Would single payer set back progress on paying for value?
Sen. Bernie Sanders (I-VT) and Rep. Pramila Jayapal (D-WA) have introduced companion bills that would dramatically reform the Medicare program and expand it to every American.
by Nathan Janda, Intern at the Progressive Policy Institute
While the left and center-left have been debating the wisdom of abolishing private insurance, another critical policy issue has not gotten much attention: The Medicare-for-all bill currently in question would create a single-payer health care system based on fee-for-service, disregarding the financial and outcome-based successes of Accountable Care Organizations, the Center for Medicare and Medicaid Innovation (CMMI), Medicare Advantage, and other payment reforms emphasizing value-based care.
The traditional way we pay for health care in the U.S. is through a fee-for-service model. Under this system, providers are paid per-patient for every visit, test, treatment, and procedure. At best, this model helps Americans get timely access to care for their health needs. At worst, this model can lead to redundant tests, poorly coordinated care, and unnecessary surgeries. This unnecessary care adds up to a lot: $210 billion annually.
Since the early 1970s, America has been searching for a better way to pay for care. One alternative is a value-based care model. Under value-based care payment agreements and physician reimbursement are based, at least partly, on patient outcomes, rather than the number of services provided.
There are currently Medicare programs that are working to improve the fee-for-service model by increasing accountability. In 2011, Accountable Care Organizations (ACOs) were created to improve health care by better coordinating health care and reducing unnecessary and duplicative care. ACOs strive to remedy the defects of fee-for-service by making doctors more accountable for outcomes and increasing coordination of care. Through this model, ACOs saved Medicare $652 million in 2016.
In 2013, the CMMI developed a new initiative called the Bundled Payments for Care Improvement (BPCI) Initiative. Under the BPCI, organizations’ payments for episodes of care are linked to financial and quality metrics. Although still in progress, CMMI built on the promising model and created BPCI-Advanced. This model qualifies as an Advanced Alternative Payment Model (APM) and operates under a total-cost-of-care model which caps how much providers are paid.
Finally, there is Medicare Advantage, which combines Medicare and private insurance in a value-based care model. In 2018, 34 percent of Medicare enrollees were enrolled in a Medicare Advantage plan. This program moves away from the traditional fee-for-service reimbursement model and has demonstrated better outcomes for beneficiaries. Although costs are not significantly different between the traditional program and Medicare Advantage, more beneficiaries in Medicare Advantage use preventive services and overall health outcomes are better. This is just one example of a well-run public-private partnership that is benefitting Americans more than traditional fee-for-service. The successes and improved outcomes of Medicare Advantage would be an afterthought, as both companion bills eliminate private insurance and, thus, Medicare Advantage. Additionally, all programs that have sought to move away from fee-for-service are in jeopardy under Rep. Jayapal’s Medicare-for-all bill which would abolish ACOs, the CMMI, and other value-based programs enacted under the Affordable Care Act.
In addition to Medicare, there are private insurance companies implementing value-based care models. Cigna, a health insurance company with over 17 million medical customers, first launched a value-based care program in 2008. The program has surpassed the goal of getting 50 percent of provider payments tied to outcomes. In addition, this program saved $606 million in medical costs from 2013–2017 because of these new payment models. Cigna’s value-based care program focuses on the importance of taking care of the whole person in order to improve health care outcomes.
Cigna is just one example of how private insurance companies are experimenting with moving away from fee-for-service. Harvard released a study highlighting another success story: Blue Cross Blue Shield of Massachusetts. BCBS started an alternative payment program in 2009. As described by The Boston Globe, this program gives doctors a fixed amount of money to take care of their patients. If the doctors deliver quality care and do not go over budget, then they can receive bonuses. If they do not deliver quality care and go over budget, there are penalties. According to the Harvard Medical School study, the programs is linked to better-quality care and fewer health care spending increases.
There is a vast amount of data showing the financial benefits and improved outcomes associated with value-based care. The health care debate is all about reforming our current system and finding the best way to do that for all Americans. It is interesting, however, that some lawmakers would want to completely reform a system just to implement an outdated payment model for the entire country when value-based care is a clear, reasonable option offering improved outcomes and better payment plans.
The single payer proposals introduced by Sen. Sanders and Rep. Jayapal may solve one problem — gaps in coverage — at the expense of more deeply entrenching traditional Medicare’s outdated and inefficient fee-for-service payment system. As the foregoing examples demonstrate, we’ve only just begun to reap the benefits of value-based care’s ability to lower costs and improve outcomes. It would be a shame if, in the name of Medicare-for-All, we set back progress toward replacing fee-for-service with value-based care.