November 21, 2017 Media

The DRIVE Health Initiative urges CMS to promote value-based policies in recent comment letter

See full submitted comment letter here.

November 20, 2017

Submitted Electronically via Email:

Seema Verma
Centers for Medicare and Medicaid Services
7500 Security Boulevard
Baltimore, MD 21244

Re: Request for Information: CMS Innovation Center New Direction

Dear Administrator Verma:

Thank you for the opportunity to provide input on the future directions of the Center for Medicare & Medicaid Innovation (the Innovation Center) and, more broadly, on CMS’s work to promote value throughout the health care system. As representatives of America’s largest employers, the DRIVE Health Initiative – a campaign launched by the Pacific Business Group on Health (PBGH) and The ERISA Industry Committee (ERIC) – urges you to promote value-based care policies to improve health care and lower costs. Since its launch in May 2017, the DRIVE Health Initiative has undertaken a number of activities to inform policymakers and urge the government to promote specific market-oriented, value-based purchasing strategies. To date, the DRIVE Health Initiative has called on President Trump to promote value-based care policies, and made specific recommendations to the U.S. House of Representatives Ways & Means Health Subcommittee and CMS on alternative value-based payment models that should be implemented by Medicare and Medicare Advantage plans.

Value-Based Care Strategies Are Key

The key to fixing the health care system is value-based purchasing strategies. The current misalignment in spending and outcomes can be alleviated with market-based strategies such as appropriate financial incentives, competition, information transparency and consumer engagement – key principles of value-based care. Value-based care provides the greatest opportunity to curb health care costs. Unless the government acts to eliminate policy barriers and leverage its influence as the largest single purchaser of health care, the efforts of patients, providers and private purchasers to operate under the market principles of informed choice and appropriate financial incentives will continue to be inhibited. With strong leadership, this Administration can dramatically accelerate the pace of change starting with targeted deregulation and market-based purchasing strategies.

We strongly believe that innovation is needed to improve our health system, and we support the Innovation Center’s intentions to promote innovative provider payment, benefit design and patient care models. The Innovation Center is a key lever for CMS to improve care for Medicare beneficiaries and to drive system transformation more broadly. We recommend that the Innovation Center’s new direction include work to:

  • Articulate a clear vision that shows how the Innovation Center’s new direction will lead to robust system transformation toward value-based payment and care delivery.
    • A clear and consistent signal from CMS will best enable providers, purchasers, payers, and other stakeholders to invest in and commit to the infrastructure and redesign needed for a high-value system.
  • Work with purchasers and other stakeholders to draw lessons from the private-sector, and to design and test aligned or collaborative cross-sector models.
    • A greater degree of alignment of payment models and incentives to improve care delivery offered by payers and purchasers is a critical step in supporting real system transformation and enabling successful models to take hold.
  • Adopt a rapid-cycle innovation and evaluation process.
    • In doing this, the Innovation Center should ensure that pilots have a large and representative sample of providers so evaluation results are useful in deciding whether models should be scaled.
    • Furthermore, evaluation models should be transparent and use a consistent set of outcomes to enable comparison
  • Build innovative models on a foundation of robust, patient-centered information that includes the true outcomes important to patients, such as through condition-oriented measure sets centered on patient-reported outcomes, patient experience, and functional status.
  • Rapidly develop or implement robust information systems and performance measures to support care redesign, consumer choice, and value-based payment.
  • Ensure that consumer-directed models including value-based insurance design provide sufficient information about cost and quality, and effectively promote high-value care.

The Employers Centers of Excellence Network

We have one specific recommendation for your consideration. As noted in our July 12, 2017, letter to CMS in response to the Request for Information on how changes may be made to existing regulations to put patients first, promote greater consumer choice, and enhance the quality and affordability of health care, we shared information about the Employers Centers of Excellence Network (ECEN). This program is administered by PBGH and is available to large employers who want to provide their employees with high quality, high value surgical care for hip replacements, knee replacements, spine care, and bariatric surgery. We recommend that the Innovation Center consider a “centers of excellence” program built upon the successful ECEN model.

ECEN selects top-tier facilities and negotiates a single bundled payment rate for each specific procedure to be applied to all care associated with that procedure including pre- and post-operative care. ECEN’s negotiated amounts save employers on average 10-15% of what they would have paid under traditional fee-for-service, and the prospective bundled payment gives physicians the freedom to provide services in ways they think will achieve the best outcomes.

