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

MedPAC financing recommendations for rural hospitals should be extended to all

In the MedPAC October meeting, the commission returned to the seemingly intractable problem of equalizing access to health care for rural communities. Medicare payment offers three sources of support within the inpatient prospective payment system (IPPS) for rural hospitals—through designation as a Medicare-dependent hospital, a sole-community hospital or qualification for a low-volume adjustment. A fourth avenue of support is exempting a hospital from IPPS and allowing it operate as a Critical Access Hospital (CAH). Continue reading

Transparency of healthcare prices and quality of care: The caboose is at the station waiting…

…for the engine to pick up steam. In the past ten years, the train carrying healthcare pricing and quality information has been rolling but the caboose is still waiting at the station. Significant improvement is necessary before we can say with confidence that pricing and quality information is sufficiently transparent, accessible and provided in a timely manner. As importantly, ongoing concerns need to be addressed so that those using information provided will be able to interpret it in a meaningful way. It is clear that while most people have difficulty understanding and, more importantly, acting on the healthcare information that is currently available, the situation is getting better¹. Continue reading

Do You Want a Healthcare House of Straw or Bricks?

Anyone who has renovated a home while living in it should relate to the challenges of shifting to value-based payment. It is takes time, money and grit to redesign a house and maintain any sort of normalcy for the occupants. The transition from fee-for-service reimbursement to value-based payment isn’t a tidy process either. As with home renovation, having a blue-print and a project plan makes it manageable. Continue reading

Will Health Care Transparency Work? Four Unique Perspectives

Health care is not a commodity. Shopping for health care services is not like shopping for a refrigerator, a tennis racquet or a DVD. Identical commodities can be offered by numerous vendors and consumers can reasonably access their prices for comparison as an important element of their purchasing decision. Consumers, however, can’t (and shouldn’t) compare health services on price alone. Health care is a service, but one unlike most other services we use on a regular basis. Continue reading

What Is Cost in Health Care?

Although cost is a common topic in health care, it is not commonly understood. As one man’s trash is another man’s treasure, similarly, in health care, one man’s cost is another man’s gain. Costs to a payer become revenue for a care provider, as do the co-payments and other shared costs paid by consumers. The perception of “cost” depends entirely on who is paying. Not only that, the definition of cost depends on who is measuring. And everyone measures it differently. Continue reading

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