Value Based Payment

Is Focus of Value Based Care Moving From Hospitals to Physicians

September 20, 2017 12:10 pm

Opinions differ as to whether recent healthcare policy decisions by the Trump administration suggest an effort to give physicians a more central role in new 
payment models.

Recent policy proposals from the Trump administration have led some analysts to believe that the administration is shifting the focus of value-based payment models.

An example is the proposed rule issued by the Centers for Medicare & Medicaid Services (CMS) in August to eliminate three mandatory Medicare bundled payment models before their scheduled launch and to scale back an existing fourth model.

Although many hospitals and their advocacy organizations wanted mandatory models scrapped, an industry adviser noted that the change would leave significantly fewer hospitals in value-based payment models.

“Keeping these mandated programs would have effectively created a lock-in of the role of the hospital as the owner and the steward of the bundle, and that clearly is not going to be the case,” says François de Brantes, vice president and director of the Center for Payment Innovation at Altarum.

In another proposed rule, issued in July, CMS recommended letting traditional Medicare pay for total knee arthroplasty in hospital outpatient departments for the 2018 coverage year. The agency also sought comments on whether Medicare should pay for total and partial hip replacements in ambulatory surgery centers (ASCs).

Those changes would allow physicians to choose between sites of care to find savings as part of value-based payment models, de Brantes says.

“This is a really important shift,” de Brantes says. “The prior administration was very big on being health system- and hospital-centric. The thought was if we make these large organizations—we can call them ACOs or whatever—responsible for overall patient management, then good things will come.”

A third policy development in recent months was the recommendation during the spring of the first two physician-focused payment models by the Physician-Focused Payment Model Technical Advisory Committee (PTAC), which was authorized by the Medicare Access and CHIP Reauthorization Act (MACRA). CMS must approve the models before they can launch.

The common denominator in the three policy approaches is Tom Price, MD, secretary of Health and Human Services.

“If you look at it with that lens, then you should be looking at a landscape in which the alternative payment models that are going to be coming—many going through the PTAC process—are all about physician-focused bundles with specialists in charge,” de Brantes says.

Such a shift could have big financial consequences for hospitals.

“Now you’re looking at an environment in which you have a bundled payment program, the docs in charge, and they have a choice between sending their patients to an ASC, which they can do now on joint replacements, or sending them to a particular facility,” de Brantes says.

Change May Not Be Imminent

Andy Slavitt, acting administrator of CMS under President Barack Obama, downplays any shift in payment-model focus from hospitals to physicians.

The 2017 start of Medicare’s new physician payment model as authorized by MACRA portends such a shift, Slavitt says. But the proposed cancellation of the mandatory bundled payment programs speaks more to the reduced role of that type of model.

“Right now, I see basically just a diminishing of the power of bundled and value-based payments,” Slavitt says.

Gail Wilensky, who led the precursor agency to CMS under President George H. W. Bush, likewise does not view recent developments as indicative of a major shift.

“I don’t see that, although Dr. Price will probably try to encourage physician-led changes and reforms,” Wilensky says.

The recent physician-focused changes are “the operationalization” of a 2016 letter to Slavitt from 179 House members, including Price when he was a member of Congress, Wilensky says. The letter was critical of Medicare for requiring participation in new mandatory models without first consulting the affected physicians, hospitals, and patients.

The View in Congress

But Congress has appeared to place less emphasis on pushing a physician focus in CMS initiatives since Price departed for the Trump administration.

Several congressional healthcare leadership aides who were interviewed in August say that shifting control of Medicare payment models from hospitals to physicians is not a priority for their bosses or for healthcare committees.

“I’ve read a little bit about that, but I haven’t heard from members that that’s a focus,” a Republican healthcare aide says.

Members of Congress are focused on providing oversight of MACRA’s implementation, including the role of PTAC in suggesting physician-focused alternative payment models (APMs), aides say.

In written comments on the rule for MACRA’s Year 2 implementation, the American Medical Association states that PTAC should be allowed to also recommend Medicaid APMs.

Adviser’s Perspective

Some industry advisers likewise do not see evidence of a shift from hospital-focused APMs to physician-focused models.

“I don’t believe that is the case; CMS will continue to introduce new models where physicians do play a key role in the delivery of value-based care in order for physicians to achieve the incentives under MACRA,” says Clay Richards, CEO of naviHealth, which advises providers on improving post-acute care. “At the same time, we don’t think that this will be at the expense of hospitals.”

Richards says the Trump administration appears to be seeking to maximize flexibility for the healthcare industry under upcoming payment models.

“I would expect that we would continue to see opportunity for providers—both physicians and health systems and hospitals—to participate as they see fit,” Richards says. “That’s really the advantage of the voluntary bundled payment models—physicians, hospitals, and health systems can participate at the rate and scale that they deem appropriate.”

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office ([email protected]). Follow Rich on Twitter: 

Note: This article originally ran as part of HFMA’s daily news coverage. For much more on the latest developments in healthcare business and finance, see


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