Making Alternative Payment Plans Mandatory: Inherent Risks and Pitfalls in Reducing Healthcare Costs

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The goal of the CMMI was to overcome several obstacles associated with previous payment reform initiatives.
The goal of the CMMI was to overcome several obstacles associated with previous payment reform initiatives.

The Center for Medicare & Medicaid Innovation (CMMI) program was created by the Affordable Care Act to identify and test new strategies for reimbursement in an effort to reduce growing healthcare costs. According to a report published in the New England Journal of Medicine, mandatory payment models of the CMMI have been met with significant reserve from both healthcare providers and Congress, an obstacle that may be halting improvements in overall cost savings in the health care sphere.

At its inception, the goal of the CMMI was to overcome several obstacles associated with previous payment reform initiatives, with Congress supplying the agency with $1 billion per year to protect it from the annual appropriations process. The CMMI began on a volunteer basis, with many providers signing on to become accountable care organizations and accept bundled healthcare payments.

Although the agency showed clear signs of cutting health care costs and saving money, there are inherent challenges with the program that possibly preclude its ability to translate to other centers. Considering CMMI volunteers are generally more likely to possess a better organizational structure and greater adaptation skills to newer payment models compared with centers who do not volunteer, the generalization of the program across nationwide centers is difficult to ascertain.

Mandatory programs, while useful for the correction of selection bias, can be challenging to implement and assess. Enrolling all providers would consequently eliminate a comparator control group, thereby reducing the ability to determine causal effects of a model. Randomly conscripting providers for mandatory model participation may also place providers at a competitive disadvantage to competitors who are not conscripted.

One option that has been accepted by CMMI is to enroll all providers in randomly selected geographic regions in a specific payment program, with unselected providers in other geographic regions serving as controls. The CMMI used this strategy in the past to test bundled payments for hip and knee replacements in 2015. Despite their proposed benefit, a substantial backlash ensued among members of Congress as well as among provider organizations.

Tom Price, President Trump's first Health and Human Services Secretary, found validation in the backlash, as he had previously paused Obama-era mandatory bundled payment programs. In addition, the Department of Health and Human Services has reduced the size of the CMMI for both hip and knee replacements, which has reduced the study's statistical power.

Despite criticism, the investigators of this report suggest that mandatory payment programs are necessary and “critical to developing robust evidence on strategies for cutting spending and improving quality.”

Reference

Levy S, Bagley N, Rajkumar R. Reform at risk — mandating participation in alternative payment plans. N Engl J Med. 2018;378(18):1663-1665.

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