Payment Reform Concerns Extend Beyond the Financial

Healthcare providers' concerns about payment reform efforts initiated by Medicare and other payers reach further than their angst over cost-cutting zealotry.

"We need to create a sustainable health system, not a sustainable healthcare system," says James Weinstein, DO, president and CEO of Lebanon, NH-based Dartmouth-Hitchcock Health. "The model needs to focus on health, not healthcare."

Weinstein acknowledges the economic necessity to "cut the spend" in Medicare, noting that the program was launched 50 years ago with a blank-check financing model. "Medicare was a great big idea to help our seniors. But today, we can ask, 'Is Medicare going to break us?'"

However, payment reform alone is inadequate to the monumental task at hand, the spine surgeon says.

"We need a health and healthcare revolution in the United States," he said. "We need to redesign the healthcare landscape.… As a society, we skirt the real tragedies that are next to us every day—in our school systems and the support systems in our homes. The social underpinnings of our nation are being whittled away. We're regressing to the mean. We have to get away from just payment reform… This has to be a community partnership."

Weinstein, one of the founding members of the Hanover, NH-based High Value Healthcare Collaborative, says his concerns about payment reform efforts at Medicare and other healthcare payers extend beyond angst over cost-cutting zealotry.

"We started this journey in 2004," the spine surgeon says of value-based healthcare delivery reforms at Dartmouth-Hitchcock. The organization has been involved in initiatives at the local, regional, and national level such as population health programs and at-risk contracting. "The models keep changing, and it's difficult to keep up… It becomes a race to the bottom. Everybody is trying to save money."

Weinstein says Dartmouth-Hitchcock is among a select group of "the walking-willing"—healthcare organizations that have risen to the challenge of participating in ambitious payment reform initiatives such as Medicare's Pioneer ACO program. "If the best organizations are struggling to make these programs work, I worry about the ability of the nation to do it," he said.

Physician Practices: 'We Have a Lot to Lose'

Barbara McAneny, MD, chairperson of the American Medical Association Board of Trustees, shares many of Weinstein's concerns about Medicare payment reform.

"We welcome the idea that we are going to have more options to get paid, but I am concerned about the practices that aren't ready," she said in a recent interview.

McAneny says many physician practices are run as small businesses with narrow profit margins. As such, they lack the financial foundation to retool their practices from the fee-for-service payment model to new value-based payment models. "We run the risk of losing more medical practices," the New Mexico-based oncologist said.

"The Medicare payment reforms are moving alarmingly fast, without a clear path forward. We cannot sacrifice the doctors who aren't ready to move forward because we need every one of them seeing patients… If we do not have a program to keep physician practices functioning, we have a lot to lose."

McAneny says many physician practices fear their financial survival is at stake as officials at the Centers for Medicare & Medicaid Services forge ahead with value-based payment reforms. "It's very scary to bet your farm that CMS got it right."

From a provider perspective, McAneny says flexibility is the key to making payment reform effective without disrupting physician practices across the country.

"The payment system has to have enough flexibility in it that physician practices can adapt to reforms," she said. "Medicine is very, very complex now. Orthopedics is a specialty for a reason. Healthcare is complex, and we can't expect to fit all the specialties in medicine into one mold… If we do not have a system that provides a safety net for small practices, it will be an infrastructure that will be hard to replace."

"Change Will be Slow"
Cynthia Ambres, MD, a US lead partner and strategy consultant at KPMG, says there is wide variation among healthcare providers in their preparations for value-based payment reform.

"Some providers are much more prepared for value-based contracts than others, but the latest initiatives from CMS will create a greater sense of urgency to act," she said recently via email. "Many hospitals moving away from fee-for-service will do so very reluctantly, because of the risks associated with value-based contracts and the dependence upon fee-for-service revenue. KPMG's survey of providers showed that nearly half of them expect value-based contracts to hurt profits."

"Providers that have made the investments ahead of this shift are in a much better position than those who haven't. The investments are in technology and the ability to use data and analytics to get a true sense of costs of delivering care and what procedures deliver value. These investments really need to be made to help ensure a sensible approach to ACO strategy and entering bundled-payment agreements."

Providers need to watch their steps carefully as they move forward with matching their healthcare delivery reforms with healthcare payment reforms, Ambres says.

Hospitals are pairing with clinics and other providers to control hospital admissions "to the best of their ability," she says. "Certain chronic conditions, such as diabetes and cardiovascular disease, can be managed with a high degree of coordinated care. Even conditions that have highly personalized treatment programs, such as cancer, can be bundled, but providers need to be very astute about how they are going to price those services."

"A few costly cancer patients in the mix can lead to a contract being unprofitable. So providers should prepare themselves with data to make sure that they can enter these payment arrangements with a better understanding of the risks and opportunities to improve care and manage costs."

She says there are several areas where providers are ahead of the value-based reform curve, launching value-based care delivery initiatives without a corresponding payment model at Medicare and other payers.

"We have some examples of efficient, high-quality care that are, for many, still too new for broad, appropriate reimbursement structures to be in place." Ambres cites online care, daily and weekly patient coaching, home monitoring, and group rehabilitation programs. "The payment systems will catch up eventually; but for now, many of these opportunities remain clustered in pilots and demonstrations. Until we have true bundled payments and more providers at risk, change will be slow."