The Billings Clinic, with its storied reputation as one of the nation’s leading physician-led, clinically integrated health systems, is viewed by many in our industry as an exemplar of where health care is heading. Clinically integrated for more than two decades, the system has invested heavily in infrastructure, from information technology to staff, to manage both populations and risk. But with the promise of value-based care finally in sight, it finds its ability to execute limited by forces beyond the walls of the clinics, hospitals, and other facilities where its 450 physicians and advanced practitioners see patients across Montana, Wyoming, and the Dakotas.

First among the obstacles is managing data — both incoming and outgoing. It is difficult for Billings to get timely, complete, and accurate third party data, particularly from Medicare and Medicaid, about its patients’ activities beyond the Clinic.

Meanwhile, it must report on 102 separate quality measures to federal and commercial payers, each with its own requirements and deadlines. One seeks 30 separate reports. Another has a nine-page form.

“Reporting is time and resource intensive,” says Heidi Duncan, MD, FAAFP, Physician Director of Health Policy, Billings Clinic. “We need more standardized reporting across all payers.”

“Finally, even though we are ready to play, we have no commercial risk products in Montana,” Duncan says.

Billings is not alone preparing for a future that always seems just beyond the grasp. Medical groups across the country are making million-dollar bets on a future providing value-based care. But like the would-be partygoer stuck at home on a Saturday night, many are getting all dressed up with nowhere to go.

In fact, from a recent survey of our members, the American Medical Group Association (which represents medical groups and other integrated systems of care) learned that health systems across the nation still see the destination called value as a distant sign still ahead of us. And the road to get there is laden with obstacles. Those who assume that fee for service medicine is already in the rear view mirror will be surprised to learn that survey respondents said that they anticipate traditional fee-for-service (FFS) payments will make up a larger percentage of their revenues in the next three years than they predicted a year ago. Conversely, they expect revenues from more advanced risk-based arrangements, such as shared-risk and partial- or full-capitation products, will generate less revenue. At the same time, while 58 percent of the respondents indicated they are ready to embrace alternative payment models, including downside risk, within two years, many also reported that commercial payers are not even offering risk products in their local markets.

One Year Later

The 2016 survey (of 115 of AMGA’s 450 member multispecialty medical groups and integrated systems of care) was our second survey, and the comparison between 2015 and 2016 is revealing. Respondents in 2016 continued to predict a transition away from FFS. However, when comparing 2016 predictions of future revenue streams to 2015 predictions, it is clear that participation in risk-based arrangements is expected to slow. For example:

  • 2015 respondents predicted that 68 percent of commercial revenue would come from FFS in 2016. Respondents this year indicated that FFS will still account for 77.3 percent of 2016 revenues.
  • 2015 respondents predicted that 8 percent of commercial revenues would come from shared-risk products in 2016. Respondents this year indicated only 4.4 percent of revenues will come coming from shared-risk products.
  • 2015 respondents predicted 9 percent of revenue from capitated products 2016; in 2016, the actual figure was 5 percent.
  • Even greater differences occurred when comparing the two surveys’ responses for predicted 2017 revenues. For example, 2015 respondents predicted that 59 percent of their commercial revenues in 2017 would be FFS, while 2016 respondents expect 70.8

Nonetheless, it is apparent our members continue to plan on a value-based future. But they report varying progress in their capacity to embrace that future. Of our smaller members—organizations with one to 49 full-time equivalent (FTE) physicians—3 percent of these respondents were ready for risk in two years; in 2016, that number increased to 86 percent. But in groups of 1,000 or more FTE physicians, 53 percent reported a readiness for risk within two years in 2016. That was down from 70 percent in 2015.

What Happened And How To Fix It

The reasons for the decrease in predicted capability among these large groups are complex, but several consistent themes emerged, including limited commercial value-based or risk-based products in their local markets; the inability to access administrative claims data from all payers; the massive administrative burden of submitting data in different formats to different payers; lack of access to investment capital; and inadequate infrastructure.

We believe that with leadership from the Trump Administration and Congress, many of these obstacles can be overcome, clearing the path for providers to move more easily and deliberately toward value-based care. Here’s how:

Data improvements

Our members have expressed concern with the lack of access to timely Medicare and commercial payer administrative claims data. In order to manage a patient population, providers need data to ensure the most effective course of action in improving health outcomes. Congress should require federal and commercial payers to provide access to all administrative claims data to health care providers. But even medical groups with access to data face challenges. Currently, medical groups submit data to different insurance companies in different formats, creating a massive administrative burden and a diversion of resources from providing care to reporting data. Congress should require federal and commercial payers and providers to standardize data submission and reporting processes.

Access to capital

Investing in the infrastructure necessary to succeed in risk is a multi-million dollar venture and lack of access to capital is a major impediment to getting to value. In order to prepare for this transition, Congress should allow providers to use income on a tax-free basis to invest in taking downside risk. Not only would accessing capital allow more providers to develop the processes they need to succeed in risk, but we believe it would also reduce consolidation in health care.

MACRA (The Medicare Access and CHIP Reauthorization Act)

For success under Alternative Payment Models, Congress should:

  • Not penalize advanced alternative payment models (Advanced APMs) if there are insufficient risk products in their local markets
  • Allow Medicare Advantage revenue to count in performance year 2019 toward meeting the Advanced APM revenue thresholds
  • Allow Track 1 Accountable Care Organizations (ACOs) to be eligible as Advanced APMs

Policymakers need to resolve these issues to give providers like Billings Clinic the tools they need to succeed in a new value-based payment system. If left unaddressed, the laudable goal of transitioning the system to one that rewards results will be, at best, delayed and, at worst, unrealized.