WLSA member company, TripleTree has posted a great blog on the impacts of medicare’s shift to alternative payment models. Read the blog below and visit TripleTree’s website to read additional healthcare and connected health blogs.
“Many heads turned to Washington late last month when the Department of Health and Human Services (HHS) laid out a definitive set of goals and a timetable for shifting traditional Medicare payments from Fee for Service (FFS) to Fee for Value (FFV). Most notably, the Department set aggressive goals for moving to Alternative Payment Models such as ACOs and Bundled Payment initiatives. HHS aims to have 30% of reimbursement run through such models by 2016, and 50% by 2018.
“The move was largely applauded by industry groups, including the AMA and the AAFP, and followed in the footsteps of a similar announcement by UnitedHealth Group, which aims to tie $65B of reimbursement to value-based arrangements by 2018, and Humana, which aims to tie 75% of its Medicare Advantage membership to value-based arrangements by 2017.
“The shift to Alternative Payment Models has been gaining momentum across the healthcare landscape as constituents recognize the growing need to align incentives between payers and providers while enhancing consumer engagement, improving quality, and ultimately reducing costs. Alternative Payment Models, Fee-for-Value, and Capitation have been extremely successful in the private sector within select geographies for some time. Further, the benefit of aligning reimbursement with outcomes and patient-centric care has proven especially beneficial to Medicare Advantage plans. A look at the upper-quartile Star rated plans highlights the positive impact on quality, outcomes, and patient satisfaction that can be derived from true alignment between payers and providers. Managed Care Organizations have been leaders in this movement and many of the methods they pioneered will likely be beneficial models for HHS to learn from as they aim to achieve their goal.
“HHS believes that the expansion of Alternative Payment Models will happen largely organically through private sector adoption, but the “opt-in” nature of these models leaves the transition in the hands of providers, who have historically been slow to change. Those providers that do make the transition to Alternative Payment Models will likely not be able to achieve success on their own. Companies providing enabling solutions will be endowed with tremendous momentum as hospitals, physicians, and other providers will undoubtedly need assistance to acclimate to new models of care delivery and reimbursement.
“Several provider-outsourcing and technology segments well-positioned to take advantage of the $150B of reimbursement flowing into Alternative Payment Models between now and 2018 include Care Coordination, Bundled Payments for Care Improvement (BPCI) Conveners, ACO Enablement, and Clinical Intelligence suppliers. Not only will competition between companies in these spaces increase as more dollars are at stake, M&A competition for the companies themselves will undoubtedly increase as well.
“The future success of the shift to FFV for traditional Medicare may also have an impact on Medicare Advantage plans. If Medicare is able to demonstrate an ability to curb the growth of cost by shifting 50% of reimbursement to Alternative Payment Models, the benchmark against which Medicare Advantage plans are judged will be tougher to meet. This will likely spur continued innovation for Managed Care Organizations as many of them aim to continue to fuel their growth through the seniors business.
“Finally, the evolution of Alternative Payment Models outside of the seniors market may be significantly accelerated by the influence of HHS on the Medicare market. The best-in-class models of payer-provider collaboration, member engagement, and care management that thrive serving the Medicare Advantage and traditional Medicare markets will be able to pivot to serve the commercial and Medicaid landscape, and in doing so, significantly expand their reach and impact.
“TripleTree strongly agrees with the spirit of HHS’s announcement, which aims to improve quality, curb spending, more closely align provider incentives, and truly transform Medicare into a system that rewards effective and efficient care. As the dust begins to settle, real work lies ahead for CMS and providers to make this vision a reality.
“We look forward to watching developments unfold over the coming months and years and would like to hear what you have to say about this exciting development.”
By: Justin Fengler & Justin Roth