We recently held our 2017 Value-Based Care Solutions Advisory Group which gave us a chance to network and share current value-based priorities, challenges and opportunities.
In addition to multiple breakout sessions, we had the pleasure of hearing from Don Crane, president and CEO of the California Association of Physician Groups (CAPG), who presented his Washington, D.C., healthcare policy insights. CAPG comprises 300 risk-bearing physician groups with members in 44 states, Washington, D.C., and Puerto Rico. With a mission “to proliferate coordinated care across the nation,” CAPG is immersed in policy advocacy. Crane’s keynote, “Volume to Value: Opportunity Amidst the Turmoil,” delivered several key regulatory updates worth further discussion.
The Affordable Care Act (ACA) Repeal-and-Replace. No one’s really sure what’s going to happen, but the most striking development is the lack of noise about it. There’s a big focus on the cost sharing reduction (CSR) payments – the subsidies that help millions of Americans who purchase coverage through the ACA to pay their co-payments and deductibles. The Congressional Budget Office scored what happens if CSR funding is eliminated. Although subsidies cost U.S. taxpayers about $7 billion a year, eliminating them actually costs more money in the form of increased premiums to the tune of 20 percent.1
Key members of Congress want to fix the ACA, but the question is whether that can happen quickly enough. Many predict Congress will enact some sort of stop-gap funding measure.
Physician Income and MACRA. MACRA, the Medicare Access and Children’s Health Insurance Program Reauthorization Act, is the big tailwind for physician practices and their owners. Other than eliminating the sustainable growth rate formula, it’s important to note that MACRA was nearly unanimously enacted by Congress and is therefore a highly durable piece of legislation.
Whether physician practices fall under MACRA’s Merit-based Incentive Payment System (MIPS) or Alternative Payment Models (APMs), it’s the harbinger of physician revenue increasing or decreasing across the nation – and should serve as the vital backdrop in driving your organization’s value-based strategies.
MACRA’s Medicare payment schedule creates an utterly flat picture for the next five to six years – 3/4 of 1 percent for APMs, or 1/4 of 1 percent for MIPS – while operating expenses increase by three to four percent. Meanwhile, there are a lot of other programs and products that are indexed and tied to Medicare. Perhaps many practices can tolerate this level of flatness for a while, but beyond six years out, it’s a de facto pay decrease. It will be an interesting day in the first quarter of 2019 when MACRA payment adjustments kick in for 2017 performance.
Quality Payment Program (QPP) Proposed Rule. The Centers for Medicare & Medicaid Services’ (CMS) QPP proposed rule would amend some existing requirements and create new policies to encourage participation in MACRA. One proposed change increases the low-volume threshold clinicians must meet to be eligible for MIPS. CAPG believes this expanded exclusion makes APMs even more important. As a result, the group is asking CMS to consider Medicare Advantage (MA) risk contracts between plans and providers as advanced APMs.
The Value Movement Looks Promising. While there is turmoil in policymaking, there may also be some opportunities. Fee-for-service is survivable today, but providers may soon have to find a different way to bill for their services with a different payment methodology. Consider a recent California study2 that looked at 10 health plans covering 24.4 million lives and all programs – commercial and Medicare, HMO and PPOs. It found in all instances that PPO models were costlier than integrated, capitated care.
For people with memories of previous HMO models, there is a new wave of integrated care being developed and succeeding. These organizations – while having some HMO-like principles, such as a primary care provider for every member – have changed over the years and now incorporate quality and utilization statistics into their network evaluation. While the HMOs of yesteryear aren’t coming back, a much improved version of them is returning under a different name.
Risk-based care works today because of better data access, sophisticated repositories, analytics and solutions that enable more intelligent coding for risk adjustments. It enables physicians to take care of the community, while focusing on the sickest patients proactively, producing better outcomes.
Today, you may survive by maintaining the status quo, but with uncertainty in current fee-for-service models you’ll likely need to find a way to make a living on a different payment methodology. The data – at least in California – proves risk-based care works really well. And I think you’re starting to see the same data be true for other regions of the country.
If you’re not already there, now is the time to try new strategies. There’s an increasing urgency to equip ourselves with the knowledge and tools necessary to control value-based reimbursement. With our people, proven processes and technology, Conifer Health can empower your organization to maximize its operational efficiencies and truly improve the cost, quality and access to healthcare for all of the populations you serve.
1. Congressional Budget Office. “The Effects of Terminating Payments for Cost-Sharing Reductions.” August 2017.
2. Integrated Healthcare Association. “Benchmarking California Heath Care Quality and Cost Performance.” July 2016.
Conifer Health offers a comprehensive portfolio of solutions to help clients make informed decisions that reduce cost and deliver quality outcomes as healthcare organizations, employers and unions adapt to new realities in the fee-for-value era.