As the healthcare industry continues a steady transition from fee-for-service payment models to value-based care models, one healthcare thought leader sees the commercial payer market playing a larger role, going forward, in pushing provider organizations into value-based care arrangements.
Mark Caron, executive vice president, business platforms and solutions, Capital BlueCross, provided a sweeping overview of the market forces driving change and convergence in healthcare in the current moment and what may be ahead, during the Health IT Summit in Philadelphia, sponsored by Healthcare Informatics. Caron, who also is CEO of Geneia, a subsidiary of Capital BlueCross that provides analytics and technology solutions, shared his perspective on the regulatory, market and demographic forces driving change and the impact on healthcare delivery organizations.
Harrisburg, Pa.-based Capital BlueCross, a regional payer, launched its first value-based care partnership, what it calls accountable care arrangements (ACAs), back in 2011. There are now more than 2,800 physicians and 362,000 customers participating in Capital BlueCross’ ACAs.
At the federal policy level, Caron noted that federal healthcare leaders have made it clear that CMS (the Centers for Medicare & Medicaid Services) is committed to moving toward value-based care, however he contends that commercial payers are making more strides in this area, especially with bundled payments.
“Contrary to what I had earlier thought—that the federal government would be the Goliath to push things over the hump—I’m now sensing that there is more impetus with the commercial payers. In fact, with employers engaging more, because now their self-funding and there are more transparency requirements, I think the commercial is going to have the stronger push,” he said. “That’s not to say CMS is backing away. Like every major program in our country, I think they underestimate the complexity. Healthcare is local, and one local market is different from another.”
He added, “I think commercials are going to continue to make more strides there. I think they see bundled payments a way to help do that and when delivery systems get more comfortable with that, they’re going to take those things on and slowly move away.”
Addressing the progress toward value-cared care, and specifically the lack of readiness among organizations in some markets, Caron said. “I would argue that part of the reason that we’re way behind is that we, first, underestimate how hard this is. And, another reason we’re not seeing a quick evolution is that as healthcare organizations implement EMRs (electronic medical records) in their own shops, and acquiring other organizations that might have the same or different EMRs, and synthesizing all of that, I think M&A (mergers and acquisitions) has slowed down some of this,” he said, adding, “I’m concerned about the rural market. If you get out to some of the more rural markets around the country, you see that; it’s a challenge.”
Market and Government Forces Driving Change
Caron noted that there continues to be uncertainty about the future of the Affordable Care Act (ACA), as Congress passed a tax bill repealing the individual insurance mandate. Insurers continue to price in uncertainty on ACA plans, he said, noting, “Hospitals are telling us, the payers, that their uncompensated care is increasing because some people are no longer on exchanges or subsidies. We’re starting to see a downward trend on the exchange population,” he said.
Under new leadership, specifically U.S. Department of Health and Human Services (HHS) Secretary Alex Azar and CMS Administrator Seema Verma, CMS is moving forward with new priorities, such as rebranding the meaningful use program as “Promoting Interoperability.” CMS continues to advance forward with value-based care initiatives, although mandatory bundled payments have been delayed. “We’re seeing more hospital systems moving towards that, and in fact, employers are more interested in that too, which we haven’t seen in the past,” Caron said.
These developments are unfolding as healthcare costs continue to rise. Caron noted that federal healthcare programs—Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and the ACA marketplace subsidies—accounted for 26 percent of the federal budget in 2016. According to data from the Healthcare Cost Institute, in 2016, there was a 4.6 percent increase in healthcare spending per capita and 12 percent cumulative growth in out-of-pocket spending from 2012 to 2016. The price of an emergency room visit increased 34 percent from 2012 to 2016 and the price of surgical admissions increased 30 percent in the same time period.
“What’s Interesting here is that it’s not so much utilization that is driving these costs, it’s unit price. I would submit that one of the unintended consequences of the ACA, in creating these integrated systems, is taking competition out,” he said. “From a payer perspective, we saw that with imaging systems, as independent imaging centers got merged in with hospital systems. In one year’s time, the same number of images doubled in cost.”
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