The Alphabet Soup of Value-Based Care Began Bubbling 40 Years Ago
By Richard A. Royer, Chief Executive Officer, Primaris Healthcare Business Solutions
The head-spinning changes occurring in healthcare’s seismic shift from fee-for-service reimbursement to value-based care payment models has led to an ocean of patient and health data, along with an alphabet soup of colorful acronyms. Surely, the change has been rapid – and frequent – and a challenge for physicians and nurses, administrators, and the entire roster of clinic, health system, and hospital staffs.
So fast, it seems, that it’s easy to image the change began occurring overnight, as if it crept up on us under cover of darkness, looming in the pre-dawn shadows and waiting to pounce at first light. No doubt some may dismiss that description as too ominous and over-dramatic; others will certainly nod in agreement.
But let’s step back for a moment, take a breath, and see the road we’ve already traveled, because the truth is, we’ve been headed towards value-based care for a long, long time.
A Quick History Lesson
Let’s go back to July 1965, the day President Lyndon B. Johnson signed Medicare into law during a ceremony in Independence, Mo. Former President Harry S. Truman was issued the very first Medicare card. The Bureau of Health Insurance was created to control the costs of the new government insurance program.
Fast-forward to 1977 when the Health Care Financing Administration (HCFA) was established to administer Medicare and begin building a national network of Peer Review Organizations (PRO) to review Medicare costs and patient care. Some rudimentary data mining was put in place to help HCFA see the full scope – as much as possible – of costs, procedures and general overall health in regions across the country. Under Medicare, institutional providers (hospitals, skilled nursing facilities, and home health agencies) were reimbursed based on “reasonable costs”. The printed, hard copy forms contained detailed information on direct and indirect costs, revenues, and charges, but not with metrics designed to determine the quality of care. In addition, a bevy of barriers – including privacy rules – made the data mostly inaccessible to providers, and far from public/patient access. Still, those early days of hit-and-miss, pen-and-paper medical records were a precursor of the astonishing sea of health data that today is flooding physicians and health systems with extra work and costs.
In the early 1980s, HCFA’s Medicare and Medicaid programs were growing even more rapidly, and with greater cost. HCFA made a decision to strengthen the PRO network by working with contractors throughout the country. Each state would have its own PRO, each with two major functions: make sure patients were properly treated in hospitals (and didn’t overstay) and review doctors, comparing them to their peers.
The approach began to change during the next 10 years as some of the treatment quality standards became outmoded. For instance, the number of days a patient stayed in the hospital wasn’t always directly related to quality of care and health outcomes. Also, the system sanctioned doctors who did not perform as well as their peers. It was regulatory, punitive, and negative.
At the same time, the Sustainable Growth Rate hospital and physician payment method that was part of the original Medicare law was showing flaws in keeping up with the number of individuals on Medicare and the costs associated with their care. Additional steps were put in place to put the system on a trajectory toward value-based care.
At the same time, another common theme began emerging. As the largest single healthcare payer in the country, Medicare often leads the private insurance industry toward change, too. When the calendar turned to the 21st century, the quality-over-volume approach to paying doctors and hospitals for Medicare was accelerating. Even the Medicare program got a face lift. On June 14, 2001, HCFA was relegated to the history books and was renamed the Centers for Medicare and Medicare Services (CMS).
Quality’s marathon becomes a sprint.
CMS began to require that hospitals work on specific quality measures and report the data. At the same time, the Joint Commission, which provides coveted, valuable accreditation for hospitals, also began adopting some of the same quality measures in order for hospitals to earn accreditation. Quality reporting work began picking up the pace in terms of sophistication and demand. New requirements for quality measure reporting centered on a variety of the most costly procedures, from hospital acquired infections and ventilator-associated pneumonia to reducing readmissions and quality outcomes for both inpatient and outpatient charges.
Meanwhile, CMS began pushing hard for data to be abstracted and digitized. And CMS began taking steps towards requiring quality reporting from physicians’ offices, not just hospitals. It was another step – perhaps a giant leap – toward requiring the use of electronic health records. (EHRs).
Along with the coming flood of data was that bevy of colorful but now-common programs and acronyms. The journey towards value-based care was in full steam, evolving into the Quality Payment Program, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the Merit-based Incentive Payment System (MIPS).
And Here We Are.
MACRA – which birthed the QPP and MIPS – came along in 2015 in large part due to Congress’s ongoing struggle with the old Sustainable Growth Rate method to control spending on Medicare services. By 2015, the SGR was going to result in a dramatic physician payment reduction of more than 20 percent. That reality would have had serious implications for doctors’ ability to accept Medicare patients.
MACRA replaced the SGR, putting in place both incentives and penalties for physicians and health systems that fall short of quality measures. The goal of MIPS is to tie 50 percent of Medicare reimbursements to a quality reporting and scoring system by 2019. CMS would like to eliminate fee-for-service entirely – with commercial insurers following along, no doubt – by the middle of the next decade.
It’s a tall order, indeed, but the data-fueled, value-based care train is rolling full steam ahead. The future of payment models and quality care – the equation that equals value – will be increasingly tied to population health, social determinants such as transportation and societal factors, coordination of care, bundled payments, coordination of care, and more.
With quality measures and financial incentives driving improvement, there are now 2,100-plus measures for large health systems to track and report. But this financial and quality evolution in healthcare is not so unique. How different are automobiles from the 1950s, considering environmental and safety rules?
Though value-based care still seems like a new concept for many healthcare providers and health systems, the new reality has been headed our way for a few decades now. And the new reality of value-based care is not an option for most providers, especially as both public and commercial payers are now driving the train.
