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March 15, 2017
Daniel Orenstein
General Counsel
Is Value-Based Healthcare Here to
Stay? Looking for Answers in New
Policies
© 2017 Health Catalyst
Proprietary and Confidential
®
What are the differences among these words? Chaos, confusion,
mess, ...
© 2017 Health Catalyst
Proprietary and Confidential
• Definition of Value-Based Care (VBC)
• Federal government VBC progra...
© 2017 Health Catalyst
Proprietary and Confidential
VBC describes payment programs and care models which are
designed to s...
© 2017 Health Catalyst
Proprietary and Confidential
• Medicare Access and CHIP Reauthorization Act (MACRA)
• Merit-based I...
© 2017 Health Catalyst
Proprietary and Confidential
HHS has stated it wants to shift the Medicare program to have 50% of
i...
© 2017 Health Catalyst
Proprietary and Confidential
VBC has made progress as measured by the number of
hospitals participa...
© 2017 Health Catalyst
Proprietary and Confidential
What is the average percentage of revenue attributable to value-
based...
© 2017 Health Catalyst
Proprietary and Confidential
However, as measured by percentage of a hospitals’ total
payments that...
© 2017 Health Catalyst
Proprietary and Confidential
• Federal requirements, or mandates, play a significant role in
adopti...
© 2017 Health Catalyst
Proprietary and Confidential
• Republicans are finding themselves boxed in by the popular
provision...
© 2017 Health Catalyst
Proprietary and Confidential
• The Bill (released March 6, 2017) should be characterized as a
“part...
© 2017 Health Catalyst
Proprietary and Confidential
Bipartisan Cooperation on Health Policy
13
© 2017 Health Catalyst
Proprietary and Confidential
Senate
92392
Bipartisanship is reflected in the MACRA vote tally
14
Co...
© 2017 Health Catalyst
Proprietary and Confidential
What percentage of Congress voted in favor of the 21st Century Cures
A...
© 2017 Health Catalyst
Proprietary and Confidential
Senate
94392
… as well as the 21st Century Cures Act vote tally
16
Con...
© 2017 Health Catalyst
Proprietary and Confidential
Federal healthcare policy issues that polarize vs. those that
enjoy bi...
© 2017 Health Catalyst
Proprietary and Confidential
• Markets
• Morality
• Entitlements
Polarizing
• Cost control
• Access...
© 2017 Health Catalyst
Proprietary and Confidential
• Cures is broad and sweeping legislation that covers many topics,
mos...
© 2017 Health Catalyst
Proprietary and Confidential20
EXECUTIVE ORDER:
Minimizing the Economic Burden of the Patient
Prote...
© 2017 Health Catalyst
Proprietary and Confidential
• On January 20, 2017, President Trump signed an Executive Order
on “m...
© 2017 Health Catalyst
Proprietary and Confidential
• The Order calls for preparing “to afford the States more flexibility...
© 2017 Health Catalyst
Proprietary and Confidential
• Tom Price, Secretary of HHS is a staunch opponent of the
ACA. Howeve...
© 2017 Health Catalyst
Proprietary and Confidential
• While Price does not support all of the activities of CMMI, he
appea...
© 2017 Health Catalyst
Proprietary and Confidential
• Bipartisan support - The success of Cures indicates that
bipartisan ...
© 2017 Health Catalyst
Proprietary and Confidential
• Support for Existing ACA Innovation programs – Although
highly uncer...
© 2017 Health Catalyst
Proprietary and Confidential
• The trend towards consumer responsibility could possibly
accelerate ...
© 2017 Health Catalyst
Proprietary and Confidential
Questions
28
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Will New Healthcare Policy Impact Value-Based Healthcare?

The final days of 2016 were fraught with uncertainty about what Congress and the new Trump Administration would do to the Affordable Care Act (ACA) and the healthcare regulatory landscape overall. So far, in 2017, we do not have much more clarity. Repeal, repeal and replace, repeal and delay, modify without repeal—there are now even more questions than answers and still no consensus Republican plan in sight. Yet healthcare executives would certainly appreciate some modicum of clarity, at least on the narrower topic of whether the shift to value-based healthcare models will continue under whatever new system is coming. This webinar attempts to add clarity by analyzing what we know so far, as reflected in the limited actual evidence that is available.

