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Payers Take Action: Fast-Tracking the Shift to Value-Based Care

June 3, 2015
by Linda Lockwood, R.N.
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Linda Lockwood

Earlier this year, we witnessed a growing trend to shift provider payment models from fee-for-service (FFS) to Value Based Care (VBC) and accountable care organization (ACO) models. While the need for this transition has been a hot topic for several years, the Department of Health and Human Services (HHS), along with major payers, moved beyond talk and initial planning this year and took bold action towards rapid adoption.

Some of the more significant developments so far this year have included:

  • In January 2015, HHS announced a plan to tie 30 percent of traditional fee-for-service, Medicare payments to quality or value through alternative payment models such as ACOs and bundled payments by 2016. By 2018, 90 percent of payments will reflect VBC and other alternative models such as hospital readmissions.
  • At its 2014 Investor Conference, Aetna announced plans to move 50 percent of their contracts to value-based models by 2018. The company also became a member of the Health Care Transformation Task Force that has pledged to increase that number to 75 percent by 2020.
  • Humana has announced its intention to have 75 percent of its individual Medicare Advantage members covered under ACOs by end of 2017.
  • UnitedHealthCare (United) covers nearly 11 million members with value-based payments. These arrangements have tripled in the past 3 years to total payments of $36 billion. United expects payments tied to value-based arrangements to reach $65 billion by the end of 2018. United expects to add over 250 ACOs in 2015, adding to their existing 520 ACOs. United attributes these arrangements to greater consistency in the delivery of quality care supported by outcomes such as:
    • Medicaid members have shown a 21 percent increase in primary care visits and a 14 percent decrease in readmissions within 30 days of leaving the hospital; and,
    • Individual and employer-sponsored plan participants experienced an 11 percent reduction in hospital admissions and an eight percent reduction in emergency room admissions.

While the Pioneer ACO Model and Medicare Shared Savings Program saved $417 million for Medicare, the initial reports out of the Pioneer ACO program were less than promising: Only one-third of the participants demonstrated reduced costs despite having met all of the quality metrics. The Centers for Medicare and Medicaid Services (CMS) has now made substantial changes to the terms of these ACO contracts, adding three more years before providers become liable for losses. In one track, it is allowing providers to keep 75 percent of the savings while only paying back 15 percent of the losses.

The result is that 89 new ACOs have joined the program in 2015, bringing the number of participants to 405. However, the question remains, how ready are these ACOs to share risk and manage the health of populations? 

Key components around interoperability, care coordination, quality reporting, and the ability to provide medical homes all remain a challenge. As this movement continues, the imperative to build the infrastructure of people, process, and technology becomes more critical and organizations who can master these challenges will become the winners. 

As long as physicians are practicing in both worlds of FSS and VBC, and technology and interoperability have yet to produce a longitudinal, actionable view of patient care across the continuum, we will continue to struggle to meet the mark. However, these new changes to the terms of the contracts and payment structure offer opportunity for organizations to take a critical look at readiness and adopt models of care with supporting technology to make an impact. The time for critical assessment is now, and the rewards will be substantial for those who can meet the challenge.

 Linda Lockwood, R.N., M.B.A., P.C.M.H. C.C.E., Solution Director, Advisory Services, CTG Health Solutions