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Changes in healthcare payment bc of vbp

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It is also conceivable that cost considerations could influence other domains. Providers have one foot in a canoe that is operating in the traditional volume-based system that incentivizes providing more frequent and more expensive care while the other foot is attempting to occupy a canoe operating in a value-based environment where there are efforts to constrain costs and reduce care that has little to no marginal benefit As long as payment systems deploy diverging incentives with low persistence and high volatility, then health systems and providers will have a difficult time investing in community benefit and population health management.

The findings this study coupled to the lack of a significant relationship between improvements and VBP adjustments 33 seem to support the diverging incentives put forth by others. Providers and facilities may make significant investments of time and money to improve the health and well-being of the communities they serve and those benefits do not necessarily accrue to the investing providers. Efforts may be effective and even result in fewer patient visits or reduced facility occupancy, which has a negative impact on the bottom line.

Not only is the healthcare provider incurring community benefit expenses, but they are also negatively impacted by a reduction of volume and frequency. It is also possible that the benefits of population health initiatives accrue to competing or nearby providers that did not make the investment.

In cases of a shared-savings program, the reduction in volume may be offset by payouts from the program. The programs themselves transfer significant health status probability of falling ill and needing care and medical care cost of providing care risk without an associated risk premium.

Of the 32 pioneer ACOs that pursued shared savings program with CMS, only 8 remain with only 6 receiving a positive payout at an average rate of 1. There appears to be a mismatch between the upside of these programs and the risk being borne. Even for providers who earn them, VBP payments are not consistent, leaving organizations unable to plan on receiving them over time, thereby hampering strategic planning and future investment decisions.

Moving forward, additional research on the relationships between hospital characteristics and quality metrics should be investigated. Specific and additional attention should be paid to the impact of cost control metrics MSPB and patient satisfaction, adherence to clinical guidelines, and outcomes.

An alternative method of improving safety and quality may include a more targeted approach that sets facility-specific performance targets What this means is that facilities may make investments in population health or value-based care but not realize any downstream payments from CMS. The resulting volatility of cash flows discourages investments to improve population, community health, and value metrics.

The datasets generated for this study may be made available upon request to the corresponding author. All authors listed have made a substantial, direct and intellectual contribution to the work, and approved it for publication. The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

The domains largely remain the same with slight nomenclature changes. The number of metrics within those domains has been reduced to 20 and includes: catheter-associated urinary tract infection, central line-associated blood stream infection, C. In , the impact of each of the four domains on the hospital VBP adjustment is equally weighted. CMS, c. National Health Expenditure Data.

Google Scholar. Available online at: www. Canada GO. What is the Population Health Approach. PubMed Abstract. Kindig D, Stoddart G. What is population health? Am J Public Health. McAlearney AS. Geneva: WHO Better Care.

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Health Aff. Is there a relationship between value-based purchasing and hospital profitability? An exploratory study of Missouri hospitals.

Lamont O. Cash flow and investment: evidence from internal capital markets. J Finance. Minton BA, Schrand C. The impact of cash flow volatility on discretionary investment and the costs of debt and equity financing. J Financ Econ. Upstream volatility in the supply chain: the machine tool industry as a case study. Prod Operat Manag. Anthony JH, Ramesh K. Association between accounting performance measures and stock prices: a test of the life cycle hypothesis.

J Account Econ. Kormendi R, Lipe R. Earnings innovations, earnings persistence, and stock returns. J Business. Accrual reliability, earnings persistence and stock prices. J Account Econom. Costs of equity and earnings attributes. Account Rev. Sloan RG.

Do stock prices fully reflect information in accruals and cash flows about future earnings? Effects of pay for performance in health care: a systematic review of systematic reviews.

Health Policy. The long-term effect of premier pay for performance on patient outcomes. N Engl J Med. Public reporting and pay for performance in hospital quality improvement. Pay-for-performance in nursing homes.

