Category Archives: Healthcare Payment Reform

Payer reforms; payer initiatives; pay for performance; P4P; Center for Medicaid & Medicare Services; CMS rules; CMS rulings: CMS regulations; RACs program; recovery audit contractors; HACs; hospital-acquired conditions; quality-based; quality of care; quality outcomes; state payment reforms; federal payment reforms

The Future Is Now: Transformation to Value-Based Care Is Underway

Barbara DeBuono and Richard KellerBlog post by Barbara DeBuono and Rich Keller

Over 85 attendees at 3M’s healthcare conference in New York City heard from the payer, government and provider speakers on how the ground is shifting from underneath us all. Value-based care is no longer the new frontier; it is right where we are standing. Linking payment to performance is here to stay. Financial incentives that reward high volume are going away; they are part of a model that is on its way to becoming the exception rather than the rule. Consider that:

  • 45% of hospitals are already part of an ACO;
  • Payers expect fee-for-service payment to represent less than 1/3 of all payments in 5 years;
  • 40% of all commercial in-network payments are value-oriented; and
  • 50 percent of delivery systems say they will be in the insurance business in the coming years.

Continue reading

Is Value-Based Purchasing Working? Should We Make it a Game?

Value-based purchasing (VBP), a program authorized by the Patient Protection and Accountable Care Act of 2010, authorizes the Centers for Medicare & Medicaid Services (CMS) to base a portion of hospital reimbursement payments on how well hospitals perform in 25 core measures.  The goal of the VBP program is to incentivize hospitals to improve care by starting to base reimbursement on quality of care delivered. This program focused on how patients rate their hospital experience, and how well hospitals follow certain standards of care. Some of the VBP core measures ask the following:

• Were blood cultures performed in emergency department prior to initial antibiotic?
• Were prophylactic antibiotics discontinued within 24 hrs after surgery end?
• How often was pain well controlled? Continue reading

Selection in Health Insurance Exchanges – Risk or Risk-Adjustment?

The initial focus of media and industry scrutiny during the launch of health insurance exchanges was primarily the potential for adverse enrollee selection of insurance products. Healthier enrollees would opt for less comprehensive packages (or avoid enrollment), while the sicker would obtain more comprehensive coverage. The net result of this situation is the adverse selection-induced, so-called “death spiral.” In fact, the exchanges appear to have successfully captured significant numbers of younger enrollees, with the majority of enrollees opting for the benchmark silver levels. High-cost individuals within the community rated pool are accounted for by the 3Rs – reinsurance, risk-corridors and risk-adjustment, with reinsurance and risk-corridors being phased out as the initial shock of transitioning to the new insurance structure is absorbed. Continue reading

How Performance Incentives Could Fail

American health care continues to rank as the least cost-effective system in the developed world. Why? You might be tempted to say that, until recently, there was no incentive to change. A purely economic view is that the costs to healthcare providers have been greater than the payoff.

The economic landscape is changing. Quality reporting, value-based purchasing, Meaningful Use, risk-based contracts, and other reforms have created rewards and penalties intended to improve the value of health care. Will they work? Well. . . Ask instead, “How could they fail?” Continue reading

System-wide Population Health Management: Bold Results Call for Bold Action

I have the opportunity to travel around the country, interacting with health plans and provider systems as they work out new payment models and new systems of care delivery, and I see an intense interest in these new models coupled with many theories on their pathway to success.

Weighed against the medical literature, three things are apparent:

  • Most of the theories on improvement focus on processes that may have small relevance to outcomes.
  • Most of the interventions at play are in very early stages and are very incremental.
  • Interventions most likely to be linked to big outcomes are culturally challenging and being held at bay for the moment.

A major impact on outcomes requires bold action. Continue reading

The Real Impact of DRGs: Meaningful Data that Changed Hospital Management

A recent blog by François de Brantes, executive director of HCI3, titled “Letting the Facts Get in the Way of So-called Truths,” is highly critical of the DRG based Medicare inpatient prospective payment system (PPS). He urges readers to discover the facts about DRGs, a system he describes as endorsed by “agents of the status quo” that produces “meaningless comparisons” of patient data, with hospitals “being hurt more than helped by false truths.” As a member of the research team that developed Diagnosis Related Groups in the late 1970s, I want to respond to his assertions. Mr. de Brantes’ blog is rife with errors and distortions of fact; any valid points are lost in a barrage of misinformation. Continue reading

Medical Homes: It’s not “Do they work?” but “How do they work?”

Earlier this year, The Journal of the American Medical Association (JAMA) published a widely publicized but limited article on medical homes in Pennsylvania that found little improvements in quality and no improvements in costs or utilization associated with medical homes. The authors concluded medical homes may generally “need further refinement” — a phrase that was taken by many in the press to mean that medical homes “don’t work.”

Subsequently, there has been much debate and little clarity around the promise of medical homes. Continue reading

What Will Patients Do When They See Your Prices?

Two trends are forcing greater consumerism and price sensitivity in health care. One is that Medicare, Medicaid, and some commercial insurance carriers, are starting to show patients and employers the prices facilities charge for common procedures. Another factor is that patients with high-deductible health and account-based plans have an incentive to consider cost when choosing services and providers.

How consumer-savvy are patients? They can search for providers by quality measures on a number of websites including HealthGrades.com and QualityCheck.org. But it’s not as easy to find out what providers charge for, say, an MRI or sinus surgery and compare prices to quality measures. Continue reading

Three Reasons Not to Model Health Care after Trader Joe’s

The AHIP conference in Seattle this month includes three consumer retail executives on the agenda. In leading up to the event, the media cited one of the speakers, the former president of Trader Joe’s, and suggested that health care should take some cues from the retail grocer.

Stop right there. Health care should not imitate the business model of Trader Joe’s, known for its folksy story-telling and unique selection of private label foodstuffs. The healthcare market is significantly different from grocery stores in ways that make it difficult to be consumer friendly: Continue reading

Regulatory Updates: Changes to Billing for Laboratory Services

It is the Ides of May (not quite as famous as the Ides of March), but a good time to think about changes to billing for laboratory services and what to expect in the CMS July 2014 OPPS update. It has been a topic of discussion since the beginning of the year, and continues to create questions given what we know will be coming this summer.

Before this year, clinical laboratory services were assigned a status indicator of A and paid based on the clinical laboratory fee schedule whenever they were present on a claim, even if there was a medical visit APC or a procedure APC also present on the claim. This changed with the January 2014 update to OPPS. CMS decided to package clinical laboratory, with two major exceptions. Meaning, if a lab service is billed with a medical visit APC or with a procedure APC on the claim, it will be packaged (not paid separately). The exceptions are: Continue reading