Has ?value? reached the tipping point?

Thursday, February 9, 2017 | Larry Sobal

 

In his bestselling book, The Tipping Point, Malcolm Gladwell writes about the magic moment when an idea, trend, or social behavior crosses a threshold, tips and spreads like wildfire. What got me thinking about whether we have reached a tipping point on the shift from volume-based care (fee for service) to a value-based reimbursement structure (fee for value) was an article last week in Forbes: UnitedHealth, Aetna, Anthem Near 50% Value-Based Care Spending. In that piece, the following data was shared: 

• UnitedHealth Group spends $52 billion of its $115 billion “in total medical spend” through value-based care
• Over 45% of Aetna’s medical spend is current running through some form of value-based care model
• Anthem, which operates Blue Cross and Blue Shield plans in 14 states, says it has 43% of payments tied to shared savings programs

Consider this with CMS’ goal of tying 50 percent of all Medicare reimbursements to quality or value through alternative payment models (APM) by the end of 2018. Those alternative payment models include accountable care organizations, the Medicare Shared Savings Program, the Next Generation ACO Model and the Comprehensive End-Stage Renal Disease Care Model, and the Comprehensive Primary Care Plus (CPC+) Model. The Shared Savings Program added 99 new participants in 2017, bringing its total to 480 participants. The Next Generation ACO model more than doubled in 2017, with 28 new participants, bringing the total number to 45. In total, CMS reports the following:

• More than 359,000 clinicians participating in the four APMs
• More than 12.3 million Medicare and/or Medicaid beneficiaries served
• 572 ACOs across the MSSP, Next Generation ACO Model and CEC Model
• 131 ACOs in a risk-bearing track, including in the MSSP, Next Generation ACO Model and CEC Model
• 2,893 primary care practices participating in the CPC+ program

I can’t help but wonder if we are at, or at least near, a tipping point where volume is truly being dethroned by value as organizations move toward taking full risk.

Interestingly, my conversations with many physician and administrative leaders around the country suggest they don’t see themselves as near a volume-to-value tipping point. Sure, there are the exceptions of organizations who are aggressively pursuing any risk-based reimbursement arrangement they can get their hands on. These organizations are either the rare few that are anxious to move down the continuum and want to learn how to be successful in alternative payment models now (and hope to possibly get a jump on their competitors), or have already mastered the complexities of reshaping care and know they can take advantage of the incentives offered in value-based arrangements.  

But despite the map image in my blog last week that showed how bundled payments are proliferating, the reality is that the actual number of organizations that are formally in an alternative payment model is relatively small. Many of the so-called “value-based” reimbursement models are still largely rooted in a fee-for-service approach, with some form of upside and/or downside incentive baked in.

I am always surprised by the degree to which organizations do or don’t acknowledge where they have some type of risk involved.

Furthermore, I am always surprised by the degree to which organizations do or don’t acknowledge where they have some type of risk involved. I was facilitating a strategy retreat with a client who proclaimed they did not have any risk contracts, but when adding up the numbers, they had almost a billion dollars of self-funded insurance costs for their employees, large amounts of unpaid charity care, a provider-owned health plan with over 50,000 Medicare Advantage participants and a sizeable amount of Medicare “fixed fee” inpatient care. Not to mention a smattering of incentive programs built into various commercial payer contracts. I don’t know about you, but to me all of these programs represent risk in terms of the organization having a financial incentive to optimize its quality and cost. Whoever said that fee-for-service does not have any aspect of risk or value associated with it?

One of the challenges of the discussion about the volume-to-value transition is that there are so many different opinions on how we define value?  Is a 5% upside only incentive a “value-based” payment model or do you have to be fully capitated before you can say that you have completely embraced a value-based reimbursement?  I’m interested in what you think. Are we at the tipping point, not yet there, or past it?  Leave a comment with your perspective.

 

Illustration: Lee Sauer

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Larry Sobal is Executive Vice President and a Senior Consultant at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and health insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems. His weekly blog post comes out on Thursdays and can be accessed at www.medaxiom.com.

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