Value-based Care, Alternative Payment Models, and a Trump Presidency

The questions about what the election means for Obamacare started long before November 8, but the churn really began late Tuesday evening. Trump’s campaign rhetoric denouncing the Affordable Care Act (ACA), also known as Obamacare, was overwhelmingly popular among the Republican base. His vow to repeal and replace Obamacare must now be fulfilled – or at least attempted.

What does all this rhetoric coupled with a Republican-controlled Congress mean for the ACA? It means that the unpopular aspects of the ACA that have caught so much media attention in the past few years will be under fire – and likely repealed. The troubling climbing premiums in the health insurance exchanges have been acknowledged by both sides of the aisle, broadcasted across all media outlets, and touted as a key point for change from Trump’s campaign in the closing days of the election.  Addressing these rising premiums will no doubt be one of the first items the Trump administration will tackle.

Repealing the “Cadillac tax” is likely another “to-do” on Trump’s agenda.  The “Cadillac tax,” scheduled to be implemented in 2020, is a 40 percent excise tax on high-cost employer health benefit plans.  This tax on high-cost plans would effectively cap the current tax exclusion for employer health benefits and remove the current incentive for employers to pay more of employees’ compensation via health benefits instead of taxable wages.  Although the House GOP’s “A Better Way” policy agenda also proposes a similar cap on employer-sponsored insurance tax breaks, it distinguishes its policy by exempting employees’ Health Savings Account (HSA) contributions from counting towards the cap.

Both President-elect Trump and Republicans have made clear that “protecting” and “modernizing” Medicare is at the top of their agenda.  This would likely include strengthening Medicare Advantage, and decreasing the authority granted to the Center for Medicaid and Medicare Innovation (CMMI) and the Independent Payment Advisory Board (IPAB), two entities created under the ACA, and possibly transforming the Medicare program into a fully competitive market-based model known as premium support.  CMMI has faced significant scrutiny in recent months over its controversial proposal of the Part B Drug Model, with Republicans threatening to limit their authority to test broad, mandatory models. Further, Republicans may repeal CMMI’s automatically renewing $10 billion budget and shift it into the normal appropriations process.

In comparison, value-based care and value-based payments have pretty uniform support from both sides of the aisle. Health reform measures have been decades in the making, with both sides agreeing that the rising cost of healthcare must be contained. Republicans have been long time proponents of reduced government spending with concepts such as capitation, care management, and reduction of waste, all of which are key to current Medicare Advanced Payment Models (APMs). APMs such as bundled payments and Accountable Care Organizations (ACOs) support the shift away from fee-for-service towards value-based care and capitated payments, and have been shown to reduce Medicare spending.

Further, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which was finalized in October 2016, was bipartisan legislation that compels clinicians to shift to value-based payment programs and directly incentivizes participation in Alternative Payment Models. MACRA continues t-o have support from both parties, and requires the continued expansion of APMs to be effective.

The current level of bipartisan support for value-based care and APMs is sure to continue throughout a Trump presidency, though the specific models and the way they are implemented may change slightly depending on the status and funding of CMMI.  That being said, CBO estimates that the CMMI models will save $40 billion, which begs the question of whether Republicans will shoulder the risk of repealing a program that both reduces government spending and has proven its success through MACRA.

So what does all this mean for APMs and the continued progress towards value-based care?  Although difficult to predict, any “repeal and replace” plan will likely retain the option for providers to participate in models that promote coordinated, better care with financial incentives.

The bottom line is that the transitions to the Trump administration may create hiccups in implementing APMs, but the shift to value-based payments is here to stay.