Fulfilling a Value-Based Vow

Medicare, commercial payers, and providers have made commitments to pushing toward value-based reimbursement, but the timeframes they've established are short. One executive on the industry task force dedicated to the effort explains what it will take to get there.

The Healthcare Transformation Task Force represents an industry that is way behind on demonstrating and providing value.

But it's trying to ignite change. In January, when it announced a commitment to moving the bulk of its payments to so-called value-based arrangements by 2020, this coalition of the nation's largest insurers and health systems seemed to be having a "me too" moment.

The group's announcement mimicked a promise made just days earlier by Health and Human Services Secretary Sylvia Burwell, in which she committed to a goal that half of all Medicare payments be based on value and quality metrics by 2018.

Private Players Launch Value-based Task Force

At least now it's no longer when, but how.

Trinity Health CEO and former Medicare administrator Richard Gilfillan, who chairs the Task Force, says the efforts will culminate in a consensus on payment methodology so that physicians and other healthcare providers don't have to negotiate many different payment models with Medicare and private insurers that can make administration of them a nightmare.

David Lansky, the chief executive officer of the Pacific Business Group on Health, a longtime purchaser-only coalition representing large employer groups, is part of the Task Force. Lansky spoke with me recently about the push toward value-based reimbursement and the short time frame both HHS and the private sector have given themselves to get there. Following is an edited transcript of that conversation.

HealthLeaders: What needs to happen to meet the goal of moving the bulk of payments to a value-based model by 2020?

Lansky: There has to be parallel movement by both suppliers and buyers in the same direction. We're attempting to figure out how to align the marketplace so people have clarity about where we're headed and can make changes in how to get there. There are significant barriers on both the buy side and the sell side ranging from the mundane, like compatible electronic medical records, to cultural changes in how people think about their work and relationships with other players in the healthcare market. Our main goal is to set a framework where organizations can compete and be successful in this new environment.

HealthLeaders: The rhetoric is promising, and healthcare reimbursement is not necessarily a zero-sum game, but will there not be winners and losers? How do you keep a coalition of payers and providers together in the face of that?

Lansky: I can't speak for all the different parties who are participating in these conversations. I can only speak for large public purchasers. Any marketplace has winners and losers. Winners should be those who create value. That said, any framework we come up with, along with the federal government's promise to move toward value-based reimbursement, needs to be clear about what it will take to be a winner.

We're not trying to get cheap healthcare, we're trying to get high-quality affordable healthcare. If we're moving toward that goal, then whoever wins or loses, at least it's a fair competition based on value. That's not been what the healthcare marketplace has been up until now.

HealthLeaders: What progress has been made as of yet on finding consensus on payment models so health systems are not serving so many masters with so many different formulas?

Lansky: I don't think we've yet made progress on that point. We're a little bit early in the process. Providers and purchasers who have been moving most quickly toward new models are looking for agreement on key features.

They're looking at what the measures should be on three tracks of work: one around ACOs, one around bundled payments and one on high-cost payments. Ideally we would come to agreement and what success would look like on each track and reward success in a technical way.

That's not a matter of a big intellectual agreement about payment. It's really getting into the nuts and bolts of how you develop a good mechanism for judging performance and making payment changes.

HealthLeaders: Aren't large employers, given the size of the population they serve, in a position to demand what they want from providers?

Lansky: Based on where they sit in the larger environment, it's difficult for major purchasers to play that card. Their resources are largely focused on their own industry. Of course, one would assume the largest employers have the most market influence, yet they also often have the most dispersed populations.
So generally, they're not connecting with any one provider system, so they need to use a large national carrier to make those payments. Those folks represent 50–60 million lives. So compared with that, it's hard for us to be influential.

HealthLeaders: What are the employer side's most important responsibilities in helping change this system?

Lansky: I honestly don't think we've come to a decision about that question. A principle is we want to be effective and we want to have conversations among people who are willing to be bold, experimental and candid about what they're learning so we can shape the best practices going forward.

Bigger is not better. The goal isn't to have one model or one answer, but to collect learning and experience, candidly, to develop a suite of tools that can help accelerate this process. We'll look at everything from how ACO payments should work to migration from single-sided risk to two-sided risk. How does an ACO acquire an attributed population? What's the right way to engage consumers and encourage their uptake of these models? There's a whole range of practical implementation elements we want to learn about.

HealthLeaders: Other than the roughly half of reimbursement the Task Force has committed to being value-based by 2020, how do you measure progress toward the goal?

Lansky: Given the diversity of participants and the complexity of the environment, we're trying to develop a meaningful set of measures. We have to think hard about the right answer. I expect there will be themes that emerge from these recent announcements and our work at some point.

What's critical are the multi-payer alignment questions. We're seeing that the more innovative delivery systems are coming up with better ways to provide care and are willing to redesign the care models for cost effectiveness and better outcomes. But they have 6–10 different payers, each with different levels of comfort with payment changes.

So if you have each payer with different ways of paying for that or different requirements for reimbursement, it makes it hard [for healthcare service providers] to deliver the optimal model to the patient. We need to figure out how to obtain a competitive marketplace, yet send a consistent signal on what is needed and how they're going to be evaluated for delivering the care we're trying to improve.

HealthLeaders: How do you align your commitment with the similarly timed announcement of a commitment to value based reimbursement from public payers?

Lansky: A number of clinicians are saying they won't do it unless Medicare says they have to. Secondly, we all say we want to pay for value, but collectively we have made very little progress in measuring it. The new SGR legislation should provide payment adjustments to physicians based on value, but we have a challenge as an industry to agree on a set of outcomes measures and utilization or cost measures that advance our social interest in value. These new programs will kick in in the next few years, and it's dangerous to reward value using the wrong metric.

HealthLeaders: What about the timing of the Task Force's public announcement on value-based reimbursement? Were you just waiting for the Feds to announce theirs to release yours?

Lansky: Well, we were aware they were working on it, and we were very pleased the commitment came, but it was only a happy coincidence that ours came shortly thereafter.