This November, the Centers for Medicare & Medicaid Services (CMS) released a slew of regulations establishing Medicare payment policies for 2018. Some argue the agency is hitting the brakes on moving Medicare from volume-based to value-based payments, citing CMS’ decision to slow down implementation, and scale back penalties under the Merit-Based Incentive Payment System (MIPS).
Along the same lines, a recent New York Times article highlighted how the Trump administration is slowing down and shrinking other Medicare pay-for-performance programs initiated under the Obama administration. The article focused on CMS’ announcement of a “new direction” for the Center for Medicare and Medicaid Innovation, focusing on smaller, voluntary initiatives, as well as its decision to abandon most of the cardiac and orthopaedic mandatory episodic payment programs.
Should providers, in response, scale back their efforts around value-based care? Is fee-for-service here to stay, at least through the end of the current administration? Here are four reasons not to be distracted by these recent political developments:
1. Absent congressional action, MIPS will expand significantly in 2019. While CMS has exercised its statutory authority to pull back its reigns on MIPS in 2018, the implementing legislation – the Medicare Access and CHIP Reauthorization Act of 2015 – mandates specific program expansions in 2019.
First, the cost component of the MIPS scoring algorithm will increase to 30% of the Final Score calculation. Second, the maximum penalty for those providers who perform poorly, or elect not to participate, will bump up to 7%. Third, performance thresholds will be based on the actual performance mean or median, not the current methodology, resulting in an arbitrarily low and easy-to-achieve number.
2. Other Medicare value-based programs continue to expand. Although CMS has pulled back on mandated participation in value-based arrangements, its voluntary initiatives continue to grow. Dozens of new ACOs are expected to join the Medicare Shared Savings Program in January, and CMS has now finalized changes to the MSSP application process to ease administrative burdens.
The most recent performance results show more MSSP ACOs are earning shared savings, and nearly all are demonstrating significant quality improvements. MSSP participation is quickly becoming the rule – not the exception – and those who remain on the sidelines will find themselves at a competitive disadvantage.
3. Participation in alternative payment models continues to grow. The Health Care Payment Learning and Action Network (HCP-LAN) recently released national survey results showing that 29% of all healthcare payments now flow through alternative payment models, a six percentage point increase over the prior year. HCP-LAN, which includes payers, providers, and policy makers, remains bullish on its goal of growing that number to 50% by the end of 2018.
4. Investments in value-based infrastructure can generate fee-for-service reimbursement. Many have expressed concern over getting too far ahead of the curve by making significant investments in value-based infrastructure. Many of these investments, however, can generate additional short-term revenue. Bringing providers together in a clinically integrated network, for example, reduces leakage. Additionally, we’ve previously made the case for fee-for-service population health management, taking advantage of reimbursement for preventive services, chronic care management, transitional care management, and remote patient monitoring.
Fee-for-service population health management investments have the potential to produce immediate return on investment. As opposed to many other value-based opportunities that require reconciliation at the end of a performance period, these initiatives can quickly begin producing incremental returns, assisting providers with their investment in necessary value-based infrastructure.
So, while former Health and Human Services Secretary Tom Price tried to reassure a group of physicians last summer that “fee for service may not be the end of the world,” today’s market indicates that traditional fee-for-service is not long for this world. Building a sustainable healthcare system for the future requires a long-term vision and plan. Providers, therefore, should stay the course, regardless of which way the immediate political winds may blow.