FINAL EXAM: PROVIDER PAYMENT AND MANAGING CARE /PERFORMANCE INDICATORS
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POWERPOINT.10.PART.1.PAYING.PROVIDERS.ANDMANAGINGCARE-52.pptxPOWERPOINT 10 – KEY POINTS POWERPOINT 10 – PART 1 KEY POINTS MANAGED HEALTH CARE: WEEK OF MAY 10, 2021 MANAGED CARE TOOLS: USING PROVIDER PAYMENT TO INFLUENCE PROVIDER AND PATIENT DECISIONS
HSA.312. SPRING 2021 CLASS
LARRY EITEL – ADJUNCT LECTURER
CONTENTS – SLIDE SUMMARY
SLIDE 1: TITLE SLIDE
SLIDE 2: TABLE OF CONTENTS/SLIDE SUMMARY
SLIDES 3 THROUGH 6: PROVIDER PAYMENT BASICS – KEY MODELS/STUDY QUESTIONS IN SLIDES 7 AND 8.
SLIDES 9 THROUGH 12: FEE-FOR-SERVICE PAYMENT AND PHYSICIANS/STUDY QUESTIONS IN SLIDE 13.
SLIDES 14 THROUGH 15: PAY FOR PERFORMANCE AND FEE-FOR-SERVICE PAYMENT AND PHYSICIANS. STUDY QUESTIONS IN PROCESS.
SLIDES 17 THROUGH 19: BUNDLED PAYMENTS FOR PHYSICIANS – PHYSICIAN CAPITATION/FOCUS ON PRIMARY CARE PHYSICIANS. STUDY QUESTIONS IN SLIDES 20 AND 21.
SLIDE 22: TRADITIONAL WAYS OF PAYING HOSPITALS – PER DIEMS AND CHARGES/ COMPARED TO DIAGNOSIS RELATED GROUPS (MEDICARE BUNDLED PAYMENT SYSTEM). READINGS AND QUESTIONS.
SLIDE 23: CONCLUSION
PAYMENT FOR HEALTH CARE SERVICES: OVERVIEW
PAYMENT CONCEPTS AND CONCERNS: It is important to have a good basic knowledge of the way individuals and insurers (both public and private) pay for health care goods and services (you should use the term “payment,’ not “reimbursement.”) Why is this so?
If we know how prices are determined, and the extent to which they reflect the actual cost of production of those goods and services, we can develop ideas about how to price things in a way that reduces waste in production, and that reduces the production of unnecessary goods and services.
If we understand the different types of pricing approaches (retrospective/fee-for-service versus prospective/bundled payments) and their respective impacts on provider behavior, we can imagine different ways of changing provider behavior.
We need to have this basic knowledge to understand such ideas as Bundled Payments, Value-based Payment, Pay-For-Performance, and Global Budgeting, and to understand the new Medicare value-based approach to payment for physician and hospital services.
BASIC WAYS OF PAYING PROVIDERS - 1
MODEL 1: Fee for Service, which is always Retrospective Payment (Determined and Paid after the Service is Rendered:
SEE READINGS 1.A.1 AND 1.A.2.
Examples include fee-for-service payments for individual clinical providers (physicians, nurse practitioners, physical therapists) AND charges for institutions (for instance hospital charge masters).
This is equivalent to paying A La Carte at a restaurant: payment is for each individual item you order, the total payment amount is known only after all services have been rendered, and the total payment amount is the sum of the prices for each individual item.
Pros and Cons:
FFS/Retrospective Payment enables clinical providers the freedom to offer all the services they think are most appropriate for patients.
However, this approach may also encourage physicians to provide more services than are necessary or valuable for patients. That is the dilemma of relying on this form of payment.
BASIC WAYS OF PAYING PROVIDERS - 2
MODEL 2: Bundled Payments, which in their most advanced form are Prospective, but which in interim forms may be either Prospective or Retrospective (SEE NOTE ON PAYMENT BELOW): SEE READINGS FOR THE WEEK OF MAY 17, 2021.
