United States: Managing The Transition To Transformation: Quality And Payment Reform: Who Is Asking For What And Why?

SUMMARY

McDermott's Managing the Transition to Transformation series is designed to help health systems and other health care industry leaders address the many challenges presented by the transformation in payment and care delivery models.  The goal of this series is to help organizations prepare so that they are not only competitive, but can also thrive under alternative payment models (APMs) and quality-based reimbursement models (QBRs). This article discusses the key stakeholder groups and perspectives involved in quality and payment reform.

IN DEPTH

Linking payment for health care services to quality, value and outcomes rather than the mere provision of the services themselves has been a feature of health reform proposals in one form or another for decades. However, only now has the link been forged with an alliance of purpose among payors—federal health care programs, private insurers and consumers—and providers whose participation in such programs holds the promise of sharing in incentive programs designed to reward high quality over high volume.

Federal Health Care Programs

Over 55 million Americans are Medicare beneficiaries. National spending on Medicare grew 5.5 percent to $618.7 billion in 2014, while Medicaid spending grew 11 percent to $495.8 billion in the same time period. Health spending over the next ten years is projected to grow at an average rate of 5.8 percent per year, which will outpace the growth in the Gross Domestic Product (GDP) by 1.3 percentage points. The costs for health care attributable to Medicare, Medicaid and other federal health care programs, and the volume of beneficiaries, have put these programs front and center in the shift to predicating payment on achieving quality and outcomes measures.

The largest of the federal health care programs, Medicare has implemented and continues to pilot numerous quality-focused payment reform programs that move payment ever further from fee-for-service (FFS) models. Among those programs specifically targeting hospital payments, the Hospital Readmissions Reduction Program, the Hospital VBP (value-based purchasing) Program and the Hospital-Acquired Condition (HAC) Reduction Program are designed to improve the quality of care, promote improved clinical outcomes and enhance patient safety. The mechanism for improvement is essentially negative reinforcement, as each program functions to reduce reimbursement to hospitals that fail to meet certain performance and quality metrics and reporting requirements. As these programs have been rolled out more fully, hospitals have debated whether they adequately factor in regional differences and variability in patient populations, the impact of which are said to unfairly penalize hospitals, or if the metrics at issue adequately measure quality. While there may eventually be modifications to the programs to account for such factors, the trend in linking reimbursement to achieving quality and clinical outcomes goals is anticipated to grow.

In addition to programs targeted at hospitals, the link between quality and payment is also being forged in relation to physician payments. The Medicare Access and CHIP Reauthorization Act (MACRA) legislation will repeal the Sustainable Growth Rate that directly impacts physician payments and instead link physician payments to quality and value for services, rather than volume of services provided. MACRA will also consolidate existing value-based payment initiatives, including the Physician Quality Reporting System (PQRS) into a single program called the Merit-Based Incentive Payment System (MIPS). MIPS is designed to factor elements like quality of care, improvements in clinical care and use of resources into the payment formula.

Likewise, in the post-acute care space, the Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 endeavors to improve care for Medicare beneficiaries through the implementation of quality metrics and resource utilization tracking by post-acute care providers, bringing these quality-based principles to the continuum of care.

Private Insurers

Private insurers have also forged ahead with efforts to tie quality to payment. While risk-based contracts are still less common, some of the largest companies have formed working groups and task forces with regional health care systems to help plan for the insurance companies to meet with goal of shifting 75 percent of their business by 2020 to contract types that incentivize providers to meet quality and cost metrics. Private insurers have also increased efforts to partner with health care systems and hospitals to coordinate care with the aim of delivering higher quality at lower costs. For example, private insurers have worked with health systems to develop programs to more fully engage patients with chronic conditions or complex diagnoses in their health care, allowing physicians and other health care providers to more closely monitor treatment, help them manage their condition and prevent further complications. Such programs bring together the interests—and can yield positive results—for private insurers, providers and patients.

The cumulative effect of these actions by federal health care programs and private insurers is that almost all providers will be subject to, and need to keep pace with, the varying demands of such programs in addition to the burden of existing regulatory requirements.

