We are in an unprecedented period with a significant focus on aligning incentives and payment reform in our nation’s healthcare system. And in the midst of this unique moment in time, The Centers for Medicare & Medicaid Services (CMS) has played an important role in guiding the healthcare delivery system in a positive direction through the development of value-based payment programs which have gone far towards optimizing site of care, right-sizing length of stay, and reducing avoidable readmissions.
Programs like the Bundled Payments for Care Improvement (BPCI) program have shown results where top performing providers have been able to generate significant savings back to Medicare while importantly, improving the quality as part of bundled payment arrangements for select acute care services. This has facilitated the evolution of successfully re-engineered models of care delivery that include four key transformation levers: Activated Leadership, Focused Episodes Opportunity, Real-time Analytics Reporting and Team-Based Care Redesign Models. By incorporating this transformation model, provider groups have demonstrated continued impact on a key driver of success, decreasing readmissions rates, as high as 23.3 percent under the innovative episode of care payment model.
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While we are in exciting times with the growth of these provider-centric, integrated health systems across the continuum embracing value-based payment models in Medicare, more needs to be done by the private sector. Medicare covers only 14 percent of all Americans with insurance, where half of Americans receive their health insurance benefits through their employer. Thus, it is critical that employers continue to take the leadership role to demand and accelerate these new forms of payments while cultivating an ecosystem for providers to collaborate and embrace multi-payer outcomes-based incentive strategies. Providers, too, are eager to thrive in a practice environment that allows them to treat patients based on their total care needs and not forced to base their income on increasing transaction driven patient revenues.
With the confluence of all these market forces, and employers in the drivers’ seat, this year is going to be an interesting one to watch for value-based purchasing arrangements that gain momentum and lead us in the direction of sustainable reform. Employers are already engaging in new partnerships and continuing to pioneer practices intended to pay for value. Some of these strategies saturating the commercial market include:
- Implementing Bundled Payment Approaches – Bundled payment approaches have been successful because they require collaboration between employers, carriers, and providers. As of 2016 large self-funded employers offering bundled programs realized cost savings of 20-30 percent per case vs FFS arrangements. Providers facing the challenges of increased costs, competition and market-wide consolidation will continue to push for more value-based arrangements from employers in the coming year.
- Adopting ACO models – A few very large employers have contracted directly with providers to form an ACO; in addition to Intel, early adopters include Boeing, Walmart, and Disney. Some employers have adopted both ACO and bundle payment approaches. Health Affairs reported in April that ACOs and bundled payment approaches complement each other, with the former seeming to reduce hospitalization and the latter improving hospital and post-acute care quality while lowering post-acute care intensity.
- Adopting Employee Incentives – According to National Business Group on Health’s latest survey, 86 percent of employers now offer financial incentives to employees for involvement in their wellness platforms, representing an 11 percent increase over last year. Additionally, two-thirds of employers surveyed plan to expand their wellness programs over the next three years.
These strategies tell a story of breaking down delivery system silos, using innovative solutions, comprehensive services, and patient-centric approaches to successfully redesign and improve care for patients. A story that will enable the alignment of our payment system to that of the healthcare outcomes.
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A story about all of us working together organically, grabbing the reins of change…to move the needle.
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