Health Care Financ Rev. PubMed Abstract Google Scholar. Physician financial incentives in managed care. Dis Manag Health Outcomes. Systematic review: effects, design choices, and context of pay-for-performance in health care.

Assessing Medicare's hospital pay-for-performance programs and whether they are achieving their goals. US Government Accountability Office. Adding a spending metric to medicare's value-based purchasing program rewarded low-quality hospitals.

Health Affairs. The relationship between hospital value-based purchasing program scores and hospital bond ratings.

J Healthcare Manag. Hospital value-based purchasing performance: do organizational and market characteristics matter? Hospital value-based purchasing and trauma-certified hospital performance. J Healthcare Quality. Robustness issues in multilevel regression analysis. Stat Neerl. Miller HD. Making value-based payment work for academic health centers. Acad Med. The business case for population health management. Prim Care. Morse S. Unruh L, Hofler R. Predictors of gaps in patient safety and quality in U.

Health Serv Res. Keywords: value-based payment, population health, community benefit, healthcare financing, payment methodologies. Public Health The use, distribution or reproduction in other forums is permitted, provided the original author s and the copyright owner s are credited and that the original publication in this journal is cited, in accordance with accepted academic practice.

No use, distribution or reproduction is permitted which does not comply with these terms. Check for updates. Ensuring adequate risk adjustment and accounting for differences in underlying patient populations are important design principles to consider when developing metrics so that hospitals are motivated to provide better care, not avoid patients with clinically complex conditions or who are economically less well off.

And finally, any program that is likely to be successful has to have a transparent design and implementation process so that hospitals can track how they are doing and make course corrections along the way. None of these changes will be easy.

Should the administration go down the road of rebooting VBP? This is a decision that cannot be made in a vacuum. There are a variety of other national efforts and experiments under way to improve care delivery, including alternative payment models such as accountable care organizations and bundled payments.

Value-based purchasing may still have a role to play in the national payment landscape, but only if it can be redesigned to promote better care. Corresponding Author: Ashish K. Note: The print version excludes source references. Please go online to jama. Jha AK. Save Preferences. Privacy Policy Terms of Use. Twitter Facebook. This Issue. Views 9, Citations View Metrics.

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Bc vbp of healthcare in changes payment 50 nuances de grey 2015

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Changes in healthcare payment bc of vbp Journal of Healthcare Management. The low persistence makes investment in population health management and community benefit more challenging. It is not clear that each domain and metric reinforce changes in healthcare payment bc of vbp other. The PO-level risk score is the sum of patient-level observed costs for all patients in PO divided by the sum of patient-level expected costs for these patients, which is then multiplied by the population average cost, where expected cost for a patient equals the normalized RRS for patient multiplied by the population average cost, and where the population average cost is the sum of observed costs for all patients divided by the sum of member years enrolled for all patients. Which physicians are incentivized? A great deal of influence, some influence, not much influence Is your PO taking any specific actions to reduce go here total cost of care?
Alcon de la sierra aquel amor Address Correspondence to: Cheryl L. The impact of pay-for-performance on health care quality in Massachusetts, — Any identified effects were relatively small. Public reporting and pay for performance in hospital quality improvement. Health Affairs Millwood. Jul; 11 7 : —

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One TEP member commented that in Massachusetts, a law was passed in that sets a maximum rate of growth in health care spending by providers and hospitals, which holds providers accountable. This law established guardrails and protects against the effects of excessive consolidation.

The TEP suggested that a similar law in other states or nationally could be a strong policy lever to guard against this type of behavior. We found no evidence of unintended effects or spillover effects from the three studies of bundled payments that included quality measures. The Hussey et al. However, Hussey et al. There was little evidence that there were major effects on quality; rather, the findings were mixed, with some measures having improved while other worsened. To assess spillover effects on quality requires access to data for other measures within the same clinical condition or addressing other clinical conditions that were not incentivized by the program, something that most programs do not routinely collect.

The TEP also identified multiple possible unintended consequences, the occurrence of which should be monitored, including the loss of revenue for providers caring for disadvantaged populations, the excessive exclusion of patients when that is an option in the program, access barriers and patient turnover from practices related to providers avoiding more difficult patients, and market concentration and price effects in the context of ACOs.

Many P4P studies have commented about possible unintended effects for patients of low socioeconomic status SES and the providers that serve these populations e. Examinations of whether VBP programs work to reduce or increase disparities are challenged by the lack of information at the patient level on race, ethnicity, education, SES, and other markers of vulnerable populations prone to disparities.

We found only five empirical studies that assessed the effects of P4P on disparities. Among the four studies that evaluated U. Three years post-HQID-intervention based solely on attaining performance in the top 20th percentile of performance distribution, there were modestly greater gains only a few significant for the high-DSH-index hospitals compared with the non-high-DSH-index hospitals exposed to P4P e.

This study should be interpreted in light of the fact that differences at baseline were negligible, and nearly all hospitals in both the P4P and pay-for-reporting groups topped out their performance on the clinical process measures that were the focus of this study. The Ryan study,[89] which had a strong design, found no negative access effects related to avoiding treating minority patients after introduction of the Premier HQID.

A more recent study by Ryan et al. This effect was a function of changes in the structure of the incentive and not due to lower-performing hospitals actually improving more. A study from the United Kingdom[91] showed a lessening of the disparities gap in performance among primary care practices, with measures largely topping out on performance; however, the results of this study are not generalizable to the United States due to substantial differences in the delivery system national health system, national HIT platform in primary care practices and design of the P4P program.

A TEP member from one large commercial health plan noted that a global-budget contract model with strong quality incentives had driven important gains in closing racial and ethnic disparities.

This is because a few medical groups with a low-SES patient mix worked to innovate with their population and to get their doctors to improve quality. These provider groups with low-SES patient populations actually achieved some of the highest gains and absolute quality scores in the state. However, this was not a universal finding among all groups with low-SES patients. While the TEP recognized the importance of monitoring the effects of VBP programs on disparities in care, panelists also noted that assessing the effect of VBP on disparities is difficult to monitor due to the lack of routinely collected data on the demographic and socioeconomic characteristics of patients.

TEP members indicated that they had faced challenges in capturing this information, despite their interest in capturing self-reported language, health literacy, and indicators of patient vulnerability to help improve their ability to work with patients.

However, several providers on the TEP stated they were making inroads in the data they capture to be able to examine disparities. For example, one delivery system has a mandatory data gathering protocol for zip code, race, and ethnicity.

There is limited evidence characterizing high- and low-performing providers under VBP. The few studies that do describe characteristics of high- and low-performing providers have been opportunistic in defining the characteristics based on the variables that were available to them e. The TEP noted that the American Medical Group Association has developed a set of elements for what defines the characteristics of a high-performing health system;[92] however, it remains untested whether these elements differentiate high and low performers under VBP.

Most of the studies that looked at provider characteristics focused on physician or physician group P4P programs. The limited literature shows that higher-performing providers tend to be large provider organizations,[7, 43, 69] have a medical group rather than an independent practice association organizational structure, have more HIT infrastructure,[93—96] and have been historically high performers.

Other studies find that high performers engage in more care management processes,[7] use order sets and clinical pathways for measured areas,[97] have nursing staff's support for quality indicators, have adequate human resources for initiatives to improve performance,[97] and engage in more external quality improvement initiatives.

Hospitals that achieved the largest improvements under P4P are characterized as being well financed, operating in less competitive markets,[56] having lower performance at baseline,[58, 59] and having a higher DSH index. Although associations have been found between patient population SES and provider performance, it is important to note that some providers that serve low-SES populations are able to perform well.

For example, Medicare has found that most hospitals with high proportions of Medicaid patients achieve readmission rates comparable to those with fewer Medicaid patients.

The CMS Physician Group Practice demonstration evaluation highlighted organizational characteristics associated with performance. Physician groups characterized as being either affiliated with an academic medical center or a freestanding physician group practice were more able to achieve both quality and cost targets than groups with only non-academic hospital affiliations.

