Consumer Advocacy Orgs Share How to Move Away From Fee-For-Service Payment

March 01, 2024 - As healthcare spending rises, shifting away from fee-for-service payment and delivery models that incentivize volume over value is imperative. Families USA and other consumer advocacy groups are urging policymakers to implement reforms that improve healthcare affordability and quality and support the transition to value-based care.

Families USA, American Heart Association, National Consumers League, National Partnerships for Women and Families, and Third Way penned the Pro-Consumer Policy Agenda to Achieve Meaningful Health System Transformation. The organizations presented six pro-consumer policy principles that would alter economic incentives to hold healthcare systems accountable for care quality and costs.

Payment incentives that improve outcomes

The fee-for-service payment model does not support care coordination and incentivizes any service whether or not it meets the patient’s needs. Redesigning the structure of the healthcare system would help achieve the Quadruple Aim of improving population health, patient experience, healthcare costs, and provider well-being.

Policymakers should consider solutions that move the industry away from fee-for-service and toward advanced alternative payment models with population-based payments that hold the healthcare system accountable for improved health, health equity, and affordable care.

The agenda encouraged policymakers to promote multi-payer alignment by adopting a common set of payment programs and incentives that have proven to improve health outcomes and reduce costs. Some successful models include the Medicare Shared Savings Program (MSSP), Making Care Primary, Vermont’s All-Payer ACO Model, and bundled payment models.

READ MORE: Overcoming the Barriers to Value-Based Payment in Primary Care

In addition, policymakers should consider options that prepare and incentivize providers to shift away from fee-for-service payments, such as expanding the Advanced Alternative Payment Model bonus payments under the CMS Quality Payment Program.

Invest in preventive services

Primary care and behavioral healthcare are critical aspects of holistic health. However, reimbursement is often low for these types of services, contributing to the shortage of providers and hindering care access. Similarly, long-term care providers—who help individuals manage chronic illnesses or disabilities—also face low reimbursement rates.

Office and outpatient evaluation and management (E/M) services are most commonly used by family physicians, behavioral health, and long-term care providers. These services include taking patient histories, making medical decisions, and conducting home visits. The advocacy groups urged policymakers to implement policies that increase the evaluation and management (E/M) values for primary care, behavioral healthcare, and long-term care services, helping to rebalance payment rates between primary and specialty care providers.

Patient protections that ensure care access

Policymakers should ensure that payment models have patient protections and guardrails that facilitate access to care for underserved patients, those with chronic illnesses, and patients with disabilities. Risk adjustment can help prevent providers from exclusively treating healthier patients and avoiding sicker ones, but current methods are resulting in low-quality care and health disparities as they underestimate patient needs. Current risk adjustment methods may also lead to gaming and upcoding due to their reliance on easily manipulated and over-reported data.

Risk adjustment methodologies used to set payment benchmarks and adjustments should be redesigned to prevent these issues and encourage treating all types of patients. These methodologies should also fully account for and encourage the treatment of patients with social risk factors and health-related social needs.

National data-sharing

READ MORE: Value-Based Payment, Fee-for-Service Levels Hold Steady

National data-sharing, interoperability, and quality measurement standards would help enable real-time coordination of services across providers and improve health equity and outcomes, according to the agenda.

Policymakers should consider solutions that ensure all payers and providers share a comprehensive set of interoperable data across medical and clinical data, prescription drug data, dental and behavioral health, and social needs data. Policymakers should prioritize the privacy of patient health data to protect consumers from re-identification or data misuse.

There should also be a comprehensive set of quality, equity, and outcomes measures that providers must meet. Policies that align quality measures across payers and providers can help patients receive high-quality care.

Promote market competition

Varying healthcare prices are not always related to the quality of care a patient receives. For example, the price of an MRI at a health system in Massachusetts ranges from $839 to $4,200, depending on the health insurance plan. Additionally, hospital prices generally range from 150 percent to more than 400 percent of what Medicare pays for the same services. These high prices are often the result of growing consolidation across and within markets among hospitals, payers, and other healthcare organizations.

Policymakers should implement regulations that help minimize anticompetitive contracts that limit access to quality, affordable care. They should also introduce fair payment policies to ensure patients pay the same prices for the same service and increase the Federal Trade Commission’s authority to scrutinize anticompetitive behavior in the healthcare industry.

Improve access to care information

READ MORE: Understanding the Value-Based Reimbursement Model Landscape

Making healthcare prices and quality data more transparent would help providers and payers compete on fair prices and high-quality care instead of consolidating market power. Policymakers, researchers, and healthcare purchasers would also be able to accurately assess and improve the quality and value of services.

Consumers and other stakeholders should have access to negotiated rates between payers and providers, provider operating costs associated with care delivery, medical and clinical data, prescription drug data, and other relevant data. The information should be disaggregated and stratified by sociodemographic factors, including race, ethnicity, and primary language.