By Patrick Pilch

With the transition to a new administration, there is often a time lapse for certain initiatives that may continue or continue in a different form from the previous administration. At BDO, we are expecting a brief slowdown in value-based reimbursement initiatives as they recalibrate at the federal level during the transition to the new administration.

We do, however, expect there to be a continued movement, and likely an acceleration, toward value-based care. Reimbursement adjustments such as MACRA and the IMPACT Act were bipartisan initiatives, and it is probable they will remain.

And as for reimbursement initiatives such as the Centers for Medicare & Medicaid Services’ Comprehensive Joint Replacement bundled payments for hips and knees and, as proposed, for cardiac care, their structure fits into a broader trend toward consumer-driven healthcare and personal choice – one espoused by the recently nominated Department of Health and Human Services Secretary, Dr. Tom Price, who has advocated for paying for healthcare with tax credits and health savings accounts. For such initiatives to be embraced by consumers and achieve the goals of lower costs, improved quality and appropriate access, the industry will need validated and trusted pricing and transparency of quality from providers and payers.

We have already seen this focus on individual contributions in other areas of personal finance. Consider the shift during the past 30 years from defined benefit retirement plans to 401(k)s and other defined contribution plans. As the Center for Retirement Research cites, “In the early 1980s, most private-sector workers covered by an employer-sponsored plan had a defined benefit plan; by 2013 the share relying solely on a defined benefit plan had declined to less than 20 percent.” The report goes on to find that “the accumulation of retirement assets has not declined as a result of the shift from defined benefit to defined contribution plans.”

What happens to bundled payments under a Trump administration?

Bundled payments, in which a single fee covers all aspects of treatment for a specific care episode from diagnosis through, typically, 90 days afterward, fit into this trend toward personal financial accountability and market pricing. While Dr. Price may not appear to be a proponent of the mandatory aspect of CMS bundles, the concept, execution and goal of them fit into his own stated positions. We may actually end up seeing a faster move to market applications, and possibly fewer CMS pilot programs, even if the Center for Medicare & Medicaid Innovation (CMMI, funded by the Affordable Care Act) may change slightly in its cadence of initiatives.

At BDO, our clients are continuing to move forward on their bundled payment initiatives – in their scrutiny of post-acute provider partners, in their physician alignment and workforce training initiatives, and in their evolution toward smarter risk stratification and data-driven efforts to find and treat the patients who need the most intervention (particularly relevant in cardiac care).

It should be noted that under either a Donald Trump or a Hillary Clinton administration, the coming year was already shaping up to be a challenging one for providers. The shift toward value-based reimbursement is bigger than any federal administration and actually began before the Affordable Care Act was passed into law.

The shift has been driven by the coalescence of:

  • Innovation by clinicians;
  • Advancements in technology;
  • Access to better clinical and financial data;
  • Greater costs borne by patients and consumers of healthcare services;
  • Strained government budgets; and
  • Additional external factors.

Several market “shifts” are creating irresistible forces for healthcare model changes, including:

  • The shift of greater risk/payment to consumers;
  • The behavioral shifts among generations in the way they access care and cost information;
  • Payment reform that has laid the groundwork for the standardization of integrated supply chains in healthcare; and
  • The capital structure shift for providers as they take on more risk, and their capital structures need to be aligned with the new operating models.

Even if bundled payments and other value-based initiatives experience a brief lull, the forces of change will not abate. Providers that put their efforts on hold and adopt a “wait-and-see” attitude do so at their own organizational peril.


Patrick Pilch is Managing Director, National Leader of The BDO Center for Healthcare Excellence & Innovation. He can be reached at ppilch@bdo.com.