Key Challenges and Solutions of Healthcare Payment Reform

January 23, 2017 - Healthcare payment reform is becoming more common across payers and providers with many stakeholders transitioning from the traditional fee-for-service reimbursement system to value-based care payments. Representatives from the National Academy of Medicine published an editorial in the Journal of the American Medical Association (JAMA) outlining how healthcare payment reform could lead to better quality of care and patient engagement.

Healthcare payment reform often involves reinventing healthcare delivery. Providers have found that redesigning healthcare delivery platforms could lead to better patient engagement and more successful treatments. This includes improving care coordination among multiple medical teams, incorporating digital tools and remote monitoring technology, and investing in data analytics.

“Alternatives to fee-for-service (FFS) payment are becoming more widespread. The idea is to provide aligned financial support for reforms in health care that improve quality and efficiency,” the report authors wrote. “For example, many healthcare organizations have found that analyzing current treatment patterns and redesigning care pathways can enable more patients to be more engaged in their care and more effectively treated in outpatient settings or in their home.”

“The new care models often use care teams, digital health tools that enable better monitoring and intervention, and considerable investments in analytics and support systems—all of which are generally not well supported under FFS. The models can potentially help ensure the appropriate use of costly technologies that are usually covered under FFS, such as breakthrough drugs and devices, which are under increasing pressure to demonstrate value in practice or face restrictions on access.”

The Centers for Medicare & Medicaid Services (CMS) have invested in advancing value-based care payment models and has set a goal of having 50 percent of their payments in the form of alternative payment models by 2018. The transition to value-based care that CMS initiated has led commercial payers to also jump on the bandwagon and invest in healthcare payment reform.

READ MORE: Why Value-Based Care Reimbursement, MACRA are Here to Stay

The challenges that payers and providers have faced in adopting value-based care reimbursement involves the mixed results seen during the first few years, according to the National Academy of Medicine. Some providers have found that performance measures put in place by payers do not accurately reflect quality improvement efforts.

Additionally, clinicians often face administrative burden regarding the complexity of adhering to varying value-based performance measures from multiple payers. Hospitals and clinics may also lack the data and analytics systems necessary to make quality improvements in their healthcare delivery.

Along with these obstacles, some stakeholders have expressed concern regarding the quality of care available for patients in need of high-cost treatments in the midst of healthcare payment reforms aimed at reducing medical spending.

Payers and providers looking to address these challenges and create a successful value-based care payment model will need to align healthcare payment reform with that of quality improvement efforts, according to the editorial. The National Academy of Medicine calls on for the federal government to bring more support to the Health Care Payment Learning Action Network and the Core Quality Measures Collaborative.

By doing so, the administrative burden that providers feel when required to meet many different benchmarks and payment models should be reduced. Additionally, payers should work to create quality measures that reflect the results and outcomes of treating patients with more complex medical conditions.

READ MORE: 4 Major Ways to Succeed in Value-Based Care Payment Strategies

Payers could also support their provider networks by sharing key claims data with hospitals, clinics, and primary care offices that would allow doctors to close gaps in care and improve quality performance. Providers, however, will need to align that data with the tools and resources necessary to better coordinate care and share best practices across their medical teams.

Among health insurance companies, the key reasons for investing in value-based care payment models involves the need to reduce continually rising healthcare spending as well as the strive for better patient care. Major healthcare payers have already seen significant cost savings due to value-based care reimbursement.

For example, Humana’s value-based care platform among its Medicare Advantage population reduced costs by 20 percent in 2015. Humana also reported 19 percent higher HEDIS quality scores in its value-based care program when compared to its fee-for-service payment system. Emergency room visits fell by 6 percent while colorectal screening rates rose by 8 percent among the Medicare Advantage population treated in a value-based care environment.

“Our integrated approach to partnering with providers enables us to improve the health care experience for consumers in multiple ways,” Bruce D. Broussard, Humana’s President and Chief Executive Officer, said in a public statement. “We’re able to offer more affordable health plans, help people improve their health through comprehensive, holistic engagement with them, and also drive higher physician satisfaction.”

UnitedHealthcare also decreased costs through its value-based care platform. The payer saw better outcomes on 83 percent of quality measures among its accountable care organizations when compared to non-ACOs.

Health insurance companies looking to successfully transition to value-based care payment models are advised to follow these solutions when addressing the challenges of healthcare payment reform.