News | Coronavirus

Big value-based payment shifts may happen during a Biden administration

News | Coronavirus

Big value-based payment shifts may happen during a Biden administration

  • Early critical decisions regarding value-based payment during Joe Biden’s presidential administration will include agency leadership and whether to continue pandemic flexibilities.
  • Biden’s healthcare advisers and congressional Democrats are divided over how fast to push for more risk in VBP models.
  • The Biden administration may revert to an emphasis on VBP model participation instead of maintaining the current focus on program savings.

A Joe Biden presidential administration may implement substantive changes in value-based payment (VBP) models, industry insiders say.

Although Biden and his healthcare advisers are generally supportive of increasingly shifting from fee-for-service payment toward VBP, many questions remain about how his administration will incorporate those approaches.

One unknown is whether the incoming administration will pause, alter or abandon any ongoing models in 2021. A lot of those decisions will depend on who is selected for key roles, including CMS administrator and director of the Center for Medicare & Medicaid Innovation (CMMI). 

Sara Singleton, a principal at Leavitt Partners, said she expects CMMI models in a Biden administration to focus on advancing health, emphasizing prevention and reducing health disparities.

An early decision will be needed about whether to offer continuing pandemic-related flexibility in reporting requirements and downside risk in existing models run by CMS. The agency has offered providers more than 100 waivers of different types during the public health emergency.

“I don’t think we’re going to see a full-out pause; there’s enough appetite from the provider community to engage in these models and continue the momentum, and the impact of COVID-19 varies by region and time,” Brenda Pawlak, a managing director for Manatt, said in an interview.

That may change if COVID-19 cases broadly overwhelm hospitals, she said.

“You may see some delays [in VBP implementation] depending on where we are with the pandemic,” Benjamin Isgur, leader of PwC's Health Research Institute, said in an interview.

Clif Gaus, president and CEO of the National Association of Accountable Care Organizations (NAACOS), is pushing the incoming administration to embrace population-based models, like ACOs, over episodic models such as bundled payments for joint procedures.

“After all these years, the one-off models aren’t producing a lot of savings and the population-based models are,” Gaus said in an interview. It’s “not that we’re producing as many savings as people thought we would, but it’s getting better all the time.”

VBP focus: Participation or savings?

Seema Verma, administrator of CMS, cited a lack of savings in the main ACO model — when bonus payments to providers were included — as a need to overhaul the program, effective July 2019. The changes included an acceleration to risk by requiring all participants to move into two-sided risk within the first two years of their five-year agreements.

“It’s very important for providers to have skin in the game,” Verma said during a discussion at an October healthcare conference. “Just having upside risk doesn’t really produce the kinds of savings and quality measures that we want to see.”

The ACO changes were part of the Trump administration’s VBP shift to focus on performance — and savings — relative to the Obama administration’s emphasis on approaches that maximize participation in those programs, according to Christopher Kerns, a vice president for the Advisory Board.

The revamped approach narrowed participation to 206 ACOs in the main ACO program, while 40% of ACOs previously in the program opted out, according to CMS data.

However, there are divisions among both Democrats in Congress and Biden campaign healthcare advisers over how far to push risk without driving providers out of voluntary VBP models, according to sources who asked not to be named.

“There is quite a bit of variation in both parties, although I would probably say from what we have seen over the last few years that Republicans favor that harsher line when it comes to requiring solid performance,” Kerns said in an interview.

VBP focus: Hospitals or physicians?

Another change that could affect ACOs, among other VBP models, is a movement away from the Trump administration’s emphasis on physician-led models. In its changes to the main ACO program, the Trump administration cited larger savings from physician-led ACOs compared with hospital-led ACOs. The administration also sought to develop more physician-focused models, such as its Primary Care First program.

“We don't expect the Biden administration to suddenly reverse course and favor systems over physicians, but if it resembles the Obama era, it will likely relax performance standards to favor a bigger tent, allowing more organizations to participate, with a long-term goal of curbing cost growth (it's clear that restraining spending will not be a near-term Democratic priority),” Kerns wrote in a blog post

Gaus agreed that the physician-led ACOs have demonstrated “greater promise.”

However, “I don’t think we have explored hard enough, and maybe incentivized enough, the hospital-based ACOs,” Gaus said. “If our principal goal is ‘Let’s get the model spread,’ not ‘Let’s maximize savings,’ then you want hospitals to be involved in this.”  

“There will likely be some more opportunities of their shifting back to the hospitals,” Pawlak agreed.

More physician VBP options could emerge from the Physician-Focused Payment Model Technical Advisory Committee (PTAC). Some members have expressed frustration that the Trump administration pursued few of the models the committee put forward.

“I don’t see them shifting away from provider-based payment models; I think you’ll see more menu options,” Pawlak said.

Short-term ACO policy options for a Biden administration could include instituting a 2021 enrollment period for more organizations to join the main Medicare model, an option the Trump administration did not offer, Gaus said. Additionally, he wants changes to the Direct Contracting Professional and Global tracks, which launch April 1, 2021, to reduce the impact of participating  on legacy ACOs.

Several ACO leaders said in interviews that they were considering moving into Direct Contracting in 2022 after they see how the initial year works for participants.

Mandatory models likely would gain traction

Mike Leavitt, chair of Leavitt Partners and former HHS secretary for President George W. Bush, expects more mandatory VBP models from a Biden Administration.

“They’re more inclined, more willing to use the force of the federal government to drive billing and economic change than Republicans typically are,” Leavitt said during a webcast. “So, if you are looking for a reason to pull back from your progress in readying to do value-based care, you are sadly mistaken. Reverse course before it is too late and get ready to do it.”

The Trump administration initially slashed the extent of mandatory participation in the Comprehensive Care for Joint Replacement model but subsequently added other mandatory models and signaled future plans to continue doing so.

Pawlak, however, doubts more mandatory models are likely, at least during the ongoing pandemic and immediate aftermath.

“COVID is going to color a lot of things and there is going to be caution,” Pawlak said.

About the Author

Rich Daly, HFMA Senior Writer and Editor,

is based in the Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

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