AEI Panel Sees Payment Reform Advancing as GOP Takes Control


Despite disagreement over the Affordable Care Act, Democrats and Republicans agree on broader issues like the need to move away from fee-for-service and the need to a better job for those with chronic conditions.

Payment reform won’t end if the Affordable Care Act (ACA) is repealed, but it will evolve differently—with more focus on health savings accounts (HSAs) and steps to lower out-of-pocket costs for consumers, according to an expert panel convened Friday by the American Enterprise Institute (AEI).

The panel, which featured Clay Alspach, JD, of Leavitt Partners; Len Nichols, PhD, of George Mason University; Karen Fisher, JD, of the American Association of Medical Colleges; and Avik Roy, MED, with the Foundation for Research on Equal Opportunity, appeared in the last session of “Fixing Healthcare: Practical Lessons From Business Leaders.” Joseph Antos, PhD, resident scholar at AEI, moderated the discussion.

Panelists agreed that an ACA appeal won’t stop the movement away from fee-for-service (FFS) toward value-based payment models—both parties strongly supported passage of the Medicare Access and CHIP Reauthorization Act (MACRA), and Republicans support steps to slow down healthcare spending. But vehicles like HSAs will get more attention, since they are prominent in alternative health plans advanced by House Speaker Paul Ryan, R-Wisconsin, and the nominee to lead HHS, US Representative Tom Price, R-Georgia.

“The move to value is going to continue,” Alspach said.

Nichols urged attendees to keep 3 things in mind as changes to the ACA advance:

  • “There is bipartisan support for the value agenda,” he said, citing MACRA as the chief example.
  • Cooperation between public health plans and private payers “is a 2-way street.” Movement toward a consensus about what metrics plans should track is essential, because providers cannot keep up with multiple different measurement systems.
  • Employers’ power to negotiate has little to do with how large they are nationwide—it’s how large they are within a market that matters. Nichols called this the “dirty little secret” about healthcare. “As big as Walmart is, it can’t tell a local hospital what to do,” he said.

Value-based care, Nicolls said, focuses less on micromanaging what providers do than on looking at outcomes, which gives providers flexibility in how they keep people healthy. But the downside under MACRA, he said, is that the reimbursement scheme pits practices against one another—and some smaller practices will lose out if they cannot make use of the tools of value-based care, such as electronic health records (EHR).

Nichols said if 4% to 9% of a practice’s total Medicare revenue is at risk, for example, “they cannot win because they cannot make the EHR generate the data to tell them how to do it.”

Alspach said that while interest in value-based care is bipartisan, the next wave of change will emphasize what the consumer experiences. HSAs will get lots of attention as the discussion of “repeal and replace” goes forward.

“Medicare will be part of the debate,” he said, although perhaps not right away, although Ryan has been clear this is priority. The GOP is concerned about rising costs. “Unless this is solved, the mandatory programs—Medicare and Medicaid—they are crowding out the budget,” he said.

Some have predicted the demise of the Center for Medicare and Medicaid Innovation (CMMI), which has drawn fire from Price for pushing hospitals to implement bundled payments and other changes in rapid succession. But Alspach thinks CMMI will ultimately survive, because it’s the best vehicle for Republicans to test their own reform ideas.

Antos noted that there’s a great tendency in federal programs to demand uniformity, but the private sector shows that, “uniformity doesn’t generally work.” Fisher said there are a few things that need to happen everywhere in healthcare: “We do want high quality care, and the opportunity to spread information quickly,” she said.”

Besides consensus on MACRA, Fisher sees other areas where partisan differences fall away, such as the need to improve care for the chronically ill. In late 2016, the Senate Finance Committee released a version of the “CHRONIC Care Act of 2016,” which seeks to streamline payment for chronic disease care and promote telehealth. Fisher expects bipartisan attention to this legislation in the new session. “While there can be disagreements on one issue, there are discussions where people are going to agree,” she said.

Fisher sees a role for government in finding agreement on what quality measures matter, to reduce burdens on providers, to revise anti-kickback rules that inhibit care coordination, and to figure out how to fund resources that benefit the public broadly, such as public health infrastructure that responds to epidemics, without those costs being embedded in patient hospital bills.

Roy agreed that HSAs and other market-based concepts would find support with the new Congress. It’s been “a central dogma of healthcare the laws of economics are magically suspended in healthcare,” Roy said. That’s not true, he said, “if you give patients more control and you have a patient-centered health system.”

He said ideas the system needs to promote are longer-term relationships between payers and patients, so that payers who pay for things treatment for hepatitis C virus keep the patient as a consumer for enough time to see the value of this investment. Right now, he said, annual contracts for healthcare mean that even though an expensive treatment or procedure may be cost-effective in the global sense, for the individual payer, “you’re not sure you’re going to capture that value down the road.”

But the bigger challenge, Roy said, is driving down costs. For all the talk about healthcare utilization being the problem, he said the Princeton health economist Uwe Reinhardt, PhD, had it right when he co-authored an article in Health Affairs that said, “It’s the prices, stupid.”

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