The former leaders say Medicare’s latest moves on value-based payment are significant for other reasons.

Aug. 25—Former Medicare administrators do not believe the program is moving away from hospital-focused value-based payments in favor of physician leadership.

Recent policy proposals from the Trump administration have led some to believe that the administration is shifting the focus of value-based payment models. For instance, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule last week to eliminate three mandatory Medicare bundled payment models before their scheduled launch and to scale back an existing fourth model.

“Keeping these mandated programs would have effectively created a lock-in of the role of the hospital as the owner and the steward of the bundle, and that clearly is not going to be the case,” said François de Brantes, vice president and director of the Center for Payment Innovation at Altarum.

Another possible indication of a shift was a proposed rule, issued in July, in which CMS recommended letting traditional Medicare pay for total knee arthroplasty in hospital outpatient departments for the 2018 coverage year. It also sought comments on whether Medicare should pay for total and partial hip replacements in ambulatory surgery centers (ASCs). Those changes would allow physicians to choose between sites of care to find savings as part of value-based payment models, de Brantes said in an interview.

A move toward physician-led models that manage chronic conditions and keep patients out of hospitals and costly post-acute settings also could provide savings, he said.

A 2016 study concluded that physician-led accountable care organizations (ACOs) in Medicare were more likely to improve quality and lower costs enough to earn shared savings, based on 2015 results.

Others counter that hospitals are well-positioned to manage many alternative payment models (APMs) because they are more likely than practices to have access to sufficient capital to build the needed infrastructure. Estimates of start-up costs range from $11.6 million for a small ACO to $26.1 million for a medium-sized ACO, according to the American Hospital Association.

Traditional physician-led organizations may have a hard time changing the organizational culture from physician-centered to a culture marked by collaboration, patient-centeredness, and alignment of goals among all specialties, Bruce Hamory, MD, CMO of Health & Life Sciences for Oliver Wyman, noted in a blog post.

Andy Slavitt, acting administrator of CMS under President Barack Obama, downplayed any shift in payment-model focus from hospitals toward physicians.

The 2017 start of Medicare’s new physician payment model, authorized by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), portends such a shift, Slavitt said in an interview. But the proposed cancellation of the mandatory bundled payment programs speaks more to the diminished role of that type of model.

“Right now, I see basically just a diminishing of the power of bundled and value-based payments,” Slavitt said.

Gail Wilensky, who led the precursor agency to CMS under President George H. W. Bush, said she wouldn’t mind a shift of payment models toward more physician control.

“I generally have wanted to see more bundling and more ACOs being physician-driven and not so much hospital-driven,” Wilensky said in an interview. “They are both occurring, but too many are happening at the hospital level because hospitals are more organized and better able to take risks.”

But any appearance of such a shift is probably wishful thinking, she said. 

“I don’t see that, although Dr. [Tom] Price [secretary of the Department of Health and Human Services] will probably try to encourage physician-led changes and reforms,” Wilensky said.

The recent physician-focused changes are “the operationalization” of a 2016 letter to Slavitt from 179 House members, including Price when he was a member of Congress, Wilensky said. The letter was critical of Medicare for requiring participation in new mandatory models without first consulting the affected physicians, hospitals, and patients.

The View in Congress

But Congress has appeared to place less emphasis on pushing a physician focus in CMS initiatives since Price departed for the Trump administration.

Several congressional healthcare leadership aides who were interviewed this week said that shifting control of Medicare payment models from hospitals to physicians was not a priority for their bosses or for healthcare committees.

“I’ve read a little bit about that, but I haven’t heard from members that that’s a focus,” a Republican healthcare aide said.

Members of Congress are focused on providing oversight of MACRA’s implementation, including the role of the Physician-Focused Payment Model Technical Advisory Committee (PTAC) in suggesting new physician-focused APMs, aides said. So far, PTAC has recommended that CMS adopt two physician-focused models as APMs under MACRA.

In its Aug. 21 comment letter on the rule for MACRA’s Year 2 implementation, the American Medical Association (AMA) urged that technical assistance and data be provided to facilitate development of physician-focused APM proposals and that Price respond to PTAC recommendations within 60 days. PTAC made its recommendation regarding the two physician-focused APMs in April.

The AMA said CMS should allow PTAC to also recommend Medicaid APMs. However, states and independent researchers have yet to demonstrate cost and outcome impacts of Medicaid APMs, according to a recent Deloitte analysis of 45 models in 28 states.

Advisers' Perspective

Some industry advisers also don’t see a shift from hospital-focused APMs to physician-focused models.

“I don’t believe that is the case; CMS will continue to introduce new models where physicians do play a key role in the delivery of value-based care in order for physicians to achieve the incentives under MACRA,” said Clay Richards, CEO of naviHealth, which advises providers on improving post-acute care. “At the same time, we don’t think that this will be at the expense of hospitals.”

Richards said the Trump administration appears to be seeking to maximize flexibility for the healthcare industry under upcoming payment models.

“I would expect that we would continue to see opportunity for providers—both physicians and health systems and hospitals—to participate as they see fit,” Richards said. “That’s really the advantage of the voluntary bundled payment models—physicians, hospitals, and health systems can participate at the rate and scale that they deem appropriate.”


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Friday, August 25, 2017