Hello, everyone. Thank you for joining today’s webinar, Medicare Payment Reform: Lessons Learned and Considerations for the Future. I am Sarah Dahs, President and CEO of the Alliance for Health Policy. For those who are not familiar with the Alliance, Welcome, We are a non partisan resource for the health policy community dedicated to advancing knowledge and understanding of health policy issues. The Alliance gratefully acknowledges Arnold Ventures for their support of today’s webinar.
And today, we’re pleased to have Erica Socker with us. She is the vice president of health care and payer reform at Arnold Ventures and she’s going to come on and provide some brief opening remarks. Erica, welcome.
Thank you, Sarah, and thank you to the Alliance for Health Policy Team for putting together this event. Welcome to everyone joining us virtually today.
For those of you who aren’t familiar with Arnold Ventures or philanthropy focused on addressing pressing domestic policy problems with evidence based solutions, our health policy work aims to make health care in America more affordable. And for us, that means more affordable for consumers, for businesses, and for taxpayers.
So, there is overwhelming evidence that we’re not getting sufficient value for the health care dollars that we’re spending.
one reason for this is that the typical way we pay for care does not support efficient care delivery.
The traditional fee for service payment system, where we pay pay the service, or by the procedure, creates incentives to provide more care, some of which is unnecessary, and to provide care and higher cost settings.
In some cases, this leads to higher healthcare costs.
But even beyond the cost implications, it also carries risks for patients, both potential health risks from inappropriate care, and also the risk of exposure to higher out of pocket costs.
Effective value based payments can help counter the incentives that are inherent in fee for service.
Typically, these models hold providers accountable for the total cost and quality of care.
For example, for a population of beneficiaries or for a particular clinical episode, these models have the potential to encourage providers to deliver care more efficiently.
We’ve made some progress transitioning from fee for service to value based payment, and, some models, such as Accountable Care Organizations, show real promise, we need to do more work to strengthen the most promising models and to increase their adoption throughout the health care system.
Today’s event will hopefully give you a sense of what we’ve learned about Alternative payment models over the past decade plus. And, in addition to that, I also hope that you’re able to walk away with some concrete ideas for how Federal policymakers can really help accelerate the transition To models that will constrain costs.
While also improving quality and equity. Both in Medicare but also systemwide.
And so, with that, I’ll turn it back to Sarah, so that we can get to our great group of panelists. Thank you.
Great. Thank you so much, Erica. And now we’ll go over some very quick housekeeping items, and then we’ll go ahead and introduce our panel. And you can remind, I want to remind everybody that you can join our conversation on Twitter, using the hashtag #AllHealthLive. Join our community at all health policy, as well as on Facebook and LinkedIn. We want you all to be active participants. So please, get your questions ready and send them in. At anytime throughout the broadcast, you’ll see a dashboard on the right-hand side of your web browser. There’s a speech bubble icon with a question mark. Go ahead and submit your questions there, as well as, if you have any tech issues that you’re experiencing, somebody will try to help you.
Be sure to check out our website, all health policy dot org, or you can find background materials, including a resource list and an expert lists. Should you have follow-up questions, as well as a recording of today’s webinar, and the slide deck that will be made available there soon. So now, the moment you’ve been waiting for, I am so pleased to be joined today by a truly esteemed group of experts. First, we have Jennifer Podulka, who’s a senior consultant at the National Healthcare Consulting Firm, Health Management Associates. Jennifer is a researcher, strategist, and policy advisor with extensive data analysis and project management expertise. Much of her work has focused on physician payment policy, Traditional Medicare, Medicare Advantage, Part D, CMS innovation models, as well as the broader healthcare system context for Medicare policy.
Next, I’m pleased to introduce doctor Michael Chernow, who is the letter, D Shafer, Professor of Health Care Policy, and the Director of Healthcare Markets and Regulation Lab at Harvard Medical School is also the chairman of MEDPAC. Doctor Chernow research examines several areas related to improving the health care system, including studies of novel benefit designs, Medicare Advantage, alternative payment models, low value care, and the causes and consequences of rising health care spending.
And finally, we’re so pleased to be joined today by doctor Mai Pham. Doctor Pham, is the President and Chief Executive Officer of the Institute for Exceptional Care, a new non-profit organization dedicated to helping people with intellectual developmental disabilities thrive. Doctor Chernow is a general internist, international health policy leader prior to the Institute for Exceptional Care. She was vice president at Anthem Inc, responsible for value based care initiatives. And prior to that, she served as the chief innovation officer at the Center for Medicare and Medicaid Innovation, where she was a founding official and the architect of Medicare’s foundational programs on accountable care organizations and primary care. So we have a fantastic lineup today. We’re going to launch today’s discussion by hearing from Jennifer Podulka. So Jennifer, let me turn it over to you to give us an overview of where we are with Medicare Payment reform and value based payment. Jennifer?
Thanks very much, Sarah. It’s a pleasure to join everyone today. And really looking forward to exploring where we’ve come on Medicare Payment Reform and where we’re going. I’m here to kick off on the where we’ve been. So if we could jump to the next slide, please.
And the next one after that, and I thought I would bore everyone right off the start with a bar chart. But the bar chart shows something really important about why Medicare is so interested in payment reform and why we’re here today. Let me orient you to what these data show.
First, the numbers about each bar indicate the average spending growth for that decade.
And you’ll note that of course, these growth numbers fluctuate a lot.