Join Dan Orenstein, General Counsel, Health Catalyst, as he analyzes these three key pieces of information:

The 21st Century Cures Act (Cures)
The Executive Order on reducing the “burden” of the Affordable Care Act (ACA)
Tom Price’s comments at his confirmation hearings

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Will New Healthcare Policy Impact Value-Based Healthcare?

  1. 1. March 15, 2017 Daniel Orenstein General Counsel Is Value-Based Healthcare Here to Stay? Looking for Answers in New Policies
  2. 2. © 2017 Health Catalyst Proprietary and Confidential ® What are the differences among these words? Chaos, confusion, mess, commotion, mayhem, havoc, shambles, pandemonium, uproar, disruption, turmoil, upheaval, disturbance, turbulence, disarray, unrest, disorder, anarchy 2 Source: https://www.quora.com/What-are-differences-between-these-words-Chaos-confusion-mess-commotion-mayhem-havoc-shambles- pandemonium-uproar-disruption-turmoil-upheaval-disturbance-turbulence-disarray-unrest-disorder-anarchy-Could-anyone-group-them-to-help-me-be- more-clear-on-which-word-to-use-in-which-situation health policy
  3. 3. © 2017 Health Catalyst Proprietary and Confidential • Definition of Value-Based Care (VBC) • Federal government VBC programs • Government influence on the progression of VBC • Health Care Reform Part II (Republican-style) • Evidence on continued government support for VBC • Trends to follow • Bipartisanship vs. Polarization • Market-based innovation • Consumer-directed payment reforms • Q&A - Discussion Agenda 3
  4. 4. © 2017 Health Catalyst Proprietary and Confidential VBC describes payment programs and care models which are designed to shift payment from the volume of procedures (FFS) to the outcomes or results of the healthcare services, With the goal of achieving the highest quality healthcare at a lower systemic cost. Defining Value-Based Care 4
  5. 5. © 2017 Health Catalyst Proprietary and Confidential • Medicare Access and CHIP Reauthorization Act (MACRA) • Merit-based Incentive Payment System (MIPS) • Advanced Alternative Payment Models (APM) • Medicare Shared Savings Program • Medicare ACOs, established by the Affordable Care Act (ACA) • Bundled payment programs, and other demonstration programs, conducted by the CMS Innovation Center (CMMI) Federal Government VBC programs have helped set the course for the healthcare industry 5
  6. 6. © 2017 Health Catalyst Proprietary and Confidential HHS has stated it wants to shift the Medicare program to have 50% of its payments for healthcare items and services comprised of value based payments by 2018. --Better Care. Smarter Spending. Healthier People: Paying Providers for Value, Not Volume, CMS, Jan. 26, 2015, available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-01-26-3.html The federal government (HHS) has set an aggressive goal for VBC 6
  7. 7. © 2017 Health Catalyst Proprietary and Confidential VBC has made progress as measured by the number of hospitals participating 7 A recent Washington Post-Philips survey shows that about a third of responding hospitals and health systems were participating in voluntary value-based payment models. 12% 17% 19% 15% 45% 38% 22% 26% 43% 45% 59% 60% Northeast Midwest South West Under consideration Yes No Source:http://www.washingtonpost.com/sf/brand-connect/philips/transforming-healthcare/?origin=13_us_en_wpvbc_philipsnatwitter____nabcd_paid
  8. 8. © 2017 Health Catalyst Proprietary and Confidential What is the average percentage of revenue attributable to value- based payment among hospitals and health systems? 156 respondents 1- 7% --16% 2- 12% -- 22% 3- 14% -- 25% 3- 22% -- 27% 4- 38% -- 10% Poll Question #1 8
  9. 9. © 2017 Health Catalyst Proprietary and Confidential However, as measured by percentage of a hospitals’ total payments that are value-based today, VBC is just coming out of the gate 9 “Despite the Department of Health and Human Services’s (HHS) goal of shifting 50 percent of Medicare payments from fee-for service to value-based payment models that emphasize quality and outcomes by 2018, the respondents said that only 14 percent of their payments were currently tied to value, as defined by CMS, and an even smaller 6.7 percent of their revenue was actually at risk.” Source:http://www.washingtonpost.com/sf/brand-connect/philips/transforming-healthcare/?origin=13_us_en_wpvbc_philipsnatwitter____nabcd_paid 14.1% 6.7% Payment tied to value Revenue at risk under VBP
