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CMS Turns to Value-Based Reimbursement, Data Analytics at 50

By Jennifer Bresnick

- Medicare has experienced its fair share of ups and downs during the first fifty years of its life, but former CMS Administrator Donald M. Berwick, MD, believes the massive public insurance program is just getting started.  In an interview with the Journal of the American Medical Association (JAMA), Berwick lays out a vision of value-based reimbursement, big data analytics, quality measurement, and significant care improvements that will be more than sufficient to meet the challenges of a growing, aging, sickening population.

Value-based reimbursement at CMS

“This country is on an expedition around discovery of new ways to pay for health care that will be better supportive of meeting the real needs of patient communities,” Berwick told Julie A. Jacob, MA.

“We [know] the current payment system isn’t working. It rewards doing more and more things whether they are of a value to patients or not, so it leads to overuse. It produces fragmentation because it doesn’t support coordinated team-based care the way we need to. It isn’t enough invested in prevention and community-based supports.”

What the healthcare system needs is a complete overhaul of how it pays for quality, which Berwick calls “the match between work and need.” 

Over the past few years, Medicare has invested heavily in value-based reimbursement structures such as accountable care organizations (ACOs), and plans to continue doing so.  This “edgy experiment” has seen some providers struggle to adapt to new ways of sustaining themselves financially, but has also produced measurable benefits for the organizations that have successfully navigated the changes.

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The lessons learned from accountable care experiments like the Pioneer ACO and Next Generation ACO programs will inform the progress of the industry at large, Berwick says, as CMS attempts to meet the complex needs of current – and future – generations.

“We badly need more investment in geriatrics and geriatric care,” stated Berwick, who current serves as president emeritus at the Institute for Healthcare Improvement (IHI) and is also a senior fellow at the organization. Berwick is also a member of the JAMA editorial board. 

“CMS has lots of leverage on this. It is for one thing a funder of a lot of graduate medical education. CMS can be a player there. Our reimbursement system needs adjustment. It’s very much oriented around procedures right now. Some changes are occurring, but I would encourage and hope that CMS will move more and more toward being able to pay for the kinds of patient-centered services that [are] going to really mark the best of geriatric care and get a little bit farther away from procedure-oriented payment as the mainstay.”

Medicare must also help the provider community continue to make progress in the realm of patient safety and care quality.  CMS has ramped up financial penalties for certain hospital-acquired conditions and preventable hospital readmissions, siphoning funding from nearly half a million physicians and half the hospitals in the nation for patient care and quality reporting flaws.  The Center for Medicare and Medicaid Innovation (CMMI) has “stimulated…an unprecedented amount of activity” in pursuit of quality improvements, says Berwick, and continues to provide opportunities for healthcare organizations to engage in novel quality care programs.

CMS is also embracing the use of data analytics to reduce fraudulent activity, a persistent concern in such a large and complex system that handles billions of dollars in payments to millions of providers every year.  CMS has been leveraging predictive analytics to preempt fraud, and recently announced that it had prevented more than $820 million in improper payments, a number that seems to be growing exponentially each year.

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"We are proving that in a modern health care system you can both fight fraud and avoid creating hassles for the vast majority of physicians who simply want to get paid for services rendered. The key is data," said CMS Acting Administrator Andy Slavitt, who is currently awaiting confirmation to assume Berwick’s former position as Medicare’s chief executive. "Very few investments have a ten-to-one return on taxpayer money."

Medicare’s adventures in data analytics and quality reporting haven’t always been so positive, however.  Over the past six years, the EHR Incentive Programs have ruffled industry feathers with their significant data reporting requirements and demand for huge technology investments.  While CMS has always intended meaningful use as a quality improvement program, its more advanced criteria are currently coming under fire from Congress and from healthcare providers alike.

Still, Medicare is a “majestic” achievement, Berwick stresses, which has provided security and peace of mind for millions of aging seniors over the past half-century.  On its fiftieth anniversary, its achievements should be lauded even as stakeholders across the care continuum debate the direction and scope of its future.

“Medicare and Medicaid were steps in this country toward health care as a human right,” Berwick concluded. “I deeply believe that health care is and should be honored as a human right, and I hope we take heart and encouragement and commitment from that decision made a half century ago and now move this country forward to what all developed nation democracies now have, which is health care that really can reach every single person with the same sense of security and support. [W]e need to be proud of what we did 50 years ago, and we can make ourselves proud by building on that so that everybody can have the care they want and need.”

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