October 15th, 2015

Getting Ahead of the Storm

Mark McAdoo

Anyone can tell you that the cost of healthcare has risen to an uncomfortable level, and The Commonwealth Fund released a report that confirms exactly how much family budgets are being impacted by the average 62% increase in family premiums from 2003 to 2011. In an effort to contain the uncontrolled growth in healthcare costs, a shift has been taking place to move from fee-for-service (FFS) payment models to value-based-payments (VBP).

The VBP aims to create an environment where providers and payers collaborate with three key goals in mind: improving quality, improving patient care, and reducing cost. Results from the early adopters of VBP models are demonstrating positive results. Geisinger Health Group in central Pennsylvania, and even the Medicare Participating Heart Bypass Center Demonstration are all examples of improved quality and decreased costs resulting from bundled payment programs.

A tipping point occurred in the transformation to VBP this last January with the Centers for Medicare Services Bundled Payments for Care Improvement Initiative (BPCI). Under this initiative, approximately 6,000 healthcare facilities will have to transition to a bundled care model. CMS targets to have 50% of all their payments in a VBP model by 2018. Two days after CMS announced this commitment, evidence of it’s impact on the private market was already seen as the Health Care Transformation Task Force, made up of leading health plans and providers, announced their commitment to transition 75% of all payments to a VBP model by 2020.

Since January there has been tremendous activity in the market, culminating in the announcement by CMS in July of the Comprehensive Care for Joint Replacement (CCJR). This new proposal essentially mandates bundled payments, a form of VBP, for all knee and hip replacements starting in 2016. Regardless of your stand on CCJR, this move only reinforces CMS’ commitment to move to a bundled payment system.

This is no longer a pilot program. VBP isn’t just one more alternative we are investigating, rather it’s one of the fastest growing initiatives we have seen in healthcare. If participants in the healthcare market want to be prepared for the major wave that is coming, the time to start transitioning is now.

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