Furthermore, patients who choose to use one of the centers of excellence receive a financial incentive in the form of waived deductible and coinsurance, as well as coverage of travel costs. ECEN collects performance data on outcomes of care for all patients, including clinical outcomes, patient-reported outcomes, and patient experience, to ensure that patients are getting the care they need.

The results from the ECEN program have been striking. For one participating employer, less than 1% of ECEN patients experienced re-admission due to surgical complications compared to over 6% of patients who received care at a community hospital, and all ECEN patients were able to go directly home after surgery, while over 9% of community hospital patients needed care at a skilled nursing facility (SNF). Additionally, for this employer, 52% of patients recommended for spine surgery by home providers were found by an ECEN center of excellence to not be appropriate surgical candidates; savings from avoiding unnecessary surgery alone are estimated at $1.3 million.

Medicare Centers of Excellence Programs

We strongly encourage the Innovation Center to build on private-sector innovation by exploring the development of voluntary centers of excellence (COE) programs in Medicare. We hypothesize that a well-designed Medicare COE program would offer:

  • Better health outcomes than typically achieved in traditional Medicare.
  • Lower beneficiary expenses through reduced cost-sharing.
  • Reduced program costs through more appropriate and higher quality care.
  • Industry-wide quality and affordability improvements due to healthy competition among providers.

This is an opportune time to consider a COE pilot, since it would be consistent with the guiding principles that the Innovation Center announced in its Request for Information, including:

  • “Choice and competition in the market – Promote competition based on quality, outcomes, and costs.”
  • “Provider Choice and Incentives – Focus on voluntary models, with defined and reasonable control groups or comparison populations . . .. Give beneficiaries and healthcare providers the tools and information they need to make decisions that work best for them.”
  • “Patient-centered care – Empower beneficiaries, their families, and caregivers to take ownership of their health and ensure that they have the flexibility and information to make choices as they seek care across the care continuum.”
  • “Benefit design and price transparency – Use data-driven insights to ensure cost-effective care that also leads to improvements in beneficiary outcomes.”

The following are the most important steps in developing a COE program:

  • Identify specific procedures or conditions for which there is a high degree of variation in quality outcomes, patient experience, and total cost of care.
  • Establish a set of criteria to distinguish consistently high performing providers.
  • Determine appropriate financial incentives for providers and patients.
  • Provide technical assistance to providers.
  • Conduct robust evaluations and monitor results, including patient experience and patient-reported outcomes.

Medicare COEs and Voluntary Bundled Payment Programs

The procedures and conditions that are most commonly included in COEs – orthopedics, cardiac care, cancer care, and diabetes – are among those that affect many Medicare beneficiaries and constitute a large proportion of Medicare spending. 4

A COE pilot would enable the Innovation Center to test bundled payment models as part of a comprehensive quality improvement program rather than a standalone test of a new provider payment model. This approach does not necessitate complex changes in payment or quality oversight. For instance, it may be possible to extend established programs like BPCI to minimize administrative complexity. In addition, the voluntary nature of a COE pilot (for providers as well as beneficiaries) would address the Innovation Center’s concerns about “mandatory” bundled payment models.

Key design elements of a COE program model include a prospectively determined bundled price, stringent quality criteria for selecting facilities, qualification of individual clinicians (e.g., surgeons) within a facility, high expectations for quality measurement and collaboration, and favorable benefit design to encourage patients to choose a COE provider. From our experience, the Innovation Center’s primary challenges are likely to be development of criteria and processes by which COEs apply and are selected, and design of appropriate patient cost-sharing incentives.

CMS and Private-Sector Collaboration

We would be happy to work with the Innovation Center to share detailed information about ECEN’s design and results, and to provide input on how the ECEN model could be adapted to meet the needs of Medicare beneficiaries. We know you have a strong interest in real world market-based solutions. Many of the large employers we represent have developed successful strategies for controlling health care costs and improving quality.

These strategies include innovations in provider payment, delivery system improvement, and consumer engagement. Value-based purchasing ensures patients receive better care and can make more informed choices, providers are rewarded for efficient and effective care, purchasers are paying for what works, and businesses can invest in jobs and innovation. The DRIVE Health Initiative is here to work with you to re-energize America’s economy by achieving an efficient and value-based health care system.

Thank you for the opportunity to offer our perspective on the Innovation Center’s new direction and the best way to achieve our shared goals of an affordable, accessible health care system that puts patients first. If you would like to discuss our recommendations or ideas in more depth, please contact us.


The DRIVE Health Initiative
William E. Kramer, Executive Director for National Health Policy President Pacific Business Group on Health
Annette Guarisco Fildes, Chief Executive Officer, The ERISA Industry Committee