a given model participant risk adjustment should be able to raise or lower the cost target
The other way to increase the accuracy of model benchmarks is to relate them to local health care markets. Comparing the ACO or other model participant to other health care providers around them not to themselves. Finally, since insurance risk cannot be completely eliminated the risk to which physician practices are exposed to must be more than nominal, but never ruinous. The goal of downside risk is to motivate the model participants and give the payer assurance that the ACO’s interests are aligned with the payers or in the case of Medicare society’s interests. Models like Track 1+, that relate risk to the finances of the participants instead of the model benchmarks will greatly encourage AAPM participation, particularly if those models offer rewards in the model for taking on risk, which is not currently the case with Track 1+.
Completing the Glide path in Value Drive Health Care
Medicare Advantage is an excellent opportunity to align incentives, but it suffers from a lack of competition. We believe there is an opportunity to create health care value through a new model of Medicare Advantage. Our proposal will allow physicians to build a network on top of Medicare participation—not instead of it—and leaving claims processing in the highly experienced, efficient hands of the MACs. Making this change will shift the conversation about provider networks from price concessions and market power to creation of truly patient-centric, quality-based networks led by primary care. This will result in better care for patients, while allowing traditional Medicare to realize deeper savings through competition and aligned incentives. By removing traditional plan operations as a barrier to entry for Medicare Advantage, Medicare can create a path for successful provider groups to move into Medicare Advantage. This increase in competition will benefit both Medicare beneficiaries and health care providers. We discuss this proposal in greater detail in Health Affairs.
We appreciate the opportunity to engage with CMS on the future direction of value based health care. We believe there is incredible opportunity for CMS to continue to lead the movement towards value based payment in health care.