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Paying Doctors for Value on Track in Health Innovation Agency

Dec. 4, 2019, 10:28 AM

New methods for the government to pay doctors and hospitals based on patients’ overall health are gaining traction in the agency tasked with testing how they work, even though some major mandatory changes are delayed.

Most of the voluntary value-based payment models introduced in the Health and Human Services Department’s innovation center under President Donald Trump are likely to be finished next year, former administration staff and industry observers said.

This overview is based on government documentation and interviews with several people close to the agency.

As health costs continue to rise, both industry and regulators acknowledge they need to find ways to a provide quality care and still stay financially viable. New payment models are designed to pay doctors more for taking better care of patients and managing the cost.

The HHS office that runs those models, the Center for Medicare and Medicaid Innovation, has expansive authority to create and test health-care payment systems without congressional approval.

Over the past two years, the innovation center has introduced 17 models on everything from the care of mothers with opioid use disorder to emergency transportation services to non-hospitals. Several of those models are expected to start Jan. 1.

In some cases, doctors can volunteer to participate in new payment systems and then offer feedback. In others that are mandatory, health providers get a set payment for an episode of care if they meet certain criteria. For example, the Obama administration required certain hospitals to be financially accountable for all care related to a hip or knee replacement.

Mandatory models go through a formal rulemaking process and typically get pushback from the industry due to concerns they could harm patient care and providers’ financial viability.

Adam Boehler, the innovation center’s director for the past year and a half, originated most of these models. He left the office Oct. 1 after he was confirmed to lead the International Development Finance Corp. Trump has yet to announce a new director, and Amy Bassano is acting director.

Kidney Care

Kidney care is the most high-profile of the government’s value-based payment methods because kidney disease is the most expensive to treat.

More than 661,000 Americans have end-stage renal disease, according to the National Institutes of Health, and an estimated 37 million people in the U.S. have chronic kidney disease, according to the National Kidney Foundation.

The administration is encouraging doctors to prescribe dialysis at home and manage patients’ overall care so they are healthy enough to receive kidney transplants. In-home dialysis leads to more independence and better quality of life for patients, and transplants lead to better survival rates with decreased medical costs.

The administration proposed four voluntary models to encourage these changes that appear to be on track. Doctors can apply now to participate, but financial accountability won’t start until 2021.

One model pays nephrologists a set fee per patient, and those doctors receive bonuses for each patient that receives a transplant and stays healthy.

The other three models rely on nephrologists and other kidney-care providers to work together to manage the total care for patients with late-stage chronic kidney disease and kidney failure. Those providers receive a set payment for each case and a portion of any financial savings to Medicare.

One proposed mandatory model is being delayed. It would require nephrologists, transplant providers, and dialysis facilities to receive a set payment for handling Medicare patients with end-stage renal disease. It’s designed as an incentive for those teams to manage costs.

The rule that would finalize this model is now under long-term action in the department’s agenda, which means it isn’t a top priority.

The delay doesn’t mean the rule won’t eventually come to be. Boehler got the two main dialysis companies, DaVita Kidney Care and Fresenius Medical Care North America, invested and involved in the model’s design early in the process, a former CMMI staffer said.

Primary Care

Other than kidney care, the models most likely to see success are five voluntary projects to pay for primary care. Increasing the amount of services provided by primary care providers would save on emergency room treatment and improve preventative care.

A quarter or more of hospitals and doctors that receive Medicare are expected to opt in and participate in the models, HHS Secretary Alex Azar said in April. They’ll be able to decide how to spend resources on patients and come up with new ways to take care of them, with the added bonus of extra payments.

The applications for all five voluntary models are open now, and payments are expected to start Jan. 1, 2021.

One of the models gives small individual primary care practices a flat payment based on the number of Medicare patients they serve. Those practices receive a bonus when patients stay healthy and out of the hospital.

Another model gives small primary care practices higher payments for specializing in patients with complex, chronic needs. Those practices, which could include hospitals or palliative care providers, will be required to have a network of relationships with other care organizations and will be assigned interested and eligible participants. Doctors can apply now, and practices will be selected in spring 2020. The model will officially launch in January 2021.

Two other models are available to larger practices that contract directly with the government, like private Medicare Advantage plans and Medicaid managed care organizations. That includes “accountable care organizations,” groups of doctors and hospitals that coordinate care and share in financial risk for their patients’ health-care spending.

Participating practices will receive a fixed monthly payment for the cost of caring for their patients. If the providers spend more than that fixed cost, they’ll need to cover it, but if they spend less they’ll be able to keep some or all of the savings. Providers could take on 50% or 100% of the financial risk of their patients’ care.

Struggling Models

In addition to the mandatory kidney care model, two more proposed payment systems may struggle to get over the finish line, former staffers said—a mandatory fixed payment for radiation oncology and a region-specific primary care model for large practices.

The region-specific model was a pet project of Boehler’s. The idea behind it is to allow doctors to manage the needs of patients within a specific geographic region, including addressing their social needs, like insufficient food or housing, that harm their health. But there’s so much uncertainty about how the model would be structured that the CMMI asked for comments from the public over the summer and hasn’t gone further.

The team tasked with designing that model is the same one working on the other direct contracting models, which could delay things further, the former CMMI staffer said.

The radiation oncology model may have problems because it requires participation by certain Medicare providers that would only make a profit by keeping costs below a benchmark price. The rule that would finalize this model is under long-term action in the department’s agenda, which means it isn’t a top priority.

To contact the reporter on this story: Shira Stein in Washington at sstein@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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