Becker's Hospital Review

26 Financial Management H HS announced ambitious goals for the healthcare industry in late January, stat- ing it wants 50 percent of Medicare pay- ments based on how well patients are cared for by 2018, which was the first time in the history of the Medicare program such explicit goals have been set for alternative payment models. By 2016, the benchmark is to have 30 percent of all Medicare provider payments fall under an al- ternative model, which includes accountable care organization, patient-centered medical homes or bundled payments. The department's second goal is for "virtually all" Medicare fee-for-service payments to be tied to quality and value. This amount to 85 percent in 2016 and then 90 percent in 2018. The announcement has received both positive and unfavorable reviews and left some in the healthcare industry wanting more information on how the targets laid out in HHS' plan will be achieved. Scott Becker, JD, CPA, publisher of Becker's Hospi- tal Review and chairman of the healthcare depart- ment at McGuireWoods, recognizes the serious outcomes the overhaul may have. "I think if this happens it will have a draconian effect on all small and mid-size hospitals, health systems and provid- ers." he says. "The largest providers, who can ab- sorb the changes and take on population health, will fare fine. The small and mid-size providers will face further harm from such substantial changes in payment methods. They are already struggling to survive. Actions like this heavily favor the larger systems and are grist for more consolidation." Concerning HHS' plan, Mr. Becker also says, "This may in part be a political salve aimed at get- ting more providers interested in a single-payer system — i.e. Medicare for all. Most mid-size and small providers would anticipate serious nega- tive consequences from the approach set forth by CMS and might view a single-payer system as a good alternative to this. It reminds me of the old adage about hitting someone over the head. If you hit them for long enough, they say thank you for stopping here. This plan is another shot across the bow at smaller and mid-size providers of all types. They may just be thankful to stop being hit." Regarding the payment overhaul, CMS said the change is being made to push the healthcare in- dustry "toward greater value-based purchasing — rather than continuing to reward volume re- gardless of quality of care delivered," and Igor Be- lokrinitsky, partner with Strategy&, believes HHS' plan is going to give providers the push they need. "A lot of the systems we work with struggle with not knowing when to transform and make chang- es for the future," he says. "A lot of them have said, 'Once 50 percent of payments are value-based, that will be enough to push us over the edge and get us to change the way we provide care.' And this will get them past the tipping point." Although Mr. Belokrinitsky is excited about the announcement, he believes HHS' overhaul plan is lacking in some areas. "[The plan] sets a very no- ble and a very necessary goal, but it doesn't neces- sarily tell health systems how to get there," he says. In the plan announcement, HHS said investments in alternative payment models created under the Patient Protection and Affordable Care Act, including accountable care organizations and bundled payments, will help the overhaul goals be achieved. However, the Medicare ACO programs have been met with mixed success so far. HHS also seeks to have 85 percent of all tradi- tional Medicare payments tied to quality or value by 2016 through initiatives such as the Hospital Value Based Purchasing Program and the Hos- pital Readmissions Reduction Program, with the number increasing to 90 percent in 2018. How- ever, less than 800 of the 1,714 hospitals that qualified for bonuses under the VBP program in 2015 will receive their bonuses due to being pe- nalized through other Medicare quality programs focused on reducing readmissions and lowering the rate of hospital-acquired conditions. Now that HHS has set the targets for the shift away from fee-for-service care, Mr. Belokrinitsky asks, "What are the programs that are going to get us there?" Along with Medicare quality pro- grams cancelling out bonuses for providers, Mr. Belokrinitsky says some of the programs "only go skin deep" and "don't get into the fundamental transformation into how care is delivered." Josh Seidman, vice president of payment and deliv- ery reform at research firm Avalere Health, sees HHS' goals as "ambitious but realistic" given the ground- work the agency has already laid for value-based payments. To him, the announcement demonstrates the move away from turnstile medicine. "Over time, all providers will need to perform will on quality metrics to see favorable compensation. Increasingly, providers will also have to transition from a reactive approach — treating sick people when they seek help — to a proactive approach — trying to help manage their health to prevent acute needs." American Medical Association President Robert Wah showed support for the overhaul plan by saying the plan is aligned with the AMA's com- mitment to providing "innovative care delivery reform that will promote high-quality and effi- cient care for our nation's seniors who count on Medicare, while reducing administrative and reg- ulatory burdens physicians face today." Like Mr. Belokrinitsky, Mr. Wah is also looking forward to hearing more details about the plan. n Plans for Medicare Payment Overhaul Receive Mixed Reviews By Ayla Ellison and Kelly Gooch MedPac's Final Payment Recommendations to Congress: 5 Things to Know By Ayla Ellison T he Medicare Payment Advisory Commission issued its final payment recommendations for inclusion in its annual report to Congress, which includes a slight increase in hospital Medicare payments and restructuring of the Primary Care Incentive Program. Here are five things to know about the payment recommendations. 1. MedPac members are asking Congress to require Medicare to freeze current reimbursement rates for home health agencies, long-term acute-care hospitals and hospice providers in 2016. 2. MedPac members are recommending a 3.25 percent increase in the payment rates for the acute- care hospital inpatient and outpatient prospective payment systems in 2016. 3. MedPac members are recommending site-neutral payments for certain post-acute services, which according to MedPac would save Medicare $1 billion to $5 billion over five years. 4. MedPac contended site-neutral payments for skilled nursing facilities and inpatient rehabilita- tion facilities "would be unlikely to negatively impact beneficiaries," according to a Bloomberg re- port. However, American Medical Rehabilitation Providers Association Chairman Bruce Gans told Bloomberg MedPac's decision "fails to consider the long-term impact of diverting Medicare beneficiaries into less intensive rehabilitation settings despite their clinical needs." 5. MedPac members are recommending the Patient Protection and Affordable Care Act's Primary Care Incentive Program be restructured to provide a 10 percent bonus payment for certain primary care services on a per-beneficiary basis, instead of the current per-visit basis. n

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