Editor’s Note: This is the first in a five-part series running on the Health Affairs Blog. This Commonwealth Fund-supported series is being produced in conjunction with the Bipartisan Policy Center and will examine current issues and care models in the delivery system reform effort. Each post will be jointly authored by Democratic and Republican leaders in health policy. Check the Health Affairs Blog for the next entry in the series on May 25.
Improving and reforming our health care delivery system is not a partisan issue. The need to improve health care delivery models, as a means for ensuring better patient outcomes and a more efficient health care system, enjoys broader consensus than elements surrounding health insurance coverage and financing. It is important for Congress, the Trump administration, and the health care industry to continue bipartisan efforts to shift our health care delivery system and provider payment models toward value-based care.
The Long History of Bipartisanship in Medicare
For more than 30 years, Democrats and Republicans have worked together on incremental approaches to fostering smarter payment models in federal health programs, which seek to reward providers and health plans for delivering cost-efficient, high-quality care. In 1983, Democratic and Republican leaders of the Senate Finance Committee and House Ways and Means Committee agreed to modernize Medicare’s payment system for inpatient hospital stays, moving from cost-based reimbursement to a pre-set prospective payment for a duration of care for a specific condition.
In 2000 and again in 2003, Congress enacted bipartisan legislation to authorize Medicare payment demonstrations that laid the groundwork for the accountable care organization and bundled payment programs that are in operation today. Most recently, Democrats and Republicans worked together to pass the Medicare Access and CHIP Reauthorization Act of 2015, which reshaped Medicare’s payment system for physician and practitioner services to better link payment to quality performance and encourage clinician participation in alternative payment models. The passage of the 21st Century Cures Act last December was also bipartisan legislation. It created policies to address site-of-service payment differences in our health care delivery system, while improving interoperability of health information technology systems.
It is critical that we continue to build upon these delivery reform efforts, as shifting payment incentives for both providers and managed care plans represents our best chance to improve quality and control health care cost growth without limiting access to services or reducing the scope of covered benefits.
While many programs are still working through growing pains, we have some early evidence of success. Medicare’s voluntary bundled payment program for orthopedic surgery cases produced savings of $864 per 90-day episode of care, on average during 2014. Meanwhile, the Independence at Home Demonstration resulted in average annual savings of $3,070 per participating beneficiary in the demonstration’s first year of operation. Under this demonstration, primary care practices share in Medicare savings that result from care coordination and in-home visits tailored to chronically ill patients’ needs. Finally, a recent Medicare demonstration to address avoidable hospitalizations among nursing home residents showed significant reductions in avoidable hospital admissions, achieved through enhanced medication management and nurse-led care coordination across primary and specialty care.
In continuing implementation of delivery system reform, policy makers must work to develop payment models that avoid unneeded complexity. The new payment arrangements must be understandable to participating providers and patients, to achieve necessary engagement of both patients and providers in the care model.
The Broader Landscape for Delivery System Innovation
The delivery system innovation movement allows for the prospect of federal health programs building off of successful private-sector models, such as the Pacific Business Group on Health’s value-based payment programs for large employer-sponsored health plans. Such complementary efforts will help encourage the public and private sectors to coalesce around a unified long-term vision for delivery reform.
Delivery system reform efforts have most often focused on breaking down payment silos in fee-for-service medicine and providing incentives for care coordination. Although these steps are critical to improving quality and promoting efficiencies, delivery system reform also presents an opportunity to foster person-centered care, including through the provision of non-medical social supports, for high-need, high-cost chronically ill individuals. Heightened focus on the high-need, chronically ill population will be increasingly important for delivery system reform, as these individuals incur medical expenses that are more than four times the national average.
While Democrats and Republicans will continue to disagree on key aspects of health care policy, we firmly believe that the bipartisan work to enhance and improve the health care delivery system must continue unabated. In forthcoming publications through this series, our Bipartisan Policy Center colleagues and policy leaders from both sides of the aisle will present potential paths forward in the ongoing march toward a smarter, value-based health care delivery system.