Washington’s big bet on value-based care

While the “affordable” elements of the ACA have received the lion’s share of the headlines and have been the main point of debate since the law went into effect in 2012, what’s often left out of the mainstream discussion is the broader healthcare sea change that’s taking place.  Spurred at least in part by the ACA, our system has been evolving from being “fee-based” to “value-based.”  In other words, instead of doctors, hospitals and other providers being paid by the number of visits and tests they order, they’re now increasingly being held accountable, and being paid, based on the value of care they deliver.

Recently, CMS announced plans to require hospitals in 75 geographic areas to participate in a test of the value-based “bundles” program.  It would pay hospitals fixed amounts for performing hip and knee replacements, two of the most common procedures Medicare recipients undergo.  This initiative, more formally known as the Comprehensive Care for Joint Replacement Model, combined with CMS’s Bundled Payment for Care Improvement bundle initiative, have the potential to be true game-changers for healthcare overall.

{mosads}That is why this move is the clearest sign yet from Washington that not only is the Obama administration serious about the move to value-based care, they are not content to let the shift happen gradually.  Instead, the White House is willing to aggressively bet on the benefits bundled payments and similar programs can deliver to the system and to patients sooner rather than later.  

One major determinant of whether or not this wager will pay off is an often overlooked area of the system that can be made more efficient: post-acute care – or the care a patient receives once they leave the hospital.  A key problem under the traditional fee-based system is hospitals and providers have lacked sufficient incentives to focus on the full episode of care. 

As a result, post-acute care coordination has slipped through the cracks, leading to inconsistent care,  whether it being discharged too early without the appropriate resources in the community – leading to preventable hospital readmissions – or staying too long in skilled care facilities – resulting in bloated Medicare fees.  With this in mind it isn’t shocking that post-acute care has been one of the fastest growing and most highly variant cost areas in healthcare.  

This is where the bundles come in. The goal is to incentivize everyone to deliver the best outcomes for patients at the lowest costs (the core of value-based care). Instead of each interaction and service being a separate bill back to the government, the bundles approach equates to one payment for both the initial hospital stay and the 90 days after – with CMS guaranteed savings.

The bundles are now in their second full year of implementation, and participation has been rapidly growing, with the total number of providers taking part increasing significantly in the past year.  In March, Rep. David McKinley (D-W.Va.) introduced H.R. 1458, the Bundling and Coordinating Post-Acute Care (BACPAC) Act, designed to create further incentives for expansion of the bundles program.  But the new plan to require widespread bundle adoption could be the equivalent of spiking a marathon runner with an adrenaline shot.  

Early results have been promising.  In our work as a bundles convener with a presence at over 100 hospitals, we are seeing many hospital and provider groups participating in the bundles deliver lower costs for the system, better patient outcomes and increased patient satisfaction.  CMS estimates the new bundles initiative will cover roughly 25 percent of the hip and knee replacements that Medicare pays for and expects more than $150 million in net savings over the next five years – a dollar amount many experts consider conservative.  Based on the current trend line, it’s fair to predict further positive results, which will continue to demonstrate the benefits when a value-based approach to healthcare is translated from theory to practice.  

However, for this positive momentum to continue, policymakers and private sector players must keep supporting programs like bundled payments, and take bold actions like the Obama administration and CMS did recently.  Otherwise, the transition to value-based care could stall, and patients, providers and taxpayers could all pay the price.  However, with the way Washington is playing their cards, it’s looking more and more like not only are programs such as the bundles here to stay, they may become the new normal sooner than anyone dared to hope or expect.  

Richards is CEO of naviHealth and Advisory Board member to the Post-acute Care Center for Research.