It is unclear whether the results based on the 10 physician groups that self-selected into the Physician Group Practice demonstration would generalize more broadly. Case studies and commentaries suggest that strong physician leadership with a clear strategy and vision is necessary to change practice culture to one that is comfortable with sharing the risk of a predetermined patient population.

There is very limited published literature to inform what structural and implementation features are associated with successful P4P programs. It is rare to find studies that examine the effects of alternative design features e. Consequently, it is difficult to assess from these studies whether the programs have been successful and would be if scaled up to a larger number of providers i. Based on the review of the published literature, there have been mixed findings on the effectiveness of VBP programs to meet its intended goals to improve quality and control costs.

This may be because VBP programs are still a work in progress and sponsors are continuing to evolve these programs in response to what does and does not work when implemented. Despite the fact that many programs have been in operation for the past five to ten years, there is a substantial gap in the knowledge base about what has been learned regarding design and implementation in large P4P programs to inform what features promote success in VBP programs.

ACOs are new, and there has not been sufficient time to test ACOs to know whether they can succeed and what factors must be present to allow them to form and achieve desired goals. There is, as yet, little accumulated knowledge about their formation and, once formed, what types of performance results are accrued and what factors are associated with observed performance results.

Evaluations of the private- and public-sector ACO experiments will hopefully generate knowledge to inform what factors need to be present for an ACO to succeed in meeting performance goals. Various challenges associated with implementing bundled payments have been identified,[] and, similar to ACOs, these models are not well tested or in routine operation. When we queried the TEP about the features of successful VBP programs based on their knowledge from having designed and operated these programs, most panelists agreed that the evidence is thin regarding successful programs and what features characterize these programs.

Based on the panelists' anecdotal evidence and the limited literature, we identified six features that appear to influence the success of VBP programs:. TEP members stated that the dissemination of best practices currently occurs through trade conferences and regional quality improvement activities.

Although the information from these conferences is not published, several provider organization TEP members observed that they do provide vital information for organizational learning of best practices and improvement strategies.

Panelists said that it would be useful to extract and compile lessons learned from providers about best practices they have implemented and to widely disseminate this information. Some panelists recommended that HHS should conduct case studies of high-performing providers to see what factors they identify as contributing to producing positive results; however, because high performers may be doing many of the same things as low performers, it is necessary to look at both high and low performers to see what differentiates them.

Alternative approaches to disseminating best practices were discussed by the TEP. The TEP broadly agreed that there is a need for qualitative research to understand what has been learned by those who design and sponsor VBP programs and by the providers who are targets of the VBP programs.

There has been a lot of iterative work by VBP program sponsors, and case studies could shed light on lessons learned that are not making their way into the published literature.

Qualitative research focused on understanding what does and does not work regarding design and implementation would be useful to those designing VBP programs. For example, it would be useful to learn how providers have used performance benchmarking data provided by both public and private VBP programs to inform their quality improvement efforts and engage leadership in organizational infrastructure investments to support high-value care. One TEP member suggested Qualitative Comparative Analysis[, ] as one qualitative analytic methodology that might be a good fit for VBP evaluations, as it attempts to isolate key factors that are necessary conditions, versus those that are sufficient conditions, to achieve the outcome.

This approach acknowledges that there are a number of possible paths or combinations of elements e. The other area flagged by the TEP where qualitative work would be beneficial is understanding what changes providers are making in response to VBP programs. Although the TEP emphasized the need for qualitative evaluation work, there may be challenges in getting private VBP sponsors to share proprietary information, particularly in a competitive marketplace. The TEP supported the need to evaluate the impact of VBP programs, and panelists felt that having a common set of variables that potentially influence outcomes, such as program characteristics e.

Although the past decade has witnessed a fair amount of experimentation with performance-based payment models, primarily P4P programs, we still know very little about how best to design and implement VBP programs to achieve stated goals and what constitutes a successful program. The published evidence regarding improvements in performance from the P4P experiments of the past decade is mixed i.

