Essay: Medicare

1. Identify and describe one of the Medicare value-based payment (VBP) models, including the target population, characteristics of the delivery model, key performance indicators or value metrics, and the associated payment incentives. In theory, how is the VBP model expected to generate savings? What evidence has been reported that indicates whether the model is or is not working as planned? What challenges and opportunities are associated with implementing the model? To date, what are the key lessons learned about characteristics associated with successful implementation of VBP models?
The Centers for Medicare and Medicaid Services (CMS) developed the Bundled Payments for Care Improvement (BPCI) Advanced model to test bundled payments for 32 specific episodes and to incentivize participating providers for decreasing care costs and improving care quality for Medicare patients receiving care for one of these 32 clinical episodes.1 This model is entirely voluntary, consists of a single retrospective bundled payment with a 90-day clinical episode duration, and places more risk onto the providers than previous BPCI models.1
There are seven quality measures for BPCI Advanced, including all-cause hospital readmissions, advance care plan, and CMS patient safety indicators that are used to measure the quality of care and reimbursement level for each episode.1 To identify reimbursement level, CMS compares the aggregate Medicare fee-for-service (FFS) expenditures included in a clinical episode against the episode’s target price to determine whether the participant will either receive a payment or be required to pay CMS. If the provider keeps costs below the target price for each episode, financial savings will be generated through this value-based payment (VBP) model, in addition to the improvement in the quality and continuity of care for Medicare patients. At this time, BPCI Advanced results are not yet available in order to determine the extent of the gains/losses realized in this VBP model.2
Implementation of BPCI Advanced for providers that have used past BPCI models, particularly BPCI Model 3, would be less challenging than for providers who have not, due to preestablished networks and pathways for continuity of care for some clinical episodes as well as familiarity with the program.2 In addition, many providers will be interested in participating, as BPCI Advanced qualifies as an Advanced Alternative Payment Model (APM) and thus exempts participants from payment reductions under MACRA.3 BPCI Advanced is also a voluntary payment model and will see less opposition than mandatory models such as Comprehensive Care for Joint Replacement (CJR) did, but it may not generate the same level of savings as CJR has.3 The greatest challenges with BPCI Advanced will be associated with new outpatient episodes, as previous BPCI models focused solely on inpatient episodes.4 Overall, there is significant opportunity to incentivize providers to decrease costs and improve quality for some of Medicare’s most common and most expensive clinical episodes, but implementation strategies must address challenges in order to optimize the success of this VBP model.
Key lessons learned in implementation from other payment models include the placement of risk on providers to increase financial savings and risk adjustment beyond the primary diagnosis; and the allowance of waivers for services not typically covered under Medicare, such as skilled nursing facility (SNF) care without 3-day hospital stay, telehealth coverage in all geographic areas; and post-discharge home visit waivers without direct physician supervision.2,4 In addition, BPCI Advanced will ensure payments are linked to quality measures, which did not happen in previous iterations of BPCI as well as utilize more specific measures for quality universally and per episode type.4 All of these will incentivize providers to maximize financial savings and to focus on improving healthcare quality for its Medicare patients.
2. In the US, the allocation of government funding for public health vs. health care delivery vs. scientific research has been the topic of intense debate. Using two (2) public health programs (or agencies) as examples, discuss trends in financing for public health vs. health care delivery vs. scientific research; politics and policies (e.g., legislative actions) that have influenced those trends; and evidence that supports or contradicts calls to increase financing for public health. Predict whether financing for public health will increase/decrease/remain flat in the current environment; provide a rationale for your prediction.
In the U.S., there has been a significant decrease in money allocated for public health initiatives and healthcare delivery, and an increase in budget allocations for scientific research. More specifically, the Centers for Disease Control and Prevention (CDC), which has historically received funding for protection against infectious diseases and for prevention of chronic disease, has seen an approximately 1.2 billion dollar decrease in funding since 2017, whereas the Food and Drug Administration (FDA) saw a 454 million dollar increase in funding, which is approximately the amount of their total budget that is spent on medical product innovation initiatives.5
The allocation of government financing for public health, healthcare delivery, and health-related scientific research is heavily influenced by U.S. politics and who is resident in the oval office, as the majority of public health funding is considered discretionary, making the amount of public health funding wax and wane with the political agendas of the federal administration. Since President Trump was elected, government financing for HRSA, CDC, SAMHSA, and CMS has decreased while FDA and NIH budgets have increased.5 A table depicting the amount in budgetary changes for each agency since Trump’s election is shown below, in billions.
Agency 2017 2019 2017-2019 (+/-)
HRSA 10,458 9,604 -854
CDC 12,100 10,921 -1,179
SAMHSA 4,258 3,548 -710
CMS 6,027 5,729 -298
FDA 2,800 3,254 +454
NIH 34,229 34,767 +538
Source: Enard KR. HMP-5720-04 Government Financing of Health Care: Military Health System, Veterans Health System, Public Health. February 2019.
The Trump administration has been very clear about its intentions for the FDA and has aggressively pressed for a more streamlined process for drug approvals in order to significantly increase the number of generic drug approvals as part of the American Patients First blueprint.6 This blueprint is intended to lower drug prices and reduce out-of-pocket costs for individuals and Medicare Part D beneficiaries and will ultimately have a major impact on the economy and the pharmaceutical industry.7 Overall, the Trump administration is heavily influencing the financing for drug research and approvals through its policies and budget allocations to the FDA.
