The work of moving away from fee for service is in progress. The results so far? Mixed.
Will COVID-19 accelerate or put the brakes on the move toward value-based payment? Christopher Chen, M.D., CEO of Miami-based ChenMed, says doctors will embrace value over volume as layoffs and work reductions hit hospitals and medical practices that depend on fee for service. Others expect a tendency to hit the pause button as payers and practices sort through the uncertainty stirred up by the pandemic.
Here are snapshots of four current value-based efforts:
1. Blue Cross Blue Shield of Massachusetts’ Alternative Quality Contract:
Lauded as one of the earliest and most successful value-based care programs in the country, the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract (AQC) sets a global budget for patient care. In the now-familiar arrangement seen with ACOs, providers receive a percentage of the “savings” if they deliver care below budget and pay out losses if they exceed the budget.
“The program is a pioneer in encouraging providers to treat the whole person — the medical, behavioral and social needs of patients,” says Maria Perrin, chief growth officer of HMS, a population health and healthcare payment company in Irving, Texas. Perrin points to the 2019 study by Zirui Song, M.D., Ph.D., and colleagues AQC saved, on average, $461 per year per member. The study covered an 8-year period from 2009 to 2016.
The AQC was launched in 2009 as a development project by the Massachusetts Blues plan and providers in Massachusetts, a state with a recent history of experimentation and innovation in healthcare coverage and payment. The 2006 law that expanded healthcare coverage in Massachusetts —so-called Romneycare — was a forerunner of the ACA. The AQC program, which is itself a prototype for ACOs, now has more than 80% of Massachusetts providers participating.
“While the results of many value-based care programs are still developing and, in some cases, such as with CMS’ Hospital Readmissions Reduction Program, highly debated, the AQC is an example of a very successful VBC (value-based care) program with clear benefits,” Perrin says. “The AQC was also ahead of trends in recognizing the need for integrated care, addressing medical, behavioral and social determinants. Further, the structure of the AQC is one that does not require regulatory or legislative actions, so it can be adopted by other health plans and health systems with relative ease.”
2. Hospital Readmissions Reduction Program
The CMS Hospital Readmissions Reduction Program is a Medicare value-based program focused on reducing post-discharge readmission rates. Started in 2012 as part of the ACA, the program imposes financial penalties on hospitals with higher-than-expected readmission rates. Last year, 2,583 of 3,129 hospitals, or 83%, were penalized under the program. The penalty, which varies with the readmission rate, is collected by lowering the Medicare payment to hospitals. According to Kaiser Health News, the lower payments will cost the hospitals, collectively, $563 million during the 2020 government fiscal year.
Hospitals have objected to the readmissions program. But John E. Morrone, a partner in the healthcare department of Frier Levitt, explains that the program is intended to connect reimbursement to quality hospital care, prudent discharge planning and better coordination of care with post-discharge providers. The program is limited to several condition and procedures, including acute myocardial infarction, chronic obstructive pulmonary disease, coronary artery bypass surgery and total knee and hip replacements. “Those diagnoses lend themselves to frequent readmission due to poor discharge planning and/or poor post-discharge compliance with drug regimen, physical therapy and behavior modification (such as diet and exercise),” says Morrone. Conversely, he notes, multidisciplinary programs, chronic care management and remote patient monitoring are effective approaches to those conditions and procedures.
Moreover, there is good evidence that some relatively straightforward interventions are associated with fewer readmissions. For example, heart failure patients who are prescribed an ACE inhibitor or an angiotensin receptor blocker when they are discharged from hospital have lower readmission rates than those who don’t get such a prescription.
3. Oncology Care Model and its successor, Oncology Care First
The Oncology Care Model (OCM) is CMS’ most important value-based care payment program in oncology, and it is scheduled to be followed in 2022 by a successor program, the Oncology Care First (OCF) Model. Started in 2016, OCM is a voluntary program that CMS says currently includes 138 practices, down from close to 200 several years ago, and 10 payers. As with many value-based payment arrangements, the practices participating in OCM can earn shared savings if they beat certain financial benchmarks; downside risk, which involves paying a penalty if spending exceeds the target but also a chance at greater shared savings, is an option. The participating practices are also paid a Monthly Enhanced Oncology Services (MEOS) payment of $160 per patient for care coordination and other “care transformation” improvements, such as giving patients around-the-clock access to a clinician who has ready access to their medical services and some patient navigation services.
OCF nudges oncology payment further along toward capitation by combining payment for evaluation and management services and drug administration with the MEOS payment into a single prospective payment. CMS incorporated some other changes into OCF that are generally seen as advantageous to oncology practices, such as considering adjustments for expensive new therapies on a cancer-by-cancer basis instead of grouping them together.
OCM has received mixed reviews, but an evaluation of its first three performance periods that came out in May was quite damning. It found that OCM showed no overall effect on per-episode payments (the modest $145 per-episode decrease was not statistically significant) and little evidence that the program incentives led to less low-value care (some combination of higher expense and poorer outcomes) and more high-value care (lower expense, better outcomes). Moreover, during the first two pay periods, OCM ended up costing the Medicare program money because the small decline in per-episode payment was offset by what it paid out in MEOS payments and performance-based bonuses for beating the financial benchmarks.
Christopher J. Kutner, a partner at New York State law firm Rivkin Radler who represents managed care organizations and physician groups, says commercial payers want to expand value-based models to better predict the cost of care. But he also points out claim systems were designed for fee-for-service reimbursement. “It’s a drastic change and challenging for payers and providers to operate on a bundled case rate or episodic payment structure.”
“Success hinges on oncologists being incentivized and enabled to deliver high-quality care alongside measurable cost savings,” Kutner adds. “Cancer care is extremely expensive, so I am encouraged that there are some emerging opportunities that stakeholders must examine in order to realize value in today’s oncology reimbursement models.”
4. CMS’ hypoglycemia measure
Between 30% to 40% of hospital inpatients (with or without diabetes) require insulin therapy during their stay. And despite its impact on health outcomes and the fact that it is largely preventable, hypoglycemia remains a very common occurrence. A study published by the Office of Inspector General shows that hypoglycemia is the third most common adverse drug event among Medicare patients.
Robby Booth, senior vice president of research and development and founder of Glytec, a company that sells insulin-dosing technology, says the new CMS hypoglycemia measure will gain a lot of buzz as the industry shifts more toward value-based care models.
“The program is designed to incentivize safer insulin management practices for hospitalized patients in order to reduce the incidence of insulin overdoses and hypoglycemia, which has a significant impact on the quality and cost of care,” Booth says. “The new CMS hypoglycemia measure (will) address these troubling statistics by incentivizing hospitals to implement clinical workflows that reduce the likelihood of hypoglycemia events.”
The measure hasn’t gone into effect yet, but it is in the final approval stages. The program is a stand-alone measure, but Booth expects that it will be followed up by another measure focused on hyperglycemia.
The program requires health systems to report severe hypoglycemia rates that are tied to a bonus payment. If the health systems don’t track the data, they lose the additional money.
“The agency will eventually use the collected data to establish a penalty for hospitals that report high levels of hypoglycemic events, which could add up to millions depending on the size of the health system,” Booth says.
Keith Loria, a regular contributor to Managed Healthcare Executive®, is a freelance writer based in the Washington, D.C., area.