Catalyst for Payment Reform

Is Payment Reform Exiting a 2+Year Shelter-in-Place?

Is Payment Reform Exiting a 2+Year Shelter-in-Place?

It was late 2019. CPR was approaching its tenth year of leading the payment reform movement and wanted to take stock of its progress. For the first five years, we published both national and state-specific scorecards offering insight to the increasing health care dollars tied to quality.  We stimulated an alternative payment model (APM) “arms race” (as one health plan executive called it) by tracking progress through reporting from health plans in our user groups. In 2015, President Obama announced the creation of the Health Care Payment Learning & Action Network (LAN) and then-HHS Secretary Burwell set APM goals for Medicare and challenged the LAN and the rest of the industry to set goals and measure payment reform as well. Given CPR’s expertise, we were hired as a subcontractor to lead the LAN’s annual measurement effort and still perform in this role to this day. Through these various lenses, we observed a “check the box” mentality from plans (and providers) to payment reform: changes in payment were still largely built on a fee-for-service chassis, with mostly financial upside gains, and resulted in mixed quality outcomes.  At the virtual table with CPR members in Q4 2019, we set our 2020 shared purchaser agenda theme, “Increasing Downside Risk”. Then, we all found ourselves in a public health emergency with the worldwide COVID-19 pandemic. 

The pandemic stimulated significant uncertainty about the future of payment reform. After all, payment reform is a disruptive strategy, requiring providers to modify practice patterns and payers to negotiate measures of performance by which providers are held accountable for care quality. The early days of the pandemic were a time during which pushing payers and providers on payment reform could have been viewed as being out of touch with the magnitude of the situation. The pandemic created a pause and stimulated leaders to rethink the potential of payment reform. For example, we pondered whether hybrid capitation/fee-for-service would gain momentum as a means for primary care providers to receive guaranteed revenue.  And we continue to ponder it, because frankly, our $4+ trillion health care system doesn’t turn on a dime. CPR has been and remains in the proverbial trenches performing important payment reform measurement and strategic thought leadership. 

Other aspects of life have returned to pre-pandemic normal. Mask mandates are gone, people are traveling again, and COVID-19 boosters seem to be part of an ongoing preventive regimen. It begs the question: is payment reform emerging from the pandemic too? It seems so, as more organizations are talking about payment reform. Regardless of your opinion, we’re pleased to see the renewed energy and offer some recommendations below for contributing to the effort.

You can start by sending a signal consistent with CPR’s drumbeat – push for more downside risk. As you have conversations with regional and national payers, and they cite providers demanding higher prices in negotiations, let them know that you expect them to negotiate more downside financial risk in provider contracts to hold the system accountable for improved quality. Remind payers that more ambitious LAN goals for downside risk will be here before we know it.

In addition, you can encourage payers and providers to experiment with and evaluate pilots involving hybrid capitation/fee-for-service payments in primary care (or other downside risk strategies for that matter). This payment model has the potential to shift patient-provider interactions from the office to non-visit-based interactions/communications.

Third, you can encourage payers to implement APMs that incent providers for reducing care disparities among populations that experience discrimination. Putting incentives in play would also fast-track the collection of accurate race, ethnicity, and language data – something that purchasers are grappling with and looking to others for support.

Regardless of the payment reform strategy, remember that there are a few foundational principles that remain critical for success. Payers must negotiate with providers meaningful financial targets, incorporate outcomes into the performance measurement, and support providers with operations and data.

Welcome back to the push for meaningful payment reform.

CPR’s Director of Member Services, Ryan Olmstead, MPH and our Program Director, Andréa E. Caballero, MPA wrote this blog post.

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