NAM Advises Leaders to Prioritize Value-Based Purchasing Reform

March 22, 2017 - In a new report, the National Academy of Medicine (NAM) named value-based purchasing as one of four action priorities for healthcare stakeholders in 2017.

To implement more value-based purchasing models, NAM suggested that stakeholders focus on three healthcare payment reforms: driving payment innovation by incentivizing improved outcomes and value, supporting providers as they transition to new payment models, and eliminating barriers to medical care and social services.

Healthcare leaders should encourage healthcare payment reform that includes value-based reimbursement, especially population-based payments, by providing financial incentives for improving health outcomes and value, the organization recommended.

Population-based payment structures are the most comprehensive alternative payment models because they require providers to take on full responsibility for patient-centered care to a whole patient population over a specific period and across the care continuum.

Policymakers and leaders should encourage providers to implement population-based payment models by offering strong financial incentives to participate.

However, the incentives must go beyond public payers, like Medicare and Medicaid, and extend to private payers to ensure industry-wide value-based purchasing adoption, the report stated.

The key is to promote payment reform innovation to encourage public and private payers as well as providers to develop “different approaches to structuring economic rewards for population-wide progress.”

Researchers also argued that stakeholders should standardize measures used to evaluate outcomes and reward providers for improvements.

Healthcare stakeholders should also develop healthcare payment reform policies in 2017 that support providers as they transition to value-based purchasing, NAM suggested.

The switch to value-based reimbursement may have recently hit a roadblock, according to a recent American Medical Group Association (AMGA) survey. Over three-quarters of medical group commercial revenue came from a fee-for-service payment structure in 2016, over ten percentage points more than healthcare leaders predicted in 2015.

The value-based reimbursement transition may have slowed because not enough evidence exists about what capabilities providers need to successful participate in alternative payment models.

“More timely and efficient evaluations of successful models are needed for Medicare payment reform pilots, as well as those being implemented in public and private programs,” wrote researchers. “Further, increased support and greater participation in public-private collaborations would be very helpful for providers in identifying the core competencies they need to succeed.”

Additionally, policymakers and healthcare leaders should prioritize medical care and social services integration to further the value-based reimbursement transition, NAM advised.

In a fee-for-service payment environment, providers did not have to think of how behavioral, social, and environmental factors contributed to health outcomes. But under value-based reimbursement, and especially population-based payments, addressing social determinants of health is key to managing populations.

A cited 2002 study found that medical care shortfalls only accounted for 10 percent of premature deaths. But behavioral patterns, genetic predispositions, social circumstances, and environmental exposures accounted for about 40 percent, 30 percent, 15 percent, and 5 percent, respectively.

To better address other factors that impact health outcomes, healthcare stakeholders should create payment reform policies in 2017 that aim to integrate clinical care and non-medical services, such as housing, food, transportation, and income assistance. Policymakers should also reallocate existing healthcare funds to social services.

Based on the three value-based purchasing reform suggestions, NAM also offered the following example policies:

• Maintain and accelerate public and private payer alternative payment model implementation, demonstration, and evaluation

• Reward measurement streamlining that helps to pinpoint and motivate system-wide and population-level innovation

• Support public-private partnerships among industry and government actors that help providers identify and implement core capabilities for alternative payment model participation, like the Accountable Care Learning Collaborative

• Implement care delivery and alternative payment models that integrate health and social services, such as funding integration so Medicaid managed care plans can coordinate social and community services that improve outcomes and reduce healthcare costs

• Establish coordinated multi-agency strategies at the federal, state, and local levels to develop scale and spread models

In addition to value-based reimbursement, NAM also suggested three other policy actions, including patient engagement promotion, community services activation in healthcare, and healthcare data accessibility improvements, including increased interoperability.

Through the suggested healthcare reforms, the organization intends to help stakeholders reduce overall healthcare spending, which costs the country about $3.2 trillion annually. The report stated:

“Because this trajectory of healthcare spending is unsustainable, reforms are needed that enable health care organizations, communities, and individuals to redirect resources to uses that achieve better health, promote efficiency, and reduce waste. Given that the leading health determinants are outside of healthcare, policies must not only encourage more judicious use of healthcare services, but also ensure supports for better health behavior and facilitate integration of health-related social service interventions  Furthermore, by fostering incentives and culture change supportive of proven, value-based models of care payment and delivery as well as connected healthcare and information, greater efficiency, better results, and more person-engaged care could be achieved.”