Although the discussions of health care in Congress receded somewhat into the background after the recent efforts of congressional Republicans’ to replace and repeal the Affordable Care Act (ACA) encountered unexpected obstacles, pressure to address the continuing rise in the price of health care has not let up. Ultimately, states must find a way to control healthcare cost trends if they want to avoid the painful choice between increasing taxes to subsidize insurance exchanges and Medicaid expansion, and reducing the extent of coverage made available to Americans. Leading up to the repeal-and-replace vote, governors and other policymakers across the nation were presenting those alternatives as the only choices for maintaining coverage for the previously uninsured. Absent from that debate was the most obvious solution: to finally tackle cost trends by implementing alternative payment models.
That absence was even more striking considering the many examples that show how effective comprehensive payment innovation can be. Oregon has created fixed per capita global fees per Medicaid beneficiary and delegated to coordinated care organizations (CCOs) the responsibility of managing to that target. CCOs already have been effective at reducing avoidable hospitalizations and emergency department visits, and they’re now exploring ways of further engaging physicians and hospitals within the CCO through bundled payments and other innovative payments.
In New York, Medicaid managed care organizations (MCOs) are mandated to move at least 80 percent of their payments to value-based contracts by 2020 or see reductions in their premiums. That mandate has prompted a flurry of activity by the MCOs with physician groups and other providers to revisit contracts and set timelines for converting existing arrangements into risk arrangements with financial penalties for going over budget.
In Arkansas, the Medicaid agency, working in collaboration with private-sector health plans, has implemented a public-private-sector program to convert fee-for-service payments to value-based payments. The agency and health plans have combined a primary care approach based on the patient-centered medical home model with a hospital and specialist approach based on episode-of-care payments. Significant improvements already have been reported.
All these local efforts, spurred in part by the passage of the ACA and the implementation of Medicare payment innovations, are now further fueled by the implementation of the Medicare Access and CHIP Re-Authorization Act (MACRA). MACRA makes it increasingly imperative for provider organizations to understand how best to succeed in moving from volume to value. Some of the strategies, learned from current field work, include focusing intently on better management of patients with chronic conditions, reducing reliance on expensive downstream providers (post-discharge in particular), and actively engaging with community-based organizations that can help support patients with special needs.
The legislative and regulatory world ahead continues to be uncertain, but the move alternative payment models remains the best solution to ensure lasting quality and affordable health care in the United States.
François de Brantes, MS, MBA, vice president and director, Altarum Center for Payment Innovation, and executive director, Healthcare Incentives Improvement Institute (HCI3).
François de Brantes will be presenting as a featured speaker at HFMA’s ANI 2017, taking place June 25-28 in Orlando. This blog post touches on the theme of de Brantes’ presentation, Medicaid and State Level APMs: Implications for Health Plans, Hospitals, and Physicians. For more information or to register, go to hfma.org/ani.