Health Plans Keep Focus on Value as HHS Backs Off Bundling, Payment Reform
Value-based reimbursement is now less of a focus for Medicare and Medicaid, but health plans will continue to carry the torch. The impact of their efforts may be diminished, however.

Value-based reimbursement is now less of a focus for Medicare and Medicaid, but health plans will continue to carry the torch. The impact of their efforts may be diminished, however.

Health plans are committed to moving toward more of a value-based strategy even though the Centers for Medicare & Medicaid Services is backing away from some key programs intended to encourage that approach, says an industry insider.

The government's retreat from those programs will make it more difficult for health plans to have significant impact on how care is delivered in the country, says Michael Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions (formerly the National Business Coalition on Health), a DC-based nonprofit that represents more than 12,000 purchasers employers and 41 million Americans.

CMS announced recently that it will abandon two bundled-payment models and cut down the number of providers required to participate in a third, saying providers wanted more input in the models' designs. Bundled-payment models are meant to incentivize quality care by paying hospitals essentially a lump sum for a particular type or episode of care, with the hospital taking the financial hit for cost overruns due to poor outcomes, readmissions, and errors.

CMS plans to cancel the Episode Payment Models and the Cardiac Rehabilitation incentive payment model, which were scheduled to begin on Jan. 1, 2018. In addition, the geographic mandatory participation areas for the Comprehensive Care for Joint Replacement, or CJR, model will be cut from 67 to 34 under the proposed rule.

In the remaining mandatory participation areas, hospitals with fewer than 20 joint replacements over three years will be excluded starting in February 2018, but they can voluntarily participate in the model if they so choose. Up to 470 hospitals are expected to continue to operate under the model, down from 800 if no changes were made.

"Medicare backing away from some of that is a step backwards, and hopefully a temporary one," Thompson says. "HHS, through Medicare and Medicaid, is one of the largest players in the system, accounting for more than half of all payments, and when they adopt this value-based approach it quickly sets a tone for the entire industry. With them backing away, we're back to where we were with many health plans trying to adopt a value-based approach but not having as much impact."

Each health plan can only impact a relatively small population of providers when compared to the influence of Medicare, Thompson notes.

"Health plans are moving away from the old silos of disease management to more of a total health approach that understands the multiple factors affecting an individual's health and guiding them in the right direction. Medicare's payment reform supported that and gave providers the right incentives, so now it will be up to health plans to carry that effort forward," Thompson says.

"I don't expect health plans to back down at all. Health plans will continue down that path but they won't have the same impact on changing the industry as we would see if everyone, including the biggest player in the market, was doing the same thing."

The loss of HHS dedication to value-based reimbursement will lead health plans to put even more emphasis on engaging consumers in optimal use of resources and achieving better outcomes, Thompson says.

"We're finding that some of the traditional approaches, those that were more passive in making resources and tools available and letting the consumer use them if they wanted to, are being replaced with more proactive services that engage consumers at the point of service," Thompson says.

"Some of those are being integrated into their call center activities because the plans are realizing that when people engage with their health plan they can be more effective if they understand these resources better, and then the health plan can guide them more effectively."