Richard H. Hughes, IV, and William Walters, attorneys in the Health Care & Life Sciences practice, in the firm’s Washington, DC, office, co-authored an article in Health Affairs, titled “CMS’ Pay-for-Performance Paradox.”
Following is an excerpt:
Formal value-based payment programs have operated nationally at least since the 2008 enactment of the Medicare Improvements for Patients & Providers Act (MIPPA). The Centers for Medicare & Medicaid Services (CMS) has primarily overseen these programs for the entirety of their existence, yet 17 years later, there is still no consistent set of best practices for compensating what is considered value in risk-based healthcare arrangements—reduced demand for future services.
The Trump administration, through its Department of Government Efficiency, has been scouring the federal government to root out waste, fraud and inefficient spending. An opportunity exists at the Center for Medicare and Medicaid Innovation (CMMI); CMMI has never relied on available commercial tools and methodologies that could save the government upwards of $8 billion annually, simply by more accurately capturing the value present in reduced demand for health care services. For providers, these methods could result in significantly greater shared savings paid out.
We aim to illuminate the current state of disparity regarding monetizing value in delegated-risk contracts between healthcare providers and payers. We use the Next Generation Accountable Care Organization (NGACO) pilot as a case study, demonstrating the significant differences in outcome based upon which methodology is used to define value in monetary terms. In a given year in the NGACO pilot model, one methodology could have yielded savings, while the other yielded losses. The NGACO findings shed light on current models including Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) and the Medicare Shared Savings Program.
Recent developments in artificial intelligence and machine learning have made tools that survey all possible outcomes from multiple methodologies much more cost-efficient, and much more accurate. For commercial entities participating in managed care shared savings arrangements, these tools can help capture all the value they have worked so hard to provide for their patients, and avoid monetary penalties when value was provided. For the Medicare program, it could mean potentially billions more in savings.