Many of the published studies evaluating the impact of P4P programs suffer from methodological weaknesses that make it hard to determine whether the VBP intervention had an effect above and beyond other changes e.

VBP programs are natural experiments and inherently difficult to evaluate because program sponsors rarely withhold the VBP intervention from a matched group of providers to see what would have occurred absent the intervention. There are many weaknesses in the methods often used to evaluate P4P and now the broader class of VBP programs , including reliance on pre-post comparisons without a comparison group that was not exposed to the intervention, comparisons with populations of providers that are substantially different from the treatment group, and failure to account for other factors that may be contributing to the observed results.

ACOs and bundled payment programs that embed clinical quality measures have only recently emerged and are just now being tested and evaluated. There is currently very limited evidence regarding the impact of these programs and whether they can be successfully implemented. Only a handful of ACO evaluation studies have been published, and these evaluations have been of relatively short duration i.

These studies also suffer from similar methodological weaknesses as seen in the P4P literature. The published studies show some improvements in cost and quality; however, several of the ACO studies reported cost savings compared with expected year-over-year trend in spending as opposed to comparing the intervention providers' experience against a matched comparison group of providers.

Bundled payment programs that incorporate a quality component are equally new, and there is virtually no evidence on whether they can be successfully implemented and what their effects are.

The paucity of publicly available information regarding what constitutes a successful VBP program—that is, what VBP design features and other factors i. In practice, more is likely known about what does and does not work in terms of VBP design and implementation than what the published literature suggests.

VBP program sponsors particularly private program sponsors have gained a great deal of experience through trial and error as they work to operationalize the VBP concept in real-world settings; however, these experiences are not being documented through traditional means. Because VBP programs are relatively new and experimentation is likely beneficial at this stage of VBP development, the question is how to generate information from all the experimentation.

Efforts to extract these lessons from VBP sponsors are critically needed to strengthen the knowledge base. Bundled payment: Effects on health care spending and quality. Winslow R. HMO Juggernaut: U. Wall Street Journal. Eastern Edition. Return on investment in pay for performance: A diabetes case study. Journal of Healthcare Management. Taking stock of pay-for-performance: A candid assessment from the front lines.

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A quality-driven physician compensation model: Four-year follow-up study. Journal for Healthcare Quality. The impact of pay-for-performance on diabetes care in a large network of community health centers. Journal of Health Care for the Poor and Underserved. Evaluation of the relationship between a chronic disease care management program and california pay-for-performance diabetes care cholesterol measures in one medical group.

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Increasing adherence to a community-based guideline for acute sinusitis through education, physician profiling, and financial incentives. Pay for performance alone cannot drive quality. Archives of Pediatrics and Adolescent Medicine. Quality improvement with pay-for-performance incentives in integrated behavioral health care. American Journal of Public Health.

Collier VU. Use of pay for performance in a community hospital private hospitalist group: a preliminary report. Transactions of the American Clinical and Climatological Association. Quality and financial outcomes from gainsharing for inpatient admissions: A three-year experience. Journal of Hospital Medicine. Chronic care improvement in primary care: Evaluation of an integrated pay-for-performance and practice-based care coordination program among elderly patients with diabetes.

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The impact of removing financial incentives from clinical quality indicators: Longitudinal analysis of four Kaiser Permanente indicators. The impact of financial incentives and a patient registry on preventive care quality: Increasing provider adherence to evidence-based smoking cessation practice guidelines. Preventive Medicine. The effect of a PPO pay-for-performance program on patients with diabetes. A randomized trial of a pay-for-performance program targeting clinician referral to a state tobacco quitline.

Archives of Internal Medicine. Impact of a pay-for-performance program on low performing physicians. Effect of financial incentives on improvement in medical quality indicators for primary care. Bridges to Excellence—recognizing high-quality care: Analysis of physician quality and resource use.

