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Detractors say no, but at maturity VBC/VBP offers hope in concert with other reforms A recent Health Affairs Forefront Blog challenged popular wisdom on the potential of value-based care (VBC) and value-based payments (VBP). According to the authors of the January 23 blog, value-based payments (VBP) and managed care will not solve the ongoing affordability crisis in healthcare. While some of the authors’ points are not wrong (including other root causes to high costs), I feel like they failed to consider the transformational journey we are on. So, let’s dig into the topic. What is VBC/VBP? VBC payments are meant to move from the fee-for-service (FFS) transactional payment system to one driven by efficiency and quality. What do I mean by transaction payments? For the past many decades, most payments in our healthcare system were made as a fee for each service transacted in the healthcare system. That can be

NOTE: Co-published in partnership with Lilac Software. See more on Lilac at the end of the blog. More changes could be slated in the future by CMS and Congress Just as the Centers for Medicare and Medicaid Services (CMS) published its proposed 2027 Medicare Advantage (MA) and Part D rule with major Star Ratings restructuring, there is now even more chatter about further changes. This has to be giving MA plans huge anxiety. Right now, more than $12.7 billion in quality bonuses flow to about 40% of all contracts in MA. A summary of the regulatory changes proposed in the 2027 MA and Part D rule In addition to cancelling out the EHO4all health equity reward and introducing a new depression measure, CMS proposed to eliminate 12 (14 if you count overlap between Part C and D) operational and other measures that did not show variability in performance. Eliminating these

NOTE: Co-published in partnership with Lilac Software. See more on Lilac at the end of the blog. The Stars road map just got even denser with some proposed changes in the 2027 Advance Notice. The Stars road map is anything but simple right now. We have a major proposed regulatory reform from the 2027 Medicare Advantage (MA) and Part D proposes rule from November. Much or all of it is expected to be implemented when the final rule comes out in April. We also have the major electronic ECDS measure conversion inflight as well as a push to get all quality programs to a Universal Foundation of measures. But it is important to track the subtle changes along the way, and these are often buried in the text of the Advance Notices and Final Announcements published each year. While much of the 150-plus page memos are dry rate stuff (but

Huge shock to MA plans with near zero rate hike in Advance Notice The Trump administration issued the 2027 Advance Notice for Medicare Advantage (MA) and Part D rates and other policy changes this week. I have reviewed the 169-page Advance Notice, the Centers for Medicare and Medicaid Services (CMS) Fact Sheet, and CMS Press Release. Below are the key highlights. The advance notice will be finalized by early April. I will publish updates on the Stars roadmap front from the Advance Notice on Monday in conjunction with Lilac Software. This will detail all the proposed Star measure changes, updates, and information discussed in the Advance Notice. MA rate proposal The Trump administration threw Medicare Advantage (MA) for a loop when it issued the 2027 Advance Notice recently. MA plans just weathered a three-year phase-in (2024 to 2026) of the new v28 model. By my calculation, that took 7.62% out

2024 saw another major surge in healthcare spending coming out of the COVID pandemic One of my Christmas traditions is to write about the release of the Centers for Medicare and Medicaid Services (CMS) Actuary’s National Healthcare Expenditure Data (NHED) for a given calendar year. This usually is released in the middle of December each year for the prior year, but alas the government shutdown meant the data were published in January. It literally takes CMS about a year to capture, calculate, and categorize all the data for a year given the size and labyrinthine complexity of our healthcare system. Each year as well, usually in the first half of June, the CMS Actuary updates healthcare spending projections for ten outyears. Why is this so important? First, it is the main comprehensive source of data for calculating the history and future of healthcare spending. Most other studies rely in some

Trump delivers on MFN with far-reaching Medicare and Medicaid models President Donald Trump issued an executive order early on in Trump 47 that set the course for most-favored-nation (MFN) pricing for drugs in America. He tried to do this in a small way in Trump 45, but the Biden administration pulled back on it. In part, it was not well thought out, and it came out at the tail end of his first administration. Since the executive order, Trump notched drug price deals with 16 of the 17 top brand drug makers. The drug makers said they would grant MFN pricing in Medicaid for all drugs and would introduce new drugs at MFN prices in America. He also got lower self-pay prices. Now, with an announcement just before Christmas, he has delivered further on his promise by announcing three new models that officially move toward MFN pricing in America. The

Tump’s TikTok video is more hype than serious reform President Donald Trump made a major healthcare announcement last week — calling his reform the “The Great Healthcare Plan.” The plan was more of a skeletal framework, but themes do tie to policy priorities in either the House or Senate GOP caucuses, which could pass in 2026. What Trump announced would need congressional action and likely will be included in a second reconciliation bill being prepared by the GOP caucuses. What are the main tenets of the president’s proposal? Other proposals How would all this get done? The GOP caucuses would likely include some or all of the recommendations by Trump in a second reconciliation bill. The reconciliation process does not need 60 votes in the Senate but there are some limits on what can and cannot be included in such measures. The House (via the Republican Study Committee, the largest

Note: This blog is published in partnership with Lilac Software. Learn more about Lilac’s Stars solutions at the link at the end of the blog. Seismic changes in Star ratings means MA plans need strategic planning and investments. Medicare Advantage (MA) plans continue to worry about the impacts of the proposed Stars regulatory changes and what they will mean to Star ratings and benefits in the future. This is occurring as the industry as a whole continues to struggle financially and has had to retrench from a geography, product, and benefit perspective. The major investment that has occurred has been in Special Needs Plans (SNPs) the past two years, but some of the regulatory changes do not bode well for Stars for plans that will have SNP lives or a high concentration of dual eligibles. Refresher on proposed changes Major measure realignment: Beginning primarily in Measure Year (MY) 2027 or

NOTE: This blog is published in partnership with Lilac Software. See more about Lilac’s offerings at the end of this blog. MA plans celebrate the sunset of the SNP-CM measure, but little really changes Many Medicare Advantage (MA) Special Needs Plans (SNPs) breathed a sigh of relief when the SNP Care Management measure was proposed to be sunset as of Star Year 2029/Measure Year 2027. Just one more year of the measure. The measure tracked the timely conduct of initial and annual reassessment Health Risk Assessments (HRAs). But I say — wait one moment! Even if the Star measure goes, SNP program audits and regulation remain and the HRA is the foundation of how plans ensure quality in their SNP care management program as well as program audit and regulatory compliance. Back on September 25 and 29 I published detailed blogs on the tremendous SNP enrollment growth as well as

Progress on drug price reform is remarkable True to an earlier announcement, the Trump administration has taken the first steps toward more expansive coverage of GLP-1 weight-loss drugs in Medicare and Medicaid. When he came into office, President Trump made the decision not to finalize a proposed rule by the Biden administration that would have expanded coverage for obesity alone in Medicare and Medicaid. At the time, it was the right call. Given GLP-1 prices, expansion could have significantly impacted the finances of the government programs. What has changed? But a great deal has changed since that decision. Trump issued several executive orders to begin to reform drug pricing, including all aspects of the drug channel and introducing most-favored-nation (MFN) pricing. After threatening tariffs on brand drugs manufactured abroad, he has struck more than a dozen deals with brand drug makers that lower costs in Medicaid and introduce lower prices