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Value-Based Care News

HHS Sets New Priorities for Physician-Focused Payment Models

HHS will prioritize physician-focused payment models that cut avoidable events by ten percent, reduce spending by $10 billion annually, and empower beneficiaries.

Physician-focused payment models

Source: Thinkstock

By Jacqueline LaPointe

- Healthcare stakeholders looking to develop their own alternative payment models for HHS implementation should look to new guidance before submitting their applications to the Physician-Focused Payment Model Technical Advisory Committee (PTAC).

HHS recently outlined how department officials will prioritize models approved by PTAC for implementation. In addition to the ten criteria for physician-focused payment models established by HHS in regulation, the federal department will give priority to models that:

  • Reduce avoidable events by at least ten percent and/or mortality by at least two percent
  • Reduce expenditures by $10 billion annually once expanded nationally
  • Empower beneficiaries by increasing choice and care access

HHS explained that the new criteria “are not strict requirements, but rather helpful guiding principles for prioritization that will be applied flexibly.”

For example, physician-focused payment models approved by the advisory committee that have little to no projected impact on expenditures could still be considered by HHS as long as officials anticipate a significant impact on care quality.

The guidance document comes as HHS is working to develop new potential model tests based on proposed physician-focused payment models by PTAC. The proposed models are from:

  • Coalition to Transform Advanced Care (C-TAC) and the American Academy of Hospice and Palliative Medicine (AAHPM) to improve the care of seriously-ill beneficiaries
  • American Academy of Family Physicians (AAFP), the University of Chicago Medicine, and Jean Antonucci, MD, for a more holistic approach to primary care
  • American College of Emergency Physicians (ACEP) to improve transitions of care
  • Icahn School of Medicine at Mount Sinai and Marshfield Clinic and Personalized Recovery Care (PRC) LLC for delivering safe and appropriate hospital-level care in patient homes
  • Renal Physicians Association (RPA) and Dialyze Direct for models that support customized, patient-centered care to improve the outcomes and medical management of patients with chronic kidney disease (CKD) or end-stage renal disease (ESRD)

The five physician-focused payment model proposals may come to fruition in the near future. But many more models recommended by PTAC will not.

The Medicare Access and CHIP Reauthorization Act of 2015 established the advisory committee to review and recommend proposed physician-focused payment models for potential use in MACRA as an Advanced Alternative Payment Model. The committee allows the private sector to get involved with the transition away from fee-for-service.

PTAC has been fully operating for about two years. The committee has reviewed over 30 physician-focused payment model proposals and recommended at least ten proposals to the HHS Secretary to test.

However, HHS has not yet acted on any of the recommendations despite the department expecting PTAC to play a major role in its “value-based transformation.”

Federal officials envision the value-based transformation to focus on “local delivery of healthcare, where patients and providers determine the best care plan, and providers are accountable for patients’ outcomes.”

“Those closest to patients – not the federal government — should be empowered, freed of unnecessary regulatory burden, and held accountable for outcomes,” the guidance document stated.

To achieve value-based transformation, new payment models must be transparent, simple, and accountable, HHS explained. Transparent models will empower consumers to drive value through choice and promote interoperability, while simple models will reduce complexity and accountable models will promote risk and create incentives that meaningfully drive behavior change.

With the three objectives in mind, HHS announced in the guidance four new areas of focus for the value-based transformation. The first focus is treating patients as consumers.

“We will empower patients as consumers by enabling access to competitive pricing and allowing patients to share financially in the benefit of choosing high-performing providers or high-quality, affordable elective services,” HHS explained.

Following that, HHS will also view providers as accountable patient navigators. Through the value-based transformation, HHS plans to pay providers for patient outcomes and remove unnecessary burdens that divert focus away from care delivery.

Additionally, HHS will focus on paying for outcomes as part of its value-based transformation.

“We will test ways to modernize outdated payment rules that pay providers different amounts for the exact same service based solely on the location in which the service is delivered. We will also expand our efforts to pay for successful episodes of care rather than discrete services,” the guidance document stated.

Finally, rounding out the four new value-based transformation focus area is the prevention of disease. HHS will prioritize models that consider a patient’s health holistically and that focus on early life interventions.

“HHS believes physician-focused payment models are critically important to value-based care and will have growing impact over time. PTAC is a critical partner in developing payment models.” HHS stated.


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