Decade to decade, the bars are really different, but that growth rate has always outpaced inflation, which brings us to our current predicament, where the Medicare Part A trust fund is projected to be depleted very soon.
We don’t know exactly when it will be 20 26, according to last year’s for these report, or perhaps 20 27, according to CBO’s most recent data. But it’s important to note that the other part of Medicare, not just a they don’t face the same newsworthy depletion date, but they do share and spending growth. It is exceeding funding sources and putting strains on taxpayers and the entire system.
Next system, type system, Next slide view.
Medicare, pretty much from the beginning, addressed spending growth through different ways that have really evolved over time. So, part of that high spending growth that we saw in the previous slide for the 19 eighties was rooted in how the Medicare system got started. It was enacted in 19 65 and underway the next year.
The program opted to adopt payment tools that were largely used by commercial insurance plans at the time.
This meant that hospitals were paid on the basis of their cost, and physicians were paid on the basis of their fees.
As one probably could have predicted, of course, of course, growth in food from this approach.
Then, in 19 83, Medicare adopted the inpatient prospective payment system to pay for hospital services.
The PPS basically pays a fixed per discharge rate for all services for a hospital stay, and this was revolutionary compared to paying based on cost.
In fact, the IPS launched additional payment system for outpatient hospital services, inpatient, psychiatric and rehab facilities, long-term care, hospital, home health, and others.
An innovation in prospective payment systems continues today.
The impact Act of 2014 required MEDPAC to study a unified post acute care payment system, which would pay a similar rate across all the different post acute care settings. And, in fact, the Commission voted in favor of this option in 20 16. We’re still waiting for that to be rolled out within the Medicare program.
The next big change occurred in 1992 when physician fees based on reported these were replaced with a new fee schedule. The fee schedules, essentially, again, a catalog of rate, in this case, for every single service that a clinician could provide and build a program for.
Then finally, the ACA passed in 2010, which included the culmination of new payment reforms, such as Medicare shared savings programs and accountable care organization organizations, and of course, it established the new Innovation Center.
Um, so we’re gonna start with the Medicare Shared Savings Program. It’s a voluntary opportunity for groups of physicians, hospitals, and other healthcare providers to come together to form Accountable Care Organizations, or ACOs. The first cohort of ACO’s actually got started in 20 12. So, the program has grown considerably since then and been operating for just under a decade.
Most recently, in 20 21, there are 477 MSSP ACOs.
I’m sorry, we have jumped the slide. If we could go back one slide, please.
And we’re missing, OK, never mind. Like missing. So I’ll make sure I get all the points in. Their 477 MSSP ACOs, that are being over 10 million beneficiaries.
That 10 million beneficiaries represent about 17% of total Medicare beneficiaries. But it’s actually greater, we look at just those who are in the traditional fee for service program.
Membership in MSSP ACOs account for about 40% of all beneficiaries who earned fee for service.
The various MSSP ACOs are spread throughout the country, but they’re not available in every market yet.
In 20 20 MSSP ACOs earn performance payments for shared savings that totaled two point three billion dollars. While saving the Medicare program one point nine billion dollars.
This made it the fourth consecutive year of net saving for Medicare.
So going back almost a decade, that means it did take several years. For MN SP to grow to be a success.
And part of the reason both for the success in the time it took us to get here is risk MSSP offers different participation track that allow ACOs to assume various levels of risk, Starting with one sided, where there’s an opportunity for shared savings, but no risk of shared law, living up to some fairly robust shared savings and shared law, or two sided risks.
Most recently, for 2010, two thirds of MSSP ACOs, shared savings with CMS, but this differed by rent. So those in the two sided risk arrangement, 88% shared risk, and those who were still doing sort of a one-sided, early risk model, only about half of those shared savings.
OK, we’re going to, now move to the next slide, which shows the four circles.
Thanks. And look at what the CMS Innovation Center has done, again, was established by the ACA.
And according to that statute, the Innovation Center is tasked with testing model to determine if they reduce spending without reducing quality of care, or improve quality of care, without increasing spending.
The Innovation Center has tested, or is, in, the process of testing 172 models that include Medicare.
I want to note that a lot of others, including CMS Report, a total number of 50 some odd modeled on ours is different, because the other groups report the count of models in aggregate, for two large efforts that awarded models to more than 100 applicants.
Those included the Healthcare Innovation Awards in the State Innovation Model, Collectively, those two efforts ran from 20 12 through 2019, and it included some really interesting models, such as the Medicare Diabetes Prevention Program, which successfully was introduced to the full Medicare program.
There were some additional healthcare innovation award models that both save money and improve quality, that have not been yet introduced to Medicare program nationwide.
Some of these focused on cancer care, care for patients with Alzheimer’s and dementia, and one focused on avoiding hospitalization for Medicare beneficiaries in long-term care settings.
In addition to the MDPP model, three other models so far has successfully either saved money or improved quality. At Home, Health value based Purchasing was just approved earlier this year.
Pioneer ACO were approved a few years ago, and elements of Pioneer ACO were included in one of the tracks for the Medicare Shared Savings Program, and then our fourth approved model, which is a mouthful.
It’s basically a prior authorization program for recurring non emergency ambulance services. It’s recently been improved, and it will be rolled out in the program from 20 21 through 2022.
It’s important to note that these four models tested some really different payment reform ideas, and all four of these ideas are now part of the traditional Medicare program.
Next slide, please.
Which brings us to where we are today.
