Blair Childs at Premier recently wrote for Health Affairs to discuss new models and incentives driving value-based are and alternative payment models (APMs). The goal as these policies are forming is to secure the health of the marketplace by creating incentives for participation and outcomes at the optimal cost and quality. Through their work organizing health systems and providers into data-driven performance collaboratives centered on these payment models, Premier, Inc. has a strong understanding of what does and does not work. Based on their knowledge, they seek to deconstruct some myths about the models that work against their long-term success.

The first myth is that APMs will encourage physician employment and consolidation which will result in higher prices. The success of APMs like Medicare Shared Savings Program and Bundled Payments for Care Improvement have been contingent on clinical integration. However, APMs do not require common ownership to achieve this goal. A series of studies have found that health system consolidation and physician employment can result in higher cost of care. Meanwhile, accountable care organizations (ACOs) succeed by integrating independent clinicians with aligned goals and incentives.

The second myth assumes that physician-led models see more success and should be favored to hospital-led models. It’s true to say that physician-led models have strong incentives to achieve savings considering many of the savings come from outside the physician group. It’s also true that models led by health systems generate savings by taking a cut on in-patient revenue. That said, where in-patient revenue is reduced, lost money is shifted to lower-cost affiliates and outpatient centers. As they earn shared savings payments, health systems see financial viability while focusing in on the health plan’s bottom line.

Another myth states that health systems will not innovate care delivery through value-based care because they have no economic incentive to participate. During the early days of value-based care programs under the Bush administration, 270 Premier hospitals volunteered to test pay-for-performance models that ultimately led to the value-based purchasing law. Since this time, it has been made clear that single programs may not achieve all desired results, but there are now several programs that have produced outstanding patient results.

Myth number four states that ACOs have been unimpressive in practice. It’s no secret that ACOs are flawed in critical ways, including reliance on fee-for-service payment and conflict with other Medicare alternative payment models. However, organizations have managed to generate $5.7 billion in total savings against projected benchmarks of $2.07 billion. In effect, ACOs have managed to save significantly for Medicare, though the results from individual programs remain incremental.

The final myth implies that savings by health system-led ACOs are only from post-acute care. The idea is that since hospitals control discharges, the savings come from the reduced use of post-acute care, rather than reduction of patient admissions. However, Premier member ACOs report moderate reductions in post-acute care (8%) while reducing spending in large part through avoided admissions for ambulatory conditions (12%). In response, emergency department use jumped by 15%. In an August 2017 report by the Office of Inspector general, these trends were seen nationally by all participants in the MSSP.

These five myths debunked, it is clear that ACOs can be a catalyst to directing care to low-cost environments. It is important to note that value-based care and APMs have the potential to improve the quality of care and strengthen integration. However, new models need to continue to be constructed to add value to the process.

For more information on any of these myths, read the full article.

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