Healthcare Reform

The Current Outlook for Value-Based Care Under the Trump Administration

April 25, 2018 3:18 pm

During Donald Trump’s first year as president, congressional Republicans proposed many pieces of legislation to repeal and replace the Affordable Care Act (ACA). The attempts fell short, as Senate Republicans could not muster the required 50 votes to pass legislation under budget reconciliation.

However, in October 2017, the Department of Health & Human Services (HHS) announced the cessation of cost-sharing reduction subsidies in the ACA health insurance marketplaces, which were paid to insurance companies to reduce copayments and deductibles for ACA enrollees earning between 100 and 250 percent of the federal poverty level. Two months later, Congress passed the Tax Cuts and Jobs Act, which repealed the individual insurance mandate, a key element of the health reform law, and on Jan. 11, the Trump administration issued guidance to states that will allow them to compel certain people to work or prepare for jobs as a condition for receiving Medicaid coverage. All these actions would pull back the coverage and access expansions of the ACA.

Largely overlooked during the rancorous debate over repealing the entire ACA were its numerous healthcare delivery reforms promoting value-based care, which aims to slow the growth of spending and improve quality.

The Status of the ACA Reforms

Proponents of value-based care have been understandably concerned that the baby might get thrown out with the bathwater. Nonetheless, many of the programs launched by the Centers for Medicare & Medicaid Services (CMS) to promote value under its ACA mandate have continued to garner bipartisan support, despite some shortcomings. Here is a brief update on the current status of the value-based initiatives.

Hospital Value-Based Purchasing (VBP). The Hospital VBP program has been criticized for having too many and overly complex quality measures, for not producing improved outcomes, and for being financially immaterial. A University of Michigan study concluded that the program achieved little patient benefit over four years. a Furthermore, a June 2017 report from the GAO concluded that most hospitals in the program received a bonus or penalty of less than $100,000 in FY17. b Given the relatively small bonus and penalty amounts, as well as the sizable costs to implement processes and technologies to support compliance with the program, most hospitals report a negative ROI for the program.

Hospital readmissions. The Hospital Readmissions Reduction Program (HRRP) financially penalizes hospitals with relatively high rates of Medicare readmissions. In September 2016, CMS reported that hospital readmission rates dropped by 8 percent nationally, on average, from 2010 to 2015, demonstrating the effectiveness of this well-known program. c

Payment adjustment for hospital-acquired conditions (HACs). The HAC Reduction Program, effective starting in FY15, required HHS to reduce payments by 1 percent to hospitals ranking in the quartile with the highest total HAC scores. The Agency for Healthcare Research and Quality noted a 21 percent decline in teh HACs rate from 2011 to 2015, preventing the deaths of 125,000 patients and avoiding $28 billion in healthcare costs. d

Bundled payments. Former HHS Secretary Tom Price famously opposed mandatory programs, leading to the cancellation in November 2017 of both mandatory bundled payments in cardiac care and mandatory expansion of bundled payments for joint replacements. However, on Jan. 9, CMS announced the Bundled Payments for Care Improvement Advanced, a new voluntary model under which participants bear financial risk, with payments tied to quality performance.

Accountable care organizations (ACOs). Since the passage of the ACA, CMS has experimented with ACOs the most, testing many population health management approaches. Consequently, ACO numbers have increased to more than 650 Medicare or Medicaid ACOs and more than 700 commercial ACOs, covering over 32 million people. Notably, in February, UnitedHealthcare, the nation’s largest commercial health insurer, reported that its value-based care programs, including ACOs, helped close 50 million gaps in care from 2013 to 2017. e

Mixed Messages

Due undoubtedly to the Trump administration’s opposition to the ACA, HHS and CMS have been generally supportive of value-based care while opposing the more government-imposed aspects of the ACA reforms. In February, CMS spokesman Raymond Thor stated that the Obama-era goal of having half of all Medicare payments tied to value-based care models by the end of 2018 was not a priority for the Trump administration. f On March 6, however, CMS administrator Seema Verma announced the launch of MyHealthEData, an initiative that will give patients control over their health information, allowing them to take it with them to their healthcare providers. Verma portrayed the initiative as foundational for value-based care. g

Also on March 6, HHS Secretary Alex Azar delivered an address to America’s Health Insurance Plans in Washington, D.C., in which he emphasized the use of experimental models in Medicare and Medicaid to drive value and quality throughout the entire system. He also told the audience that valued-based transformation of the nation’s healthcare system was one of his top priorities for HHS. Azar has publicly voiced support for mandatory payment models, and he has advocated “bold measures that will fundamentally reorient how Medicare and Medicaid pay for care,” but he has also been critical of the results of ACO programs. What is clear is that Azar would prefer some sort of market-driven transformation. h


The Trump administration has obviously emphasized the checkered results of the ACA healthcare delivery reforms, but it’s clear that a number of them have been impactful. It will be interesting to see how the consumer-driven approach touted by Verma and the market-driven vision of Azar will mesh with each other and with the prevailing tide of accountable care. Given these disparate vectors, look for the march toward value-based care to proceed slowly, but inexorably.


a. Ryan, A.M., Krinsky, S., Maurer, K.A., Dimick, J.B., “Changes in Hospital Quality Associated with Hospital Value-Based Purchasing,” New England Journal of Medicine, June 15, 2017.
b. Government Accountability Office, “Hospital Value-Based Purchasing: CMS Should Take Steps to Ensure Lower Quality Hospitals Do Not Qualify for Bonuses ,” June 2017.
c. Terry, K., “Hospital Readmission Rates Drop Nationally,” Medscape, Sept. 15, 2016.
d. Agency for Healthcare Research and Quality, “National Patient Safety Efforts Save 125,000 Lives and Nearly $28 Billion in Costs,” Press Release, Dec. 12, 2016.
e. Beaton, T., “UnitedHealthcare Finds Value-Based Care Closed 50M Gaps in Care,” HealthPayer Intelligence,” March 13, 2018.
f. Gregory, J., “Groups Shrug Off HHS Scrapping Obama-Era Goal on Value-Based Care,” HealthExec, Feb. 23, 2018.
g. Morse, S., “Seema Verma Rolls Out New CMS Interoperability Initiatives at HIMSS18,” Healthcare IT News, March 6, 2018.h. Hagland, M., “CMS Makes a Big Splash with Verma’s Speech, But What Does It Really Mean?Healthcare Informatics, March 8, 2018.


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