The movement of Medicare payment models toward physicians appeared to begin before the change in leadership at HHS this year.

Aug. 21—Recent policy proposals from the Trump administration have led some to believe that the administration is shifting the focus of value-based payment models from hospitals to physicians.

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule last week to eliminate three mandatory Medicare payment models before their scheduled launch and to scale back an existing fourth model.

Although many hospitals and their advocacy organizations wanted mandatory models scrapped, one industry adviser noted that the change would leave significantly fewer hospitals in value-based payment models.

“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.

In another proposed rule, issued in July, 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).

“This is a really important shift,” de Brantes said. “The prior administration was very big on being health system- and hospital-centric. The thought was if we make these large organizations—we can call them ACOs or whatever—responsible for overall patient management, then good things will ensue.”

That push by the Obama administration ran counter to physicians’ desire for autonomy and required them to defer to hospitals in newer payment models.

A third policy development in recent months was the recommendation during the spring of the first two physician-focused payment models by the Physician-Focused Payment Model Technical Advisory Committee (PTAC), which was authorized by the Medicare Access and CHIP Reauthorization Act. CMS must approve the models before they can launch.

The common denominator in the three policy approaches is Tom Price, MD, secretary of Health and Human Services.

“If you look at it with that lens, then you should be looking at a landscape in which the alternative payment models that are going to be coming—many going through the PTAC process—are all about physician-focused bundles with specialists in charge,” de Brantes said.

Such a shift could have big financial consequences for hospitals.

“Now you’re looking at an environment in which you have a bundled payment program, the docs in charge, and they have a choice between sending their patients to an ASC, which they can do now on joint replacements, or sending them to a particular facility,” de Brantes said.

An Ongoing Shift

The first signs of the movement of Medicare payment models toward physicians appeared before Price took over at HHS this year.

For instance, although hospital-led accountable care organization (ACOs) predominate in Medicare, the number of physician-led ACOs has been quickly growing. Physician-led ACOs without hospital involvement comprise 40 percent of all Medicare ACOs, according to a February post by Oliver Wyman industry advisers. Physician-led ACOs have increased as a share of all Next Generation ACOs from 17 percent in 2016 to 27 percent in 2017.

In Medicare, physician-led ACOs have had more financial success despite accounting for the minority of ACOs. Among the 106 commercial and Medicare ACOs (excluding Next Generation participants) that saved money in their first performance year, 54 were physician-led, the Oliver Wyman advisers noted.

The number of Medicare, Medicaid, and commercial ACOs reached 838 last year, according to a 2016 post in Health Affairs.

One caveat for advocates of physician-run ACOs is that few clinicians think they will improve care and reduce costs. Only 19 percent of physicians participating in an ACO thought the entities were likely to enhance quality and decrease costs, according to the Physicians Foundation 2016 survey of 17,000 physicians. And growing shares have negative views of ACOs compared to the group’s 2012 survey.

“Though physicians have had more time to evaluate the ACO model, they are not more positive about it, and many remain uncertain as to what ACOs do,” the survey’s authors wrote.

De Brantes said the Medicare shift is simply following a physician focus in value-based payment arrangements by commercial, employer, and Medicaid payers.

A 2016 study in the American Journal of Managed Care of two years of results from Cigna’s Collaborative Accountable Care initiative—a physician-led ACO—in Texas found that the initiative cut spending by 5.7 percent. The researchers specifically cited as a possible driver the “responsiveness of a physician-owned ACO versus a hospital-led ACO.”

Hospital leaders also have expressed frustration with the difficulty of finding commercial health plans that are willing to work with them on alternatives to fee-for-service payment. Sixty-seven percent of hospital executives responding to a 2016 Premier survey said they were considering working with a provider-owned health plan in in their area or starting a plan rather than working with a commercial plan.

Employer Trends

However, it’s less clear that self-insured large employers are embracing physician leadership of value-based payment models over hospital leadership.

“I wouldn’t say that employers are drawing a line particularly between hospital- versus physician-led,” said Ellen Kelsay, chief strategy officer for the National Business Group on Health (NBGH). “They’re truly looking for whichever setting will respond best in terms of cost, quality, and outcomes.”

For instance, employers increasingly are trying to meet cost and quality goals by using sometimes-costly centers of excellence while also encouraging beneficiaries to obtain care in a nonhospital environment, such as via telehealth.

Hospitals “are conflicted between filling their beds and now being pushed toward value-based arrangements,” Kelsay said in an interview. “Until they see a groundswell and an increase in employers really driving many of these value-based arrangements, they will cling to their more traditional payment models.”  

It’s still “early days” in employers’ use of value-based care but the transition appears to be accelerating. For example, 22 percent of large employers plan to utilize an ACO within a year, but that share could more than double quickly based on the number considering such a step within two years, according to the latest NBGH member survey.

If models do shift more toward physician leadership, de Brantes said, physicians may want to reconsider whether they should seek employment with a hospital.

Less than half of practicing U.S. physicians owned their medical practice in 2016, marking the first time that the majority of physicians were not practice owners, according to an American Medical Association study released in May. Only 47.1 percent of physicians in 2016 had ownership stakes in a medical practice, compared with 53.2 percent in 2012.

“On the clinician side, if you’re reading the tea leaves, you should be looking at this saying, ‘Wait, the last thing I should want to do right now is to want to sell myself to a facility because I may be able to yield far better results for myself as a practice if I become smarter about which hospitals I want to align my business with in these new payment models,’” de Brantes said.

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

Publication Date: Monday, August 21, 2017