- Global budget payments support providers treating patient populations in vulnerable communities by granting them the flexibility to address the health needs of their community, the American Hospital Association (AHA) recently stated.
Millions of individuals live in communities considered vulnerable, the hospital group’s Ensuring Access to Care in Vulnerable Communities explained. These communities lack access to primary care services, have high uninsurance or underinsurance rates, exhibit cultural differences, report low education or health literacy levels, and experience environmental challenges. Vulnerable communities also have a poor economy, high unemployment rates, and limited economic resources.
These communities exist in rural areas with declining and aging populations and business closures, as well as urban communities with high disease burdens and limited access to basic life needs of residents.
Individuals in vulnerable communities depend on local hospitals for care. But unfavorable economic conditions and growing disease burdens challenge hospitals as they try to stay open during the healthcare industry’s shift to value-based care.
The AHA identified global budget payments as an emerging strategy for hospitals to preserve patient access to care.
What are global budget payments?
Global budget payments offer providers a fixed reimbursement amount for a fixed period for a specific patient population. Providers receive the payment regardless of case volume or intensity of services delivered, the hospital association explained.
The fix payment structure gives providers flexibility to deliver tailored care to patient populations as long as total care costs do not exceed the reimbursement total for that population. Providers also know they will be paid regardless of the services they provide to patients, such as follow-up calls and comprehensive chronic disease management.
Several payers have implemented or are considering global budget payments for hospitals, including two states.
Maryland’s healthcare system operates under an all-payer global budget program known as the Maryland All-Payer Model. The state reimburses all hospitals a prospectively set budget that covers inpatient and outpatient services provided to residents within a year regardless of the patient’s insurance carrier.
State health officials adjust each hospital’s budget each year for inflation, payer mix changes, population and demographics, and the impact of value-based reimbursement programs.
A 2017 Health Affairs study uncovered that the all-payer global budget model reduced Medicare hospital costs by $429 million, exceeding the expectation that the model would save $330 million over five years.
Maryland hospitals also reduced potentially preventable complications by 48 percent and lowered the all-cause readmission rate to just 3.4 percent above the national rate, accounting for a 57 percent improvement.
Pennsylvania is heading down a similar path by partnering with CMS to implement an all-payer global budget program for acute care and critical access hospitals in rural areas. CMS intends to provide $25 million in funding over four years to help the state implement the model in early 2017.
Elements of a successful global budget payment strategy
The AHA called on Congress and CMS to consider similar global budget payment systems for vulnerable rural and urban communities. The programs should include four key elements.
First, global budget payment programs should have “predictable, stable” reimbursement. Hospital payments should cover the cost of care, as well as the expenses incurred to build the infrastructure and capabilities needed to redesign care delivery.
Hospitals in vulnerable communities may need global budget payments that exceed historical payment levels to cover all the expenses of delivering improved care, the hospital group noted.
Payers should also consider the timing and structure of payments, as well as adjustments for factors beyond the hospital’s control, such as natural disasters or epidemics.
Second, broad provider participation in the program will help to improve care quality while decreasing costs.
“Provider participation, which could be limited to hospitals or could include a broader set of providers. Increased participation could result in better alignment between and more accountability from healthcare providers for the quantity and quality of services offered,” the report stated. “The types of services included in or excluded from the global budget also must be defined.”
Third, health plan participation is also key to global budget payment program success. The program should include private and public payer participation. Otherwise, hospitals would be simultaneously operating under fee-for-service and global budget payment models.
Finally, health leaders should choose appropriate quality measures, AHA advised.
“The implementation of measures that hold providers accountable for their quality of care is essential,” the hospital association wrote. “Payers also must provide timely access to actionable information related to care, payment and cost to allow providers to make necessary decisions regarding care delivery.”
Additionally, the AHA urged CMS and Congress to ensure global budget payment programs “account for the different sizes and types of hospitals, acknowledging that each of which may be at very different points in the transformation process.”
Hospitals must redesign care delivery and financial processes to succeed under global payment programs. While some organizations have started on the value-based reimbursement journey, other hospitals, like small, rural organizations, may be further behind with this process.
CMS should create payment policies that “bridge the gap” between fee-for-service or cost-based reimbursement and global budget payments. The risk versus reward equation should also encourage hospitals to assume additional financial risk without penalizing them for needing additional time and experience to fully participate.
The AHA also advised policymakers to waive fraud and abuse laws, such as the Physician Self-Referral Law and the Anti-Kickback Statute. Hospitals will need to forge financial relationships under global budget payments that could violate certain laws.
Participating hospitals should also be exempt from certain Medicare reimbursement policies to allow providers to move patients throughout the care continuum with ease. Current discharge planning requirements stop hospitals from sharing post-acute information and the skilled nursing facility “3-Day Rule” and inpatient rehabilitation facility “60-Percent Rule” prevent hospitals from discharging to post-acute care providers of their choice.
Hospitals should have the flexibility to discharge patients to high-value post-acute care facilities under global budget payment models.
The AHA concluded that global budget payments are not widely available in healthcare markets right now. But hospitals should prepare for the alternative payment model as the industry seeks new ways to reimburse providers in vulnerable communities under value-based reimbursement.
Providers can find more information on how to prepare for and implement global budget payments, as well as how to preserve care access in these areas, by visiting the Ensuring Access to Care in Vulnerable Communities Task Force’s website.