CMS Mandates and Value-Based Care

In order to project and accurately predict what’s forthcoming in the healthcare space, focusing primarily on Value-Based Care (VBC), we need to reflect historically and understand what has impacted the industry to date. This historical perspective will be broken into two time periods: The Trump Administration policies from 2016 until 2019, followed by reviewing 2020 independently, in part two. The following will focus on the Trump Administration.

When the Trump administration was elected to office, many in the healthcare industry were worried. The rhetoric relating to the Affordable Care Act (ACA) during the campaign was to “repeal it, replace it, get something great”. This slogan left many in the industry feeling uncertain, especially in the VBC space. A significant portion of the ACA policy was focused on the introduction of new value-based programs, including implementation and testing of Alternative Payment Models (APMs) and approaches focused on quality over the standard fee-for-service model dominating the market space for many years. There was concern that the administration’s desire to overturn the ACA would include rolling back already existing programs and would result in a deliberate return to the fee-for-service model. As a result, organizations like the National Academy of Medicine (NAM) formed new groups, such as their Vital Directions initiative, to ensure that the discussion around VBC continued. Additionally, various strategy recommendations for payers created by various companies and institutions were published around the uncertainty in VBC in the healthcare marketplace and best practices to mitigate uncertainty and associated risk of potential repeal and replace.

Value-Based Care

Through the uncertainty, VBC emerged as a bipartisan topic with bipartisan support. Both parties agree and understand that healthcare cannot continue with a fee-for-service payment approach, as the financial impact of this system is not sustainable. Projections from the Congressional Budget Office (CBO) and Trustees of Social Security and Medicare stated that the Hospital Insurance (HI) Trust Fund would become insolvent in 2024 and 2026 respectively with the current yearly rate increase in healthcare costs. It became clear that the time for action was now. What remained up for debate is specifically what value-based programs and reimbursement models to implement.

That said, due to the varying degrees of debates and differences in views on the “how’s” around value-based pricing and care, many APMs were slow to implement and slow to introduce changes to address potential failings within the Medicare program. However, that cannot be said for the Medicaid and Commercial spaces.

Commercial insurers had already completed the testing of early VBC models and were seeing modest success with Patient-Centered Medical Homes (PCMHs), Accountable Care Organizations (ACOs) and bundle shared savings approaches. They also saw the potential savings and benefits of coupling core VBC attributes with things such as Narrow Networks. Together, these not only drive costs down but also encourage members to obtain care within their attributed ACO. As a result, ACO membership increased. Commercial insurers started looking at methods to bring value-based care to their members. The potential return on investment was starting to show promise and, more importantly, was starting to catch traction with Employers.


In the Medicaid space, the focus toward VBC had different incentives and approaches. States are in charge of administering individual state Medicaid program(s), but states rely heavily on federal dollars to fund Medicaid. Over the years, federal funding has not grown to match the financial burden of most Medicaid programs, leaving states to pay more. In an effort to reduce and/or curb ever-increasing costs, states have pushed for two different approaches: Medicaid expansion and/or pivot into value-based reimbursement. The vast majority of states have adopted Medicaid expansion under the ACA, providing healthcare and services to previously uninsured populations, while increasing federal funds for their state. However, some states have elected not to expand coverage, which excludes more than two million uninsured adults who would have been eligible with Medicaid expansion. New VBC approaches focus heavily on primary care, with some moving towards a total cost of care and/or global budget. Medicaid was willing to embrace contracting with providers for not only upside but downside risk as well. This allows for more predictable expenses and ensures that the providers tightly manage the patient’s care, one of VBC’s overarching goals.

The Trump Administration took a voluntary approach to VBC and allowed insurers and healthcare providers to experiment with incentives and APMs. The administration also focused on how to reign in Medicare and Medicaid spending, a problem-driven primarily by the quantity over quality aspect of fee-for-service reimbursement. Part of their approach was to focus on price transparency across the entire continuum of care, as directed by President Trump’s Executive Order on price and quality transparency. “Price transparency puts patients in control and supports competition on the basis of cost and quality which can rein in the high cost of care. CMS’ action represents perhaps the most consequential healthcare reform in the last several decades,” said CMS Administrator Seema Verma. It is evident that patients need access to pricing data in order to act like a consumer in the truest sense.

The aforementioned policies and approaches were in play leading into 2020 without anyone able to predict the significant and pivotal impact of a global pandemic during a presidential election year on the United States healthcare system. In the next installment, Enlace Health will cover the impact of 2020 on value-based care and alternative payment models.


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