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Healthcare Re-Reform: Value-Based Care Remains a Constant Theme
John Peabody, MD, PhD, FACP

Healthcare Re-Reform: Value-Based Care Remains a Constant Theme

John Peabody, MD, PhD, FACP
It is a fundamental premise that providers and health systems who want to succeed in the existing uncertain healthcare environment must remain focused on delivering value-the highest-quality care at the most efficient price.
Both Republicans and Democrats agree healthcare is too expensive in the United States. While a focus of the potential repeal of the Affordable Care Act (ACA) is how access to care will be affected, the cost of delivery and quality of care remain ascendant challenges. Patients and payers continue to demand high-quality care and sophisticated tools to demonstrate care quality. Therefore, it is a fundamental premise that providers and health systems who want to succeed in this uncertain environment must remain focused on delivering value—the highest-quality care at the most efficient price. 

While numerous questions remain about how healthcare “re-reform” might look, many important insights into President Donald Trump’s potential path forward have been identified. Six key trends indicate that high-value care will remain the important differentiator for successful health systems and providers: 
  1. Greater consumer responsibility for health spending. The existing trend of shifting costs to consumers and patients is unlikely to be slowed by any of the proposals set forth by Trump or his Cabinet. In fact, greater use of tax credits and health savings accounts is likely to accelerate this shift. An increasing array of online tools makes it easier for consumers to identify lower-cost providers and to differentiate based on quality. As more of the cost of care comes directly out of consumers’ accounts, expect continued shifts away from high-cost providers. This shift is already evident in such areas as elective outpatient imaging. 
  2. Sustained pressure on Medicare spending. Medicare makes up 15% of the federal budget today2 and is unlikely to see support for large spending increases from HHS Secretary Tom Price, MD, or CMS Administrator Seema Verma. Even as specific programs change and evolve within CMS, controlling costs will continue to be a priority for the new administration, especially with Speaker Paul Ryan, R-Wisconsin, leading the House. 
  3. Continued demand for high-value, low-cost healthcare from employers. According to data collected by PwC’s Health Research Institute, health insurance premiums are expected to increase by 6.5% in 2017.3 In addition, more than half of all Americans get health insurance through their employers and these employers are feeling crushed by rising costs. Employer focus on controlling costs, such as through the use of high-deductible health plans, will remain a key component in healthcare selection. It is likely we’ll see a rising number of employers enabling access to care via on-site primary care clinics available to employees. Partnerships with major insurers to provide coverage outside of these clinics will remain, but the majority of care will be administered and managed from primary care sites managed by the employer. 
  4. More competition among payers. Changes such as allowing interstate sales of health insurance products are likely to drive competition among payers for increasingly price-sensitive consumers and cost-conscious employers. This competitive environment will drive continued growth of emerging plan structures, such as tiered benefits and narrow networks that seek to reward high-value providers and to punish high-cost, highly variable ones. It’s also likely that more payers will launch bundle programs through these narrow networks with providers who focus on high-value care in specialist areas. This will drive further consolidation through the integration of multiple care settings, such as ambulatory surgery centers and integrated delivery networks. 
  5. Increased experimentation at the state level. Those advocating for ACA repeal want increased control at the state level, especially for Medicaid. Paying attention to local state environments is likely to be even more important in the coming months and years. We’ll likely see strong success stories, and some failures, that will provide lessons for the whole nation.
  6. Lessening the role of Center for Medicare and Medicaid Innovation (CMMI). Republicans have pushed back on the mandatory reporting requirements and participation in programs that have come out of CMMI. In September 2016, a group of 178 House Republicans and 1 Democrat signed a letter asking CMS to “cease all current and future planned mandates” under CMMI. The letter denounced new initiatives as potentially compromising patient care, as “patients are blindly being forced into high-risk, government-dictated reforms with unknown impacts.”2
Other broad criticism from lawmakers includes the opinion that there are too many federal programs to manage.4 While Democrats argue that important innovations are more likely to be discovered by exploring different approaches, Republicans are skeptical that federal agencies can generate innovation; the latter party defers the role to states or other stakeholders like private payers. With a new Republican Congress, we could see a refocusing on certain programs that have already produced results, like bundled payments.

Continued pressure to control costs will escalate this year, both inside and outside Washington, DC. Health systems and providers need to recognize that variability of both quality and cost are becoming large influencers of payment decisions and patient choice alike. Legislation and existing regulation, like the Medicare Access and Children’s Health Insurance Program Reauthorization Act, already create the impetus for moving away from a fee-for-service world. One of the most important components of any plan that would aim to improve quality and reduce costs is to engage physicians in the process of standardizing care. 


John Peabody, MD, PhD, FACP, is a professor in the School of Medicine, University of California at San Francisco and in the Fielding School of Medicine, University of California at Los Angeles. He is also the founder and president of QURE Healthcare. 

1. Cubanski J, Neuman T. The facts on Medicare spending and financing. Kaiser Family Foundation website. Published July 20, 2016. Accessed February 23, 2017.

2. Sullivan P. Lawmakers call for end to Medicare ‘experiments.’ The Hill website. Published September 30, 2016. Accessed February 23, 2017.

3. Medical cost trend: behind the numbers. PwC website. Published June 2016. Accessed February 23, 2017. 

4. Casalino LP, Bishop TF. Symbol of health system transformation? assessing the CMS innovation center. N Engl J Med. 2015;372(21)1984-1985. doi: 10.1056/NEJMp1500457. 
Copyright AJMC 2006-2018 Clinical Care Targeted Communications Group, LLC. All Rights Reserved.
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