Earlier this month, incoming CMS leadership published a healthcare blog, indicating some key takeaways from the past, such as their findings, that mandatory participation in financial incentives can help to ensure that meaningful provider participation really takes place in models.
And, second, they found that providers have reported finding it challenging to accept downside risk where they’re at risk for losses, if they do not have tools to enable and empower changes in care delivery.
The group also noted plans for the future of the Innovation Center, such as making equity for all beneficiaries, the centerpiece of every model and not separating it into individual models.
They also plan to focus on launching fewer models, taking to heart a recent recommendation from Medpac.
And then third, they acknowledge the burden of out of pocket costs and signaled their intent to look for ways to lower that cost burden.
Currently, there are 28 models underway. If we can jump to the next slide.
And these 28 models are arranged into seven categories that are assigned by the Innovation Center.
The seventh one is not shown here on the screen because it focuses on Medicaid and chip.
I’ve included examples under each of these and some of these models are pretty exciting. So, most recently, the bundled payments for care improvement advanced model, the first year evaluation results just came back and found cost saving.
This is particularly exciting because similar findings on savings weren’t found for the initial bitsy model. But with the Innovation Center has done is revised methodology for some initial models and come back with an advanced or two version. And we’re starting to see that approach payoff.
Um, I’ll also note the CJR model has been extended through 2024 and recently completed for a year of evaluation.
And then, if you look across on the screen, under primary care transformation, that’s right below on the screen for global and professional direct Contracting. This builds on elements of ACOs, even though it’s not in the accountable care category, and it offers some really significant flexibility to primary care practices, and other providers to tailored care to the unique needs of their patients.
In fact, on the other side of the screen, under new payment and service delivery, there’s a new model, Geographic Direct Contracting is currently on pause while it’s being reviewed It resumed with similar methodology.
This would actually introduced some truly transformative ideas into Medicare, where organizations would build on ACO concepts, to build organizations that take responsibility for all Part A and Part B spending for every Medicare beneficiary and a market who has an enrolled.
So I’ll leave you with this before I turn to my colleagues. These are some really exciting model happening across these ideas, categories and ideas in one category. Or at this point: cross fertilizing across other categories.
ACO concepts are built into models in multiple categories, and we look forward to seeing what those results are.
Pass to my next speaker, please.
Great, Jennifer. Thank you so much. That was phenomenal presentation, and we will get all of your slides up on our website, including the one that I apologize thought was missing. So now I’m please turn it over to doctor Michael Chernow.
Sarah, thank you so much. I’m thrilled to be here. As Jennifer’s talk illustrates I always learn a ton from being part of these panels. And so I’m thrilled to be here. I will just say, I’m speaking in my role as a professor, not in my role as a … chair.
So, keep that in mind. So, I’m going to talk about the future of APMs, largely in the context of Medicare, so, next slide.
Let me just talk about sort of broad motivation, and at least for me, the notion is that there’s a lot of inefficiencies in the Medicare program, and we know that from work on geographic variation, we know that, from work, on a low value care, and over use. I worry a lot about this going forward. There’s a lot of services. Let’s take telehealth, which is both very, very high value, but also has the potential to be overused in a range of ways. And we really struggle with how to manage telehealth in a fee for service payment model.
And there’s a lot of work on inefficient sites of care, site neuville type payment. Jennifer mentioned the post acute care work. If you listen to the Med Pac meeting coming up the end of this week, we also have more post acute care work thinking about like unifying models. It’s really hard to get a lot of this right in the way our silo fee for service fee schedules are set up. Next slide.
Um, again, because of these sort of siloed fee schedules, we find a lot of problems in use, and we think fee for service is sort of part of the reason why we see these inefficiencies. I would certainly say it’s not the only reason, but we deal with them in very clunky ways is a bunch of apps. If you look at post acute care policy, for example, of how long people can stay, how many sessions they can have, a bunch of other types of caps and other very clunky ways to deal with these efficiencies.
On the other thing I’ll point out, which is only one bullet point, but I really would like to emphasize, is: current policy calls for sub inflation growth in fee for service prices writ large.
So in the MACRA MIPS system, these are scheduled to grow below with inflation for the next set of decades, in for facilities, the ACA put in place to productivity adjustment, which has fees growing lower the input costs. So we’re very low fee trajectories in current law. And so the question is, can we develop payment models and encourage efficient care delivery and support the delivery system without increasing spending relative to where we are current law. Next slide.
Next slide. So I’m going to talk about alternative payment models. The basic theory is that efficiency, which is really the only way out of our fiscal conundrum, requires flexibility in how inputs are used. That’s a general economics points. If you were an Econ 101, someone will be talking about how do you blend labor and capital?
But broadly speaking, you become efficient when you use inputs more efficiently in the healthcare sector, services, inpatient, admissions, offices, if drug surgeries, diagnostic tests, all of those are inputs conceptually, and the output is actually health. So, the core challenge here is, can we set up payment models that encourages the flexibility, says, tubs to toot the use of these inputs, and allow providers to capture the gains from the efficiency?
So, an example would be if we can get rid of the needless diagnostic test or use a lower cost, but still high quality, post acute care settings. Can we mix and match those inputs to reduce spending the get same, or even better outputs? That’s sort of the goal.
