The fee-for-service payment model for healthcare treatment may be withering, but there's little hard evidence that alternative payment models such as accountable care organizations will provide better care at a cheaper cost, experts agreed in a forum Wednesday convened by the Federal Trade Commission.
Chapin White, a senior policy researcher at the RAND Corp., pointed to the historic slowdown in Medicare costs as one of the most important trends in healthcare spending. But he also pointed out that the spending reductions have been achieved largely through rate cuts to providers rather than widespread adoption of risk-based payment systems. “ACOs are really tinkering on the edges of the big picture of Medicare spending,” White said.
The original crop of 32 Medicare ACOs–known as Pioneers–have achieved mixed success in terms of holding down costs and boosting quality. The CMS announced last year that Pioneer ACOs lowered Medicare spending by $817 million during the first two years of operations. But 13 of the original 32 ACOs have dropped out of the program after struggling to hold down costs and facing the prospect of having to pay back money to the federal government.
The Medicare Shared Savings Program—a broader test of accountable care launched in 2012 under the Affordable Care Act—added 89 additional participants in January. There are now more than 400 ACOs in that program providing coverage to roughly 7.2 million Medicare beneficiaries.
Last month, the CMS announced a goal to have half of fee-for-service Medicare paid under contracts with incentives to manage quality and reduce costs. ACOs are just one emerging form of such value-based payment models. Patient Centered Medical Homes and bundled payments are two other approaches intended to avoid rewarding providers for quantity of care instead of quality.
Kristen Miranda, vice president for strategic partnerships and innovation at Blue Shield California, said the changing payment landscape is resulting in some strange bedfellows. In particular, she cited the not-for-profit insurer's partnership with competitor Anthem Blue Cross to launch the $80 million California Integrated Data Exchange as evidence of unique collaborations aimed at creating a more efficient healthcare system.
“These are very wild and exciting times,” Miranda said. She argued that the traditional tools insurers have used for holding down costs—driving tough bargains with providers and limiting networks—aren't sufficient anymore. “What neither of those approaches does is to really get underneath the hood about what's driving healthcare costs,” Miranda said.
A couple of participants in the forum cited the need to make a change in Medicare payments that doesn't depend on overhauling reimbursement models. They argued that paying doctors more for services provided at hospitals than they get paid for the same care delivered in an office is driving up costs and driving consolidation. “The site-of-service differential has to go,” said Simeon Schwartz, CEO of New York's WESTMED Medical Group.
Michael Chernew, a healthcare policy expert at Harvard Medical School, cited another change that's helping to spur payment innovations: the fight over Medicare's sustainable growth-rate formula for paying doctors. The current patch for the SGR formula expires at the end of March, teeing up another fight over the issue on Capitol Hill, and lawmakers should be careful that the rates lawmakers adopt aren't so generous that providers have little incentive to adopt alternative models.
White pointed out that there have been movements away from the fee-for-service system in the past, but that they eventually stalled out. That means it's too early to tell whether the current movement toward value-based payments will result in permanent changes to the healthcare financing system. “They looked like they were heading to the sky,” White said of previous efforts, "and then they collapsed.”
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