November 19, 2019

November 18, 2019

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Cooking Up Winning Reimbursement Models at HLTH

Taking the value-based dialogue from the theoretical to the practical, Foley partner Chris Donovan moderated a standing room only panel on October 28th at HLTH titled “Cooking Up Winning Reimbursement Models.”

Joined by panelists Divya Paliwal, MD, Chief Clinical Transformation Officer at Horizon Blue Cross Blue Shield; Jeffrey Hulbert, Chief Business Officer at Beth Israel Lahey Performance Network; and Claudia Williams CEO of Manifest Medex, a California-based Health Information Exchange, the group shared their view points on the state of value-based reimbursement. As was shared with the audience, according to the group, the days of transaction-based care are over. The health ecosystem is turning to outcome-based contracting and innovative pricing arrangements to align costs to value rather than volume.

While all panelists acknowledged momentum in the drive to value-based payment models (both public and private), key issues of data sharing, data accuracy, interoperability of Electronic Medical Records (EMR), and data blocking function continue to impair acceleration of value-based care models. New proposed federal rules on both interoperability issues by the Office of the National Coordinator for Health IT (ONC), proposed admission, discharge, and transfer (ADT) rules, and new proposed care coordination safe harbors allowing IT and other outcomes-based arrangements are all moving the value-based care ball in the right direction.

Primary care leadership and Accountable Care Organizations involving Clinically Integrated Networks with both physician practice and health system representation have been particularly successful in accelerating the move to new reimbursement models. The panel acknowledged that engaging post-acute providers with quality compliance records that limit hospital inpatient readmissions was a critical next step to expanding value-based care outside the inpatient and primary care settings.

The panel shared their viewpoints on how population health management tools utilizing artificial intelligence (AI) technology are helping drive better outcomes at lower cost. One example cited by Dr. Paliwal is the use of AI and associated pharmaeconomics to demonstrate how a more expensive drug can lead to better clinical outcomes for a patient and, hence, lower overall care costs. This strategy is a realistic example of value-based savings despite the fact that the drug is more expensive on a per dosage basis than alternative medications for the same indication.

Conversely, the panel noted some hurdles that need to be overcome in order to truly move to a value-based reimbursement model.  These challenges include:

  • The reality that inpatient beds based on volume help a system’s top line revenue  whereas system- owned medical groups in value-based care models are running in the opposite direction to limit and shorten inpatient admissions
  • The reality that many Medicare value-based programs have their own requirements, including rebasing, beneficiary assignment rules, and fraud and abuse waivers causing a patchwork of legal requirements that can cause overlaps with the same patient  (e.g. bundled and ACO beneficiary) and cause confusion and a lack of alignment amongst stakeholders
  • The challenge that disparate payers can have different quality metrics, making reporting extremely difficult and time-consuming for participating organizations
  • Addressing, in a more direct way, social determinants of health (SDOH) and their impact on costs and pricing, acknowledging that the new proposed OIG expanded safe harbors for beneficiary inducement focused on SDOH are a step in the right direction

The panel agreed that value-based payments are here to stay. But, its pace of adoption by providers hinges upon both cultural and regulatory developments. Historically, in the health care ecosystem, these forces change iteratively over time. However, the influx of capital, passion, and focus (represented by this year’s thousands of HLTH attendees demonstrably keen on driving change) are an indication that this is an area that will continue to attract investment and operation attention of all players. That attention is likely to bring greater program acceleration based upon the introduction of better software tools and processes. In addition, vertical integration between providers and payers and the increasing role of digital and telehealth modalities will likely accelerate growth.

© 2019 Foley & Lardner LLP

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About this Author

Christopher J. Donovan, Foley Lardner, Partner, Litigation Lawyer
Partner

Christopher J. Donovan is a partner with Foley & Lardner LLP. He focuses his practice on advising companies and their investors and lenders in mergers and acquisitions, recapitalizations, buyouts and restructurings as well as advising on a broad range of commercial arrangements. Mr. Donovan has particular experience in the health service, particularly post-acute, and life sciences sectors. He has a unique blend of deep regulatory as well as corporate and finance experience to bring to a transaction as a result of his consummating dozens of health and life science...

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