So how we do that’s complicated, one of the biggest challenges, we deal with these, these, these deficiencies when they get generated. The question becomes, who’s gonna keep those savings? So I coined the term, in a previous thing I wrote, the waste is an asset. And so once the system becomes more efficient, how much of those savings go to the program? How much go to the providers that are generating those savings? How much goes to hospitals, physicians, primary care, doctor specialist. This is a big issue. And how one’s evaluating in front of the the politics around all of these different models. Next slide.
So medpac, last June at this June a few months ago, had a recommendation that the secretary should implement a more harmonized portfolio with fewer alternative payment models that are designed to work together to support the strategic objectives, are reducing spending and improving quality. The key insight is, Jennifer mentioned, there’s a lot of models, and the problem with them coming and going and being launched simultaneously is, it’s very hard to really engage the delivery system.
There’s a lot of effort that spent choosing, which models to join, there’s a lot of concerns, that, some of the savings that is generated in one model, get siphoned off and give them organization participating in another, Because there’s overlap, and how the, models work. If people are saying, in an episode based payment model, and the population based payment model, how does all of that work together? And the idea is, instead, to think about each model, and launching them, is, to think about launching them as sort of a broader portfolio of models. Because if you have three models, all evaluated against, say, placebo, essentially, fee for service, and you adopt that, all three, it’s not theory, the sum of all results. Another way that I tend to say, This is, we may want to let a thousand flowers bloom. We don’t want to plan all the flowers the same hole. And so, thinking about them as a group of models, and collect a payment system, I think is important. Next, slide.
So the idea, again, is to develop models in a way that thinks about them together. As opposed to developing the diffusing them in a way that is isolated. Think about how the models, financial incentives, are complimentary with each other and they don’t become diluted when combined. So for example, if you give all of the post acute savings to a model focused focused on post acute care, you’re siphoning those savings away from population based payment models. Whether you want to do that is unclear, depends on the specifics, except you certainly need to be cognizant of that problem.
And to the extent possible, the models could have more consistent features, how we set the spending targets, how would you attribution, and a bunch of things like that.
And we’re going to be working, again, I’m speaking as a professor, But just so your audience knows, we will be working this cycle, embed pack, to think through a lot of these issues. So I encourage people to join. Next slide.
So here’s one parcel vision. I will emphasize again, this is a Michael version, it is not something necessarily advocating. It is just one possible way that this might all play out, so you can envision a multi track APM model with low risk programs for small physician group, think CPC, Plus, Jennifer mentioned, some of those, you could think of high risk models for larger groups, the next Gen or direct contracting, global things that fit your groups can be part of and tracks in-between. They don’t all need to have downside risk, so we can discuss the role the downside risk plays. Jennifer mentioned the importance of that of her talk. Episodes are unbelievably important things to be added strategically to these existing set of models or to the APM models. So in lower risk tracks, I think there’s going to be a heavy reliance on episodes, in some of the higher risk tracks.
You might allow the episodes to the added where I would call under the waterline where the organization taking population based risks can develop their own episode models and work with the organizations that they’re aligned with.
Um, I think we need to think a lot about participation incentives.
Jennifer mentioned the blog from the CMS leadership. Strong participation incentives are important. That’s my work. I’m not gonna go so far as to say mandatory, but in any case, it’s particularly important for high risk tracks. I think in the benchmark setting, processes supported to remove the ratchet effect, which is the tendency to have benchmarks in the future go down if you’re successful in the past. And I think you can do that through some administrative mechanisms and how benchmarks are set. But, again, this is very much up for discussion. There’s a lot of details that require refinement, how we deal with risk adjustment. How we deal with attribution, how we deal with composition of ACOs, or even episode who’s taking risk.
There’s a lot of nuances to actually how these things work that have to be built out. And, again, equity is a fundamental objective of how we do this. And I think you can deal with that through benchmark policy, risk adjustment issues, and performance metrics. And I think we have a long way to go, to make sure that as we move on this journey, we not only create a fiscally sustainable health care system. Do we make sure that we promote quality access and equity for all? And certainly, we’re going to keep those goals front and center in the med tech discussions. And I think in where we’re going. So I think that is my last slide. Let’s see if I have any concluding slide.
There you go, That’s the end, so I’m going to turn it over now, I think, tomorrow.
Thank you so much, Michael. That was, that was great. And my, let’s hear from you.
Thanks for joining.
Thanks, Sarah. Thanks, Jennifer and Michael for the tee up, so I’m batting cleanup, and I think it was my job to talk with you a little bit about blue Sky, which Michael touched on. But also really to call to your attention issues that are on the margins, historically of value based payment discussions that I think really need to be more centralized.
Let’s start by talking about disparities. Think it’s a it’s become a bit facile for us as commentators, as policymakers to ask demand that program directors take into account health disparities and how to reduce them. But you have to be confident in the mechanisms that you use to approach this problem. And to begin with you need to kind of level set on what you mean by health disparities and what your focus areas really are. So let’s make sure that between the legislative bodies, the executive branch and, and those working on the problems in the marketplace, that there’s some agreement on what domains of health disparities we’re talking about.
Whether it’s the intersections with race, ethnicity, disability, rural location, or other factors. It’s really important to level set on that, because that will drive how you think about the resources you’re going to need to bring to bear and the metrics that you think about and the goals that you set. So, it’s also important to recognize that, especially for racial ethnic disparities, there are several sources of disparities, right?
There is, for example, what happens when a given provider treats different patients and different subgroups differently.
