Editor’s Note: This is the second in a five-part Health Affairs Blog series, produced in conjunction with the Bipartisan Policy Center, examining current issues and care models in the delivery system reform effort. Each post will be jointly authored by Democratic and Republican leaders in health policy. Check back for the next entry in the series on June 1.
As a predominant purchaser of health care in the United States, federal health insurance programs must remain committed to advancing smarter approaches to health care payment and delivery. As former administrators of the Centers for Medicare and Medicaid Services (CMS) and its predecessor, known as the Health Care Financing Administration (HCFA), we each played a role—in both Republican and Democratic administrations—in implementing important bipartisan modernizations of Medicare payments for health care providers. In 1991, the HCFA implemented a demonstration to bundle hospital and physician payments for an entire hospital stay for heart bypass surgery, a pre-cursor to the larger bundled payment movement under way today. More recently, in 2016, CMS finalized regulations to implement significant changes to Medicare physician payments that were required under the bipartisan Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. At their core, both payment reforms seek to promote efficiency within health care delivery, while better linking payment to quality outcomes.
CMS, through the programs under its discretion, can wield important influence as a health care purchaser. The agency directly governs payment policy for the Medicare program, which served 56 million beneficiaries in 2016 and plays an indirect role in delivery system reform in the Medicaid program, which covered an additional 71 million individuals last year. Medicare payment amounts, and to a lesser extent Medicare payment policies or models, can also form the basis of commercial payers’ negotiated provider payment rates and reimbursement approaches. Through Medicaid and initiatives to align Medicare’s programs with states and commercial payers, such as the initiative to align quality measures across Medicare and private-sector payers, these initiatives can influence care provision across whole communities.
CMS has shown preliminary success in shifting Medicare’s delivery system into value-based care. The agency has already met its initial goal of tying at least 30 percent of Medicare payments to quality performance or value-based arrangements by 2016 and remains on track to cross 50 percent by 2018. By propelling transformative changes in the way federal programs pay for health care, CMS can improve care quality and better control care costs in its own programs, while also sending a strong signal to participants in the private health insurance market. Through Medicaid and initiatives to align Medicare’s programs with states and commercial payers, these initiatives can influence care provision across whole communities.
CMS and the Center for Medicare and Medicaid Innovation (Innovation Center) should continue to draw on lessons from payment innovations advanced by vanguards in the private sector. High-performing integrated health systems, such as Kaiser Permanente and the Geisinger Health System, have long excelled in developing and testing novel risk-bearing payment models. CMS has successfully developed a communication channel, in its Health Care Payment Learning and Action Network, through which the agency can help educate care providers and clinicians about the mechanics of new payment models in development. CMS should continue to leverage that communication forum in a “two-way” approach, seeking out input from clinicians on ways to improve federal payment models, based on private-sector experiences. CMS should also coordinate closely with the MACRA-established Physician-Focused Payment Model Technical Advisory Committee to continue to gain insight into private-sector models that could be replicated in federal programs. In the same vein, the Innovation Center could focus on consolidating and aligning various payment models, where possible, to avoid confusion amongst clinicians and an overlap of conflicting payment incentives.
At the Bipartisan Policy Center, we believe that the investment and model testing at CMMI must continue in a focused and thoughtful manner. CMS estimates that more than 207,000 health care providers are participating in CMMI’s payment and care delivery models and initiatives. Through the payment models tested at the Innovation Center, these participating providers serve approximately 18 million patients. The Innovation Center should continue to be a place where model development can thrive, particularly in light of the strong incentive that MACRA places on clinician participation in alternative payment models (APMs). The Innovation Center should also focus on testing models on a large-enough scale—and with a set of participants who reflect the diversity of the Marketplace—so that CMS can work with Congress to determine which models are scalable and could be expanded to the entire Medicare or Medicaid programs. Such an approach would maximize the potential for accelerating the adoption of payment models that can improve health outcomes, while controlling cost growth.
We are in the relatively early stages of changing how care is paid for. Our government payers can play a leading role in accelerating the adoption of models that reward better quality care and pay smarter. Testing, measuring, and creating new iterations is critical to improving patient care.
Although the path to reforming the health care delivery system will prove difficult, the foundation has been laid and progress is being made. It will be vital for the federal government to maintain its commitment to ongoing investment in new payment and delivery models for federal health insurance programs, while sending clearer signals to other payers and health care providers. As CMS’s payment innovation operations continue to mature, we believe there is an opportunity to tailor approaches toward more specific payment priorities that provide more opportunities for clinician participation in APMs, without conflicting payment signals across models.