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

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

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