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Survey: Transition to Value-Based Reimbursement Slowing

December 12, 2016
by Heather Landi
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Close to 60 percent of multispecialty medical groups and integrated delivery systems are ready to accept downside risk within two years, but several obstacles are slowing the transition from fee-for-service to value-based payments, according to a recent survey from the American Medical Group Association (AMGA).

AMGA, which represents medical groups and integrated systems of care, conducted its second annual survey on taking risk and the white paper about the results, “Taking Risk 2.0: Is the Transition to Value Slowing,” found that a number of barriers to risk still remain.

In 2015, AMGA conducted a survey of its membership (multispecialty medical groups and integrated delivery systems) to determine if healthcare financing was beginning to transition away from fee-for-service (FFS) payments to risk-based payment arrangements. The survey also asked respondents to identify challenges to taking risk and what tools they needed to address these challenges. The survey showed FFS payments were expected to decline over a three-year period and those revenues would be replaced by risk- or value-based reimbursements.

AMGA conducted its second annual risk survey to determine if the transition to value is continuing and if obstacles to taking risk remain. Additionally, the survey asked respondents a new question related to how they were reimbursed under Medicare Advantage (MA).

The 2016 survey responses indicated that FFS revenues continue to decline by more than 20 percent, with value-based payments increasing proportionally.

While a majority of 2016 survey respondents indicate they are ready for downside risk within two years, they also report that FFS payments will make up a larger percentage of revenues in the next three years than predicted in the 2015 survey. Moreover, predicted revenues from more advanced risk-based arrangements like shared risk and partial- or full-capitation products declined significantly compared to 2015 predictions.

According to the survey results, respondents report that commercial payers generally are not offering risk products in their local markets. At the same time, barriers to taking risk remain relatively unchanged from last year’s survey and largely involve the need to improve data sharing with payers and creating the internal infrastructure to take risk. Finally, respondents indicated that the majority of MA reimbursements are tied to some type of FFS payment structure.

Specifically, survey participants identified a number of obstacles to taking risk:

  • Immature risk market – 64 percent of respondents report none to limited commercial value-based or risk-based products in their local markets
  • Lack of access to claim data – Providers are not able to access administrative claim data from all payers. Without this data, it is nearly impossible to manage quality and cost.
  • Non-standard data – Providers have to submit data in different formats to different payers, creating a massive administrative burden
  • Limited access to capital – Access to capital is an acute issue that delays investments in the infrastructure necessary to take risk. Lack of capital access also drives consolidation.
  • Inadequate infrastructure – Necessary infrastructure is expensive and difficult to implement, and requires significant change management.

The report authors noted that the impediments to taking risk identified in last year’s survey, including data-sharing issues and the lack of commercial risk products, largely have not been addressed.

“In 2015, AMGA’s risk survey white paper noted that if policymakers did not address these obstacles, they would have to accept that the transition to value would be slowed. According to this year’s data, that deceleration is already occurring. Congress and HHS need to address these impediments soon, or the transition to value will either be unnecessarily difficult and prolonged, or it may grind to a halt much like it did in the 1990s,” the report authors wrote.

AMGA also offered a number of recommendations to the incoming Trump-Pence Administration and Congress to further the transition to a value-based healthcare system:

  • Congress should require federal and commercial payers to provide access to all administrative claims data to healthcare providers. Without this data, it is almost impossible to manage a patient’s care and cost.
  • Congress should require federal and commercial payers and providers to standardize data submission and reporting processes. Currently, medical groups submit data to different insurance companies in different formats.
  • Congress should create a fund that allows providers to use income on a tax-free basis to invest in taking downside risk. These monies, AMGA stated, would be tax-free only if they were used to make the multimillion-dollar investments in the infrastructure necessary to take downside risk or used to offset losses in risk contracts.

AMGA also offered recommendations on succeeding in MACRA. AMGA recommended that Congress should not penalize Advanced Alternative Payment Models (APMs) if there are insufficient levels of risk arrangements in their local markets. “Under the Medicare Access and CHIP Reauthorization Act (MACRA), an Advanced APM must meet strict revenue threshold requirements, which rely on a robust commercial risk market,” AMGA stated. “According to AMGA’s survey, that market is underdeveloped at best. If there is an insufficient level of commercial risk penetration in a local market, an Advanced APM would instead have to meet the 25 percent Medicare financial threshold to qualify for the Advanced APM incentive.”

Additionally, AMGA recommended Congress should allow Medicare Advantage revenue to count in payment year 2019 as meeting the Advanced APM revenue threshold.

And, AMGA would like to see Congress allow all federal Accountable Care Organizations (ACOs) to qualify as Advanced APMs. “Moreover, Congress should allow all ACOs to choose prospective attribution methods so they can understand who their patients are. Congress should require CMS to revise its risk-adjustment methodology so it reflects actual patient acuity and to provide regulatory relief, such as waivers from the skilled nursing facility three-day rule, to all federal ACOs,” AMGA stated.

 

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