Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

What Considerations Do Alternative Payment Models Require?

By Jacqueline DiChiara

- As the direction of various payment models evolve, payers are focusing on a variety of focuses and objectives. Effective physician engagement may require a stronger focus on specialist engagement, especially in preparation for 2018’s transition to alternative payment models in 2018.

David Muhlestein, PhD, Senior Director of Research of Development at Leavitt Partners LLC, spoke with this week about the progression of fee-for-service, best approaches to the value-based payment movement, and physician engagement opportunities. How is the role of fee-for-service payments changing?

DM: There’s a broad industry trend where fee-for-service has incented an increase in volume of services being provided which is not necessarily correlated with the ultimate goal of healthcare — improving the health of people. There’s this recognition that we are going to change how we pay for healthcare, whether we want to start paying more for the outcomes that are produced. Where are the many different payment models utilized headed next?

READ MORE: Engaging Providers Key to Value-Based Reimbursement Adoption

DM: A wide variety of different payment models are trying to shift from just doing something where you’re going to be paid to showing that there’s some sort of value. There are different approaches. They’re all trying to pay more for the outcomes as opposed to just for the services that are being rendered. How should payers best approach the value-based payment movement?

DM: From the payers’ side, they really need to identify what their objectives are. There’s a concern from some payers that if they move to capitated payments, their role is going to diminish and eventually disappear as providers start providing those core functions.

In some cases, that’s okay because the payers might be providing other services. They could be doing claims processing. They could be doing network design. They could be doing marketing and outreach. Their fundamental role may change. What should payers essentially focus on?

READ MORE: NAACOS: Mandatory Bundled Payments Impede ACO Financial Success

DM: Payers should say, “What are the objectives that we have in relation to the populations that we are responsible for?” If they’re just trying to address concerns around cost for utilization for certain procedures, maybe they could work in the bundled payment space.

Another approach is to experiment with an ACO model. They may want to contract with the provider and try to limit the total growth of expenditures for this population. They should cautiously experiment with different models and find out what works. What strategies and methods best engage specialists?

DM: You could either identify a very specific diagnosis or identify a core group of patients that have similar needs and similar care management plans.

Diabetics are a good example. If somebody has diabetes, there is going to be a series of things that are very similar for all diabetics. You try to engage specialists around that diagnosis. You try to say we are responsible for this subset of the population. You can do that for a handful of diagnoses, not something universal.

READ MORE: NAM Advises Leaders to Prioritize Value-Based Purchasing Reform What role do specialists have in population health management?

DM: Many specialists are procedure-based. You can start working with the specialists to improve the quality of care that is being delivered in two ways.

One of those is helping them establish and develop best practices and standards for how you’re going to manage certain conditions or certain procedures, but also helping people identify what are the best practices for diagnosing that.

Second, and maybe most important, you can establish best practices for diagnosing the illness and deciding when to get the specialist involved in the first place.

In many cases, you might have a primary care doctor doing the initial diagnosis and they’re making a referral to the specialist. You could start establishing when the specialist should truly be involved. Specialists should be heavily involved in training other doctors about when the specialists need to be brought in. Are physicians on board with Secretary Burwell’s goal regarding the transition to alternative payment methods in 2018?

DM: That goal definitely made a lot of people pay close attention and a lot of providers are already thinking about this.

It really depends on how you define what those alternative payments models are. Providers are more accepting of some because they’re based on the fee-for-service system that they know.

It depends on the approach that HHS takes. If they’re using a wide variety of different payment models and providers can accept the level risk they are ready for, I think they’ll be more receptive than if more risk is pushed on providers who don’t feel they are ready. Will ACOs help or hinder specialists financially?

DM: It’s really going to depend on the specialist and the ACO. The reason for that is in some cases, specialists will continue to be paid under a fee-for-service model, even if the larger provider group is being paid under a different payment arrangement. In that case, it may not affect their income. In other cases, the specialists could be affected financially, but that could be a function of the role that the specialist is being asked to play. Depending on how the reimbursement models are structured, the physician could be better off or worse off. How will value-based care improve overall costs?

DM: There is a limit to how much you can decrease the volume. In the short term, there is definitely opportunity to focus on the volume of services, but in the longer term it’s about reducing the need for higher-acuity service.

Value-based models are not going to be the silver bullet that solves all of the healthcare cost problems in America. But, they could lead to a lower growth in healthcare expenditures.

If you really are providing better care at a lower acuity setting then you’re going to end up with better health outcomes. Value-based payments have a modest opportunity to lower the costs and a stronger opportunity to improve the quality of care.


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