Most importantly, the CDC has seen a 1.2 billion dollar decrease in funding since Trump’s election, aligning with his administration’s view on the importance of public health.5 This decrease in funding negatively impacted the CDC’s initiatives related to immunizations, emerging and zoonotic infectious diseases, chronic disease prevention and health promotion, birth defects and other disabilities, environmental health, injury prevention and control, occupational safety and health, global health, and public health preparedness and response.5 Each of these areas saw a negative impact in hundreds of millions of dollars that will substantially worsen the health of the United States across multiple areas of public health. Ultimately, the Trump administration’s choice to decrease CDC funding will have substantial long-lasting impacts on population health in the U.S.
There is a significant body of evidence demonstrating the importance of public health investment for a nation that goes beyond the health of the population and that demonstrates significant financial and economic benefits.8 According to the CDC, ninety percent of U.S. healthcare expenditures are for chronic and mental health conditions; however, only 2.5% of national health expenditures is actually spent on government public health activities.9,10 The United States spends more on healthcare per capita than any other country, without significantly better health outcomes and with much of that spending on preventable chronic conditions.9,11 If the U.S. invested more heavily in public health activities aimed at preventing chronic conditions across all social determinants of health, significant financial savings would result and lives would be saved.12
In the current political environment, public health financing will continue to decrease in favor of advancing scientific research for new products and treatments. As mentioned previously, politics heavily influence budget allocations, and the current president has repeatedly demonstrated his interest in increasing spending for scientific research for pharmaceuticals, medical devices, and other treatment options via the FDA, and a decreased interest in allocating budgets for the prevention of chronic diseases through the CDC. Any increases in public health financing via budget allocations will likely only come when a more public-health-minded president is elected.
3. The Medicaid program is a persistent focus of calls for delivery system reform. Describe, with supporting evidence, the reason(s) that Medicaid is a target for reform. Compare and contrast the goals and characteristics of two (2) proposals for Medicaid reform and the potential benefits and/or harms for Medicaid beneficiaries and other stakeholders (providers, state, local governments, etc.) associated with the identified proposals. Which proposal, if any, would you recommend? Why?
Medicaid is a target for reform because it provides health insurance coverage for twenty percent of Americans, is the largest payer for long term care, and finances approximately twenty percent of all personal healthcare spending in the country.13,14 In addition, Medicaid is administered on the state level, causing substantial differences in the program across all fifty states.14 Medicaid also provides insurance coverage for children, the elderly, and people with disabilities in addition to covering people with low income.13 Ultimately, Medicaid is a significant payer whose state-run programs have significant variation and affect a significant portion of the U.S. population, generating a need for reform.
One of the main routes to reforming Medicaid in 2019 is through Medicaid demonstration waivers, which provides states the opportunity to trial programs that are not otherwise allowed under current law and objective requirements of Medicaid.13 Two areas of interest for multiple states are waivers for work-requirements to receive Medicaid and waivers for addressing the ongoing opioid crisis.
Arkansas Works is a demonstration waiver aimed at increasing the employment level of Arkansas’ Medicaid population by mandating certain reporting requirements for work and job search hours in order to receive Medicaid program benefits.15 According to the Arkansas Department of Human Services, Arkansas Works will provide various benefits relating to employment that will help “individuals to lift themselves out of poverty and to improve their overall health.” 15 Stakeholders include non-exempt Medicaid beneficiaries, state government, and employers. Non-exempt Medicaid beneficiaries will benefit from having a source of income, health coverage, and other health benefits from being employed if they would not have been otherwise; however, they may face difficulties in logging hours and meeting program requirements that will result in loss of health coverage until they are eligible to re-enroll. The state of Arkansas will benefit from having a more productive population with access to health insurance coverage if the program is successful, but will have significantly more paperwork and must ensure provision of job search materials for Medicaid beneficiaries. Employers can benefit by filling some open positions with non-exempt Medicaid beneficiaries, but will have a larger administrative workload from fact-checking employee hours for the work requirements.
Medicaid covers approximately forty percent of adults with opioid addiction, making demonstration waivers that adequately address opioid addiction a necessity.13 New Mexico’s waiver to treat enrollees with opioid use disorders with federal funding was recently extended for five years.16 In this waiver were authorizations to increase copayments for inappropriate emergency department use or high-cost drug utilization, to increase premiums, to terminate coverage for failure to pay premiums after a three-month period, and to eliminate retroactive coverage for new enrollees. 16 Stakeholders include Medicaid beneficiaries, the state of New Mexico, and Medicaid beneficiaries with opioid or other substance abuse disorders. Medicaid beneficiaries without a substance abuse disorder will lose substantial coverage if unable to consistently pay premiums and spend higher percentages of their total income on copayments if unable to meet new requirements; these stakeholders will only benefit from health coverage if they are able to meet the new requirements. Medicaid beneficiaries with opioid addiction or other substance abuse disorders will be harmed in the same way, but will receive an additional benefit for coverage of treatment of their substance abuse disorder. The state of New Mexico will benefit if beneficiaries are unable to meet the new requirements by controlling costs if coverage is terminated, if premiums and copayments are raised, and if beneficiaries are able to meet the requirements by choosing less costly drugs and by appropriately using emergency departments. In addition, the state of New Mexico will also benefit from a healthier population by treating opioid-dependent beneficiaries in their state. Overall, this waiver favors the state of New Mexico and may have some negative implications for Medicaid beneficiaries if they are unaware of or unable to meet new requirements.
Although these demonstration waivers are designed to address very different issues affecting the Medicaid population and can be difficult to compare, I would not recommend either waiver for either issue because their implementation has a vast number of negative impacts on the populations it is designed to help. While states must include requirements to ensure sustainability of Medicaid funding, many of these requirements unfairly disadvantage an already disadvantaged population and do not seem appropriate. Ultimately, these waivers demonstrate a value system that I do not agree with nor support, and I could not recommend either waiver based on the downstream impacts it has on its beneficiaries.