I refer to that as within provider disparities. This is where the concept of having concordance between the race, ethnicity of the clinician, and the patient, may lead to better outcomes. That is, that is where that comes into play. It comes into play in terms of language access, for example, and other factors. And how you address that is, you can actually measure the within provider variation in quality performance. And those kinds of performance metrics really focus attention on the within provider sources of disparities.
However, we all know that there are other sources of disparities that don’t have to do with how a given provider behaves, but rather, to do with differences in the structural components of care delivery that happen for different subgroups and communities.
So, health care like education like housing, is physically segregated. In Medicare, something like fewer than 10% of the primary care physicians care for over 80% of black Medicare beneficiaries. So, care is quite segregated at baseline if that’s the case. Then, what we’re looking for when we try to address structural sources of disparities are those factors that vary by location and by type of provider.
And so, when you, when you try to address those, then what you want to reach for are not performance metrics, right? Because, not to pick on, on mass general, but at Mass General, they could do great on the within provider performance metrics, but it doesn’t, it doesn’t solve the issues that they get much higher fees than, you know, clinics in rural Massachusetts. So, when you want to address structural source of disparities, you have to turn to what I think of as pricing tools, right? And that’s really, things, like how you set the spending benchmarks, how you do risk adjustment to percent of savings that you offer, an ACO, or primary care group.
The types of factors that affect the dollars per beneficiary that a clinical organization could stand to earn, that acknowledges geographic and other types of segregation. And the disparities in the resources available to a given provider organization based on their payer mix, right. If you’re in a wealthy suburb, you’ve got lots of commercial insurance and a lot more resources with which to hire extra nurse care managers, even if they spill over into your Medicare work. So, so, just keeping in mind that it’s important to explicitly address within and between provider disparities.
And then it’s important to remember that health disparities are driven really, much more so by non clinical factors than by clinical factors. And that doesn’t take away from the, I think, appropriateness of holding healthcare providers accountable for health disparities, even when they have to reach out and think about how to find partners to address those non clinical aspects of living. But it is an opportunity within value based payment to acknowledge those factors, the social drivers of health, and do, and to do so with policy levers that are completely within CMS and other payers, Mill you and authority to do CMS in particular.
You know, MA plans already have the flexibility to offer in lieu of services through their supplemental benefits, but they don’t have a huge incentive to do so. And, and making that expectation more explicit would be helpful. And it would be helpful to offer.
Traditional Medicare, ACOs, those kinds of flexibilities as well.
Making it easier regulatory wise to have to encourage both public and private investment and community infrastructure, things like addressing food deserts, things like having safety nets so that people don’t become socially isolated. Social isolation is a stronger predictor of hospitalization than cardiac status, for example.
And most importantly, the, the upper level level of co-ordination it would take across federal government to really think through creative ways to allow communities, these solutions to address non clinical social drivers of health really have to be community specific. But allowing those communities to blend and braid various financing and payment streams would open up a lot more possibilities.
Then, not least, it’s important to acknowledge that, you know, we think that this is important to do, but we don’t yet have a super strong evidence base about the quantitative return on investment. We might be able to expect, we see it happening in other countries that spend more on social services than health than, than we do and less on health care than we do that. That they
have a healthier population.
But it’s a matter of documenting that here and pricing it and figuring out what that Connect dot looks like. That is a perfect role for the Innovation Center. But it does, it does start to come into conflict a little bit with CMMI’s current statutory authority, which is really focused on generating models with the potential to save or improve quality. It’s a question of how that’s interpreted. It may also be a question of whether CMMI needs more statutory flexibility to really take that into account?
So then switching from talking about disparities to talking about multi payer momentum, why is this important?
Well, you know, if you’re a clinical organization, and Medicare is making a whole lot of noise, yes, you’ll pay attention because that’s 30% of your book of business.
On the other hand, it’s just 30% of your book of business.
And that will limit the degree of risk that you’re willing to take on. And the degree to which you’re really willing to actually change your underlying business model from one that generates volume to one that generates value. So, that multi payer momentum is really, really critical for giving a sense of inevitability, but also allowing the CFOs that these organizations to, you know, with, to abandon the ambivalence. They have currently about thinking about their investments in terms of generating value. Well, how do you do that?
First of all, federal government is not just Medicare, and I think it’s, it’s been easy for us to forget that it’s not easy to co-ordinate across departments, but federal government finances, a ton of healthcare through other means that could be much more co-ordinated and the way they approach value based payment. I’m talking about the a A, sorry ACA exchanges about Tricare FEHBP, even HRSA, and ACL, which don’t mostly don’t pay directly for health care services. They have roles to play, especially in addressing social drivers of health, and in terms of workforce issues for disadvantaged populations, like rural areas, there, could be a lot more co-ordination across the federal health programs.
And then secondly, it’s important when you’re thinking about engage in commercial payers, in this work, in partnership with, with public payers, that you acknowledge their realities, OK, value based payment contract and works differently in private markets. It’s very difficult to, to issue mandatory value based payment contracts, unless you are, even sometimes if you’re a local blues plan with 80% market share, it’s difficult to make that mandatory. Why? Because there will always be providers, and the vast majority of markets with must have status. And you can’t function, as a health plan. You can’t offer a plan network that doesn’t include that major academic center or that major hospital system, which means that providers really have the upper hand for the most part. And so these value based payment contracts, while they do exist, and they continue to grow in the commercial markets. It’s not uncommon for them to be held hostage to rate negotiations.
So the same providers who are touting their value based care credentials are also negotiating very aggressively for increases in their fee for service rates with private payers, such that in some cases, that price growth can actually outstrip any savings they generate from lowering utilization.
