The idea of a bridge that could connect San Francisco to Marin County, California began to surface in the late 1880s as the region’s population started to boom.1 At the time, ferries provided an essential link between the two regions. In 1933 – decades after engineers began to discuss the concept of a bridge – construction began. Four years later, the first cars puttered across the smooth, new concrete. Now, more than 100,000 vehicles traverse the Golden Gate Bridge each day.2
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is creating a different type of bridge – one that will transport the health care industry away from the traditional fee-for-service (FFS) model to one aligned with value rather than volume. Congress designed MACRA to be disruptive. If implemented as planned, it will alter the very nature of competition among health care stakeholders.
On March 29, 2017, Deloitte’s Center for Health Solutions partnered with NEHI (the Network for Excellence in Health Innovation) to bring 30 stakeholders from around the country to Washington, DC. Representatives from health systems, health plans, biopharma companies, and medical technology companies sat down together to discuss their mutual challenges and desire to find a bridge from their existing FFS operating models to a new destination where outcomes matter.
For health care stakeholders to thrive under a new set of payment rules, strong collaboration and partnerships will likely be more important than ever. Indeed, some of the participants said that one of the biggest hurdles is getting stakeholders on the same page. But, many agreed that once all parties are committed to accepting more risk, they will have an incentive to work together toward common goals.
MACRA’s payment models, while still based on Medicare FFS reimbursement, offer significant financial incentives to providers that participate in risk-bearing, coordinated care models. One of the key takeaways I noted is that under FFS, providers that were able to reduce their costs or improve care quality typically saved money for the health insurer or employer that paid the bills. But under MACRA, a doctor who delivers high-quality care at a lower cost has the potential to earn more than a colleague down the street – and reinvest that money back into their organization to focus further down the prevention scale. That’s never happened before.
Like any transformation, MACRA is causing anxiety and frustration among many key stakeholders. Convincing providers to move away from the only payment model they’ve ever known could be a significant challenge – for physician leadership as well as partners in the industry. And there are a wide range of reasons providers may want to stay put. Hospital systems that already excel in pay-for-performance models might have little room to improve and see limited value in MACRA’s improvement-based incentives. On the other end of the spectrum, some small providers may not be willing to change until seamless and affordable systems are in place that help to manage their performance. Other providers have no intention of changing. Moreover, some have concerns that we are measuring results for the sake of measurement. To get stakeholders on board, the measures required by the law need to be impactful (i.e., it really matters to get this right) – to organizations, physicians, and patients. Also, many regulatory frameworks set up to curb abuse under the FFS system will need to be revisited; laws like Stark, Anti-Kickback Statutes, and the Health Insurance Portability and Accountability Act can be restrictive enough to prevent success under these value-based models, some participants said.
Finally, there was a general consensus among many of the participants that community-based organizations will be critical partners along this journey, as many significant issues that health care organizations are trying to solve for are rooted in the social determinants of health. For example, a homeless person with diabetes or an older adult living alone in a two story house recovering from a hip replacement face very different challenges than someone who has a regular job, health insurance coverage, and a roof over their head. There was agreement that we need to figure out how to involve these organizations in order to really move the needle on providing the patient-centered care that is at the core of value-based models.
Unlike other laws, MACRA doesn’t push for one-time compliance. Rather, it’s aimed at inspiring constant improvement. The law is so disruptive because, while it impacts only Part B payments to health care providers, the measures pull the total cost of care and quality regardless of the type of service. It also encourages commercial health plans to participate in the journey over the bridge through the other payer model. But, we’ve only taken the first step in a long journey. Providers that take advantage of MACRA will likely change the basis of their competition. The tools, technologies, patient engagement strategies, compensation models, and new clinical models could be hard to replicate, and the early innovators will earn a competitive advantage and accrue all the benefits of a market leader.
The foundation for FFS was poured more than 110 years ago in the form of prepaid monthly statements made to medical groups to cover all-inclusive services. In 1930, the first Blue Shield plan began making payments to physicians, which moved the industry toward the FFS model. It is time to leverage our FFS-based system to build a bridge back to prepaid financing. This move could help improve quality and outcomes and allow the delivery care model to innovate without the constraints of the FFS rule set.
Like the Golden Gate Bridge, MACRA will be several years in the making. But with a clear view of the destination and acknowledgment of the potholes along the way, the health care industry might be relieved to watch FFS fade away in the rear-view mirror.
1 Golden Gate Bridge Research Library, Golden Gate Bridge, Highway and Transportation District
2 Annual Vehicle Crossings and Toll Revenues, Golden Gate Bridge, Highway and Transportation District