Accelerating the Adoption of Value-Based Purchasing Initiatives
By Barbara J. Zabawa, JD, MPH
Attorney/Owner at the Center for Health Law Equity, LLC
Recently the public and private sectors underscored their commitment to transform our health care system from a volume-based payment system to a value-based payment system. First, the Health Care Transformation Task Force, comprised of six of the nation’s top 15 health systems and four of the top 25 health insurers launched a private sector alliance that aims to put 75% of its business into value-based arrangements by 2020. See http://www.hcttf.org/releases/2015/1/28/major-health-care-players-unite-to-accelerate-transformation-of-us-health-care-system. The Task Force’s initial priorities include improving the Accountable Care Organization (ACO) model, developing common bundled payment framework and improving care for high-cost patients. Id.
The announcement by the private sector came on the heels of an announcement by the federal Department of Health and Human Services (DHHS). On January 26, 2015, DHHS stated that it wants to link the majority of Medicare fee for service payments to quality and value by 2016.
Specifically, DHHS identified four existing categories of payment to providers for care:
- Fee for service with no link of payment to quality
- Fee for service with a link of payment to quality (such as through the Physician Value-Based Modifier)
- Alternative payment models built on fee for service architecture (such as ACOs, medical homes, bundled payments for episodes of care)
- Population-based payments (such as Pioneer ACOs).
DHHS seeks to have 85% of Medicare fee for service payments in value-based purchasing categories 2 through 4 by 2016 and 90% by 2018. See DHHS Fact Sheet: Better Care, Smarter Spending, Healthier People (Jan. 26, 2015). Thus, the old model of paying only for volume is disappearing fast.
DHHS’s value-based payment initiative will impact physicians in two primary ways:
- Physicians will need to measure quality of care more diligently.
- Physicians may become more integrated with other providers through alternative payment models such as ACOs, primary care medical homes, and bundled payment initiatives.
With regard to the first impact, many physicians may already be moving in the direction of value-based payments through participation in the Physician Quality Reporting System (PQRS). Beginning in 2015, DHHS is applying a Value Modifier that provides for differential payment under the Medicare physician fee schedule based upon the quality of care furnished compared to cost during a performance period. See CMS Summary of Physician Value-based Payment Modifier Policies; see also SSA § 1848(p). DHHS’s approach to implementing the Value Modifier is based on participation in the PQRS. Id. Although DHHS will apply the Value Modifier in 2015 to groups of physicians with 100 or more eligible professionals only, the law requires DHHS to apply the Value Modifier to all physicians and groups of physicians by January 1, 2017. 42 USC § 1395w-4(p)(11). As a result, DHHS urges solo practitioners and physicians in smaller groups to participate in the PQRS now so they become accustomed to reporting quality data. See CMS Summary of Physician Value-based Payment Modifier Policies. Moreover, reporting PQRS data helps physicians avoid negative payment adjustments by Medicare. See DHHS MLN Matters, Posting the Limiting Charge after Applying the EHR and PQRS Negative Adjustments, No. MM8667 (Oct. 6, 2014).
It should be noted that the PQRS measures feed into the DHHS website, Physician Compare, a website that helps consumers make informed choices about the health care they receive from Medicare physicians. 42 USC § 1395w-5; CMS Fact Sheet on Better Care, Smarter Spending, Healthier People: Improving Our Health Care Delivery System (Jan. 26, 2015). Thus, not only will physician payment be tied to quality and value, consumers will be able to compare physicians on the basis of reported quality measures through the Physician Compare website. Indeed, by January 1, 2019, DHHS is allowed to establish a demonstration program to provide financial incentives to Medicare beneficiaries who see “high quality” physicians. 42 USC § 1395w-5(h).
As for the second impact, which is enhanced integration between physicians and other providers through ACOs and other alternative payment models, more physicians may be employed by large, integrated health systems which are creating ACOs. Alternatively, physicians could partner with other provider types in forming ACOs. Similar to the Value Modifier, payments to these integrated groups depend upon quality measures and outcomes of the Medicare beneficiaries served. Nationally there are 424 Medicare ACOs in 2015, a number which has increased every year since the Medicare ACO program’s inception in 2012. As more of these accountable care models develop in both the public and private insurance markets, physicians will need to determine whether and how they will integrate with health systems to assist in coordinating care for patient populations.
The federal Department of Health and Human Services defines ACOs as groups of different providers who come together voluntarily to coordinate high quality care, particularly to the chronically ill, to ensure that patients receive the right care at the right time while avoiding unnecessary duplication of services and preventing medical errors. See http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ACO/index.html?redirect=/aco/
. ACOs that succeed in both delivering high-quality care and achieving cost savings can share in those savings. Id.