And so, we want to be cognizant of dynamics like that, when we do things at the federal level. Like setting HHS goals for increasing the percent percentage of spend from a private payer, that flows to a value based payment contracts. Well, if you set that at 75%, that’s telling the payer, well, if I want to meet that, essentially, you know, public relations goal, I have to be willing to pay whatever the provider wants in order to get them to be willing to sign this value based payment contract. It also means that I may be signing value based payment contracts with providers who are incapable of doing value based care, and therefore I’m diluting the impact of my own program.
So, know, we have to be cognizant of the differences in these market dynamics, when we make policy, so that we’re not sending counter-productive signals, and then lastly, I want to make a pitch for true collaboration. It is to reflects for government to often say, here, we’ve designed this thing now, private payers would you like to join us. That is not a collaboration.
A collaboration is co designing something with your partners. A collaboration is giving them agency and how they participate, and the timing and acknowledging that they have operations to move, They have hardware and software to move and contracts to change, that are at least as complicated as those at CMS have to move. That doesn’t always happen consistently, and I’ve seen it work, and I’ve seen it not work and I think that if, if CMS is really serious about multi payer collaborations, they have to make the investment and the relationships.
So, um, I wanted to also dive a little bit deeper into some of those market dynamics and explain why it’s often frustrating for me to listen to conversations that are binary, value based payment works, value based payment doesn’t. First of all, you know, if we haven’t fixed the underlying prices in fee for service, if that’s on us, that’s not the fault of value based payment models. But, also, because there are so many more dynamics that play into how effective a value based payment program is. one of those things is just the market, leverage that, a small, but important number of large providers have, How does this work?
Well, for one thing, it makes the status quo of volume based payment, much too attractive.
They can garner very high rates, commercially and and Medicare has done very little to make fee for service unattractive for them. So there’s a ton of inertia, and you’ve seen that even through almost 18 months or more of the pandemic now. And with intermittent shutdowns, there’s still a ton of inertia. No one is divesting from bricks and mortar, even as they invest in more digital options. Why? Because there’s this belief that health care prices won’t go down ever, at least, not for them, the most powerful providers. And so they can continue to have to keep that as the backbone of their revenue engine is fee for service.
Then, these must have providers have an an awful lot of resistance to a lot of things that would make value based payment more effective want. And that’s because they have the power of reputation. They are a big employer, and whatever market they serve, and so they have huge political clout. They have, they are a network provider there must have network provider, and they get those high revenues from negotiate a commercial prices. Well, those commercial prices are not siloed. From impact and Medicare, They exert continual upward pressure on Medicare prices. Why? Because the providers can point to their high commercial prices and say, See, the delta between private and public is so huge. Medicare, you have to catch up when, in fact, it’s an artificial delta, because they negotiated those prices themselves at a price point that they liked.
And so because of these dynamics, they have very little incentive to participate and voluntary value based payment models.
They’re sitting happy and high on the hog and that in competency more generally dampens competition, it means that new entrants, new providers who have more efficient, lower cost operating models have a really hard time going to the marketplace. They can enter but they almost inevitably end up having to partner with these big guys and use us dilute the impact that they could potentially have. For example, imagine we don’t have it yet. But imagine a group of providers that got together and said, You know what?
We can offer a payer data default for hospitalization as hospital in the home, not in a big building with ginormous overhead that we can offer virtual or on-site primary care. That’s digitally enabled. Don’t require offices for that either. That, you know, we’re using a different staffing structure, and our salaries are different, and so on, and so on and so on.
It would be almost impossible for that organization to arrive in a marketplace and get the kind of patient volume they need. Why? Because the incumbents are so powerful.
So, how can we, what does this look like to acknowledge these market dynamics and value based payment models? Well, especially if, if it’s CMS, there is the opportunity to execute on more mandatory models, especially ones that have a particular focus on these high priced high cost providers and rapidly move them to downside risk.
They can afford it, they can learn how to do it, just like everybody else did.
They’ve just not been given the motivation. I won’t talk about making fee for service less attractive here because that is a whole other hour and Michael and I can get quite agitated about that. But, um, but I will point out that there’s also an opportunity to create explicit incentives for use of lower cost care models like virtual and in home services. And to favor those new market entrants. For example, through beneficiary incentives to select them to Jan more generous financial benchmarks. I don’t mean more generous that Medicare ends up losing money but more generous than for regular ACO’s and also to offer population based payments for bundles of lower cost services. So as Michael alluded to, may be problematic to offer to pay for Telehealth Fee for service ad infinitum, but perhaps to bundle things like, you know, low effort, telehealth plus.
Primary care in the home, plus, et cetera, et cetera, et cetera. And in an effective and efficient way.
So I, I think that’s the end of my slides. I just wanted to tease you a little bit with this set of issues.
And, um, encourage you to think beyond the pain of, of picture, that is just Medicare, when Medicare, and makes decisions. They have broad ripple effects throughout the industry, and vice versa, the industry’s dynamics have ripple effects on Medicare. And it’s important to keep those dynamics in mind when designing value based payment programs, if we want to optimize how effective they are.
Thank you so much. My, and I’m going to invite everybody else to come back on for some Q and A We have about 15 minutes. And please, go ahead and submit your questions if you’re in the audience, through the, the, the Q&A button. And we’ll get those to you by. you did a phenomenal job, sort of bringing us into some of the reality of, like, moving from the vision and value based payment to how it actually impacts the delivery system and what all of those different dynamics look like.
