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The move to value accelerates in 2021, spurred by lack of fee-for-service payments during pandemic


One of the surprising outcomes of COVID-19 this past year is how it has helped move healthcare delivery towards value-based care. That is expected to continue and increase in 2021.

During uncertainty, instead of moving back to the security of the old fee-for-service model, providers saw the benefit of moving down the path to value.

As more than one expert has said, if you were counting on fee-for-service to get paid during the pandemic, you weren’t getting paid. If you had a value-based arrangement, you were still getting paid.

Orthopedic procedures were down by 90{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}, according to Dave Terry, CEO and founder of Archway Health. Oncology was down by 20{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} because cancer procedures could not be put on hold as orthopedic procedures could. 

Providers in shared value arrangements for orthopedics had a steady cash flow of about $160 per member, per month, according to Terry.

“We’ve seen a lot of providers start to say, ‘How do I tap into that?'” Terry said. “Provider interest is increasing. In 2021, we’re still quite excited about the movement to value-based care. We felt that way pre-COVID; 2020 was a bit of a pause. Going forward, we’re seeing a number of things accelerating movement to value-based care.”

The National Association of ACOs recently praised the work of Congress for  saving value-based payment incentives by including a provision in the COVID-relief bill to encourage continued participation in risk-bearing alternative payment models like accountable care organizations. 

Congress did this by freezing thresholds needed to secure a 5{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} bonus on annual Medicare payments. A survey earlier this year from NAACOS found that 96{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} of the 216 ACO respondents would not meet the 2021 thresholds based on their performance in 2020. 
At some point this decade, Medicare spending will top $1 trillion per year. As policymakers look for ways to lower the rate of spending growth, ACOs have become the leading mechanism, according to NAACOS. 


With President-elect Joe Biden taking over the White House, support for the Affordable Care Act will grow. Other than sending in a legal memorandum in support of the ACA,

Biden can do little to change the outcome of the Supreme Court decision that will decide whether the law is invalid now that the tax penalty is gone from the mandate to have insurance.

But all indications from the oral arguments this fall appear to favor keeping the ACA, despite the 6-3 conservative majority.  Both Supreme Court Chief Justice John Roberts and Justice Brett Kavanaugh asked questions that indicated they sided with the defending issue that the individual mandate is severable from the rest of the law. A decision is expected this spring.

This would be good news towards stable insurance markets, less uncompensated care for hospitals and health insurance coverage for those not otherwise covered by their employer, Medicare or Medicaid.

Going forward in 2021, the Biden administration has named California Attorney General Xavier Becerra to replace Alex Azar as secretary of Health and Human Services.

What is not expected to change is the trend towards new payment models coming out of the Center for Medicare and Medicaid Innovation. 

“What we’re hearing is the Biden Administration will continue in that direction and at a faster pace,” Terry said. 

But rather than having 50 different programs, the forecast is towards fewer programs but bigger ones. And more mandatory programs.

“That’s what we’re hearing in general from Washington, D.C.,” Terry said. “We expect to see some programs become mandatory.”

Such as mandatory bundled payments by 2024, he said.

The current CMMI models have gotten providers some experience in the value-based model. They’re doing things like building the infrastructure, getting care managers.
“Combined with diversifying revenue,” Terry said, “interest is growing.”


The use of telehealth is expected to fall back post-COVID-19, but not to pre-pandemic levels. Much depends on congressional action to make current telehealth flexibilities under the pandemic permanent. 

As Centers for Medicare and Medicaid Services Administrator Seema Verma said early in December, congressional action is needed for telehealth not to return to a rural benefit.

Most of all, providers need to see action on parity of payment, to know they won’t lose money on a virtual visit compared to seeing patients in-person.

While most in the industry can’t imagine telehealth going away now that it’s here, payment parity is key for telehealth to move from a necessity under the pandemic to a benefit not promoted nor supported through provider infrastructure improvements.

Twitter: @SusanJMorse
Email the writer: [email protected]


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