2020 and Ahead: Providers to Direct Shifts in Payment Models?

Abhinav Shashank
Fri 20 Sep 2019
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Innovation has been driving the US healthcare and steering it on the wheels of novel payment models towards better outcomes in quality of care and cost. However, these new payment models seem to be perpetually stuck in a state of delay. 

Although success rates for all payment models vary considerably, they are very dependent on provider flexibility. Additionally, to nudge provider performance, CMS has also been continuously trying to plug the loopholes and move towards a new and sustainable balance between risk-sharing and incentives. 

What Do The Numbers Unveil? 

In the year 2018, the Medicare program cost $582 billion which amounted to about 14 percent of total federal government spending. The number of people enrolled in Medicare was 60 million in 2018 and is projected to reach 90 million in the next thirty years.

Looking at the 2017 Performance Data for MSSP, 60 percent of ACOs saved money in 2017 and 34 percent of ACOs earned shared savings, up from 56 percent and 31 percent, respectively, in 2016. Putting it together with CMS 2016 Performance Year results, 45% of physician-only MSSP ACOs earned shared savings compared to 23% of hospital-based ACOs. 

Also, these numbers suggest that size and scale, although important, are secondary predictors of ACO success. Instead, physician independence maybe more important in determining success in risk-based payment models.

The Changing Face of Payment Models

This realization led to a change in payment models. Now, CMS is not just designing payment models to appeal to hospitals and health systems, but to physicians as well. Additionally, physician groups have also emerged as infallible and dependable participants for reducing Medicare spending.

In her speech at the National Association of Accountable Care Organizations (NAACOS) Spring 2019 Conference, CMS administrator, Seema Verma pointed out that recent payment models are designed to support physician-led entities and help them stay independent while taking on risk. 

Some Recent Value-based Payment Models

With all this performance-directed innovation, the five new payment models are hopeful to balance independence and simplified risk-sharing for physician groups. These payment reforms are expected to align financial incentives to lower costs while ensuring high quality and improved patient experience, moving towards the value-based system.

CMS has divided these five payment models into two paths:

I. Direct Contracting (DC) Path

  1. DC-Global asks providers to assume 100% of the financial risk with the CMS in return of two payment models, Primary Care Capitation or Total Care Capitation, including a “risk-adjusted monthly payment for all services provided.” (To be launched in January 2020, with performance years, beginning from January 2021. The model will last for five years.) 
  2. DC- Professional asks providers to share 50% of the financial risk with the CMS in return for “a capitated, risk-adjusted monthly payment for enhanced Primary Care Services”. (To be launched in January 2020, with performance years, beginning from January 2021. The model will last for five years.)
  3. DC-Geographic asks providers to assume 100% of financial risk in return for “a capitated, risk-adjusted monthly payment for enhanced Primary Care Services.”

(Issued request for public comments, but plans to launch the model with a performance period beginning January 2021)

Challenges To Solve

The DC Payment Models aim to create a competitive care delivery system with different levels of shared risk and monthly payments. These payment models are designed for ACOs, MA Plans, Medicaid managed Care Organizations, among others. Where physicians in these categories face long-standing challenges like autonomy and technical platform compatibility for smooth operations, payment models are trying to share their challenges in terms of risk and outcomes. 

With these models at hand, physicians can serve their patients better without stressing over patient risk. Not only do these avenues try to assure better reimbursements, but they also help physicians get more involved with their healing processes.

Outcomes Expected

It will reward providers that bring greater efficiency and care quality on the table, with a fixed monthly payment in hand, which could either be expected primary care costs or the total cost of care. Better reimbursements are the motivation for providers to improve their care quality. It is a great effort in the direction of bringing physicians closer to their job than anything else. 

Increasing the dependency of incentives on care quality is expected to push organizations to incorporate better technological solutions and save time for their providers. It will take the grunt work away from providers to automated and swifter solutions so that patient-provider interaction is enhanced with more time and better quality.

II. Primary Care First (PCF) Path

  1. PCF-General is designed for primary care practices that are willing to assume large financial risk in return for a simplified, total monthly payment that will allow clinicians to focus on patient care rather than unpredictable revenue.
  2. PCF-High Need Populations is designed to encourage primary care practices (Medicare-enrolled practices providing hospice or palliative care services) to assume financial responsibility for urgent, seriously ill beneficiaries who lack a primary care practitioner or care coordination, in return for a simplified, total monthly payment, that will allow clinicians to focus on patient care rather than unpredictable revenue.

(CMS will begin accepting first-round applications for five-year PCF Payment models in spring 2019, with a launch planned in 26 regions across the US beginning in 2020. The second round of applications to be accepted in January 2020.)

Challenges to Solve

The PCF Payment Models aim to stir greater performance of primary care practices in ensuring the best care quality, by focusing on both, critical medical quality measures and high-need beneficiaries. These models are designed for primary care practices and are majorly encouraging them to assume greater risks. 

Taking a step ahead towards better care, it is taking a load of arbitrary revenues off the shoulders of the physicians. These models have innovated payments for physicians, with a wide umbrella of beneficiaries. With such inclusions, physicians are getting closer to their patients, and organizations will be bound to provide them the quality time for healing the populations.

Outcomes Expected

PCF participating practices will receive payment adjustments based on their performance on certain clinical quality measures including controlling high blood pressure, managing diabetes, and screening for colorectal cancer. It will reward practices that specialize in care for patients with complex, chronic, or severe conditions with higher monthly payments. Government is realizing the crucial role of physicians in saving the costs, and these models are designed for a slow transition to reformed healthcare. 

With an increased focus on improving total person-care for high-risk patients that are based in primary care background, it pushes health networks to improve the work environment for physicians for better care quality, outcomes, and reimbursements.

The Road Ahead

It will be interesting to see how physicians enter into the new CMS models. Bending the cost curve has been a long-standing challenge for our care approaches, but with the dynamic partaking of incentives and care outcomes, new payment models can hope to jump on the bandwagon for improved cost and care outcomes. 

As we are all trying to understand the right balance between performance-based payments and financial-risk sharing by providers, striking the right finance into healthcare will still need us to fight the barriers that have been holding back physician participation in risk acceptance.

To know more about how physicians can improve healthcare outcomes with the current payment models, get a demo.

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Read the story behind the $1 billion savings of US healthcare and get the region-specific analysis of the value-based landscape across the US with this one-of-a-kind “State-of-the-Union” report.


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Abhinav Shashank
2020 and Ahead: Providers to Direct Shifts in Payment Models?

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