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Put an end to pilot project-itis
Former CMS leaders chart a new path for payment reform
The 2010 Affordable Care Act, in addition to expanding insurance coverage, authorized Medicare to develop new payment models that incentivize improving care while lowering costs. It called for developing substitutes for fee-for-service medicine, where the more you do the more you make with little regard for quality or patient outcomes.
Over the past decade, the Center for Medicare and Medicaid Innovation (CMMI) launched 54 pilot projects aimed at achieving those goals. They took various forms.
Hundreds of major hospital systems and large physician practices created accountable care organizations (ACOs) that were designed to save money by improving care coordination among different providers. The government and the provider groups shared the savings.
Dozens of advanced ACOs began taking on actuarial risk for patients under their care, just like an insurance company. They kept the savings but received no extra money when total care costs went above the average in the fee-for-service program.
CMMI also launched a series of bundled payment programs, where hospitals and specialty practices received a set fee for an entire episode of care like a knee or hip replacement. There were outcomes-oriented pilots like the Diabetes Prevention Program, which provided intensive dietary and exercise counseling to help pre-diabetics avoid more costly treatment down the road.
Unfortunately, only five pilot projects in the CMMI portfolio led to significant savings for the Medicare program. And just four, including diabetes prevention, moved from pilot status to a program that covered all Medicare beneficiaries.
That led the Medicare Payment Advisory Commission to conclude “the alternative payment models (APMs) aren’t reaching their full potential.” Earlier this month the full commission recommended CMMI “create a harmonized portfolio of fewer APMs designed to work together to support the strategic objectives of reducing spending and improving quality.”
The new sheriff in town
Elizabeth Fowler, the Biden administration new director of CMMI, appears to be taking their advice. She has launched a fullscale review of the program. She’s well suited to the task since she served as chief counsel to the Senate Finance Committee during 2009-10 when most of the experimental designs were inserted into the law.
Yet her first actions have disturbed some proponents of reform. She rolled back participation in several pilot projects involving primary care, kidney care and the Medicare drug benefit.
She has also paused new applications for a direct contracting pilot project, which has the potential to become one of CMMI’s more far-reaching experiments. Direct contracting closely mirrors the Medicare Advantage program in that it pays providers a flat monthly fee (it’s called capitation in the trade) to care for every person within a geographic area. The Trump administration rolled out direct contracting as its alternative to full-risk ACOs; in essence, it was a way of rebranding a program associated with the Obama administration.
During this week’s virtual spring meeting of the National Association of Accountable Care Organizations (NAACO), Fowler went to great lengths to assure the 600 on-line attendees that CMMI’s commitment to value-based care “has never been stronger.” But, she said, “we also need to be honest about the nature of innovation. Not everything is going to be a home run. True innovation means failing until we get things right.”
The original architects of the CMMI programs have a different perspective. Writing earlier this month in JAMA, former CMS administrator Donald Berwick and former CMMI head Rick Gilfillan argued the time for pilot projects is passing. CMMI should “use its authority to scale the ACO model nationally by making it mandatory for all Medicare participating clinicians and hospitals,” they wrote. “Clinicians, hospitals and payers find it difficult to operate in an ambiguous world straddling payment for volume and value.”
They pointed out that the hospital systems and large physician practices that are pursuing advanced ACOs, i.e., those that are moving toward full capitation, produced modest savings for CMS and small returns for their sponsors. Moreover, the research shows those savings grow the longer they are in the program. Yet most providers across the country have failed to get involved.
The reasons are as varied as the non-participants. Many smaller institutions lack the capital to make the necessary initial investments, such as coordinating the patient electronic health records that use different software and are spread across multiple providers. Many large systems are simply making too much money under fee-for-service medicine and have little interest in pursuing alternative payment models whose ultimate goal is reducing their revenue stream.
“I sat on a panel with a hospital executive who said we’re going to ride this fee-for-service pony into the sunset,” Fowler told the NAACO meeting. “We need to find a way to bring everybody along” where “fee-for-service isn’t a comfortable place to stay.”
Moving beyond payment reform
Berwick and Gilfillan also recommended CMMI begin developing pilot projects that promote health equity. That requires transforming the culture of the healthcare delivery system from one that provides sick care to one that promotes health. “Health inequities in the U.S., driven by poverty, structural racism, gaps in rural care, and failures to improve the social determinants of health, far exceed inequities from differences in health care,” they wrote.
They called on the White House to create an “all-of-government health equity campaign” that brings together every government agency that can help address poverty, food insecurity, and the education, housing and transportation needs of distressed urban and rural communities. CMMI could then sponsor payment models that allow hospital systems to deploy those resources in ways that improve the health of the disadvantaged populations they serve, they suggested.
Fowler promised to complete her review over the next several months. Hopefully, she will come up with a more expansive program that covers both payment reform and cultural transformation, one that, whether through mandatory participation or its compelling vision, the healthcare community finds a way to support. The times demand it.