Verma warns healthcare industry faces two paths
The leader of Medicare and Medicaid warned private health plans to follow the federal government’s lead on innovation and in shifting to value-based payment, or politicians will “eliminate your industry.”
Seema Verma, CMS administrator, addressing a Washington, D.C., gathering of members of America’s Health Insurance Plans in September, warned that the public has soured on the costly, complex fee-for-service healthcare system.
“They’re frustrated with you,” Verma said, as attending health plan executives exchanged glances.
Verma said “a change will take place” as the current system is replaced with either a single- payer system or a private system driven by innovation.
Warning signs for the existing system recently have included public polls and the votes of 47% of American Medical Association (AMA) delegates to urge adoption of “Medicare for All,” Verma said. “Consider that [AMA] vote the canary in the coal mine that health insurance is in danger,” Verma said.
Health plans need to be serious about shifting to value-based payment, which Verma described as “the future of healthcare.”
Only a tiny share of hospital revenue is risk-based: Ratings agencies
Just 1.9% of net patient revenue for not-for-profit hospitals in 2018 came from risk-based payment, according to Moody’s Investors Service. The ratings agency issued a sector profile in September on the 284 not-for-profit hospitals it tracks. The report included a finding that risk-based payment declined slightly from 2% of the hospitals’ total revenue in 2017.
Similarly, the latest sector profile from Fitch Ratings concluded that “only a few payers [are] pushing at-risk contracting,” and therefore “many providers will continue to develop a strategy based on increased size and scale.” Fitch noted that approach will allow them to “extract greater efficiencies, gain contract leverage with payers and suppliers, and build adequate capabilities to support population health.”
The tiny share of risk-based hospital revenue runs counter to longstanding and continuous pronouncements about the shift to value-based payment by the Obama and Trump administrations.
“As the market moves to more value-based payment, and as participants demonstrate success, at some point models will no longer become optional and will become standard payment policy,” said Seema Verma, CMS administrator, at a September gathering of hospital executives in Washington, D.C.
However, industry advisers and executives were not surprised about the continued low participation of hospitals in risk-based payment.
“As much as we talk about it and as much as we try to grow it, we’ve had trouble sometimes with the payers,” said Carrie Nelson, MD, chief clinical officer for Advocate Physician Partners (APP), in an interview.
APP’s share of revenue from value-based payment has stagnated at 20%, she said, because of issues such as having to shift from a value-based contract back to fee-for-service payments with one health plan. The sides had been unable to resolve data-related issues and concerns about inaccurate assessments of care quality, Nelson said.
Court tosses $380 million site-neutral payment cut
Hospital advocates are celebrating the legal reversal of $380 million in site-neutral Medicare payment cuts — although no refunds were ordered, and the cuts may soon return.
The U.S. District Court for the District of Columbia on Sept. 17 issued a decision in American Hospital Association, et al. v. Azar, ruling against CMS’s “site-neutral” payment policy included in the CY19 Outpatient Prospective Payment System (OPPS) rule. Ruling that CMS exceeded its statutory authority to adjust payments under the OPPS, U.S. District Court Judge Rosemary Collyer vacated that portion of the rule. However, instead of granting the hospitals’ request for a refund of the payment reductions, Collyer remanded the case back to CMS.
The payment cut targeted offcampus provider-based departments that had been exempted from cuts under the Bipartisan Budget Act of 2015. The cases stemmed from a December 2018 lawsuit challenging the site-neutral cuts. The suit was filed by the American Hospital Association, the Association of American Medical Colleges and several hospitals.
The parties in the lawsuit later submitted a joint status report but could not agree on whether additional remedies were required.
Proposed mandatory models should be voluntary or delayed, providers say
The latest proposed mandatory Medicare payment models — the Radiation Oncology (RO) model and ESRD [End-Stage Renal Disease] Treatment Choices (ETC) model — drew concerns from many providers, including hospitals that cited the potential for adverse financial impacts. CMS proposed the RO model in July to test whether prospective bundled payments for 90-day radiotherapy episodes of care would reduce Medicare spending while at least maintaining care quality. The model, scheduled to launch in early 2020 , was proposed for physician group practices, hospital outpatient departments and freestanding radiation therapy centers that deliver radiotherapy services for 17 types of cancer in certain geographic areas. The model would require participating providers (40% of such practices) to report certain quality, patient experience and clinical data to CMS over the five years of the model, with providers at 100% risk for any spending beyond their allotted payments.
The American Medical Association urged that the RO model be shifted to a limited voluntary model and called for the following structural changes:
- Stratifying bundled payments based on patients’ clinical characteristics
- Modifying effi ciency and quality adjustments to avoid penalties related to patients with greater needs
- Adjusting payments for costlier rural communities
- Setting payments at the cost of care and starting with budget-neutral payments
- Adjusting payments annually based on evidence, technology and infl ationn
- Paying providers for data collection
Premier, a learning alliance of hospitals, wrote to CMS to oppose mandatory enrollment in the ETC model, arguing “providers should be able to decide what alternative payment models are appropriate for their organization.
CMS issues revised discharge rule
CMS issued a final rule in September aimed at reducing regulatory burdens for providers participating in Medicare and Medicaid and revising discharge planning requirements. The discharge planning rule, first proposed in 2015,fi nalized provisions requiring hospitals and critical access hospitals (CAHs) to create discharge planning evaluations for patients likely to suffer adverse health consequences in the absence of adequate discharge planning, and when patients, their representatives or physicians request such a plan. The rule also required hospitals, CAHs and home health agencies to provide certain medical information to the receiving facility when transferring patients.
CMS dropped a proposed requirement for hospitals and CAHs to establish a post-discharge follow-up process for at least some patients discharged to home. Recognizing that hospitals already are doing so according to specific situations and patient needs, the agency encouraged providers to continue following evidence-based best practices to establish an appropriate process.