Examples include capitation payments for individual clinical providers (physicians), MS-Diagnosis Related Groups (hospitals), and other Medicare prospective payment systems for Home Health Services, Rehabilitation Services, and Ambulatory Surgery Services.
This is equivalent to paying Fixed Price at a restaurant: payment is for a bundle of items (in that case food and drink items), rather than for each individual item.
Pros and Cons: Bundled Payment Systems, which may be based on specific medical procedures, or on more general medical conditions (as, for instance, defined by the ICD-10 disease classification system) are meant to establish reasonable levels of payment for clinically and financially meaningful bundles of services.
They are meant to establish reasonable payment limits, and where possible to provide, or support the collection and use of, clinical and financial information that will allow clinicians and administrators to communicate meaningfully and effectively.
However, Prospective Payment may discourage the delivery of some services deemed necessary by clinicians. The challenge of these Bundled Payment Systems is that they must be routinely upgraded, and open to revised financial analysis and clinical opinion from knowledgeable elements of the clinical provider community.
QUESTIONS:1
Be familiar with:
The basic difference between Fee-For-Service Payments (Physician Fees, Hospital Charges) and Bundled Payments (Physician Capitation, Medicare Diagnosis Related Groups -MS).
How those terms relate to the restaurant terms A La Carte and Prix Fixe.
Be familiar with these terms, and what they mean:
Usual, Customary, and Reasonable (UCR).
Customary, Prevailing, and Reasonable (CPR).
RBRVU Payment System: Resource - Based Relative Value Units.
TEXT BOX - POWERPOINT 10 Be familiar with the meanings of Cost, Price, Expenditure, and National Health Expenditures.
TEXT BOX – POWERPOINT 10: What are some of the assumptions behind the belief that Provider Payments and Payment Systems can be used to affect Provider and Patient behavior, and to encourage properly managed patient care?
TEXT BOX – POWERPOINT 10: What are some of the expected results of effective design and implementation of Provider Payment systems?
TEXT BOX – POWERPOINT 10: What are some of the special concerns to remember when discussing and analyzing appropriate payments to Primary Care Practitioners?
QUESTIONS:2
FOR EACH OF THE MAJOR APPROACHES TO PROVIDER PAYMENT (MODEL 1 AND MODEL 2) - GENERIC QUESTIONS.
MODEL 1: FEE FOR SERVICE/ PAYMENT PER SERVICE, DETERMINED RETROSPECTIVELY.
MODEL 2: BUNDLED PAYMENT/PAYMENT FOR A BUNDLE OF SERVICES, DETERMINED PROSPECTIVELY.
Be able to identify one critical strength of each system.
Be able to identify one critical weakness of each system.
Be able to identify one way in which it is believed a payment system will have a positive impact on Provider and/or Patient decision-making about the appropriateness, location, price, or type of medical treatment.
Be able to identify one way in which a payment system could be improved.
FEE FOR SERVICE: PHYSICIAN PAYMENTS - 1
BACKGROUND TO PHYSICIAN FEE-FOR-SERVICE PAYMENTS:
SEE READINGS 1.A.1 AND 1.A.2.
Examples:
Physicians have traditionally been paid fee-for-service, and most physician services continue to be paid this way.
Physician bills contain individual service items, identified by CPT-4 code (and, as a supplementary coding system, HCPCS codes), and payment is for each individual service.
More recently (past 15 – 20 years) there have been various approaches to adjusting Fee-for-Service payment systems, including additional coordination payments, additional payments to encourage provider use of electronic health data systems, and adjustment of FFS payments for quality of service provided.
FEE FOR SERVICE: PHYSICIAN PAYMENTS - 2
TRADITIONAL FEE-FOR-SERVICE PAYMENTS TO PHYSICIANS:SEE READINGS 1.A.1. AND 1.A.2.
