Q&A: Archway CEO Terry on bundles, how value-based care may thrive under Trump’s HHS

With a presidential transition bringing in a HHS Secretary opposed to mandatory bundled payment programs and other demonstrations at the agency, providers may be tempted to think the transition to value-based care may grind to a halt in the coming years.

Not so, according to Archway Health CEO Dave Terry. 

Terry spoke to HealthExec about how the policies of President-elect Donald Trump and his pick to run HHS, U.S. Rep. Tom Price, MD, R-Georgia, could benefit value-based care initiatives and bundled payments in both Medicare and commercial insurance.

HealthExec: Going into 2017, how would you describe the state of bundled payments?

Terry: Currently, there are about 2,500 providers across the country participating in a Medicare bundled payment program across three main initiatives: Bundled Payment for Care Improvement (BPCI), Comprehensive Care for Joint Replacement (CJR) and Oncology Care Model (OCM). Providers in the BPCI program have reconciled up to 10 times at this point and many of these physician groups, hospitals and skilled nursing facilities (SNFs) have experienced significant savings, while improving the patient experience. Recently, both Lewin and JAMA published reports showing meaningful savings of organizations within bundled payment programs.

The commercial health insurance market has been slower to adopt bundled payment programs than Medicare, but activity among health insurance companies and self-insured employers is gaining real momentum.

Do you expect to see some acceleration on the commercial side in 2017? And how will their models differ from what Medicare has done?

We’re starting to see a lot more interest in bundles from self-insured employers and health plans. This is driven by the success that Medicare has had, as well as by increased need to find new ways to reduce premium growth and overall healthcare costs. We expect this momentum to continue to grow in 2017.

Commercial bundles will be a lot different in their design than the BPCI and CJR programs. In Medicare, the only opportunity for savings is to reduce the utilization of services, while in the commercial market there are big opportunities to reduce the price of care as well as utilization. This will create new opportunities for lower-priced high quality providers in many regional markets across the country. 

We also expect to see more innovation from specialists who will gain greater control and autonomy of the clinical process through bundle contracts. This will drive new types of bundles across multiple specialties, in chronic and acute care, and in the outpatient and inpatient arenas. This activity will enable more specialist groups to remain independent and will start to reverse the trend of specialist consolidation.

President-elect Donald Trump’s HHS Secretary, Tom Price, has been very opposed to mandatory bundles, like CJR. What do you expect his impact will be?

While there is a chance that as head of HHS Secretary Price will eliminate these programs, we expect them to continue as voluntary initiatives. By keeping these programs in place, CMS can utilize CJR and EPM as Advanced APM (Alternative Payment Models) within MACRA (the Medicare Access and CHIP Reauthorization Act), as well as enable participating hospitals to build on the process improvements and infrastructure investments they have already made.

We also expect CMS to continue to move forward with the Advanced BPCI program they announced last year. A major goal of this program will be to create physician driven two-sided risk structures that qualify as Advanced APMs within MACRA, which Rep. Price supported along with more than 480 of his colleagues in Congress. Essentially, an Advanced APM is either an ACO for primary care physicians or a bundled payment model for specialists. This will be a big opportunity for all types of specialists including orthopedic surgeons, oncologists, cardiologists, urologists, gastroenterologists and others to gain greater autonomy over their care process, improve quality, reduce costs, and earn new revenue by participating in bundled payment programs. With the addition of the Advanced BPCI program, we expect to see significant growth in specialist-initiated bundles.

Should the Trump administration as a whole be seen as an opportunity for bundled payments or a danger to their progress?

Our view is that the Trump Administration will be very positive for value-based care in general and bundled payments in particular. It is clear from what President-elect Trump, House Speaker Paul Ryan and others have said that government spending and regulation will be reduced in favor of more market based solutions.

In addition, there will be increased pressure for payors to lower health insurance premium growth and for providers to lower costs. These pressures will push commercial payors and self-insured employers to build on the success Medicare has had with bundled payment initiatives.

We also expect Medicare to significantly expand their voluntary bundled payment programs, as described above. Medicaid bundled payment programs will also start to grow as CMS moves toward block grants, which will increase state flexibility while also creating more pressure to reduce costs.

What position would you expect hospitals and providers to advocate? No more bundles? Changing models from mandatory to voluntary? Or expanding these programs?

We have seen a lot of pent up demand for more bundled payment programs from specialists, particularly orthopedic surgeons, cardiologists and oncologists who have seen their colleagues do well in the BPCI and OCM programs. For that reason, we expect specialist organizations to push for more voluntary bundles and APMs that enable them to participate directly, earn savings, and avoid MIPS.

We have been surprised to see how strongly many hospitals and the (American Hospital Association) have pushed back against the mandatory aspect of CJR and EPM. We think they’ll win this battle and these programs will shift to voluntary. With that said, we’ll continue to see hospitals be mixed in their approach, with some hospitals embracing bundles while others come along reluctantly or avoid them.