Value Based Payment

Why the federal agency that oversees healthcare payment innovation is rethinking its approach

April 25, 2021 11:40 pm
  • The director of the Center for Medicare & Medicaid Innovation is conducting a “strategic refresh” of the agency to consider how it can better guide the healthcare industry’s transition to value.
  • CMMI is reviewing or tweaking several models that have generated a fair amount of hype in healthcare policy circles.
  • The approach to evaluating models may need to be updated.

Value-based payment is at a “crossroads,” according to the leader of the federal government agency tasked with initiating transformation in U.S. healthcare.

Liz Fowler, PhD, JD, the new director of the Center for Medicare & Medicaid Innovation, expressed her view that in the decade since the agency was established, “We’ve lost some consensus in the stakeholder community about what we’re trying to achieve and where we’re heading.”

Speaking at the Spring 2021 Conference of the National Association of ACOs (NAACOS), Fowler noted that the fee-for-service payment system remains firmly entrenched in broad segments of the industry. She recalled sitting on a panel with a hospital executive who said, “We are going to ride this fee-for-service pony into the sunset.”

“I know that [sentiment] is out there,” Fowler said. “We need to find a way to bring everyone along. We can’t have fee-for-service remain a comfortable place to stay.”

To give the transition a boost, Fowler is conducting a “strategic refresh” of CMMI and its role in systemic healthcare innovation.

Finding the right incentives

Best practices for nudging providers to move into worthwhile value-based payment (VBP) models remain elusive. Fowler said she would prefer not to require providers to adhere to a prescribed timeline for taking on risk.

“We need to have a clear path for the innovators who are ready and willing and able to take on that risk, but I think we also need to push the laggards and then we need to reach those who have challenges participating,” she said. “It may not be one-size-fits-all.”

But in a separate session at the NAACOS conference, Mark McClellan, MD, PhD, professor at Duke University and founding director of the Duke-Margolis Center for Health Policy, noted the benefits of making some level of VBP participation mandatory.

“If we keep pumping money into the fee-for-service program, we shouldn’t be surprised if it really takes a lot of coaxing and therefore [produces] very little net savings and maybe additional net cost for providers to move into alternative models,” McClellan said. “And probably the easiest way to get savings in models is to make them mandatory so that we don’t just get a selected group that thinks they can succeed under the particular rules in place at the time.”

Models that involve voluntary participation and up-front incentive payments generally have resulted in net losses for Medicare, McClellan said. Recurring problems with those models include benchmarking and risk adjustment, in addition to the likelihood that participants already are further along the VBP continuum and therefore have less room to find savings and make improvements.

Incentive payments should be used to motivate providers not merely to participate in new models but also to invest in transformation that will live on after the pilot phase, Fowler said. She cited the CHART ACO Track as an example of a program that can pave the way for structural change among participating providers.

Rethinking how to proceed

Sometimes, Fowler said, it’s useful for the federal government to “take a beat” in implementing new models “to ensure that a forthcoming model can realistically deliver on what’s intended, that it’s the strongest option based on our evidence and data.”

To that end, in recent months CMMI has:

  • Pulled back on pending models to conduct additional review (Geographic Direct Contracting; Primary Care First Model’s high-need and seriously ill population option)
  • Delayed start dates (CHART Model ACO Transformation Track; Kidney Care Choices)
  • Modified ongoing programs (Medicare Part D Payment Modernization Model)

“We need to be honest about the nature of innovation that not everything is going to be a home run,” Fowler said. “Some things will work, others won’t, and we need to be agile.”

Speaking to conference attendees, Fowler asked for patience “as we take time to review the portfolio of models, make adjustments where necessary and make sure that our path forward is sustainable and meaningful.”

Considering a new approach to evaluation

Only four of more than 50 CMMI models have met the cost and quality criteria to be permanently integrated in the Medicare program.

“A lot of what we’ve done has been aimed toward certification of models to become a permanent part of Medicare,” Fowler said. “In trying to get a model certified, it really does suggest a very specific model and a very specific way of thinking about evaluations and the assessment by actuaries.

“I wonder if we can instead think about the overall goal being transformation of the system instead of certification, or both. Having talked to some experts, they say don’t give up on certification, but try to think about it more broadly so that the evaluation isn’t necessarily what’s driving the model design and development.”

Stakeholders also should recognize that the inspiration for reform goes beyond finance, McClellan said.

“We’re doing this not for the payment reforms but because of where our healthcare system is falling short,” McClellan said. “Yeah, it’s about the evaluations showing that we’re getting better outcomes and lower costs. It’s really about building a better health system. That’s why we got into this in the first place.”


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