Up until the early 1990s, payment by commercial insurers and Medicare was usually based on self-reported physician charges for each individual service provided. Either the full charge, or a discounted charge, was paid, as indicated below. Medicaid programs in the various states developed their own fee schedules as the basis for paying physicians providing services to Medicaid enrollees.
Up until the early 1990s, physician provider payment made by individuals and insurers was primarily based on procedure-specific or service-specific reference prices, associated with CPT-4 and to a lesser extent HCPCS codes.
For a given geographic area (like a Standard Metropolitan Statistical Area, for instance the Los Angeles SMSA) and for a specific service or procedure code, insurers collected and / or purchased data for a representative sample of providers.
Then, for each procedure or service code, the range of physician fee-for-service prices charged by all the sample physicians was determined, and the charges were ranked from highest to lowest. A particular fee/price cut-off was then determined (for example, the fee at which or below which 75% of the physicians in the sample billed).
That price became the insurance plan’s contractual payment for the service or procedure in that geographic area. The price might also be discounted by a certain percentage. So – payments were CPT-4 or HCPCS code-specific, were specific to particular geographic areas, and were capped at at or below the level which a substantial number of area physicians routinely charged patients and insurers. ALSO – IF THE PROVIDER’S CHARGE WAS BELOW THE FEE-SERVICE CUT-OFF, THE PROVIDER WAS PAID THE LOWER OF THE TWO CHARGES.
Before Medicare this system was known as UCR (Usual, Customary, or Reasonable). Under Medicare, and through 1992, this system was referred to as Customary, Prevailing, or Reasonable (CPR).
FEE FOR SERVICE: MEDICARE PHYSICIAN PAYMENTS - 3
MEDICARE CREATES A NATIONAL PHYSICIAN FEE-FOR-SERVICE PAYMENT SCHEDULE: RBRVU SYSTEM SEE READINGS 1.A.A AND 1.A.2.
Since 1992, Medicare has implemented a different kind of fee-for-service schedule for physician services delivered to Medicare enrollees. That schedule has by and large been adopted (with some modifications) by most commercial insurers.
This RBRVU system (Resource Based Relative Value Units) is in essence a national fee schedule, based on CPT-4 codes. Unlike previous fee-for-service payment schedules, it attempts to base the fees on a more objective standard than the historical area-specific prices established by individual physicians or groups of physicians.
The RBRVU system bases the price of each procedure on the relative resource intensity associated with the procedure (The intensity of time, resources, physician training, and physical and/or mental energy used to provide the service or procedure. With periodic re-estimates of that resource intensity). Also included in the prices is some portion of the cost of running the physician office and an allocation for the cost of malpractice insurance.
This RBRVU system has helped make the payment to physicians more rational, more in line with the actual costs of production, less arbitrary, and not subject to unjustified local variations.
However, the system has become distorted over time for a number of political and institutional reasons. It is relatively more generous to Specialty Care Practitioners than to Primary Care Practitioners, and is held by some to be partially responsible for the gradual reduction in the percentage of U.S. Physicians who are Primary Care Practitioners.
FEE FOR SERVICE: PHYSICIANS AND THE FUTURE - 4
THE FUTURE OF FEE-FOR-SERVICE PAYMENTS TO PHYSICIANS:
SEE READINGS 1.A.1 AND 1.A.2.
Medicare is leading the way in adjusting fee-for-service payments for quality of performance (value-based reimbursement or Pay for Performance/ P4P) and in some cases in adjustments to the FFS schedule for additional physician payments to encourage better coordination of services. Other insurers are likely to follow this example, especially the Medicaid programs in a number of states. Value-based adjustments to FFS payments, rather than an extensive movement to bundled/prospective payment, seems the most likely immediate future for FFS and payment of physician and other clinical providers.
