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News that the Donald Trump White House is curtailing value-based care initiatives for Medicare could cost taxpayers billions of dollars.
The Centers for Medicare & Medicaid Services (CMS) last week announced plans to slow the move away from fee-for-service medicine when it comes to paying for knee and hip replacements and eliminate other value-based care initiatives.
“Changing the scope of these models allows CMS to test and evaluate improvements in care processes that will improve quality, reduce costs, and ease burdens on hospitals,” said CMS Administrator Seema Verma. “Stakeholders have asked for more input on the design of these models.”
But the business community and those worried about Medicare’s solvency say hospitals and doctors have had plenty of time to prepare for bundled payment and other value-based initiatives started under the Obama administration.
Slowing them will merely cost taxpayers money and more quickly deplete Medicare’s Hospital Trust Fund, which is projected to run out of money in 2029. After changes to the “total comprehensive care for joint replacement model" or CJR, a Medicare spokesman said the changes made by their proposed rule will “save the Medicare program $204 million, instead of $294 million over the remaining three-year performance period,” which runs 2018 through 2020.
If the Trump administration continues its march away from value-based models or makes them voluntary, it will lead to much greater Medicare spending and potentially harm quality of care, industry observers say.
“Rather than cut back programs that the Congressional Budget Office has already determined would save taxpayers $250 billion over five years, it would make more sense to continue those programs while looking for new reimbursement approaches that would also deliver value,” said Dr. Stephen Ondra, CEO of North Star Healthcare Consulting and former chief medical officer at Health Care Service Corp., one of the nation's largest operators of Blue Cross and Blue Shield plans.
Under the CJR model, hospitals where the surgery takes place are accountable for the quality as well as the costs of care from the start of the surgery through 90 days after discharge. This means Medicare pays for an “episode of care” rather than fee-for-service, which is based on volume of care delivered and seen as costly.
Employers and private insurers are already moving aggressively toward value-based payment, including bundled fees for hip and knee surgery so the Trump administration slowing the effort makes little sense, analysts say. A new survey from the National Business Group on Health, which represents employers like Boeing, General Motors and Amazon shows nearly 40% of employers are incorporating some “type of value-based benefit design” including bundled payments for knee and hip surgeries.
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"Anything that slows the momentum toward a value-based reimbursement system is a step backward,” NBGH CEO Brian Marcotte said. “We cannot sustain the unmitigated health care cost increases fueled by the perverse nature of fee-for-service. It's just unsustainable."
To be sure, more than 400,000 knee and hip procedures cost Medicare more than $7 billion just in hospitalization costs in 2014 alone, CMS figures show.
When the Obama administration launched the “comprehensive care for joint replacement model,” or CJR, hospitals and doctors in 67 regions – one in every five U.S. metro areas – became at risk for all Medicare spending for hip and knee replacements covered by the health insurance program for the elderly.
But last week, the Trump administration under U.S. Secretary of Health and Human Services Dr. Tom Price and Verma reduced the number of mandatory geographic areas from “67 to 34,” CMS said. The administration also proposed in a new proposed rule to make the “33 remaining areas to participate on a voluntary basis.”
Participating hospitals essentially have to keep their costs below the $25,565 cost per episode based on Medicare’s payments or they will face a penalty for going over that amount. Many see the bundled fees as a way to get doctors, hospitals and other caregivers to work more closely together.
Despite moves by CMS under Trump, Price and Verma, bundled payments are becoming the norm among private insurers like UnitedHealth Group, Aetna, Anthem, Cigna and Blue Cross and Blue Shield plans shifting billions of dollars in payments to value-based models.
Those picking up the tab for healthcare say they will keep urging the Trump administration to pursue value-based care. "We provided comments to CMS recently urging it to continue moving away from fee-for-service toward alternative payment models, including bundled payments, and believe that Medicare needs to continue to move in this direction,” said Steve Wojcik, National Business Group on Health’s vice president of public policy.
