Overcoming health-care challenges by moving from volume to value

While we served in different administrations, we faced similar challenges in trying to improve the nation’s health-care system. The basic goal was to improve the quality of the care delivered and moderate the costs.

While there are several key reforms that will help us address this challenge, one idea that nearly all health leaders in the Bush, Obama and Trump administrations agree on is that we need to move as quickly as possible from a fee-for-service, volume-based model to a health system that pays for what happens to the patients — the outcome or value of care.

{mosads}Under the fee-for-service model, each provider is paid separately for distinct services and no one physician is responsible for the overall cost or outcome. This makes care coordination, which is central to moving toward a value-based model, difficult if not impossible.

Our goal is a new payment model that would allow for bundled services — like one payment for a knee replacement rather than separate payments for the diagnosis, the surgeon, the device, the hospital stay and the required recovery.

The good news is that over the last three administrations we have taken many steps to try to move our entire system — federal, state and commercial — down this path including the adoption of new care and payment models.

However, getting to this point has not been easy, in part because the system is not designed to encourage the health care community to work together for the benefit of the patient. And in some instances, it is explicitly designed to prevent collaboration.

If we agree that the goal is worthwhile, then we need to work to remove the barriers.

Over time, many regulations were adopted and designed to prevent fraud and abuse — a worthy goal. But many regulations, designed for a fee-for-service model, now create roadblocks in the move toward a value-based system and need to be modernized.

For instance, care coordination, where doctors can talk to each other, share information about a patient, and try not to duplicate care or tests, is often limited because of complex requirements that were written for a fee-for-service billing era.

Another example is that hospitals are reluctant to support or reward doctors for following best practices and protocols designed to improve outcomes because it could be viewed as an inducement under the Stark and Anti-Kickback Statute.

Aspects of value-based arrangements (VBAs), such as a results-based contract, that are in tension with the current federal Anti-Kickback Statute include:

1. Services that must be bundled in to develop and operationalize the VBA (data collection, tracking, analysis, reporting).
2. Services and technologies that are a part of the solution to achieve the targeted outcome (care coordination, monitoring, optimizing care pathways, and technology integration to help clinicians make needed interventions).
3. Elements of the outcomes-based pricing (front-end discounts, under-performance rebates, performance / incentive payments) or outcomes-based warranties (coverage for not achieving a warranted outcome, providing alternative or supplemental items or services).

Adding to the challenge of moving from volume to value is the fact that these laws often overlap one another, yet have different interpretations, centers of authority, and requirements. Stakeholders have often thought to reform one law without addressing the interplay of these requirements. Too often providers are confused or concerned about the consequences, resulting in undermining the rapid and permanent move to a value-based system.

To address these issues, we need new value-based exceptions and safe-harbors to more clearly promote the rapid transition from the fee-for-service environment to a value-based model. New care models — where all contributors to health care can share accountability for achieving clinical outcomes and share responsibility for the total cost of care for a patient or population – should be encouraged.

Stark and anti-kickback laws are a remnant of the fee-for-service world and harm the very patients they are supposed to protect by deterring more comprehensive patient-centered, coordinated care.

While well intentioned, these laws have not been sufficiently updated to reflect the transformation in health care payment and delivery or account for the rapid emergence of new treatments and innovative technologies. In addition, changes should consider incorporating new technologies into value-based arrangements. These laws need to recognize that services might be bundled with a product to more effectively address costs and quality.

However, while progress is being made, we are still far from achieving our goal. We need a combination of legislation to provide greater clarity and to make exceptions permanent, and to revisit regulations, safe harbors, exceptions and guidance to allow for holistic value-based solutions, more explicitly recognize new reimbursement models such as accountable care organizations, as well as better acknowledge how medical technologies and pharmaceuticals aid in the move from volume to value. The goal of better patient care while reducing health inflation is a shared mission.

To assist in continuing the progress that has been made, CMS recently released a formal Request for Information (RFI), calling for ideas on Stark reform, and in a recent speech HHS Secretary Azar said a similar request related to anti-kickback reform would soon follow. We were also pleased to see the House Ways and Means Committee announce that it will hold a hearing soon on the issue of Stark reform. These events are two of many encouraging signs of forward momentum that we see.

We think this can be done, but we must take up this challenge now.

Kathleen Sebelius was the 21st  Secretary of Health and Human Services under President Obama; Tommy Thompson was the 19th HHS Secretary under President George W. Bush.