And what I wanted to do is open up to Michael and Jennifer to also ask if you have any comments about, you know, like, we kind of sometimes use these terms interchangeably. Like, payment reform, value based payment, value based care, delivery system reform, and, like, do you have comment on, how do you make sort of, the idea? into a reality?
And like, what, what have you seen, works and what doesn’t?
I told you want to start, that’s a broad question.
I’m not sure how much you want me to talk about the term, but I’ll say quickly, I’m not a huge fan of the term value based payment, for a range of reasons, I do think there’s a value component inequality component, I think most of what’s going on in this phase, um, is alternative payment models that allow more flexibility and more control for the delivery system. So, I prefer the term alternative Payment Models.
Of course, that incorporates a value component, the quality measure component, I think that matters in terms of what I think has been successful.
Jennifer went through some of the CMS results. I’ll say something broader about patients. These are extremely difficult.
So it is important, when you see the results official or otherwise, to understand how they fit into context, particularly what the alternative comparison group was. Increasingly, there’s a lot of alternative payment in the control groups. So you’re comparing the treatment group to models that have some alternative payment in them.
But that part aside, I think the evidence on population based payment models think ACOs is broadly positive, although not overwhelming in magnitude. And I think we can do a lot better on the population based payment side in terms of program design. I think, by and large, my joke is if someone promises you a dollar and gives you a dime, take the data.
Hopefully, it will grow. I think, again, as Jennifer mentioned, there’s been a lot of success in some of the episode based payment models, but you have to understand, it very much depends on the episode.
So, making a statement. like …
works, just fine thing to make, but understand that, that is not necessarily uniform across all of the episodes. And so understanding the details of that matter.
The advanced primary care models are unbelievably important because of the importance of primary care writ large, but I think the general results for those models have been less success with a macro sense, and then there’s a ton. I won’t go through all of them. I will call much more targeted models around specific conditions, for example.
And one of the challenges harmonization is how those specific condition models fit in with broader population based models. And that, I think, really gets to the heart of some of the themes of harmonization that I talked to earlier.
I think thanks, Michael. And by the way, for those in the audience who are pretty new to all of these terms, the alliance has some resources that are on our website, including some glossaries and some other other resources that might be helpful to you. To Jennifer. I mean, as you looked, you know, to these four models that, you know, what, What work?
You mentioned, risk like what were some of the core elements of models that work? were there any common alum and elements in common? Or, you know, did they start differ by model?
That’s a really good point and I think the finding that mandatory risk, and two sided risk or mentored patient risk poses some sort of advantage to increasing the likelihood of a model being found successful is sort of somewhat of a newer finding. And some of the elements included in the four models that have been approved so far, really don’t incorporate some of the more recent lesson. So, all four models are really different. And they did not all require mandatory. They definitely did not require two sided risk.
So that goes to show, CMMI have a lot of characteristics, an idea to work through.
And right now, we know some of the things that seem to tend to work better, but we don’t have a perfect recipe thing.
These are the things we’ve tried, and we’d roll them out completely. And these are the things. We’re just going to keep replicating in every model.
Yeah, and my, you mentioned mandatory participation in the models, Michael, you were, you know, not sort of advocating necessarily one or the other, I mean, This wouldn’t be America. If we didn’t have a conversation about mandatory versus voluntary, like how can you give us a sense, you know, especially for those who are new or, like?
What does that look like? What is at stake for these?
You know, whether it be bigger health systems or smaller providers? like, what are the different considerations that that policymakers are thinking about and contemplating as they think about mandatory versus voluntary?
Yeah, so this is where I share that.
I walk around with a taxonomy of providers in my head in my head that they fall into at least five categories, and then there’s one that, or four categories, and there’s, there’s one crosscutting issue that sits on top. one, You’ve got the true believers, right? That the organizations that are going to do, they’ve been doing value based care since before. There were ACOs, and they don’t know any other way to live. I would put Montefiore in into that bucket. Then you’ve got the early adopters who are Adventuresome. They’ll, they’ll try it, but they’re extremely empirical. They’ll try it, and they’ll do it for as long as it works as soon as it stops working for them financially, they’ll stop.
I would put my older pulmonologist brother into that bucket Right. And I would put a good number of ACOs into that bucket, as well.
Then there are the laggards there are less adventuresome, but if they see their peers doing it and they see that their peers are doing OK, they’ll gingerly step. And they’re not unwilling. They’re just more cautious by nature. And then you’ve got the never, ever. Right. So, that that is the group where I think many of them must have provider. So now you’ve got some also got some must have providers who are early adopters. They want that reputational lift of looking like an early adopter, but underneath there paddling like a duck, really, really hard on fee for service. So it’s all a wash, right?
Those are, at least some of the taxonomies.
and I think that policy can’t treat providers with a one size fits all approach, right? For true believers, Early adopters you can off, you can afford to offer. Somewhat more generous financial terms, because they are the market leaders. They are the ones that everyone else is watching. If they fail, you will lose a lot of momentum, right? For the laggards, maybe you need, you know, a different set of incentives and a gentle nudge like MACRA or QPP, or whatever.
But for those laggards, I don’t see anything moving them except mandatory models and so, while politically, we can argue about whether it’s politically harder or easier to target mandatory models at a subset of providers.
No, operationally speaking, those are the ones who need the mandatory models the most, if they are to be a constructive part of this care delivery system.
