health care costs, outcomes, and payment...

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Health Care Costs, Outcomes, and Payment Policy

Mark McClellan, MD, PhD Senior Fellow and Director,

Initiatives on Value and Innovation in Health Care Brookings Institution

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Alternative Payment Models for Health Care Providers

Payment linked to quality and cost for a specified episode of care Type of Payment: Case-level

Episode Based

Payment linked to quality and cost for a specified population Type of Payment: Person-level

Whole Person

Examples: • Elective procedure

episodes • Hospital admission

episodes • Primary care

medical home

Examples: • Comprehensive care

for frail patients • Accountable care

organizations • Capitated care with

perf. measures

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Growth of Accountable Care Organizations Over Time: Medicare and Non-Medicare

0

100

200

300

400

500

600

700

800

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q1 2014

Q2 2014

Q3 2014

Q1 2015

# of

ACO

s

Medicare Non-Medicare Total

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Growing (Preliminary) Evidence on Accountable Care Organizations

Medicare ACOs 7.8 million beneficiaries 405 MSSP ACOs 19 Pioneer ACOs

First year results: Higher measured quality Approx. one-quarter beat cost benchmark 1-2% overall savings vs benchmarks Second year results: 11/23 Pioneers earned shared savings ~1% overall savings vs benchmarks Substantial improvement on quality measures

Commercial ACOs

16+ million beneficiaries (Over 300 plans)

Typically larger payment and benefit reforms than Medicare ACOs Early results (not consistently analyzed): Improvement in measured quality Variable reported savings, 2-12%

Medicaid ACOs

Over 40 ACO contracts in 19 states

Limited results so far, but promising impacts for some high-risk beneficiaries

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MSSP Performance on Cost & Quality

ACO Quality Performance Score vs. Percent Savings

McClellan et al. Early Evidence on Medicare ACOs and Next Steps for the Medicare ACO Program. Health Affairs blog. January 22, 2015

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Medicare ACO Program: Work in Progress

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• Most Medicare ACOs expected to stay in Track 1 (shared savings)

• Some attractive features for two-sided risk ACOs available only in Track 3: prospective attribution, patient attestation, waivers from 3-day hospital stay requirement for SNF coverage

• No option for ACOs besides Next Gen pilot to shift further than than two-sided shared savings – though partial capitation models in commercial ACOs are becoming common

• Rulemaking expected on including regional costs trends in financial benchmark

• No changes to risk adjustment methodology

• Limited opportunities so far for more meaningful patient engagement: patient attestation in Track 3 only, financial incentives to seek care within ACO in Next Gen pilot only

• These features will continue to evolve

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Medicare’s Payment Reform Strategy

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Future of Payment Reform

• Timely and consistent methods for sharing data and analytics to improve performance

• Meaningful, consistent performance measures derived from care data

• Rapid evaluation of reforms and expansion of successful reforms

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Future of Payment Reform

ACO/Shared Accountability Payments • Reimburses population-level improvements in

quality and overall per-capita costs • Encourages coordination across the continuum of

care • Can reinforce/ support “piecewise” accountable-

care reforms




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Future of Payment Reform Medical Homes for

Primary Care • Supports care coord,

prevention, chronic disease mgmt, and other key primary-care activities

• Rewards reductions in primary care-related cost trends




care reforms




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Bundled Payments for Specialty/Intensive Care

and Post-Acute Care • Combine payments across

providers involved in specialty care

• Rewards greater efficiency and quality within the episode of care




care reforms




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Bundled Payments for Specialty/Intensive Care

and Post-Acute Care • Combine payments across

providers involved in specialty care

• Rewards greater efficiency and quality within the episode of care




care reforms




Performance-Based Payments for Drugs, Devices • Reimburses improvements in results and reductions in

costs for devices and drugs • Supports targeting treatments to patients likely to benefit,

not greater volume

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• Mission – to accelerate the health care system’s transition to alternative payment

models by combining the success of the private sector with the power and reach of the public sector.

• Goals – In 2016, at least 30% of U.S. health care payments are linked to quality

and value through of Alternative Payment Models (APMs) – In 2018, at least 50% of U.S. health care payments are so linked – These payment reforms are expected to demonstrate better outcomes

and lower costs for patients

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Work Groups The LAN will form multi-stakeholder WGs charged with developing practical, actionable, operationally meaningful recommendations on issues and models that represent the best opportunity for accelerating adoption of APMs. Work groups will: • Build on existing successes.

• Identify and address critical barriers to adoption to accelerate progress.

• Address key technical components of selected payment models, e.g., risk adjustment, attribution, performance measures, and data.

• Harvest and share best practices around, e.g., implementation, bearing risk, patient/consumer engagement, and functional capabilities.

• Incorporate perspectives of patients and consumers as models are defined and recommendations are developed.

APM Definitions and Progress Tracking Outcomes: • Common operational

definitions • Plan for monitoring the

progress of APM adoption

Clinical Episode Payment Model

ACO/ACO-Like Payment Model

Future work groups will be established as need arises.

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Affinity Groups AG 1 | Employers & Purchasers

This affinity group’s objectives are to:

• Identify best practices and lessons from innovative payment models by convening leading purchasers.

• Determine interest of large and medium-sized employers to push for wider use of APMs.

• Develop a “toolkit” for employers who want to encourage the use of APMs.

• Encourage employers to participate in multi-payer initiatives at the State and community level.

AG 2 | Consumers & Patients

AG 3+ | Future affinity groups will be established as need arises

The LAN will bring single-sector groups together to identify, discuss, and address barriers that are unique to the group. • Specific and defined

objectives will be directly tied to LAN goals.

• Key roles include engaging constituent community, acting as a sounding board, and disseminating lessons learned.

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Challenges Ahead for Effective Payment Reform • Data and support systems

• Performance metrics

– Quality measures – Spending/resource use measures – Attribution – Benchmarks – Reliability and validity

• Meaningful and reinforcing payment changes

– Definitions – Complementarity in payment reforms (population, episodes,

specialty care – Complementarity in benefit reforms – Path for shifting from FFS

• Faster and better evidence

health care costs, outcomes, and payment...

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