Editor’s Note: Mike Pykosz is CEO and co-founder of Oak Street Health, a national network of value-based primary care health centers located in 21 states serving adults on Medicare.
After a contentious mid-term election, a new Congress has convened with divided party control. The conventional wisdom tells us the nation should brace for two years of partisan gridlock. As Kiplinger’s congressional reporter Sean Lengell wrote in an article right after the election, “Don’t expect much, if any, major legislation to reach the president’s desk during the next two years.”
I hope that conventional wisdom is wrong and there is actually an opportunity for common ground in the 118th Congress around a subject I know well — healthcare.
Given the vigorous debates over the past decade around the Affordable Care Act, this may appear unlikely.
But, there is one area upon which both parties have long agreed: value-based care, the idea that providers should be rewarded for patient health outcomes, rather than the number of services they provide. These models create incentives for more preventative care and stronger provider relationships — all while driving down unnecessary costs and improving health outcomes. Because value-based care results in lower costs, and therefore net savings to the government, taxpayers ultimately benefit alongside patients.
And, politically, improving value-based care is something that meets the healthcare priorities of both parties.
Republicans, for instance, have said they are interested in looking for Medicare savings, especially because of the forecasted 2028 depletion of the Medicare Hospital Insurance Trust Fund. Democrats have put health equity — or bridging the disparities in quality care and outcomes among different groups — at the top of their list.
Value-based care organizations, including those that predominantly contract with Medicare Advantage plans, and those that participate in the CMMI ACO REACH Model, show promise for addressing both concerns. But to reach their full potential to promote equity and achieve Medicare savings, some measured reforms are needed — both to provide regulatory certainty and bring MA costs per member in line with traditional Medicare as a source of savings for Medicare.
Consider that the most vulnerable populations, specifically lower-income individuals without access to medical care, drive a disproportionate amount of health spending. Some estimates suggest that as little as 10% of the American patient population accounts for nearly two-thirds of total healthcare costs.
Providing these Americans with better access to care, especially preventative care, helps reduce this inequity and saves money. The recent proposed rule by the CMS establishing a health equity index as part of the MA Star Rating program would encourage MA and Part D plans to improve care for enrollees with certain social risk factors and CMS should finalize it.
Right now, there is a short-term yet highly visible debate regarding CMS’ proposals to change risk adjustment in the 2024 MA Advance Notice. As that debate subsides, and as CMS looks to reign in spending and create sustainability in MA, the agency must be diligent to ensure any changes don't have the unintended consequences of disproportionately reducing payments for underserved, lower-income and racially diverse older adults.
An important difference between value-based and fee-for-service providers is that the former have an incentive to work with lower-income, underserved patients and can make the investments necessary to increase quality of care for them. The CMS should take smart steps not to shift the incentive back to focusing on higher-income, less-diverse populations with lower disease burdens.
Another way to drive down costs and address health equity is to support the CMMI ACO REACH model, the first program in Medicare history to fundamentally incorporate health equity into its operations. ACO REACH drives resources to areas with otherwise limited access to care and allows the most innovative and effective value-based provider organizations to provide care for Medicare recipients outside of MA.
Recent data on the first year of the model show promising results — an average net savings rate of 1.3%, with some organizations saving as much as 29% with no reduction in quality. For those concerned about network and provider access, ACO REACH is run inside the traditional, public Medicare program, allowing seniors to see any Medicare provider they want at any time. Finally, provider participants in ACO REACH face financial penalties if they don’t provide higher-quality care that improves outcomes; the program has a 2% “quality withhold” — a percentage of dollars withheld which can only be earned back when a provider demonstrates they are meeting certain quality standards. Critically, the model is strongly supported on equity grounds by both the US Conference of Mayors and the African-American Mayors Association.
Despite the partisan fighting and policy gridlock we may see over the next two years, value-based care need not fall victim to these dynamics. We have been nurturing value-based models as the solution to many of our longstanding health challenges over the years, and now we’re on the cusp of seeing real impact. Measured reforms that strengthen the programs and create regulatory certainty offer wins to both sides of the aisle and, most importantly, a win for our rapidly aging population desperately in need of better care.