Pay for performance, quality of care, and outcomes in acute myocardial infarction. Do hospitals alter patient care effort allocations under pay-for-performance? Ryan AM, Blustein J. The effect of the MassHealth hospital pay-for-performance program on quality. The effect of pay-for-performance in hospitals: Lessons for quality improvement. Hospital pay-for-performance programs in Maryland produced strong results, including reduced hospital-acquired conditions.

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The research described in this article was sponsored by the Office of the Assistant Secretary for Planning and Evaluation in the U. Cheryl L. Sorbero , et al. Policy Context and Study Purpose The Medicare program has gradually been moving toward implementing VBP across various care settings, starting with pay-for-reporting programs e.

Study Approach We defined VBP programs as private or public programs that link financial reimbursement to performance on measures of quality i. Accountable care organization refers to a health care organization composed of doctors, hospitals, and other health care providers who voluntarily come together to provide coordinated care and agree to be held accountable for the overall costs and quality of care for an assigned population of patients.

The payment model ties provider reimbursements to performance on quality measures and reductions in the total cost of care.

Under an ACO arrangement, providers in the ACO agree to take financial risk and are eligible for a share of the savings achieved through improved care delivery provided they achieve quality and spending targets negotiated between the ACO and the payer.

The payment arrangement includes financial and quality performance accountability for the episode of care. We used three approaches to gather information to address the questions: Environmental scan of existing value-based purchasing programs: We reviewed information that was publicly available for VBP programs 91 P4P programs, 27 ACOs, and 11 bundled payment programs sponsored by private health plans, regional collaboratives, Medicaid agencies or states, and the federal government.

The VBP programs we reviewed do not represent the universe of all VBP programs in current operation in the United States, and the documentation for some programs we reviewed was not complete given the propriety nature of the information.

Review of the published evaluation literature on value-based purchasing: We examined the peer-reviewed published literature for studies that evaluated the impact of P4P, ACO, or VBP-type bundled payment programs. Such a division of investments would guide how CMS allocates resources and measures success. The benefits to a long-term portfolio approach are manifold.

First, a long-term commitment to a specific set of investments helps guard against shifting political goals. Second, it provides clarity to providers about the types of value-based program initiatives that are most suitable for investment. Finally, it allows for a clear accounting of success and failures in value-based payment, separating wheat from chaff. A fifth of the portfolio could focus on novel experiments that are not payment models, but can still yield savings e.

A tenth of the portfolio could aim to reduce out-of-pocket costs. Furthermore, health equity should be considered across all portfolio areas. Such a pre-determined allocation would work in parallel with the larger strategic vision for national practice transformation, and it could be adapted based on the evolution of evidence for APMs.

Accelerating the transition to value-based payment requires both drawing in late adopters and moving current program participants to higher-risk APM contracts. To expand and entrench APMs, CMS must focus on aligning APMs across payers, simplifying the administration of APMs, reforming the way performance benchmarks are set, requiring participation in APMs when possible, and reducing the appeal of traditional fee- for-service when it is not.

Over the next decade, policymakers should promote national transformation and alignment by leveraging the full range of federally funded health care programs. The private sector accounts for the largest share of national health care spending due to its high reimbursement rates.

However, as shown in Table 2, commercial insurers have been slow to shift to value-based payment. For APMs to be successful, they must be aligned and harmonized across payers, service lines, and health plans. The federal government and CMS can lead this movement by aligning value-based payment in public programs with those in private programs that receive federal subsidies. While the government may move many payers in similar directions, it must balance harmonization with being overly prescriptive.

Medicaid, Medicare, and commercial insurance markets serve different populations, which may require different spending priorities and quality metrics. Aligning goals across programs should be flexible enough to allow these differences to emerge within a specified payment structure. However, aligning goals for APMs should not further entrench inequities by taking as a given that quality outcomes should be worse for populations with high social risks.

Therefore, CMS should spearhead the development of multi-stakeholder standards, with template models e. Where appropriate, it should promote state or regional multi-payer models that can push providers in a coordinated direction. The overall goal is to increase the share of revenue tied to quality past the point of no return, which requires commercial buy-in.