However, the increased percentage of physicians who are employed by, or whose office practices have been purchased by, Integrated Delivery Systems may translate into a substantial number of physicians being subject to Global Budgets, various kinds of Bundled Payments, and other Alternative Payment Mechanisms. (APMs).
QUESTIONS:3
FEE-FOR SERVICE PAYMENT:
POWERPOINT 10; READINGS 1.A.1 AND 1. A.2. AND TEXTBOX
What is the difference between these approaches to Fee for Service Physician Payment?
Usual, Customary, or Reasonable (UCR).
Customary, Prevailing, or Reasonable (CPR).
RBRVU Payment System: Resource - Based Relative Value Units.
Why are fees based on Relative Value Units (like the RBRVU System used by Medicare) considered a major improvement over the fees paid under UCR and CPR rate schedules and systems?
Is the basic Medicare RBRVU Fee Schedule relatively uniform across the United States?
What is one (1) current problem with using the Medicare RBRVU Fee Schedule to pay Primary Care Physicians?
To what extent do Private Insurance Plans and Companies use the Medicare RBRVU payment system?
FEE FOR SERVICE: PHYSICIANS AND THE FUTURE - 1
PAY-FOR PERFORMANCE AND THE FUTURE OF FEE-FOR-SERVICE PAYMENTS TO PHYSICIANS: SEE READINGS 6.A. AND 6.B.
What is pay-for-performance? Is it widespread?
A pay-for-performance (P4P) model provides what are typically financial incentives to providers to improve the quality of the care they deliver, and/or reduce costs. Pay-for-performance is an “upside only” method of payment reform. The model gives health care providers the chance for a financial upside – such as a bonus — but no added financial risk, or downside. Our 2013 National Scorecard on Payment Reform demonstrated that almost 11 percent of commercial payments are value-oriented; approximately 1.6 percent of commercial payments are fee-for-service with pay-for-performance.
Despite the small portion of dollars flowing through pay-for-performance programs, we know it is an slow growing but increasingly popular model of payment reform. According to a 2010 report issued by the National Conference on State Legislatures (NCSL), an estimated 85 percent of state Medicaid programs were expected to operate some type of pay-for-performance program by 2011. Provisions in the Affordable Care Act expand the amount of pay-for-performance used by Medicare as well.
Does it work?
Historically the evidence has been mixed as to whether P4P models improve the quality and affordability of health care goods and services.
Throughout the U.S., there are several examples of pay-for-performance models; many of these were examined in a Health Affairs/Robert Wood Johnson Foundation Health Policy Brief on the topic in 2012.
That brief concluded, “Despite limited evidence of effectiveness, pay-for-performance remains popular among policy makers and public and private insurers as a tool for improving quality of care and containing health care costs.”
FEE FOR SERVICE: PHYSICIANS AND THE FUTURE - 2
PAY-FOR PERFORMANCE AND THE FUTURE OF FEE-FOR-SERVICE PAYMENTS TO PHYSICIANS: SEE READINGS 6.A. AND 6.B.
California P4P program: The California P4P program, managed by the Integrated Healthcare Association (IHA) on behalf of eight health plans representing 10 million insured persons, the largest non-governmental physician incentive program in the United States, has shown the model can raise quality scores for participating physicians.
And yet, these and other examples have shown that the model often does little to contain costs and improve affordability. CMS’ Premier Hospital Quality Demonstration, which ran from 2003 to 2009,showed only small improvements in quality and no effect on expenditures.
The California P4P program is shifting to a new paradigm, incorporating additional metrics that measure resource use and cost, in addition to quality. While the program has shown pay-for-performance can improve the quality of physician organizations, it has done little to rein in costs. The new value-based payment model attempts to accomplish both.
QUESTIONS:4
PAY FOR PERFORMANCE
POWERPOINT 10; READINGS 6.A., 6.B. AND READING 6 TEXTBOX.
QUESTIONS ARE BEING DEVELOPED.
