Value-based Healthcare: The Politics of Value-based Care and its Impact on Orthopaedic Surgery

Abstract

Amid a global pandemic, a concomitant economic crisis, a protracted and polarized election, and a spotlight on structural racism and entrenched inequities in the United States, the incoming Biden administration is tasked with addressing a long list of health policy and practice priorities. Over the past decade, the Affordable Care Act (ACA), President Obama’s signature legislation, which then–Vice President Biden famously called “a big fucking deal” [9], has continued to catalyze value-based care delivery and payment reform. Competition based on outcomes and cost-effectiveness of care—a core tenet of the ACA—can be traced back to the Clinton administration’s proposed 1993 Health Security Act, launching American healthcare along a value-oriented path for coverage expansion as an alternative to explicit rationing. In a rare example of bipartisan alignment, the principle of value-based healthcare is neither championed by only one side nor vilified by another. Both parties continue to support innovative value-based care delivery models developed by the Centers for Medicare & Medicaid Services (CMS) and its Center for Medicare & Medicaid Innovation (CMMI). Orthopaedic surgery has played a leading role in CMMI’s value-oriented initiatives, including the Bundled Payments for Care Improvement (BPCI) program launched in 2013 and the Comprehensive Care for Joint Replacement (CJR) model that began in 2016 [2, 6]. The pursuit of value in healthcare is now front and center. That being the case, what should orthopaedic surgeons and the healthcare industry expect for the future of value-based care in the next presidential administration? The Biden Administration Agenda President Biden has resisted calls for a sweeping overhaul of the healthcare system to guarantee universal, tax-financed coverage such as “Medicare for All.” On the other hand, the Biden administration’s anticipated health policy agenda promises to expand upon the ACA framework for payment and care delivery, emphasizing price transparency and competition, high-quality care, and equitable access to healthcare services [12]. Whether the Biden administration builds off existing initiatives or attempts more disruptive approaches remains to be seen. What is certain is that the COVID-19 crisis has changed the game. Regaining control over viral spread, ensuring access to care for those who are infected, and rolling out the largest vaccination drive in US history has added urgency to collective health system improvements [17]. In one of its first actions, the Biden administration rejoined the WHO and its COVID-19 Vaccines Global Access (COVAX) program, one pillar of the Access to COVID-19 Tools (ACT) Accelerator [21]. COVAX aims to ensure equitable vaccine development, production, and distribution across more than 180 countries in the program. The pandemic has also revealed serious weaknesses in the core funding and professional staffing models for hospitals and medical practices. Those models remain highly dependent on a subset of billable interventions, including elective surgery, that are covered by private insurance rather than Medicare or Medicaid. COVID-19 infection rates, hospitalizations, and mortality rates are much greater in poor communities of color than elsewhere. These profound inequalities associated with COVID-19 risk and response have made it clear that access to affordable care not only requires value-based care delivery, but models of care that explicitly pay attention to structural racism, explicit and implicit bias, and the protection of civil rights. Healthcare Prices in the Value Equation In a 2019 Gallup poll, almost 23% of Americans—roughly 58 million people—identified as having medication insecurity, defined as not being able to pay for at least one prescription in the last 12 months [23]. Resources and supplies involved in delivering clinical services, notably prescription drugs, are likely to be a greater focus of the Biden administration’s pricing policies rather than redefining processes of care. Among its campaign policy proposals, the Biden administration focused on subjecting drug companies to Medicare price negotiations and to limit launch prices for drugs that face no competition in the market [12]. Recent federal experience with pricing for COVID-19 drugs and vaccines may accelerate these efforts. Democratic administrations have historically increased antitrust enforcement and (via the Federal Trade Commission [FTC]) consumer protection. Based on historical precedent, we believe that the Biden administration will prioritize healthcare price competition through active enforcement of antitrust laws by the Department of Justice and the FTC [19]. Such efforts might include challenging potentially anticompetitive contractual provisions that: (1) delay market entry of generic drugs, (2) affiliate healthcare providers even if they do not occupy the same geographic markets, or (3) perpetuate cozy relationships between dominant insurers and dominant providers. It is possible, however, that reluctance to increase financial pressure on hospitals already dealing with COVID-19 will prompt political resistance to some of these federal policies—as has been demonstrated by the Certificates of Public Advantage, granted by Texas and a few other states, which confer immunity from federal and antitrust laws on merging hospitals in less-populated regions where state politicians are persuaded that competition would be counter productive [1, 7]. Pricing pressure may also be relieved by competition from alternative providers and delivery models that previously had been prohibited or underfunded—legal changes that COVID-19 necessitated to relieve shortages and avoid infections. The pandemic-accelerated shift to telehealth will likely generate federal support for further development of a digital infrastructure for price transparency that enables patients, hospitals, and medical groups to “shop” for lower-cost services, including reference prices for care bundles. Pricing: Implications for Orthopaedic Surgery The Biden administration pricing strategy may affect orthopaedic surgery, which continues to serve as a hot-button area for cost savings from a payer perspective. Despite provider revenue loss from COVID-19-related moratoria on elective surgery, CMS proposed to cut relative value units for hip and knee arthroplasty by 5% and an additional 5.4%, respectively, in a 2021 Medicare Physician Fee Schedule policy [5]. Policies intended to create a more equitable market in terms of pharmaceutical prices may herald similar opportunities in pricing medical devices relevant to orthopaedics—such as joint replacements. An analysis based on inpatient data from 869 facilities found that savings of USD 23.7 million for knee implants and USD 19.1 million for hip implants could be achieved if all hospitals met or exceeded the top 25th percentile pricing [15]. A more stringent pricing strategy could be based on the key aspects of variation underlined by the analysis: 90% of the variance was attributed to the hospital's purchasing characteristics (vendor negotiations