  10. 10. © 2017 Health Catalyst Proprietary and Confidential • Federal requirements, or mandates, play a significant role in adoption of value-based payment programs • 36% federal requirements, 6% commercial payors, 4% state laws • Competitive considerations are also a significant factor. Health systems do not want to be left behind or left out of consideration for value based payor contracts • 37% voluntary, 9% competitive considerations Hospitals’ motivations for participating in VBC might not be “purely” to pay for quality/outcomes and reduce cost 10 Source:http://www.washingtonpost.com/sf/brand-connect/philips/transforming-healthcare/?origin=13_us_en_wpvbc_philipsnatwitter____nabcd_paid
  11. 11. © 2017 Health Catalyst Proprietary and Confidential • Republicans are finding themselves boxed in by the popular provisions of the ACA • Subsidies to purchase health insurance (22M more people covered) • No denial of coverage for individuals with pre-existing conditions • Coverage for children up to age 26 • “Repeal and replace,” “repeal and delay,” “modify without repeal” • These are just some of the top level designations, with many policy ideas still being floated and evaluated for restructuring healthcare coverage • Some of these policy solutions may affect the progress of VBC, but we don’t yet know which ones will make it into legislation Healthcare Reform Part II (Republican-style) is still in the early innings 11
  12. 12. © 2017 Health Catalyst Proprietary and Confidential • The Bill (released March 6, 2017) should be characterized as a “partial” ACA repeal and replacement. • The Bill retains many features of the ACA, for example: • Coverage for pre-existing conditions • Coverage for children up to age 26 on parents’ plan • No annual or lifetime caps • The most significant changes are rolling back the Medicaid expansion and replacing the ACA credits to purchase health insurance and cost sharing with tax credits tied to age. • Doesn’t clearly address cost control, payment methods within health plans. Medicare ACOs, CMMI, MACRA are not affected. House proposed ACA replacement Bill deals with coverage rather than payment reform 12
  13. 13. © 2017 Health Catalyst Proprietary and Confidential Bipartisan Cooperation on Health Policy 13
  14. 14. © 2017 Health Catalyst Proprietary and Confidential Senate 92392 Bipartisanship is reflected in the MACRA vote tally 14 Congress 8 YesNo 37
  15. 15. © 2017 Health Catalyst Proprietary and Confidential What percentage of Congress voted in favor of the 21st Century Cures Act? 160 respondents 1- 51% -- 24% 2- 67% -- 20% 3- 74% -- 16% 4- 88% -- 20% 5- 94% -- 20% Poll Question #2 15
  16. 16. © 2017 Health Catalyst Proprietary and Confidential Senate 94392 … as well as the 21st Century Cures Act vote tally 16 Congress 5 YesNo 26
  17. 17. © 2017 Health Catalyst Proprietary and Confidential Federal healthcare policy issues that polarize vs. those that enjoy bipartisan support 17 Issue Polarizing or Bipartisan Explanation Healthcare coverage design Polarizing Federal coverage involves questions that invoke party ideology about whether, and to what extent, the federal government should be involved in an industry that operates largely in private markets, as well as the scope of federal entitlements. Reimbursement methods Mixed To the extent that reimbursement reflects cost control efforts, there is bipartisan support. However, some efforts at cost control, such as allocating appropriate resources to end of life care, have been viewed as ethically questionable “rationing” by conservatives. Value-based healthcare programs Bipartisan Payment and care models that improve quality and reduce cost are hard to argue with. They are part of existing payment programs, so do not invoke ideological questions on the appropriateness of federal support. Plus market innovation is supported by both sides.