Having said all that, I also want to make a point with regards to, this ties to your question about what’s worked and what’s not is.
I think sometimes we forget that we don’t need to get savings from every part of the care delivery system.
I think sometimes we forget that there are parts of the care delivery system that we have grossly under invested in.
And those parts of the care delivery system, we should not be trying to get savings from there. There’s not a lot of room in the innovation centers statute right now that allows it the flexibility to make those types of changes. This is why, I think the advanced primary care models have not done as well on paper, because that is not a piece of the delivery system that we should be trying to get net savings from.
We actually need to invest more in primary care, right? And I, I would put rule health care in that bucket as well. So, I think we need to take a step back and not think of these bits of the system is in silos, but rather, what is this the overall system that we need? Where are the net investments where the net savings to come from and be more deliberate in that sense and not hold every part of the system to the same standard?
Thank you, and we did have a Twitter question come in about whether CMMI would need, you know, new statutory authority to better incorporate social determinants of health. And I thank you. You touched on that in your presentation, and, you know, I guess, it sounds like the answer is maybe that I think they do. I think it’s, I think the Office of General Counsel is always very nervous about allowing CMMI to waive that, part of the Social Security Act that says, Medicare will make payments only for clinical services.
That’s a very touchy piece of statute for them to waves. And, and, I think also, you know, giving that flexibility, more explicit flexibility to spend Medicare dollars on that is, is the thing. But they also need flexibility. Maybe, I completely understand why legislators would want CMMI geared toward generating savings. But maybe they don’t need to spend all of their money doing that. Maybe there’s a portion of their appropriation that can be spent on making net new investments or unjust, you know, building other system infrastructure that would facilitate the generation of savings and other models, like better risk adjustment, for example. So, I do think that there could be opportunity to revisit some of the statute.
Great, Thanks. Thanks, my, and, Michael, you had wanted to weigh in, and I also wanted to ask you this audience question, which was around, you know, how much, if at all, do you think the APM’s that are being tested, will play a role in extending, you know, the solvency of the party trust fund? What, if any impact? Do you think that’ll have? And I recognize two, or we’re coming up on one o’clock, and we’re gonna stop right at one. So, if you could briefly comment on that. We appreciate that. The trust fund is a challenging issue, because it’s only one part of Medicare. Let’s do the broader question of solving medical problem. Understand that. Wow. There’s a lot of pricing improve, as we can do in Medicare.
The big picture, Medicare has an efficiency problem, not a pricing problem.
Prices are set to rise below inflation, and so, finding solutions will require finding efficiencies that’s going to be some version of things we do in Medicare Advantage, and other changes we make in the Medicare traditional model to get efficiencies. I believe APMs are an important part of that, but we have a ways to go to design the right APMs.
Great, thank you so much, Jennifer. Let me turn the final question to you. You know, we’ve talked a lot about the different goals, right? A value based payment, whether it be increasing affordability. You know, slowing, spending, and improving quality advancing equity.
As you have studied the breadth of these models, do you think there are any existing, or, like, new ideas that can help to achieve all three of those goals within the construct?
And I mean, I know that’s a huge question, But do you have thoughts about how to how, how policymakers, practitioners could think about addressing all of this? Kind of a You know, we talk to you. Just talk about the Triple Aim than the Quadruple Aim with clinician burnout. Now it’s like, you know, bringing the equity component and as well.
Yes, I do, actually. And I want to note, you know, question raised the issue of all the acronyms in the lexicon that we’re using. Very high level and yet underneath all of these elements, quality of care, and accountable care and payment savings.
So many nuances and ideas. And when you go look at what’s happening at the Innovation Center, each of these models is subject to an independent evaluation. Or an outside group comes in. Here’s what happens in the CMMI model compared to the control group. And there’s hundreds or thousands of pages of tremendous detail. So we’re not using quality improved. But they’re talking about what really improved for beneficiaries who may not have to go back to the hot, fluid time. Were they able to stay in their long-term care facility and bounce back and forth? There’s not an element of equality. Addressing equity and social determinants of health is a newer idea, incoming leadership who ignore their commitment to it.
I would expect to see the start showing up in all elements are modeled, provider selection beneficiary, attribution measured, And then eventually it’s going to start showing up an evaluation in great detail information. We have about all of these models to policymakers need a little help digesting that putting up some high level electric terminology.
Really interesting briefings.
Great. Thank you so much. So, unfortunately, we’re running up to the end of our time. I think we could go another hour to three hours with questions and we got some great audience questions. And I would encourage you, to the extent you have specific questions for our panelists, you know, they’ve graciously shared their their contact information on our expert list. There are other experts out there that you can contact, as well as on our resource list. Feel free to reach out to the alliance to if we can be helpful. So, once again, thank you so much, Doctor Pham, doctor Michael turn it over to Jennifer Podulka for a really enlightening and comprehensive conversation. I think this is just the beginning of, of many more.
Thanks, Arnold Ventures for your support. And please, if you’re in our audience, go ahead and fill out that evaluation survey. Quality Matters, and it matters to us. And we use your input on planning our future programming. So with that, I want to thank everybody for joining us. Please join us September 15th and 16th for our Health Equity Summit. We have a really exciting lineup including Administrator Bookstall Ashore, who will be joining for for a fireside chat with us. So, join us for that. And with that, hope everyone has a great afternoon or rest of your morning, if you’re on the West Coast.
Thank you. Thanks. Bye.