Value Based Payment

Azar: Time to Move Value-Based Payment Beyond ACOs, Bundles

March 6, 2018 9:30 am

The new value-based payment models could be based on suggestions provided by industry groups in recent months, the HHS secretary said.


March 5—The new leader of healthcare policy for the federal government says it’s time to advance value-based payment efforts beyond accountable care organizations (ACOs) and bundled payment initiatives.


Recently confirmed U.S. Health and Human Services (HHS) Secretary Alex Azar II on March 5 told a national meeting of the Federation of American Hospitals that he will undertake a more aggressive push to implement value-based payment.


“Simply put, I don’t intend to spend the next several years tinkering with how to build the very best joint-replacement bundle; we want to look at bold measures that will fundamentally reorient how Medicare and Medicaid pay for care and create a true competitive playing field where value is rewarded handsomely,” Azar said.


Azar also downplayed future prioritization of ACOs, which he said have provided “lackluster” results.


“In retrospect, this is not such a surprise: Providers were not given new meaningful space to experiment—such as the arrangements they needed to truly take on the risk of a patient’s outcomes,” Azar said. “Meanwhile, they were allowed to share in modest cost savings but not asked to accept responsibility for cost overruns.”


Azar said he plans to accelerate the movement to value-based payment by using the “tremendous power” of the Center for Medicare and Medicaid Innovation (CMMI) and tools created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) to experiment with new payment models.


“We are mindful that aggressive models have not always worked out, so appropriate guardrails will always be essential,” Azar said. “But make no mistake: We will use these tools to drive real change in our system.”


Azar did not specify what new payment models will be pursued, but he provided some key details of how they could work.


For example, he underscored the need to end provider collection of quality measures.


“Nobody benefits when our outcomes measures create burden instead of value,” he said. “It’s the patient who suffers when a provider spends more time reporting quality measures than delivering quality care.”


That new approach was seen in the Trump administration’s FY19 proposed budget for HHS, which proposed removing two MACRA performance categories (the budget does not specify which categories) and evaluating performance based only on “meaningful quality and cost measures.” For those measures, “Performance would be assessed by CMS [the Centers for Medicare & Medicaid Services] without requiring any reporting from clinicians, thereby leaving more time for clinicians to focus on patient care,” the budget stated.


Azar said the new value-based payment approaches would be informed by stakeholders’ responses to CMS requests for information (RFIs).


One recent CMS RFI regarded the design of new payment reform models. Among the recommendations from the American Hospital Association was a dedicated model to test coverage and payment changes that would lead to more effective and widespread adoption of virtual care strategies, according to a letter responding to the RFI.


4 Keys to Transformation


The plan to revamp federal value-based payment programs was one of four “engines for transformation” that Azar touted.


Another was reducing government rules that block “integrated, collaborative, and holistic care for the patient” and “structures that may create new value more generally.”


Among the regulations that may be impeding value-based transformation are Medicare and Medicaid price-reporting rules and Food and Drug Administration communication policies that hinder innovative pharmaceutical company and payer collaboration. Additionally, “various well-meaning anti-fraud protections may actually be impeding useful coordination and integration of services,” he said.


He also cited the example of federal regulations that limit the degree to which providers can use ride-sharing services to provide reliable, low-cost transportation to appointments. The number of free rides that can be provided to a patient in a given year, for instance, is strictly limited.


“These are the kinds of wraparound services that can often improve outcomes at incredibly low cost. We’re devoted to figuring out ways for providers to take advantage of them,” Azar said.


Two other areas of transformation involve giving consumers greater control over health information through interoperable and accessible health IT and encouraging transparency from providers and payers.


Azar blamed the lack of electronic heath record access on physician and hospital resistance to giving up control of records, as well as the small number of systems for easily disseminating such information.


“We aim to work with the private sector to open up avenues that will empower patients,” Azar said.


Instead of “micromanaging the standards and processes used,” Azar planned to establish broad goals of giving patients control of their records in a useful format and giving them the means to bring their records to a new provider.


“That’s interoperability,” Azar said. “The what, not the how.”


On transparency, Azar said he would begin by encouraging the healthcare industry to find solutions and would “lay out more powerful incentives if it doesn’t.”


Consumer Focus


The key theme uniting Azar’s four priorities was that value will be determined by “a marketplace of many players” and not by “arbitrary authorities or central planners.”


“Each piece of our plan for value-based transformation recognizes this, and it’s the main reason I am optimistic that we may have more success, and sooner, than past efforts,” Azar said.


The consumer-centric approach should make such a transformation easier but not painless.


“Putting the healthcare consumer in charge, letting them determine value, is a radical reorientation from the way that American health care has worked for the past century,” he said.


The reorientation toward consumers will potentially require “uncomfortable” federal intervention because facilitating a competitive, value-based marketplace “is going to be disruptive to existing actors.”


Azar also dropped the latest Trump administration dig against consolidation. A key consideration for upcoming models is whether they create any new burdens or require scale to an extent that could drive consolidation in the healthcare market.


“As a matter of principle, we want to move to a system where we can be agnostic about ownership structures, a system that will allow independent providers to group together to drive innovation, quality, and competition,” Azar said. 



Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare.



googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text1' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text2' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text3' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text4' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text5' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text6' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text7' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-leaderboard' ); } );