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The Keckley Report

The Two Changes Most Likely in the Value Agenda of the U.S. Health System

By September 19, 2022March 1st, 2023No Comments

For the past 15 years, regulators have tried to reduce spending and improve quality by changing incentives from volume to value. Has it worked?

Background: At the Federal level, policymakers have used their fiduciary control of Medicare and cost-sharing authority in state Medicaid programs to attempt cost containment. Laws have been passed to enable a shift from fee-for-service to value-based provider payments most with bipartisan support:

·        2008 Medicare Improvements for Patients and Providers Act (MIPPA),

·        2010 Affordable Care Act (ACA)

·        2012 Hospital Readmissions Reduction Program (HRRP)

·        2013 Hospital Value-Based Purchasing Program (HVBP)

·        2015 Medicare Access & CHIP Reauthorization Act (MACRA)

·        2017 Merit-Based Incentive Payment System (MIPS)

·        (Pending) Value in Health Care Act (HR 4587) 2021.

In tandem legislative efforts, the Center for Medicare and Medicaid services (CMS) has implemented a flurry of pilot programs to test new ways of paying for healthcare: since 2013, the CMS Innovation Center has authorized more than 50 alternative payment programs spanning three administrations and widespread voluntary participation among provider organizations.

Finally, the Executive Branch has issued Price Transparency Executive Orders targeted to hospitals and health insurers: notably, both were authorized by the Trump administration and maintained in the Biden administration.  

Have these worked? The findings are mixed:

·        In a white paper issued in October 2021, the Center for Medicare & Medicaid Innovation reported “Over the last ten years, only six out of more than 50 models launched generated statistically significant savings to Medicare and to taxpayers and four of these met the requirements to be expanded in duration and scope.”

·        On Aug. 30, CMS released 2021 results for the performance of accountable care organizations (ACOs) under its Medicare Shared Savings Program (MSSP) — arguably the flagship of its value agenda. It reported ACOs had saved Medicare $1.66 billion, with 99% of ACOs meeting quality standards and 58% earning a shared savings bonus. But notably, Medicare savings were down from $1.9 billion in 2020, and 21.9% of 2021 savings went to the only 10 of the programs’ 475 participants.

·        Compliance with the Hospital Price Transparency Executive Order which began January 1, 2021, has been tepid: only 14.3% were in compliance after the first year, and smaller, independent and financially distressed hospitals essentially paid little attention. And it’s too soon to know how the Transparency in Coverage Rule will impact insurer compliance: it took effect July 1, 2022.

·        And the CMS Office of the Actuary’ Projections (March 2022) indicate health spending will increase at least 5% per year through 2030, with hospital and prescription drug price increases the primary drivers and employers and consumers payments disproportionately impacted. 

What ahead?

At last week’s Modern Healthcare Leadership Symposium, health system leaders cautioned against dismissal of the value agenda while acknowledging results have been mixed. There’s palpable concern that health insurers and private equity-backed primary care centric physician organizations enjoy advantages that hospitals don’t. And there’s recognition among many that fully capitated payments to integrated delivery systems is the lever most likely to drive the shift from volume to value…but there’s also hesitance. Enmity between national health insurers and hospitals systems is palpable and intensifying as each seeks to “own” the value agenda. 

So, in the near term, changes in the value agenda will likely center in two areas:   

Increased emphasis on alternative payment models (APMs) that produce the highest Medicare cost savings. Funding for the Medicare program is not sustainable: As Rachel Burton, senior analyst for the Medicare Payment Advisory Commission (MedPAC), noted in a recent presentation, the numbers of workers contributing to the Medicare Program through payroll taxes has dwindled over the years. In 1970, more than 4.5 workers contributed to the program through their payroll tax to fund care for one beneficiary; today, the ratio is 2.9 workers per beneficiary. Barton suggested that to sustain the Medicare Hospital Trust Fund (Part A) another 25 years, the government might need either to raise the percentage of the workers’ pay from today’s 2.9% to 3.66%, or to decrease Medicare Part A spending by 16.9%, or $69 billion per year.

Thus, streamlining the APM options, modifying benchmarking and risk methodologies and moving toward mandatory participation are likely changes that would stimulate greater Medicare cost savings. Two-sided risk in Direct Contracting, bundled payment and MSSP programs seems necessary along with possible limits on the roles business partners may play in shared savings.

Increased alignment between Medicare Advantage and Medicare fee for service programs: CMS will continue to scrutinize Medicare Advantage plans to limit mal-coding while expanding supplemental benefits that deter or mitigate traditional utilization of specialty care and chronic condition management. In effect, Medicare Advantage offers a parallel lab for testing value strategies akin to Medicare fee for service programs already in place.  In that process, MA will enlighten value strategies about network adequacy, whole-person health, the expanded roles of mid-levels and effectiveness of guided self-care technologies in lowering costs and improving health. Policymakers anticipate parallel hardwiring of value innovations in Medicare Advantage and Medicare fee for service will stimulate adoption in the commercial and Medicaid populations.

