Sustaining the Transition to Value-Based Health Care

Initial efforts to repeal and replace the Affordable Care Act seem to have been put on the back burner — at least for the time being. But discussion continues on one critical question: What’s the role of value in our health care system?

Many experts and policymakers are more convinced than ever that it’s a central issue. And that, sooner rather than later, the United States will possess a value-based health care system.

In fact, value-based norms for reimbursement and reward have been replacing fee-for-service or activity-based payment for quite some time. Starting in the mid-1980s, diagnosis-related groups, capitated payments, and most recently pay-for-performance programs have joined other many value-centric delivery and reimbursement methods. This shift to value is driven by the need to improve quality and contain costs — both imperatives for health care payers and providers, as well as for overall U.S. economic competitiveness.

The transformation will not be concluded overnight. For example, the Centers for Medicare and Medicaid Services recently announced that they will delay, for a 6-month period, the planned expansion of bundled payment programs.

Near-term process adjustments notwithstanding, though it seems clear that the direction in which the health care ship is headed remains unchanged. One strong indicator: The Trump administration has consistently signaled its preference for markets, rather than government, to drive the transition to value. Given the ways that markets can surpass governments in terms of efficiency and flexibility, this may well accelerate the pace of change toward value-based payments. Certainly, the private sector continues to pursue value-based contracts to better align quality, outcomes, and payments.

While the administration’s position is evolving, some governmental reimbursement models, such as the Medicare Access and CHIP Reauthorization Act, exhibit likely staying power. The administration seems intent on implementing MACRA, due in large part to the law’s strong, bipartisan congressional support. Note that, when serving in Congress before his recent appointment as Secretary of Health and Human Services, Tom Price voted for MACRA — and even offered CMS his expertise and experience as a physician to further its implementation.

Foundational to MACRA are certain value-based payment models and demonstrations embedded in the ACA. Under MACRA, participation in these models will earn physicians a 5 percent bonus payment. Work on these innovative payment models continues. Newly appointed CMS Administrator Seema Verma previously performed extensive health policy consulting work and program design for insurance coverage expansion in numerous states. She seems poised to bring a strong spirit of innovation to many aspects of payment reform.

Future changes in the law’s coverage provisions are certain to impact the bottom line for both payers and providers. Affected health care entities must continuously review their options in light of new developments. Forward-looking organizations may also proactively seek out the best consultative solutions, to assist them in assessing alternative payment strategies and effectively implementing end-to-end value-based payment models.

Ultimately, the combination of regulatory changes and payer/provider support will further hasten the transition to value-based programs. There’s just no strong consensus among important stakeholders to do otherwise. Who can argue successfully with the basic concepts of paying for quality and transparency? Let’s state it definitively: Value-based payment systems will soon be the state of the art in American health care.


Nick Augustinos is president and CEO of Aver Inc.

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