CMS must also simplify the administrative burden of alternative payment models. As noted, regional benchmarking can achieve substantial simplification for providers.

Additionally, APMs must lock in providers with more attractive multi-year commitments. Annual recommitments to APMs can result in substantial churn of providers participating in APMs and beneficiaries attributed to APMs, creating few incentives for providers to make long-term investments in efficiency. In contrast, long-term contracts—such as five-year agreements— signal a commitment to program success from CMS, and encourage providers to make greater technical and programmatic investments in early years, with expected savings accruing in later years.

Long-term contracts should include multi-year beneficiary attribution—unless beneficiaries opt out or move—which allows providers to cement care relationships and truly reap the returns on care management investments. Along with long-term contracts and mandatory participation, CMS should prioritize identifying and implementing technical changes to the structure of APMs to facilitate model adoption Figure 3.

CMS must move away from voluntary provider participation in APMs, and work with providers and conveners to implement mandatory participation whenever feasible. The last decade has demonstrated bipartisan support for many mandatory programs, which have at least four advantages. First, mandatory participation simplifies the adoption of new payment models for providers and produces fair competition when benchmarks are set at the regional level.

Second, mandatory programs mitigate undesirable dynamics that occur when markets segment into value-based and fee-for-service providers, such as risk selection of patients by providers participating in APMs. Third, they are the most efficient way to bring in late adopters.

Finally, they allow for better control over evaluation, which in turn produces robust results, allowing the best versions of models to emerge and diffuse more rapidly. In some cases, requiring participation in APMs is not possible.

In those cases, increasing the voluntary adoption of risk-bearing APMs requires reducing the attractiveness of fee-for-service arrangements. First, CMS must re- evaluate the current physician fee schedule, which is biased towards procedures, overvalues several specialty procedure codes, and undervalues primary care. CMS must reprice the most used billing codes based on value, adjusting payments based on actual work time as documented in established research.

CMS must also rebalance fees paid for inpatient hospital diagnosis-related groups DRGs and medical supplies e. The impact of these reforms would reverberate throughout the private market. Negotiations between commercial payers and providers use CMS fees as a reference point, often reflecting Medicare fees with relative multipliers. Therefore, rebalancing the CMS fee schedule will not only pull providers to APMs within Medicare, but it will also improve the capacity of private payers to engage in APMs with health systems and physicians.

CMS can also leverage consumer demand to reduce the attractiveness of fee-for-service, driving beneficiaries to providers participating in APMs, and, more importantly, to high-performing providers. For example, CMS could offer greater flexibility for telehealth waivers for providers in APMs and reduce patient cost-sharing for specialists who utilized bundled payments. These mechanisms would discourage continued reliance on traditional fee-for-service by making voluntary participation in APMs more economically attractive, which will encourage broad practice transformation.

Far too often, the design of value-based contracts fails to account for health inequities or the possible effects of value-based payment on health disparities. With a few exceptions, such as the ACO Investment Model, most alternative payment models do not have an explicit goal of reducing health disparities. As a result, APMs may penalize practices if they care for patients with high social risk. Rather than targeting health equity, health disparities are considered as an afterthought in the evaluation, with monitoring to make sure spending reductions and quality improvement do not inadvertently worsen access and care of populations with social risk factors.

Going forward, APMs should proactively promote equity with design decisions that treat reducing disparities as a priority. Several mechanisms can tie alternative payment models to health equity. In most cases, APMs can include explicit, direct funding that targets the care of populations with social risk factors, including funding for community health workers, community-based services, and teams that integrate health and social services. APMs can require participants to screen for social risk factors, track those data in electronic health records, and address those risk factors.

Stratifying outcomes by race or other sources of social risk would allow CMS to tie shared savings bonuses to reducing disparities, publicly reporting those data and rewarding providers that close gaps. Consistently implementing these types of reforms across APMs in Medicare, Medicaid, and ACA exchange plans would offer providers a meaningful business case for addressing disparities.