  18. 18. © 2017 Health Catalyst Proprietary and Confidential • Markets • Morality • Entitlements Polarizing • Cost control • Access to and availability of care • Quality of care Bipartisan Issue categories that are polarizing and those that generally enjoy bipartisan support 18
  19. 19. © 2017 Health Catalyst Proprietary and Confidential • Cures is broad and sweeping legislation that covers many topics, mostly on streamlining and accelerating the discovery of new drugs and medical devices. It includes provisions to improve mental health and substance abuse treatment and to improve patient access to new therapies, among many other areas covered by the Act. • The Act also establishes programs and oversight to promote health information interoperability and to prohibit “information blocking” practices. The 21st Century Cures Act became law on December 13, 2016 with broad bipartisan support. 19
  20. 20. © 2017 Health Catalyst Proprietary and Confidential20 EXECUTIVE ORDER: Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal
  21. 21. © 2017 Health Catalyst Proprietary and Confidential • On January 20, 2017, President Trump signed an Executive Order on “minimizing the economic burden” of the ACA. • The Executive Order, widely viewed as a symbolic act to show action on repealing the ACA, asks the executive branch and HHS to: 1- Take steps to minimize the “unwarranted economic and regulatory burdens” of the ACA, and 2- Waive, defer, grant exemptions from, or delay provisions of the ACA that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications. The Executive Order focused on limiting the ACA where possible 21
  22. 22. © 2017 Health Catalyst Proprietary and Confidential • The Order calls for preparing “to afford the States more flexibility and control to create a more free and open healthcare market.” • Also calls for federal departments or agencies with healthcare jurisdiction to “encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.” The Executive Order also reflects principles of open markets and promoting innovation 22
  23. 23. © 2017 Health Catalyst Proprietary and Confidential • Tom Price, Secretary of HHS is a staunch opponent of the ACA. However, he made comments in his confirmation hearings on portions of the ACA that promote programs aimed at innovation in healthcare delivery and value-based care. • Price indicated that he supports in principle the activities of the Center for Medicare and Medicaid Innovation (CMMI) which was established by the ACA to test and promote innovative payment and delivery system models that have the potential to improve the quality of care. Secretary of HHS Tom Price indicated his support for innovation programs under the ACA 23
  24. 24. © 2017 Health Catalyst Proprietary and Confidential • While Price does not support all of the activities of CMMI, he appears to support the mission of CMMI in principle, which is essentially a test bed for value-based healthcare programs. This provides another indication that these programs may continue to enjoy support in the Trump Administration with Price as Secretary of HHS. Secretary of HHS Tom Price indicated his support for innovation programs under the ACA (continued) 24
  25. 25. © 2017 Health Catalyst Proprietary and Confidential • Bipartisan support - The success of Cures indicates that bipartisan cooperation will continue on key healthcare issues, notwithstanding the extreme ideological divide on market and entitlement related healthcare issues. Value-based payment programs have historically fallen into the non-ideological, bipartisan category. • Market-based innovation – The emerging evidence is that Congress and the Administration will support innovation in payment and delivery models, and flexibility in programs that will be included for participation in federal payment programs, which will flow through to commercial payment programs. Pulling the threads together, the evidence shows us that VBC is likely to enjoy continued federal government support 25
  26. 26. © 2017 Health Catalyst Proprietary and Confidential • Support for Existing ACA Innovation programs – Although highly uncertain, there are some indications that not all of the ACA will be scrapped. And in this case the innovative payment and delivery programs, which are on the non-ideological side, may be among those pieces of the ACA that will survive and be supported in some form. • Spillover effect to Commercial VBC programs - Federal government support is likely to influence the continued development of commercial VBC programs. Pulling the threads together, the evidence shows us that VBC is likely to enjoy continued federal government support 26
  27. 27. © 2017 Health Catalyst Proprietary and Confidential • The trend towards consumer responsibility could possibly accelerate if a significant structural basis of the reform is increased tax credits and health savings accounts. • These programs could put more responsibility on the patient to shop for healthcare. • The overall share of payment could shift to individuals from third party payors. • Would emphasize information provided to patients on cost and quality to support shopping • VBC would likely continue, but given its diminished importance in the payment mix overall, it could get less policy attention and decelerate. Another trend to watch with Healthcare Reform Part II is consumer-directed healthcare payment methods 27
  28. 28. © 2017 Health Catalyst Proprietary and Confidential Questions 28

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