3 barriers to post-SGR payment reform

Payment reform in healthcare hit a major turning point in April when Congress permanently repealed the Sustainable Growth Rate (SGR) formula, but major challenges remain for meaningful reform, according to a Health Affairs blog post.  

Even amid the good news of the SGR repeal, as well as Health and Human Services Secretary Sylvia Mathews Burwell's initiative to quicken the transition to value-based care, there are several other barriers policymakers must address, writes John O'Shea, M.D., a practicing surgeon and senior fellow in the Center for Health Policy Studies at the Heritage Foundation in the District of Columbia. 

They include:

  • No standardized, patient-centered definition of value
  • A lack of accounting systems that reflect the true cost of care delivery
  • Insufficient meaningful performance metrics

Moving providers who use the fee-for-service model into alternative payment models (APMs) will be vital to payment reform, O'Shea writes, but for this to work, providers must have a viable APM to join. While many individual initiatives involving APMs have proven successful, overall early results and conceptual problems suggest APMs may not be ready to support the healthcare system at large.

For instance, pay-for-performance is one of the oldest APMs, but research indicates its positive financial outcomes are small and short-lived. Similarly, accountable care organizations (ACOs), while still relatively new, have shown discouraging early results, according to O'Shea, with only 11 of the 23 ACOs in the Pioneer program earning shared savings. Moreover, multiple ACOs have exited the program, with two more considering leaving despite high quality ratings due to financial woes.

Bundled payments, meanwhile, show promising early results compared to ACOs, O'Shea writes, as they are a better fit for specialist services, while ACOs are biased toward primary care. Bundled care has its challenges as well, according to the post, as the model needs accurate risk-adjustment mechanisms to avoid underuse of care.

"Greater effort should be made to develop small, easily reportable, meaningful, specialty-specific core sets of patient-centered outcome measures," O'Shea recommends. "In addition, clearer principles and a realistic blueprint are needed before rushing ahead on physician payment reform."

To learn more:
- read the blog post

Suggested Articles

A commonly used format for formulary submissions has been updated to enable drug companies to share information with payers on unapproved products.

NextGen Healthcare's Rusty Frantz sounded off about hospitals opposing proposed federal data-sharing rules while also sharing data with tech giants.

Welcome to this week's Chutes & Ladders, our roundup of hirings, firings and retirings throughout the industry.