Value Based Payment

The Fate of Value-Based Care with an ACA Repeal

February 21, 2017 2:39 pm

Concern about access, not about the cost or quality of care, dominates the debate around repealing and replacing the Affordable Care Act (ACA).

Although the numbers vary, sources agree the number of people who gained health insurance coverage as a result of the health reform law, either through the expansion of Medicaid or through the health insurance marketplaces, is in the millions, with the U.S. Department of Health & Human Services placing the number at 20 million. a 

As a result of this focus on access, a largely unasked question has been “What will happen to value-based care?” It’s an important question because the nation’s healthcare costs continue to rise—increasing 5.8 percent and reaching $3.2 trillion in 2015, equal to almost $10,000 per person. b In addition, the ACA mandated five major healthcare delivery reforms promoting value-based care:

  • The Hospital Value-Based Purchasing (VBP) Program
  • The Hospital-Acquired Condition Reduction Program (HACRP)
  • The Medicare Shared Savings Program (MSSP)
  • The national pilot program for payment bundling
  • The Hospital Readmissions Reduction Program (HRRP)

Furthermore, the ACA provided funding of $10 billion over 10 years for the Center for Medicare and Medicaid Innovation (CMMI), which was tasked with testing and evaluating various payment and service delivery models involving, in most cases, voluntary provider participation, with only a few models being mandatory.

Reform Alternatives

Most likely, the ACA’s value-based care initiatives will be reformed in one of three ways.

As one approach, Congress may completely repeal every one of the initiatives (as well as their derivative programs, such as new forms of accountable care organizations inspired by the MSSP), in line with the comments made on the campaign trail by Sen. Ted Cruz (R-Texas) and President Trump. c Such a meat-cleaver approach would reverse the rising tide of value-based care and clearly signal—in the absence of new value-based care initiatives to replace those repealed—a return to a healthcare system dominated by the fee-for-service model.

In a more likely and more surgical approach, Congress may repeal the CMMI and its programs as of Jan. 1, 2020. This proposal was articulated in the House Republicans’ “A Better Way,” published in June 2016. d Such a move could leave intact just a handful of value-based care programs, primarily the HVBP, HRRP, HACRP, and MSSP, although the Centers for Medicare & Medicaid Services (CMS) could develop other programs during the next four years.

A third approach, reflecting the views of the newly confirmed secretary of Health and Human Services (HHS), Rep. Tom Price (R-Ga.), who generally opposes value-based care, would be to repeal all mandatory value-based care programs. Price has been particularly critical of CMMI and its mandatory programs, the Comprehensive Care for Joint Replacement Model (CJR) and the Cardiac Rehabilitation Incentive Payment Model (CRIPM). e

Positive Results

A couple of recent developments about the incidence of hospital-acquired conditions (HACs) and hospital readmissions provide evidence of the effectiveness of value-based care, which generally involves the use of economic carrots and sticks to drive reduced cost and improved quality.

Hospital-acquired conditions. A recent report compiled by the Agency for Healthcare Research and Quality, and released Dec. 12, 2016, by HHS, concludes that from 2011 through 2015, approximately 125,000 fewer patients died due to HACs than would have died under the 2010 rate of occurrence of these conditions. The report also notes that more than $28 billion in healthcare costs were avoided. f During the period, there was a 21 percent decline in the rate of HACs, including adverse drug events, catheter-associated urinary tract infections, central-line-associated bloodstream infections, pressure ulcers, surgical site infections, and others. In 2015, the first year of the HACRP, which imposed a Medicare payment adjustment of 1 percent on hospitals that rank in the quartile of hospitals with the highest rate of HACs, there was an additional 4 percentage point reduction in the rate of HACs relative to the baseline year of 2010, after no improvement from 2013 to 2014.

In a national health expenditure fact sheet issued in September 2016, CMS reports that hospital readmission rates dropped by an average of 8 percent nationally from 2010 to 2015. g The number of avoidable 30-day readmissions of Medicare patients dropped in 49 states and the District of Columbia. In 43 states, readmission rates fell by more than 5 percent and, in 11 states, by more than 10 percent. Notably, the HRRP became effective in October 2012, and both its financial impact and number of applicable conditions have increased in recent years.

Given the need to control rising healthcare costs as well as the proven effectiveness of programs to reduce the rate of HACs and hospital readmissions, the Trump administration and congressional Republicans would be wise to not throw out the baby of value-based care with the bathwater of the ACA.

Ken Perez is vice president of healthcare policy, Omnicell, Inc., Mountain View, Calif., and a member of HFMA’s Northern California Chapter.


a. “20 Million People Have Gained Health Insurance Coverage Because of the Affordable Care Act, New Estimates Show,” press release, U.S. Department of Health & Human Services, March 3, 2016.

b. Martin, A. B., Hartman, M., Washington, B., Catlin, A., et al., “National Health Spending: Faster Growth In 2015 as Coverage Expands and Utilization Increases,” Health Affairs, January 2017.

c. Cunningham, P.W., “Cruz: I Will Repeal Every Word of Obamacare,” Washington Examiner, Jan. 28, 2016.

Trump-Pence campaign website, “Trump: Obamacare Is a Disaster,” Oct. 25, 2016.

d. “A Better Way HealthCare Snapshot,” House Republicans, June 22, 2016.

e. See Advisory Board, “179 Lawmakers Say Mandatory Medicare Payment Reforms Are Illegal: CMMI ‘Has Exceeded Its Authority,’ Letter Says,” Daily Briefing, Oct. 2, 2016.

f. National Scorecard on Rates of Hospital-Acquired Conditions 2010 to 2015: Interim Data From National Efforts to Make Health Care Safer , Agency for Healthcare Research and Quality, page last reviewed, December 2016.

g. Terry, K., “Hospital Readmission Rates Drop Nationally,” Medscape Medical News, Sept. 15, 2016. 


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