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Now a little more than halfway through 2016, it’s time to look at trends in the industry and how they will shape the relationships among stakeholders for the years to come.
Healthcare policy has long been a moving target, but it’s hard to remember a time when more change was cycling through the industry. Now, more than half a decade since the passing of the Affordable Care Act (ACA), the focus has shifted from expanding access to health insurance to reforming the delivery of healthcare.
In particular, policymakers have embarked on a series of experiments and initiatives to transition from the traditional fee-for-service (FFS) system to a payment-for-value delivery system, with key attention to cost containment and quality improvement.
SmithWe are in the first generation of pursuing approaches better than FFS, and expect the industry’s shift toward value-based care (VBC) to accelerate and continue to impact providers, patients, vendors, and payers in different ways.
Now a little more than halfway through 2016, we thought it would be a good time to look at trends in the industry and how they will shape the relationships among stakeholders for the years to come.
1. Technology will be increasingly important
It’s not really news to say that healthcare providers are looking for tools to inform their decision making. Such technology is essential to collect data for everything from clinical decision making to quality reporting for payment determination.
Predictive analytics hold power to look at past patients in order to select the best treatment for current patients. Automated database tools such as patient registries also hold promise to advance care by easing the reporting burden on physicians while still maintaining the collection of important data.
With certified EHR use now a requirement under several Medicare programs and the new MACRA rule, tools that can make reporting easier and support comprehensive analysis of large data sets will prove increasingly important for improving delivery and outcomes.
2. Physician support in risk agreements must increase
Simply setting up a VBC payment arrangement involves some level of upfront risk. However, there is increasing pressure for providers to move beyond one-sided risk bearing arrangements, in which they have the opportunity to share savings, to two-sided risk models in which they’re also at risk for losses.
MeltzerMany large payers are turning their attention to value-based payment models and risk-based contracts with their network providers. Accountable care organization (ACO) models, in which providers take responsibility for quality and cost of care for patients, are gaining momentum for private and public payers.
Looking to Medicare ACOs, CMS is increasing incentives for providers to transition from one-sided Track 1 models to Track 2, 3, and Next Generation models that put them on the line to repay losses, something we can expect to see more of with the implementation of MACRA in the next few years.
As two-sided risk bearing arrangements proliferate in the years to come, it’s crucial that they’re thoughtfully and judiciously designed to avoid intimidating the physicians they’re trying to attract. Putting physicians on the line for successes and losses holds promise for driving more efficient care delivery, but only if physicians can be engaged and supported.
3. Networks will continue to narrow
No longer is the focus on network size alone. Instead, the movement is toward trimming networks to hold fewer, but higher quality, providers. Fitting with the trend of providers bearing more risk, there’s tighter payer-provider collaboration that makes the push toward higher quality just as important for payers.
Increasingly, payers are using quality and cost-efficiency data to identify the best hospitals, post-acute care providers, and specialists to build their networks. The open network and the fragmented care that came with it is becoming a thing of the past. This new integrative approach could very well aid in the transition from rewarding more care under FFS to rewarding better care under a value-based system.
One thing that will be important to keep in mind as more networks are built around quality, is that cost reductions are coming from better outcomes rather than merely reduced rates.
4. End of the administration does not mean the end of reform
While we might expect the pace of regulatory reform to wane in the final months of the Obama presidency, it’s clear that this is no lame duck administration. With only six months left in his term, President Obama is continuing to try to make medicine more efficient and less expensive.
In his historic JAMA article, Obama called for a government-run insurance plan (a so-called “public option”), congressional action to rein in drug costs, and Medicaid expansion in the 19 states that have yet to do so under the ACA.
Though any of the three coming to fruition remains a political long shot, programs like the proposed Medicare Part B Drugs Payment Model, mandatory for 75% of the country, indicate the administration is not straying from policy reform.
Medicare’s first mandatory payment models went into effect earlier this year, and CMS is continuing the shift to value-based payments with the late July announcement of additional mandatory payments. Specially, CMS proposed mandatory payment models for heart attacks, bypass surgery, and hip and femur fractures, as well as continued refinements to the Comprehensive Care for Joint Replacements Model (CJR).
Where to go from here
The push from FFS to value-based payment systems has already garnered broad multi-stakeholder support and it is unlikely to reverse course. It’s important to keep in mind that provider education, engagement, and support will remain central to the successful implementation of such VBC arrangements.
Providers are tasked with adopting the numerous changes resulting from healthcare reform, which add data collection and reporting requirements for these new value-based arrangements to their duties of furnishing high-quality care.
Thus, VBC arrangements that add unnecessary complications will not gain sufficient provider support to be successfully implemented. At the same time, setting up these arrangements to simplify and align quality and payment programs across payers can alleviate the complexity of data collection at the point of care delivery.
Building closely managed and well integrated networks of high quality providers will continue to be essential. Skilled nursing facilities, large physician practices, and post-acute facilities should be thinking hard about these predictions and how they fit into the coming changes.
Erin Smith is the vice president of policy and government affairs at naviHealth, and an expert on payment and delivery innovation.
Jourdan Meltzer is a research associate at naviHealth, focusing on public policy and implementation in healthcare.