and vendor-surgeon relationships), and surgeon factors (surgeon preference and practice). Patient characteristics were associated with limited variation [10]. Such strategies may also stimulate organizations to obtain a better handle on costs of care based on resources that are utilized by patients, knowledge that underlies episode-based bundles, and reference pricing. High-Quality Care and Quality in the Value Equation As of this writing, the Biden administration has not articulated its anticipated approach to the role of quality measurement and improvement in health policy, but we believe the established practice among presidential administrations of always claiming to safeguard both quality and choice is likely to continue. We would hope that a realignment of quality rhetoric based on value-based principles requiring quality measurement and emphasizing health outcomes over process metrics should be adopted and strongly rewarded. Accordingly, we believe that the administration should bolster quality-related initiatives already set in motion by CMS and CMMI, such as incorporating patient-reported outcome measures (PROMs) into quality metrics in the form of PRO-Performance Measures. To refine the connection between care processes and outcomes, the Biden administration should accelerate efforts to fund and support national repositories and registries for collection and dissemination of health information and to apply predictive analytics and artificial intelligence to different population subsets. Whereas efforts to create state-mandated all-payer claims databases have been subverted by U.S. Supreme Court decisions [8], a federal database with sufficient backing may not be as legally controversial. Such initiatives promise to align financial incentives so that providers are both supported and accountable for achieving targeted goals that enhance value. While it may be politically tempting to go easy on provider infrastructures hit by pandemic-related service disruptions, the administration should not unduly slow down such innovations. Payment Models: Implications for Orthopaedic Surgery The pandemic’s effect on bundling initiatives around quality and outcomes, including value-based payment models relevant to orthopaedic surgery, is less predictable. The Trump administration presided over multiple shifts in Medicare payment models, including changes from mandatory to voluntary bundling through the BPCI Advanced program [3]. Overall results have been mixed, with the outgoing CMS Administrator Seema Verma reporting no major savings or quality improvement based on claims data but experimental studies showing some benefit [13, 18]. With low utilization of elective surgery and shortages of beds and protective equipment, COVID-19 continues to expose the frailty of fee-for-service payment. Burdens on healthcare professionals and facilities may reduce the Biden administration’s willingness to add to the stress via uncertain payment reform. While practices focus on staying afloat in the midst of an unrelenting pandemic [14], medical specialty societies such as the American Academy of Orthopaedic Surgeons (AAOS) should expand work on implementing evidence-based practices, performance improvement initiatives, and patient-centered outcomes measurement at scale. Initiatives driven by professional societies (such as the AAOS Clinical Practice Guidelines, Appropriate Use Criteria, and Registry Program) and federal organizations like CMS Measures Management System Blueprint suggest we’re moving in the right direction [4]. Equitable Access to Care The Biden administration has proposed expanding access to insurance coverage by lowering the Medicare eligibility age to 60 and introducing a “public option” for rural areas and mental health services [12]. The COVID-19 pandemic has further highlighted inequities in the U.S. healthcare system, including shocking disparities in access and outcomes for minorities and vulnerable populations as well as inattention to the social determinants of health [22]. President Biden’s early executive orders for a COVID-19 health equity task force enabling equitable pandemic response and recovery [21], advancing racial equity and support for underserved communities through federal government [20], and confirmation of the first-ever presidential adviser with a sole focus on health equity and combating racial disparities in healthcare [16] confirm the centrality of the current administration’s commitment to these issues. We believe that more efforts will be made to shore up the ACA than expand coverage with new entitlements at the outset. Instead, coverage expansion will likely be indirect through expanding Medicaid across more states and by reducing racial disparities. Because of its enormous threat to public health and economic stability, the COVID-19 pandemic has opened unexpected paths to improving care access beyond expanding insurance. State laws that had for decades limited remote service delivery were suspended or repealed on an emergency basis as the pandemic created health workforce shortages and precluded face-to-face interactions between patients and providers. Many of these demonstrably outdated restrictions will never be reimposed: telehealth has received widespread adoption, and the scope of practice has expanded for advanced nursing and other professionals delivering primary care. These changes are value-enhancing: They make healthcare services more affordable and accessible, especially in rural and underserved communities, and they are being reinforced by a realignment of public and private payment policies that the Biden administration is very likely to continue. Regulations: Implications for Orthopaedic Surgery Healthcare regulations sparked by the pandemic will have a lasting impact on orthopaedic surgery. The adoption of virtual care has catalyzed several principles of care integration: coordination, continuity, and decision-making aligned with patient preferences, values, and needs. The COVID-19 response has also demonstrated the importance of workforce flexibility, bolstered the team approach, and affirmed the importance of building resilience and caring for the caregivers. It has opened channels to alternative management strategies (behavioral health, patient education, exercise, and self-management) and even prompted a reduction in some low-value interventions (MRI for common degenerative conditions such as osteoarthritis). Further, we expect that new rules issued under the Stark Law and Anti-Kickback statute by the Department of Health and Human Services will have the effect of reducing regulatory barriers that should help orthopaedic surgeons and other ambulatory care centers expand access, coordinate care, and accelerate value-based delivery models [11]. The Biden administration faces a daunting set of challenges from a global pandemic and economic insecurity to inequities of income and healthcare. However, the policies it will pursue may transform healthcare at an unprecedented and uncertain time. Whatever emerges over the coming years, orthopaedic surgery is poised as ever to break new ground, particularly if our field stays true to the principles of value-based care.