HHS needs to overhaul its approach to value-based payment to ensure widespread practice transformation and rein in Medicare spending, according to a report by the Leonard Davis Institute of Health Economics at the University of Pennsylvania released Wednesday.
Experts said the agency needs a new strategy because providers and payers have been too slow to adopt value-based payment, especially arrangements that require providers to take on significant financial risk. In addition, most existing initiatives don't systematically lower healthcare spending or improve quality. According to the report, CMS must develop a clear vision for the future of value-based payment, simplify and align its models across payers and mandate participation in advanced payment models whenever possible. The agency should also make it easier for providers to take part in voluntary models, commit to longer-term contracts and make fee-for-service reimbursement less attractive for providers when mandatory participation isn't possible.
"The high costs of care with the impending insolvency of the Medicare trust fund, persistence of poor quality of care and health disparities along racial and socioeconomic lines and mixed success of alternative payment models indicate the need for a revamped vision for the 2020s," the report said.
While healthcare experts have made similar recommendations in recent years, the report takes things a step further by urging greater coordination of the federal government's efforts to move the healthcare system from volume- to value-based care. Former CMS Chief Innovation Officer Dr. Mai Pham, now CEO of the Institute for Exceptional Care and a co-author of the report, said that innovation isn't the sole responsibility of CMS' Center for Medicare and Medicaid Innovation, noting that most value-based payment activity occurs through the Medicare Shared Savings Program.
The report recommends that the federal government expand and create alternative payment models across markets and align payment policies across all public and private programs that get federal funding, including Medicare, Medicare Advantage, Medicaid, Medicaid managed care and ACA marketplace plans. HHS and CMS could further coordinate its more traditional payment policies with value-based payment initiatives, Pham said. She pointed to CMS' effort to rebalance pricing between primary care providers and specialists in its final physician fee schedule—provider groups beat back many of those changes after lobbying Congress for more Medicare money.
"There are a lot of levers that can be pulled," Pham said.
Experts recommended that CMS manage its entire portfolio of value-based payment models rather than look at each of them individually.
"The portfolio approach treats new payment models as a series of investments across APM programs, with specific allotments based on desired high-level goals, such as reducing per-beneficiary costs, improving value and addressing health equity," according to the report.
The new approach could help guard against shifting political goals, give providers more clarity about which value-based initiatives they should invest in and make it easier to judge the successes and failures of an alternative payment model or strategy.
It could also make sense to evaluate all value-based payment models together because some alternative payment models like Primary Care First may not save money, but could improve value, said LDI Executive Director Dr. Rachel Werner. It would also allow policymakers to examine how alternative payment models perform in the real world over the long term.
"It takes a long time to change behavior and healthcare delivery," she said.
The report also takes aim at health equity, an issue that policymakers have mostly avoided when it comes to value-based payment. Experts recommended that CMS promote equity with advanced payment models that prioritize reducing disparities and tie financial performance to health equity outcomes.
"We need to start measuring disparities in equity and holding providers accountable for it," Werner said.
CMS has promised to improve how it collects, tracks and reports data concerning health disparities and inequities, but that won't "magically translate" into changes in healthcare delivery, Pham said.
The report recommends that CMS include dedicated funding for populations with high social risk factors, improve how it measures and reports social risk factors, and develop health equity targets for accountable care organizations and other risk-bearing groups.