Patients/Consumers

Patients have historically been the most forgotten part of the health care equation. Indeed, they are not referred to as consumers as they are in other industries; rather, health care is something that happens to patients. However, there has been a growing trend over the past several years to make patients the focus of the health care encounter. Patient-centered care is one of the primary goals of CMS and, when it passed MACRA, CMS explained that it created both the Alternative Payment Model (APM) requirement and MIPS to drive patient-centered healthcare and continue the development of patient engagement as a fundamental component of health care.

Patients have long desired greater transparency in health care settings. Imagine walking into a store, being told that a particular item is what you must take, and then leaving the store with the clerk saying, 'We will figure out what that costs for you in particular and bill you later.' This is precisely what happens any time a patient without a fixed co-pay insurance product (as more and more Americans are opting for) visits a hospital in the fee-for-service model. Unlike other industries, patients rarely know what they will pay for services until after they have received them. Given the immediacy with which a consumer can price almost any product or service, it is critical that the medical industry begin viewing patients as consumers and treating them accordingly.

In addition to transparency on costs, patients would of course like the actual costs to be lower. In 2016, the health care costs for an average American family of four covered by an employer sponsored preferred provider plan rings up at $25,826, triple what it cost in 2001 according to the Milliman Medical Index.

From a patient perspective, payment reform tied to quality metrics would link lower costs with higher quality services and better outcomes, giving patients more of a voice and ability to act like consumers in any other industry segment.

Physicians/Providers

The shift from a fee-for-service model to a quality- and value-based model is being driven by forces far beyond the control of the average physician. Physicians appear to be caught in the machinations of this shift and are seemingly unprepared for the vast impact that MACRA will have on them. Indeed, a recent national survey of 523 primary care and specialty physicians found the following:

  • Fifty (50) percent of surveyed physicians have never heard of MACRA and 32 percent recognize it by name but are not familiar with its requirements;
  • Eight-in-ten of surveyed physicians say they prefer traditional FFS or salary-based compensation as opposed to value-based payment models, some of which qualify under MACRA's APM track; and
  • Seventy-four (74) percent of surveyed physicians believe that performance reporting is burdensome and 79 percent do not support tying compensation to quality, both requirements under MACRA.

Despite the preferences of physicians, MACRA will directly affect how CMS pays physicians for services provided to Medicare beneficiaries by substantially linking such payments to performance metrics and incentivizing physicians to reduce hospital utilization and to participate in alternative payment models that bear substantial financial risk. MACRA will undoubtedly create incentives that reshape how physician services are provided, including encouraging physicians to consolidate into larger groups, entering into arrangements with physician specialty management companies, or, most likely, becoming employed by or otherwise contractually aligned with health systems in order to have access to the information technology and other care management infrastructure that they will need to achieve the MACRA metrics.

The key question to consider is whether physicians will ultimately prefer the new system to the fee-for-service model. Under the fee-for service model, physicians are constantly overtaxed and have limited time to spend with each patient. Indeed, 40 percent of patients feel rushed during their actual visit with the average office visit lasting only twelve minutes. Much of the allure of practicing medicine probably quickly dissipated for most new doctors upon graduation once they realized the sheer volume of patients they would need to see on a daily basis.

Part of the promise of MACRA is that both physicians and patients will receive a benefit. Ideally, physicians will get a significant benefit by being able to practice medicine in the thoughtful way they originally sought to, with the quality of their work determining their pay instead of the sheer number of patients seen. From the patient perspective, if MACRA is properly implemented, it can promote more flexible care that is tailored to the needs of patients.

Conclusion

Federal health care programs and legislative changes are leading the paradigm shift toward quality-focused payment reform. By tying payments to quality metrics, federal health care programs (through legislation such as MACRA), aim to create the necessary incentives to realize their goal of making patient-centered care the new standard in the health industry. Involvement of and collaboration by private insurers, physicians and consumers will continue, and together these constituencies will help further the transition to transformation of health care. 

Managing The Transition To Transformation: Quality And Payment Reform: Who Is Asking For What And Why?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions