Working Together to Reward Quality Healthcare Over Volume

February 2017
Topics: Payment Models, Public Health, Health IT
Traditionally, America’s healthcare system rewards quantity over quality of care. The LAN is a public-private partnership committed to a healthcare system that delivers better care, spends dollars more wisely, and results in healthier people.
Doctor speaking with patient.

Did you know the U.S. ranks #13 out of 13 high-income nations in terms of healthcare outcomes for patients? This is despite the fact that, at $3 trillion annually, we dramatically outspend all other countries.

There are many reasons for this contradictory situation. But among the most vital: Our traditional healthcare system pays doctors and other clinicians based on the volume of care they give to patients, rather than the quality of care they provide. Clinicians receive payment for each individual service, such as a physician visit, surgery, or blood test. That's regardless of whether these services help—or harm—the patient.

One of the ways to change this system? Reward outcomes instead of quantity. That kind of thinking is motivating the U.S. to move away from a fee-for-service system to one that rewards quality through alternative payment models (APMs).

This is a massive undertaking. The U.S. healthcare system is inherently complex. It involves providers, patients, employers, health agencies, suppliers, and industry—each bringing overlapping and often conflicting motivations, systems, and technologies. And while the U.S. government is the single largest healthcare payer, Medicare still represents less than half of all healthcare spending. The majority is through private insurers and states.

8,000 Stakeholders Are Moving the Needle

To address this complexity, the U.S. Department of Health and Human Services introduced a public-private partnership called the Health Care Payment Learning and Action Network (known as the LAN) in March 2015. Through the LAN, HHS is one partner working closely with private payers, employers, consumer groups, providers, states and state Medicaid programs, and other partners to expand APMs into their programs. 

"There's no doubt the vast majority of providers care deeply about their patients," says MITRE's Anne Gauthier, LAN project leader. "But a system that doesn't reward quality provides little incentive to encourage care coordination, apply best practices, and use other techniques that can improve healthcare outcomes."

At the same time of the LAN announcement, HHS set clear goals and timelines for shifting Medicare reimbursements from volume to value. This includes tying 30 percent of Medicare payments to quality or value through APMs by 2016 and 50 percent by 2018. HHS also set a goal of tying 85 percent of all Medicare fee-for-service payments to quality or value by 2016 and 90 percent by 2018.

"Ultimately, this is about improving the health of each person by making the best use of our resources for patient good," said Douglas E. Henley, M.D., executive vice president and chief executive officer of the American Academy of Family Physicians. 

Recognizing the need for a knowledgeable and neutral third party, CMS turned to the MITRE-operated CMS Alliance to Modernize Healthcare (CAMH) federally funded research and development center to help establish and convene the LAN. CAMH recruited the LAN’s Guiding Committee as well as multi-stakeholder work groups and single-sector affinity groups that play critical roles in this work.

By the end of 2015 and all during 2016, LAN groups worked in "sprints" to develop LAN products. The LAN also held three national summits where nearly 2,000 people attended. The LAN has grown rapidly, with approximately 8,000 stakeholders joining. Participants include payers, providers, employers, state partners, consumer groups, individual consumers, and many others.

The LAN developed consensus recommendations with multi-stakeholder input to drive action, adoption, and alignment in the healthcare field. CAMH helped write these white papers that identify best practices for implementing APMs, including the following payment models and components: Elective Joint Replacement, Maternity, and Cardiac Care for Clinical Episode Payment Models; as well as Patient Attribution, Financial Benchmarking, Performance Measurement, and Data Sharing for Population-based Payment Models. In addition, the LAN’s Measuring Progress report estimated that nearly 25% of health care payments in 2016 were in APMs—thus supporting better care coordination and patient care. The LAN shared them as part of their multi-level communications effort to educate and connect a wide stakeholder audience with best practices and lessons learned.

Creating a Common Language for APMs

All APMs aim to improve the way payers and providers work together to achieve cost and quality targets. But each APM approaches the targets from different angles. For example, one model of payment is based on the specific steps to care for a condition from start to finish. Another model provides payment for the total cost of any care patients need, regardless of the steps needed to care for them.

To help the LAN and other stakeholders discuss and evaluate such different approaches, CAMH created the APM Framework. "This provides a way to categorize APMs within the context of real-world applications," Gauthier says. "It's already changing the way the healthcare industry talks about APMs."

In addition, CAMH helped CMS recruit more than 130 organizations as "Committed Partners." These organizations have their own specific targets that match or exceed the established goals for accelerating APM adoption. By publicly committing to APM adoption, the leadership of these partners provides examples and inspiration to encourage the active involvement of more organizations.

Achieving the First Goal Ahead of Schedule

CMS has already achieved one of the goals that HHS set back in March 2015. In March 2016 HHS announced Medicare tied 30 percent of Part A and Part B payments to APMs.

At the LAN Summit in spring 2016, Dr. Patrick Conway, then CMS Principal Deputy Administrator, wrote to the LAN Guiding Committee, “CMS is proud to achieve the 30 percent target almost a year ahead of schedule, and we appreciate that we would not have been able to do this without the help of you and the LAN.”

"Moreover, we know that true transformation of our health system cannot be done through Medicare alone, and so we look forward to continuing to work with the LAN membership at-large.”

Gauthier adds, "Payment is such an important incentive. It affects how everyone, including the providers, healthcare leaders, insurers, and the government agencies think and act. The LAN helps them work together to improve the health of our nation's people."

—by Bill Eidson

MITRE's partnership with the LAN is just one part of our healthcare mission. You can learn more about our current work by visiting the overview of MITRE at HIMSS17, the world's largest gathering of health IT professionals. 

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