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 Results Are In: Pioneer ACO Model

Last week, The Journal of the American Medical Association (JAMA) published the results of a study that showed that the Pioneer Accountable Care Organization (ACO) Model achieved almost $400 million less spending for patient care than fee-for-service (FFS) Medicare patients over two years. These cost savings were attained without deterioration in the quality of care. Continue reading

The Hippocratic Oath in the Age of Accountable Care – First Do No (Financial) Harm

Patients are becoming increasingly responsible for a greater proportion of their medical costs. The upfront share of premium payments, cost sharing at the point of care in the form of copays and deductibles, as well as the proportion of Americans with high deductible plans, have all been increasing. Since patients are the ultimate consumers of healthcare services, the issue of cost and the efforts to minimize the “financial harm” that can result from overprescribing, overtreating, or simply overlooking price differences among similar treatments should be a top concern of healthcare providers. Does the Hippocratic Oath that physicians take upon entering the practice of medicine extend to avoiding financial, as well as physical harm? Continue reading

Four SIM Projects Likely to Prove Truly Innovative and Worth Modeling

Thirty-eight states are developing State Innovation Models (SIM), or new models for multi-payer healthcare payment and service delivery, funded by grants from CMS. The SIM program tests ways to lower costs of caring for Medicare and Medicaid clients while maintaining or improving quality of care. It is an experiment in payment transformation, and, as with most experiments, some trials will perform better than others. Which SIM projects are most innovative? Which are most likely to succeed? Continue reading

Refining the Definition of Health Service Units Will Help Control Prices and Gain Value

In recent years there has been a great deal of attention on the variation in service volume across providers and regions. Our suite of tools, collectively entitled Potentially Preventable Events (PPE), has led our research group to engage with a variety of stakeholders in their efforts to minimize volume variation. This variation typically results from inefficiencies, poor quality of care leading to the use of otherwise unnecessary services or the overuse of services resulting from practice pattern. Volume is a sensible target for cost reduction efforts and, when detailed as variation across peer providers or regions, is hard to justify. Price (transaction price) comparisons are more complex but, arguably, have greater bearing on total U.S. healthcare cost. At least this is what we are told each year by the policy folks at the Organisation for Economic Co-operation and Development (OECD). Continue reading

Comprehensive APCs: 4 Steps for Review

It’s already two months into 2015 and I can’t help but think of the changes coming to the outpatient prospective payment system (OPPS) and APCs. CMS introduced APCs and OPPS in 2000. Since then, they have been working to slowly increase packaging within the system.

In 2014, significant increases in packaging were introduced. This year, they have continued to make major changes that will have an impact on every hospital that is subject to the Medicare OPPS and APCs. I am specifically thinking about: Continue reading

The Need for Case Mix Adjusted Payments: Lessons from Louisiana’s PCMH Program

The title says a lot: “Patient-Centered Medical Homes In Louisiana Had Minimal Impact On Medicaid Population’s Use Of Acute Care And Costs.”¹

Health plans and other payers want to improve total cost of care and quality by aligning payment and measurement models with better health care delivery. They ask “How will we know better care delivery when we see it?” The National Committee for Quality Assurance’s PCMH (patient-centered medical home) recognition program is one way. Continue reading

Designing Smarter Pay-for-Performance – Let’s Not Go down This Path

Aaron Mckethan, PhD, and Ashish K. Jha, MD, MPH, recently wrote an article for The Journal of the American Medical Association (JAMA) with an irresistible title: “Designing Smarter Pay-for-Performance Programs¹.” The key sentences of the perspective article are:

To the extent that higher-risk patients can be reliably identified prospectively, this information can inform the design of smarter, more targeted pay-for-performance programs. Specifically, a targeted pay-for-performance program would have, at its core, a prediction model that would identify patients who are at elevated risk of failing to meet a meaningful clinical goal or of having a bad outcome. Continue reading

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