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

Why I Wouldn’t Want to Be a Hospital CFO

More than 60 percent of CFOs at struggling hospitals expect to lose their jobs by 2016, according to a Black Book report. Not surprising amid news that at least 20 hospitals will go bankrupt this year. Moody’s predicts declining operating margins for all but large health systems. These are difficult days for healthcare finance.

The Black Book report said CFOs point to health IT—investment in EHR systems, HIE, and patient portals—as the main source of their revenue cycle woes. But I suspect the pain is symptomatic of a dysfunctional revenue model that is strained to a breaking point. Continue reading

Palliative Care: Payers and Providers Collaborate to Improve Quality of Life, Care and Experience

A study published by the Institute of Medicine (IOM) this fall, Dying in America: Improving Quality and Honoring Individual Preferences Near the End of Life, concluded that improving the quality and availability of medical and social services for patients and their families could not only enhance quality of life through the end of life, but may also contribute to a more sustainable care system. Among the calls to action from the IOM committee are strengthening palliative care and the reorientation of policies and payment systems to support high-quality, end-of-life care.

What is palliative care? Continue reading

U.S. Healthcare Costs: Steps to Reduce Payment Variation and Increase Value

In 2003, health policy experts Gerard Anderson and Uwe Reinhardt, along with two Johns Hopkins doctoral candidates, published an article in Health Affairs provocatively titled “It’s The Prices, Stupid: Why The United States Is So Different From Other Countries.” The article reports data from 2000 published by the Organization of Economic Cooperation and Development (OECD) that showed U.S. per capita health spending to be 134 percent higher than the OECD median and 44 percent higher than the country with the next highest per capita expenditure. This occurred despite the fact that most utilization measures in the U.S., such as physician visits per capita and hospital bed days per capita, were below the OECD median.

Not much has changed since then, except that prices keep going up. Continue reading

What Consumers Think about Healthcare Costs

Benefits enrollment season has me reflecting on health plan options, premiums, and out-of-pocket (OOP) costs. I think I’ve made the right decisions, but I’m making a lot of assumptions because I don’t have good information to estimate costs.

I’ve come to view healthcare costs as similar to my mortgage or utility bills: a huge cost-of-living expense, even though everyone in my family is healthy (knock on wood). It’s especially sobering considering I, like many others in the workforce, essentially pay two healthcare premiums, one for my employer-sponsored plan and the other as Medicare payroll taxes for a program that may not benefit me by the time I qualify. Continue reading

Putting Patients at the Center of Their Health Home

Much of what we seek to achieve in health reform centers upon improving the quality of patient care. We are strong advocates of outcomes quality, things that matter to patients, but in general the industry falls short of creating pathways to realistic engagement with those experiencing those outcomes. However, there are interesting models of coordinated care that seek to place patients at the center of care decisions, rather than just at the center of financial fallout, when they encounter the health system. One such model is the integrated social/health care personal budget for the chronically ill being piloted in the United Kingdom by the National Health Service (NHS).

There are two main planks to this model. The first recognizes that social care, social support that enables the chronically ill to maintain function within the community is an essential component in reducing medical care costs. Where possible, living at home with support has dual benefits: it is cheaper and it provides a higher quality of life compared to institutional care. Support is often required for the chronically ill to maintain daily living arrangements that in turn keep them in better health and out of the emergency room. In fact recent NHS spikes in admissions may be related to reductions in social care budgets. The second acknowledges that patients engaged in their own care, and more importantly the goals of their care, will both work harder to adhere to a treatment plan and will achieve something of greater meaning to them than the well-intentioned plans of health care professionals. Continue reading

Who Will Win at Population Health Management?

Healthcare by transaction is dead. This economic model cannot be sustained. The new frontier involves aligning care providers across the continuum so they can think differently – and act differently. Successful population health management involves the strategic use of data to deliver the right care to the right population at the right time. Instead of managing the health of an individual episodically, providers will be challenged to manage the health of a group of individuals over time. The shift from volume to value requires providers to take on accountability for the total cost of care, the quality of care and the outcomes of care – rather than simply provide services when people are sick. Continue reading

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