Posts Tagged ‘FFS’

Majority Back Medicare Timeline for Value-Based Reimbursement

January 29th, 2015 by Patricia Donovan

For the first time in Medicare history, HHS has set explicit goals for alternative payment models and value-based payments.

The healthcare industry took notice earlier this week of Medicare’s ambitious timeline for moving Medicare payments from volume- to value-based models—an agenda validated by the majority of respondents to HIN’s eleventh annual Healthcare Trends and Forecasts survey.

Ninety-two percent of respondents to the December 2014 survey endorsed healthcare’s transition to rewarding healthcare value and quality over volume of services, noting the trend has boosted accountability and revenues.

In a related data point, 26 percent view the adoption of value-based reimbursement and rewards as the most promising area of healthcare.

The HHS timeline will tie 30 percent of traditional or fee-for-service (FFS) Medicare payments to quality or value through alternative payment models by the end of 2016. Alternative payment formulas include accountable care organizations (ACOs), patient-centered medical homes (PCMHs), and bundled payment arrangements for episodes of care, which CMS has tested in a range of pilots in recent years.

The HHS said it will tie 50 percent of payments to these models by the end of 2018. In 2011, Medicare made almost no payments to providers through alternative payment models, but today such payments represent approximately 20 percent of Medicare payments.

With views toward value-based reimbursement mostly favorable, 2015 Trends survey respondents shared some spoils of a value-over-volume approach:

  • „„“Higher levels of accountability in order to be well positioned to execute in a value environment.”
  • „„“As a high quality provider, shift to rewarding this behavior has increased revenue.”
  • „„“Not as much direct impact as implied and perceived focus on quality and reporting.”
  • „„“We built a provider network upon this principle.”

In other trends documented by the survey, declining reimbursement and cost constraints posed considerable challenges for respondents in the last 12 months, while interventions to tighten transitions in care, reduce hospital readmissions and integrate care via the patient-centered medical home (PCMH) model—all value-based initiatives—were among business successes recounted by this year’s participants.

Payment Bundling Requires Suspension of FFS State of Mind

March 25th, 2013 by Patricia Donovan
payment bundling shared savings

Webinar Replay: Moving Forward with Payment Bundling

Four hundred healthcare providers — about a tenth of all hospitals in the United States — can’t be wrong, can they?

That’s the number signed on to participate in a Medicare payment bundling pilot run by CMS, their biggest payor. And while it’s too early to know if the reimbursement concept will stick, one thing’s for certain, noted Jay Sultan during a recent webinar on Moving Forward with Payment Bundling: there’s a growing body of proof that the payment model works.

As an example, Sultan, associate vice president and chief product portfolio architect for TriZetto® shared some data from California’s Hoag Orthopedic Institute, formerly two surgical groups who have collaborated in a bundled payment model and “reengineered every aspect of care, from beginning to end, significantly lowering its common cost structure.” In one proof point shared by Sultan, Hoag reduced infection rates for knee replacements to 0.1 percent, significantly below the national 2 percent average, Sultan explained during the advice-filled session. The savings per avoided infection is about $60,000, he said.

While the federal payor has yet to report, early feedback from CMS’s recently concluded ACE bundled payment demo is largely positive in terms of revenue for participating payors, hospitals, physicians — even the patients in the pilot received a rebate from CMS, he added.

Based on Sultan’s own research, he is “not aware of any prospective payment, bundled payment program that was not beneficial for the providers, the payor and the members.” He contrasted prospective payments with retrospective payments, which he characterized as similar to fee-for-service (FFS) but with the possibility of receiving a bonus afterward.

There is a place for both payment types, but prospective does a better job of transforming care, Sultan noted.

Sultan went on to outline the general challenges for both payors and providers of crafting an episodic payment program, which could take up to 12 months. A strong analytics framework for both health plan and provider use is essential. What is also required is a mind shift on the part of entities unused to working together and sharing data, who need to realize that “under payment bundles, the provider and the payor have an opportunity to collaborate, instead of competing against each other in a zero sum way.”

For payors, some prickly areas early on might include provider contracting, claims administration, and impact on member responsibility.

Providers, for their part, must become adept at managing risk. Providers “need to be able to get the data, to develop analytics, and to develop methods for collaborating with each other — including the fact that some providers are going to lose,” he emphasized.

Sultan offered a wealth of advice for each entity contemplating a shift to bundled payments. For all stakeholders, what will be required is a paradigm shift away from FFS, the foundation for much of the industry’s day in, day out day out operations. “We measure our utilization by it, we evaluate our quality by it, we do all these things based on fee-for-service.

“When you change that, whether you’re changing it for shared savings ACOs, moving from FFS to capitation, or going from FFS to payment bundling, it has profound impacts throughout the entire organization.”

Sultan provides more advice on bundled payments, from two key factors to keep in mind when trying to engage physicians in the model to the major decision facing primary care now that CMS has introduced bundled payments for care coordination tasks, in this expanded interview.