The value imperative has fundamentally changed the retail, transportation, higher education and insurance industries. It will do the same in healthcare. Though results have been mixed to date, it is inevitable that the value agenda will replace most of the fee-for-service payment methodologies. The public’s discontent with the status quo assures the pace will accelerate.



Inflation down slightly but likely to persist: The Labor Department on Tuesday reported its consumer-price index: prices rose 8.3% in August from the same month a year ago, down from 8.5% in July and from 9.1% in June; the core CPI, which excludes energy and food prices, increased 6.3% in August from a year earlier, up from the 5.9% rate in both June and July—”a signal that broad price pressures strengthened. “Food prices continued to climb sharply this past month, as did those for new vehicles. Note: prices for medical care commodities are up 4.1% in the last 12 months (LTM), physician services up 1.1% and hospital services up 4.0%.

US Department of Labor September 13, 2022

Study: Medical debt impacts one in 5 household in population: Researchers analyzed changes in medical debt using the 2018, 2019, and 2020 Surveys of Income and Program Participation. Participants were nationally representative samples of US adults surveyed for 1 to 3 years. Findings:

·        A total of 10.8% of individuals and approximately 18.1% of households carried medical debt. Persons with low and middle incomes had similar rates: 15.3%; of uninsured persons had debt, as did 10.5% of the privately-insured.

·        In 2018 the mean medical debt was $21 687/debtor. In cross-sectional analyses, hospitalization, disability, and having private high-deductible, Medicare Advantage, or no coverage were risk factors associated with medical indebtedness; residing in a Medicaid-expansion state was protective).

·        One-fifth of insured adults aged 18 to 64 years incurred unaffordable out-of-pocket costs in 2020, and insurance deductibles left another 7% financially vulnerable.1 Among Medicare beneficiaries, out-of-pocket costs averaged $5460 in 2016; half spent at least 12% of their income on such costs, and one-quarter spent at least 23%.

Himmelstein et al Prevalence and Risk Factors for Medical Debt and Subsequent Changes in Social Determinants of Health in the US JAMA Netw Open September 16,2022;5(9):e2231898. doi:10.1001/jamanetworkopen.2022.31898


HHS finds telehealth providers at low risk of fraud:  HHS’ watchdog examined more than 740,000 telehealth providers in the Medicare program and found last week that just 0.2% were at high risk of waste, fraud and abuse in the pandemic’s first year. HHS’ inspector general found providers risky if they billed for a large number of telehealth hours or often ordered medical equipment post-telehealth appointment. The office found that the providers it flagged billed Medicare $127 million — a tiny slice of the program’s $800 billion-plus spending in 2020.

Medicare Telehealth Services During the First Year of the Pandemic: Program Integrity Risks September 2, 2022

Study: out of state telemedicine use modest during pandemic: Researchers analyzed out-of-state telemedicine use during the COVID-19 pandemic. Findings:

·        In the first half of 2021, there were 8, 392, 092 patients with a telemedicine visit and, of these, 422 547 (5.0%) had 1 or more out-of-state telemedicine visits. Those who lived in a county close to a state border (within 15 miles) accounted for 57.2% of all out-of-state telemedicine visits. Among the out-of-state visits in this time period, 64.3% were with a primary care or mental health clinician.

·        For 62.6% of all out-of-state visits, a prior in-person visit occurred between the same patient and clinician between March 2019 and the visit. The demographics and conditions treated were similar for within-state and out-of-state telemedicine visits, with several notable exceptions. Among those with a telemedicine visit, people in rural communities were more likely to receive out-of-state telemedicine care (33.8% vs 21.0%), and there was high of out-of-state telemedicine use for cancer care (9.8% of all telemedicine visits for cancer care).

Mehrota et al Receipt of Out-of-State Telemedicine Visits Among Medicare Beneficiaries During the COVID-19 Pandemic JAMA Health Forum September 16, 2022;3(9):e223013. doi:10.1001/jamahealthforum.2022.3013

Public Opinion

Survey: Majority of Americans think the U.S. health system underperforms: The survey of a representative sample of 1,505 adults aged 18 or older was conducted July 28 and Aug. 1 by the Associated Press-NORC Center for Public Affairs Research. Findings:

Overall system performance: Asked whether they think the U.S. handles the following healthcare issues “extremely well” or “very well” …

  • 12% said healthcare in general

  • 11% said community support and resources for older adults

  • 11% said healthcare for older adults

  • 6% said quality of care at nursing homes

  • 6% said prescription medication costs

  • 5% said mental healthcare

Access: 78% said they were “extremely concerned,” “very concerned” or “moderately concerned” about having access to high-quality medical care when they needed it. 66% said it’s the federal government’s responsibility to make sure that all Americans have health insurance coverage.


  • 80% said they favor allowing the federal government and private insurance to negotiate for lower prices on prescription drugs

  • 68% said they favor requiring government and private insurance plans to cover the cost of care provided through telehealth programs

  • 58% said they support the creation of a new government health insurance plan that any American can purchase instead of purchasing a private health insurance plan, i.e., public option

  • 43%said they support a single-payer healthcare system in which Americans would get their health insurance from one government plan, i.e., single payer

  • 62% said Americans should pay less for their medical care even if it meant paying more in taxes.

