Cost Effectiveness of Health

The stakes are only growing in efforts to improve the cost effectiveness of health, CMMI’s Elizabeth Fowler says

October 6, 2021 12:52 am
  • Elizabeth Fowler, head of the Center for Medicare & Medicaid Innovation, spoke to an HFMA audience about the importance of efforts at the federal level and beyond to improve the cost effectiveness of health.
  • Stakeholders can expect CMMI to develop models to reduce low-value care.
  • A greater number of mandatory models is likely, and CMMI recognizes the need to better support participants.

The task of making the U.S. healthcare system more cost-effective is becoming increasingly urgent, the head of the Center for Medicare & Medicaid Innovation (CMMI) told an HFMA audience.

In response to a question about whether the debate over healthcare spending may be overblown, especially given how many people’s livelihoods are rooted in the industry, CMMI Director Elizabeth Fowler, PhD, JD, said there’s a big price to pay for overspending.

“We shouldn’t underestimate that it does crowd out other spending and it does crowd out other priorities” at both the federal and state levels, she said Sept. 30 at HFMA’s virtual Thought Leadership Retreat.

“There’s a way we can spend more efficiently and still get better outcomes. And the reason I think that value-based care and delivery system reform are so important is because if we’re successful at driving more cost-efficient and higher-quality care, we avoid more dramatic cuts in the future.”

As an example, Fowler cited projections that the Medicare Hospital Insurance Trust Fund, which pays for Part A care, will become insolvent in 2026.

“If we don’t have better strategies for driving more cost-effective care, Congress comes in with sort of a meat-ax approach, as opposed to a scalpel approach,” Fowler said. “And [says], ‘Let’s just cut 2 or 3% across the board.’ And everybody suffers, whether you’re a good provider providing high-quality care or whether you’re an inefficient provider. We don’t want to get to the point where we’re making those tough choices.”

Looking to improve the value of healthcare

Reducing the amount of low-value care will be a focus of federal initiatives, Fowler said. Eliminating as much waste and unnecessary care as is possible through value-based payment (VBP) models will be key to improving affordability and, in turn, the cost effectiveness of health.

Estimates going back more than a decade indicate that about 30% of spending on care delivery “didn’t make a difference in improving anyone’s health,” Fowler said. “That’s a pretty high number. But trying to get at that unnecessary care is really challenging.”

The specific programs that will be implemented to tackle that challenge are in the planning stages. But in a blog post published this past summer, Fowler, CMS Administrator Chiquita Brooks-LaSure and two colleagues wrote that addressing affordability would be a cornerstone of federal VBP efforts. Among the possibilities are models that waive cost sharing for high-value services, they wrote.

The potential expansions of telehealth and hospital-at-home coverage could be ways to enhance person-centered care, Fowler said.

“We’re in the middle of doing some focus-group work, really trying to understand patients and what they’re looking for out of these [models],” she said. “I don’t think patients pay attention to innovation models and they certainly may not know what CMMI is, but if there were models that tried to provide care more conveniently for them, what would that look like? What does value mean for them? What does care delivery mean for them?”

Defining what health really means

Another key to making health more cost-effective is to bring interventions more upstream, including with respect to social determinants, Fowler said. Health should not merely be defined as the absence of disease but instead should mean that people stay on a healthy trajectory throughout their lives.

“[With] all of that upstream work, there’s a lot of innovation going on, a lot of great thinking,” Fowler said. “Whether it’s something CMMI takes up or not remains to be seen. We’ve done some work in social determinants, and I think there’s more to do in that space.”

Fowler said CMMI has had success with the Accountable Health Communities Model, which encourages participants to ask beneficiaries about social determinants and then connect them with community resources as needed. The model is scheduled to end in 2022, and Fowler said the next step should be to incorporate those approaches in larger programs such as the Medicare Shared Savings Program (MSSP).

Bolstering health equity will require implementing tailored programs in Medicaid as well as Medicare. The challenge is CMMI’s lack of statutory authority to waive Medicaid regulations that may inhibit high-value care.

Conversations have begun with the Center for Medicaid and CHIP Services on the potential for collaborative programs that can make a difference, Fowler said, while partnerships with state Medicaid agencies are part of CMMI’s effort to promote more multi-payer arrangements.

“There’s more to come there, but not without a caveat, which is [that] we have to think about our authority,” Fowler said.

Evaluating the mechanisms that can make a difference

Fowler said part of her role is to help move the U.S. healthcare system away from fee-for-service. A rigorous assessment is taking place to determine the characteristics of models that can form the foundation of a new federal payment system.

In the 11 1/2 years since its launch, CMMI has established more than 50 VBP models. Only four met the statutory cost and quality criteria to be taken out of the pilot phase.

Those models, among them the Home Health Value-Based Purchasing Model and the Medicare Diabetes Prevention Program, “have made a very important contribution, but they’re not the innovations that will achieve health system transformation to cost-effective care,” Fowler said.

Achieving that transformation will mean redefining what constitutes successful pilot programs and viewing results through less of an all-or-nothing prism. There may be a rationale for building on models that advance health equity, for example, even if the savings to Medicare are limited.

“A model can transform care delivery but not meet the standards for certification,” Fowler said. “In that case, maybe the outcome is not expansion, but a recommendation to Congress or incorporation into an existing aspect of Medicare” such as the MSSP.

The debate surrounding mandatory participation in VBP continues at CMMI. Voluntary programs don’t support healthcare transformation, Fowler said, because participants tend to self-select based on their ability to do well in the model.

“To help drive more people into relationships with providers that are accountable, we need to start moving away from voluntary models,” Fowler said. CMMI will work to provide participants in mandatory models with the options and tools they need to succeed, she added.


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