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Creating Incentives for High-Value Care

A Q&A with Harold D. Miller and Jeffrey Bailet, M.D.

Transforming Care spoke to Harold D. Miller and Jeffrey Bailet, M.D., about their work with the Physician-Focused Payment Model Technical Advisory Committee, which was created under the Medicare Access and CHIP Reauthorization Act of 2015 to evaluate physicians’ proposals for new payment approaches.

harold miller

Miller is president and CEO of the Center for Healthcare Quality and Payment Reform and has written extensively about how to reduce health care costs without denying patients the care they need.

Transforming Care: You’ve said fee-for-service payment systems prevent providers from delivering lower-cost care. Why is that?

Miller: A big reason is there is no fee at all for many high-value services. A physician practice can lose money doing things that would improve care for patients and reduce overall spending. For example, responding to a patient phone call might avoid an emergency department (ED) visit, but we only pay physicians when they see patients in the office, so it’s not surprising that we have a lot of unnecessary ED visits. Patients with cancer often end up in the hospital due to dehydration and other complications of chemotherapy because we don’t pay for the triage or intravenous hydration services that can avoid the hospitalizations. If we want patients to get higher-value care, we need to ensure physician practices receive enough revenue to cover their costs when they do the right thing for patients.

Transforming Care: Global payment models are intended to address this by giving providers the latitude to use capitated or bundled payments as they see fit. But even in countries that use global budgets for payment, such as Canada, you still see high rates of low-value care. Accountable care organizations, which also encourage providers to pay attention to resource use, meanwhile haven’t produced dramatic results. Why aren’t these approaches as effective as we expect?

Miller: The problem with typical capitation and other global payment models is there is no change in the way most doctors are actually paid, so the payment barriers don’t disappear. Capitated medical groups may pay the primary care providers (PCPs) differently (e.g., with a monthly payment instead of visit fees), but all of the specialists are still paid using the standard fee-for-service system. Capitation simply shifts the responsibility for limiting utilization of specialty care from the health plan to the PCPs, rather than giving the specialists the ability to actually redesign the care they deliver. There are more ways to pay than just global payments and fee-for-service, but we need to be clear about what we want to pay for before we can design a payment model that will support that.

Transforming Care: What are some examples of better alternative payment models for specialists?

Miller: In many cases, a fairly simple change in payment can enable specialists to make a significant improvement in patient care and save considerable money for Medicare and other payers. For example, many patients with a chronic disease have trouble controlling their symptoms and are hospitalized frequently as a result. Paying the specialist a monthly amount tied to the severity of the condition and the outcomes achieved, rather than paying based on the number of office visits or how many different conditions the patient has, can dramatically reduce spending. In addition, we need bundled payments for diagnosis, not just treatment. When physicians are forced to evaluate symptoms during short visits, it’s not surprising that patients end up getting a lot of unnecessary tests and potentially the wrong treatments.

Transforming Care: If you were to give the Centers for Medicare and Medicaid Services (CMS) one piece of advice about developing alternative payment models what would it be?

Miller: I would be creating more payment models tailored to specific patient conditions and providing flexibility to the specialists who treat them. CMS has been so focused on trying to control the total cost of care through global payments and integrated systems, it is missing the opportunity to engage specialists in improving care and reducing spending for many high-cost conditions.

Jeffrey Bailet

Jeffrey Bailet, M.D., an otolaryngologist and executive vice president of health care quality and affordability at Blue Shield of California, is chair of the Physician-Focused Payment Model Technical Advisory Committee.

Transforming Care: What are the biggest obstacles physicians face in developing and implementing alternative payment models?

Bailet: There clearly are significant infrastructure investments that the provider community needs to make to effectuate these models or enable them to be successful — whether it’s investing in a medical record system or connecting to a health information exchange or tracking performance and providing intelligent, real-time interventions. This is a challenge for smaller and rural practices not tethered to large systems. They don’t have the resources required to stand these models up.

Transforming Care: What are some of the strengths and weaknesses of the proposals you’ve seen to date?

Bailet: We’ve seen proposals from providers who are very experienced with clinical delivery and are incredibly innovative in designing new clinical delivery strategies. Where the models struggle is on the payment part of their submission because they don’t have access to data to be able to model the benefits, the outcomes, or the return on investment. And yet those steps are required when you scale these models or evaluate them to determine their impact.

Transforming Care: Can the Physician-Focused Payment Model Technical Advisory Committee assist them?

Bailet: We can and do direct the stakeholders to areas within Medicare where they can get access to certain data and reports. So, we are helping them but there is opportunity to be more purposeful. Congress has given us more latitude to provide initial feedback to the stakeholders. Some have taken that feedback and, in some instances, withdrawn their proposals to go back to the drawing board and strengthen them.

Transforming Care: What about proprietary data? How big an impediment is limited access to that?

Bailet: That is a national challenge obviously. We have a lot of data that is walled off within health care delivery systems and electronic medical records. Where we need to go is having real-time data that is available on an open platform to appropriate parties: the payers, the patients, and the providers. I believe CMS is moving in that direction.

Transforming Care: Is there a limit to the number of condition-specific models CMS or other payers can administer?

Bailet: Yes. CMS only has so much capacity to get one of these models stood up. We are looking for synergies between some of the models. Where overlap exists, we should seize upon it. Our challenge is to create models that are big enough to allow people to participate across the country to get to scale and to drive savings and increase quality but customized enough to have an impact and allow specialties to participate and contribute.

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Publication Date: June 29, 2018