Coal Mining Isn’t Coming Back and Neither is Fee-for-Service Medicine

Published April 19, 2017

The American Healthcare Act failed before it even made it to a vote, but the GOP’s efforts to undo Obamacare are not limited to a straightforward “repeal and replace” path in Congress. While President Obama was in office, the Republican Congress used its leverage to chip away at certain aspects of the law, such as the funding of risk corridors that make insurance marketplaces healthy.

President Trump signed an Executive Order to minimize agency cooperation with the law. And now his Health and Human Services Secretary Dr. Tom Price is implementing an anti-Obamacare agenda by delaying the expansion of value based payment models, starting with orthopedics and cardiac rehabilitation. Price – an orthopedist himself — appears to be a fan of old-style fee-for-service medicine.

‘Value based care’ – or healthcare compensated with the goals of better outcomes and lower costs –  expanded dramatically under President Obama. Focus on ‘value’ led to a heightened emphasis on patients, greater coordination of care, and an increased prominence of post-acute care (services provided in skilled nursing facilities and in patients’ homes). As providers and payers discovered, the single greatest opportunity to improve cost, quality and the patient experience across the entire episode of care is to focus attention on the optimal use of post-acute care. That means helping patients get the right level of services for the right amount of time with a relentless focus on returning patients to where they want to safely heal – at home.

Secretary Price seems intent on turning back the clock by ramping down Obama-era policies and pilots, or at least making them optional. There are parallels with EPA Secretary Scott Pruitt’s denial of the human role in climate change and the President’s Executive Order undoing clean energy policies and putting the emphasis back on coal.

Despite the Administration’s efforts, coal burning doesn’t have a bright future and neither does fee-for-service medicine.  Americans are facing a demographic tsunami with over ten thousand baby boomers aging into Medicare each day.  The value distortion of our fee for service approach has created the most expensive healthcare delivery system in the world. The combination of high expense and dramatically higher utilization from Medicare members as they age will drive our policy makers back to ‘value’.

Value based care makes sense, because it aligns the interests of patients, healthcare providers, and payers. Leading provider organizations agree, and so do health insurers, including commercial plans, Medicare Advantage and Medicaid managed care. Obama and his team established the value based path. Now health insurers are expanding on the models developed for government programs to extend value based care throughout our health system. Analytics and big data are being applied to optimize care transitions and overall care coordination, starting with prevention and carrying through the entire continuum including post-acute care and return to the community.

When the federal government gets serious again about bending the cost curve –and it will—value based care models will be ready to play an ever broader role. That will result in continuous innovation in payment models and post-acute care.