Support for greater government role in health care for older adults Associated Press-NORC Center for Public Affairs Research www.


Study: physician wait times increasing: The survey of 1000 physicians in 15 metro areas was conducted by AMN Healthcare and Merritt Hawkins March and May, 2022. Key Findings:

·        In 2022, the average wait time for a physician appointment across five specialties was 26.0 days, an 8% increase compared to a 2017 survey and 24% increase compared to a 2004 survey.

·        Portland, Oregon, (45.6 days) has the highest average physician appointment wait time across all five of the specialties in the survey.

·        New York (17.4 days) has the lowest average physician appointment wait time across all five of the specialties.

·        2022 wait times by specialty: cardiologist (26.6 days), dermatologist (34.5 days), family medicine physician (20.6 days), obstetrician-gynecologist (31.4 days), orthopedic surgeon (16.9 days),
Interpreting the data

Survey of Physician Appointment Wait Times and Medicare and Medicaid Acceptance Rates


Study: Smaller hospitals less compliant with price transparency rule: “Hospitals across the board have so far struggled to meet CMS’ price transparency requirements, but smaller facilities are more susceptible to noncompliance, according to a study by Northwestern University’s Feinberg School of Medicine.”

The research, published in ClinicoEconomics and Outcomes Research, identified characteristics of 6,214 hospitals using data from the American Hospital Association Annual Survey, as well as cash prices of commonly performed procedures and visits from Turquoise Health.

While price transparency compliance ranged from 13% to 49% of hospitals studied, the findings revealed that facilities with fewer beds were less likely to be compliant with the rule. Additionally, hospitals located in the South and the West were also associated with less transparency.

Smaller Hospitals More Likely to be Noncompliant with Price Transparency Rule Health Leaders September 14, 2022

Care Management, Medication Management

Study: real-time prescription suggestions reduce patient out of pocket costs: Question:  Do real-time prescription benefit (RTPB) recommendations for clinically appropriate, lower-cost alternatives at the point of prescribing reduce patient medication out-of-pocket costs?

Findings:  This cluster randomized clinical trial found that RTPB recommendations led to a 11% reduction in patient out-of-pocket costs for ordered medications. Among high-cost drug classes, the intervention led to a 40% reduction in out-of-pocket costs; however, RTPB recommendations were made for only a small proportion of orders.

Meaning: “These findings indicate that medication price transparency solutions that target patient-specific, real-time out-of-pocket cost information to the prescriber and recommend clinically appropriate alternatives can generate savings for patients.”

Desai et al Effects of Real-time Prescription Benefit Recommendations on Patient Out-of-Pocket CostsA Cluster Randomized Clinical Trial JAMA Intern Med. September 12, 2022. doi:10.1001/jamainternmed.2022.3946


Humana tells investors it will focus on MA, primary care: In its investor call last Thursday, Humana focused on ambitious growth of its Medicare Advantage plans and primary care clinics over the next three years.

·        Humana is the second-largest Medicare Advantage company in the country by enrollment. The company had more than 5.1 million MA members behind UnitedHealth Group at 8.3 million. Together, Humana and UnitedHealth make up almost half of the entire MA market. Medicare Advantage contributes 80% of Humana’s revenue, which is expected to hit $93 billion this year.

·        Humana owned 222 primary care clinics as of June 30. It expects to add 30 to 50 clinics per year through 2025, CFO Susan Diamond told investors. Roughly 15 to 25 of those will come through acquisitions, and the remaining will be built from scratch through a joint venture with private equity firm Welsh, Carson, Anderson & Stowe.

·        Humana also owns a large pharmacy benefit manager, a middleman that processes drug claims and creates lists of approved drugs. Humana pushed roughly $26 billion worth of its members’ prescriptions through its own PBM in 2021 — up from $21 billion in 2016.

Bob Herman Humana appeases Wall Street with big projections of Medicare Advantage growth StatNews September 16, 2022

Long Term Care

Study: quality of life declined in SNFs during pandemic: Researchers analyzed quality of life measures in skilled nursing facilities in the US from January to November 2020. Findings:

·        In 2018-2019, mean monthly mortality was 2.2%, hospitalization 3.0%, and ED visit rate 2.9% overall. In 2020, among active COVID-19 SNFs compared with their own 2018-2019 baseline, mortality increased by 1.60%, hospitalizations decreased by 0.10% and ED visit rates decreased by 0.57%.

·        Among no-known COVID-19 SNFs, mortality decreased by 0.15% (95% CI, −0.16% to −0.13%), hospitalizations by 0.83%and ED visits by 0.79%. All changes were statistically significant.

Barnett et al Changes in Health and Quality of Life in US Skilled Nursing Facilities by COVID-19 Exposure Status in 2020 JAMA August 29, 2022;328(10):941-950. doi:10.1001/jama.2022.15071