With the future of the Affordable Care Act (ACA) in flux and Washington stymied by political controversies, the movement toward value-based payment appears to have hit a pause at the federal level even as it proceeds full steam ahead in the private healthcare market.
Under the ACA, the Centers for Medicare and Medicaid Services (CMS) implemented a number of programs designed to improve healthcare delivery while lowering costs, including shared savings programs, bundled payment models, and medical homes. While some of these are being delayed or modified, others—such as accountable care organizations (ACOs)—are continuing to expand across the country. Even if Congress does somehow manage an ACA repeal, value-based payment likely will continue in some form, say experts.
There are currently more than 920 active public and private ACOs across the country covering more than 32 million lives, an increase of 2.2 million covered lives in the past year, according to David Muhlestein, PhD, JD, chief research officer with Leavitt Partners and a co-author of a June 28 Health Affairs article on new payment models. This number is only expected to increase, he said. “The current discussions about healthcare won’t change the move toward value-based payments,” Muhlestein said. “The pace might change, but it won’t change the focus.”
In fact, there already is some slowing on the federal front. CMS in August proposed scrapping two of its mandatory bundled payment models and scaling back a third. The agency also plans to cancel two additional incentive payment models scheduled to begin January 1, 2018, saying stakeholders¬ have asked for more input on the design of the models. Both Health and Human Services (HHS) Secretary Tom Price and CMS Administrator Seema Verma have been critical of making bundled payments mandatory, instead supporting a voluntary approach.
Dennis Weissman, president of lab consulting firm Weissman and Associates, agreed with Muhlestein that the trend toward value-based payment is alive and well even as it slows on the federal level. “Secretary Price is no proponent of value-based payment, so it should come as no surprise that CMS is slowing down support for some of its federal bundled payment models, though not cutting off funding altogether,” Weissman noted. “Conversely, I see alternative payment models actually gaining steam in the private sector.”
Private health organizations have introduced dozens of pay-for-performance¬ programs in recent years. Forbes magazine recently reported that about half of the payments made by the nation’s largest health insurers are through some form of value-based care model, a figure that seems poised to grow. As an example, Aetna CEO Mark Bertolini has set a goal of having 75% of the insurer’s payments made through value-based models by 2020.
Clinical laboratories are in a unique position to contribute toward accountable care and value-based payment models, as they have valuable data that ACOs and insurers want to use to improve outcomes while reducing costs. Some large laboratories, such as Sonora Quest in Arizona and TriCore Reference Laboratories in New Mexico, have had some success in leveraging their data to help manage the health of populations in their regions.
Though laboratories currently are not required to participate in value-based payment models, many are finding that providing value-added services is a key to survival, according to Weissman. “The larger health system is moving in that direction,” he said. “Unless labs can demonstrate that they are actually adding value, their payments will continue to be nickel-and-dimed to death.”
Value-Based Incentives for Pathologists
Payers also are pressing pathologists to provide added value. Under Medicare, most physicians—including pathologists—must participate in the Merit-based Incentive Payment System (MIPS) or Alternative Model Payment Track, which will affect their Medicare payments in 2019 and 2020.
Under MIPS, Medicare payment adjustments to physicians range from +/- 4% beginning in 2019 to +/- 9% in 2022 and beyond. Pathologists can avoid any payment reductions in 2019 by reporting at least one quality measure to Medicare in 2017 and may actually get a bonus if they report more. Those who report on six applicable measures in 2017 and participate in a high-impact clinical improvement activity will be eligible for a bonus of up to 4% in 2019.
New Lab Payment System Portends Change
One area where clinical laboratories are likely to see major changes is in Medicare reimbursement for tests paid under the Clinical Laboratory Fee Schedule (CLFS) due to the Protecting Access to Medicare Act (PAMA), which rebases the CLFS to reflect private sector fees. Medicare officials say they are on track to implement this market-based payment system on January 1, 2018, even though many in the lab industry believe the agency has inadequate and inaccurate data on which to base the new payment rates.
AACC and a number of other laboratory organizations have requested a 1-year delay in implementation, arguing that there are too many problems with the data reporting and even the definition of applicable laboratory—such as the almost complete exclusion of hospital outreach laboratories.
“The exclusion of an entire laboratory sector, particularly hospitals operating large outreach laboratories, negatively affects the integrity of rate calculations under [PAMA],” the lab organizations wrote in a letter to Price. “The implications are immense and would ultimately threaten to reduce laboratory infrastructure across the country, and therefore, limit beneficiary access to laboratory test services that support patient clinical care management. The applicable laboratory definition should be redefined to appropriately capture the true laboratory market.”
If HHS does move forward in 2018 with a market-based system for lab test payments, laboratories likely will face up to a 10% cut in payment the first year and up to 15% in subsequent years. Point-of-care (POC) testing, which can be more expensive due to limited volume, could be hit hard by the payment cuts, noted Charles Root, PhD, president of CodeMap, a consulting company. However, he believes that a change in the way Medicare pays for automated test panels (ATP) might offset some of those cuts.
In a policy memo issued late last year, CMS said that as of January 1, 2018, it would no longer pay for 23 common chemistry tests, including glucose, based on the ATP payment schedule. Instead, under PAMA, pricing is supposed to be based on a single current procedural terminology code. This potentially will enable laboratories to bill for individual tests that make up an automated panel, resulting in greater reimbursement.
“A basic metabolic panel pays $11, but if you separate out the testing, you could end up getting $25,” Root explained. “This is a potential counterbalance to any cuts in POC. It is true that POC testing will be cut under PAMA, but this could more than make up for those cuts.”
Weissman, however, is doubtful that CMS will agree to pay for ATP testing individually. The Advisory Panel on Clinical Diagnostic Laboratory Tests, which advises Medicare, has proposed other options for paying for ATPs, including paying for individual tests but capping total payment or creating a new bundling system. CMS is supposed to announce its decision on paying for ATPs as part of its announcement on preliminary payment rates, slated for late September as CLN went to press.
Whether or not Medicare meets its deadlines for implementing a market-based payment system for lab tests in 2018 and whether Congress succeeds in repealing the ACA, there is one thing that most experts agree on: Value-based payment models are here to stay.
Kimberly Scott is a freelance writer who lives in Lewes, Delaware. +Email: [email protected]