In addition to specific financial incentives, there are also several non-financial policies CMS can put in place to address health equity. For example, Medicare and other federal payers can require that ACOs produce equity impact statements that outline the current state of health equity in the beneficiary population, and how the ACO plans to reduce disparities in outcomes for populations with social risk factors. Impact statements should include measurable goals, clear metrics for success, and a commitment to making this information publicly available.

CMS should also improve its approach to measuring social risk, which may require intra-agency coordination to develop new standards for data collection and measure definitions. Furthermore, CMS must lead the development of validated measures of health equity, which are scarce. Finally, all publicly reported patient outcomes, such as readmission rates, should be stratified by social risk factors.

These reforms would also reduce the likelihood that providers in APMs might avoid caring for populations with social risk factors. Unstable housing, food insecurity, limited educational attainment, and poverty drive poor health outcomes. Policymakers can use APMs and the full suite of federally financed health care to encourage providers to integrate health care delivery with social services that address needed housing, food, and transportation, whether delivered by states, the federal government, or independent non-profits.

Thus far, CMS has taken a limited approach to addressing social determinants of health, such as allowing Medicare Advantage plans to pay for food and transportation services. Over the next decade, across all APMs, CMS must explicitly require providers to connect beneficiaries to other social support programs for which they are eligible and provide guidance and funding for APMs to close gaps related to social determinants of health.

The largest opportunity to do so lies in Medicaid, but these efforts should not be limited to Medicaid. CMS should provide clear guidance that allows Medicare, Medicaid beyond the use of waivers , and Medicaid managed care organizations to spend federal funding on social supports—either directly or through contracted agreements with social service providers—and to include capitated payment to providers for care management activities. Allowing for greater spending on social supports through federal insurance will also require greater accountability.

Specifically, Medicaid must become a one-stop shop for all means-tested social welfare programs. Federal funding for state Medicaid programs and Medicaid managed care organizations should be contingent on actively enrolling beneficiaries and their dependents in other programs for which they qualify, such as housing vouchers, supplemental nutrition assistance SNAP , or Head Start.

CMS should provide technical assistance to states to implement and support these efforts. In the decade since the passage of the Affordable Care Act, the health care system has reached a series of important milestones in its shift to paying for value. Led by CMS, a growing share of payers have moved away from outmoded fee-for-service payment. More providers than ever before are engaged in some form of quality-linked payment, and a smaller cadre have begun experimenting with advanced forms of population- based payment and large-scale practice transformation.

We now need a more focused, whole-of-government push toward a high-quality, efficient system. The persistence of health disparities, uneven quality, and continued rise of health care costs, and the concomitant threat to federal and state budgets, requires renewed focus on spreading the adoption of advanced forms of alternative payment models. These models must move from experimentation to an entrenched, nationwide standard.

The past decade of experimentation shows that alternative payment models as currently implemented are not driving large-scale, systemic change. But a careful study of the lessons from both successful and underperforming models suggests that properly designed APMs can yield improvements in value through cost reductions and quality improvements. The next decade must put those lessons into practice by engaging late adopters, ramping up already adopted and successful APMs, driving payment and practice transformation in commercial insurance, and integrating equity front and center in value-based payment.

The goal of a sustainable health care system that pays for better quality, equity, and efficiency is both audacious and fully achievable. Navathe reports receiving personal fees from Navvis Healthcare, Agathos, Inc. Navathe, MD, PhD. Burwell, S. Setting value-based payment goals—HHS efforts to improve U. N Engl J Med, 10 , Health Aff Millwood , 40 1 , Health Aff Millwood , 39 11 , Health Aff Millwood , 35 8 , Josepth-King, M.

The Lewin Group. Equipping physicians for value-based care: What needs to change in care models, compensation, and decision-making tools? Health Affairs Blog. N Engl J Med. Annual Review of Public Health, 41 1 ,