BUNDLED PAYMENTS: BACKGROUND - 1
BACKGROUND TO BUNDLED PAYMENTS: AVAILABLE IN READINGS FOR WEEK OF MAY 10, 2021..
Bundled Payments are equivalent to paying Fixed Price at a restaurant: payment is for a bundle of items (in that case food and drink items), rather than for each individual item.
Payment is prospective for this reason: For some general category of services (For example, non-physician hospital services, home health services, rehabilitation services), clinicians work with policy-oriented staff, administrators, and computer programmers and analysts of various kinds to identify groups of patients who are clinically similar (in terms of families of diseases, for instance), and who use similar levels and types of resources. Prices, sometimes adjusted for risk, are then established for a total appropriate bundle of services to be provided to these patients.
In terms of actual payment for services given to a patient: When a patient’s critical clinical and functional characteristics are known, or a specific procedure which is at the core of the payment bundle is performed, the appropriate price of services is then assigned. Rather than payment for each individual service item, payment is for the COMPLETE bundle of services.
Please Note: As a transitional step toward fully prospective Bundled Payments, some insurers may set a target price for a particular service bundle, and then pay providers Fee for Service while keeping track during the year of whether the final FFS payments are at, above, or below the target price.
Depending on the outcome at the end of the year, there would then be a reconciliation process in which the provider either keeps all of the FFS payments, or gives back some portion or amount of those payments.
BUNDLED PAYMENTS: CAPITATING PHYSICIANS - 2
BASICS OF PHYSICIAN CAPITATION: SEE READING 1.B.
CAPITATING PHYSICIANS: Means paying Primary Care Physicians a set yearly amount, broken into monthly payments, for each patient assigned to them by an HMO or POS health insurance plan. This budgeted amount is based on actuarial estimates of the average per person utilization of Primary Care Services for a large group of people, taking into account the age, sex, and other critical characteristics of the members of that large group.
Was used extensively by HMO and POS health insurance plans in the 1990s.
Contributed to the Physician component of the Managed Care Backlash: Capitation payments were often too small, did not reflect the actual case mix of the Primary Care Physician’s assigned panels of patients, and were tied to an excessive burden of medical management responsibility placed on the Primary Care Physician.
BUNDLED PAYMENTS: CAPITATING PHYSICIANS - 3
BASICS OF PHYSICIAN CAPITATION: SEE READING 1.B.
THE FUTURE OF PHYSICIAN CAPITATION:
Alternative forms of Primary Physician capitation have been developed and discussed since 2000.
They involve much higher, case-mix adjusted payments, and substantial funding for physician office staffing, information systems, and other forms of support.
Such alternative systems have not yet gained substantial support within the health care services industry.
Health care services policy and insurance industry practice are tending more toward adjusted Fee for Service payments, rather than Capitation, as a way of affecting Physician behavior. (For Example: the implementation of Pay for Performance Payment Systems.)
SPECIALTY PHYSICIAN CAPITATION MAY BE A MORE EFFECTIVE USE OF CAPITATION.
AS MORE PHYSICIANS BECOME HOSPITAL EMPLOYEES, AND MORE PHYSICIAN PRACTICES ARE HOSPITAL- OWNED, THE GLOBAL BUDGETING OF HEALTH CARE DELIVERY SYSTEMS (PHYSICIANS AND HOSPITALS) MAY BE THE MOST EFFECTIVE USE OF BUNDLED PAYMENTS TO INFLUENCE PHYSICIAN BEHAVIOR.
QUESTIONS:5
BUNDLED PAYMENTS FOR PHYSICIANS: PHYSICIAN CAPITATION
POWERPOINT 10; READINGS 1.B. AND TEXTBOX.
What kinds of Managed Health Insurance plans use Capitation?
Is it mainly used for Primary Care or Specialty Care Physicians/Practitioners?
Why did physicians not like Capitation as it was implemented in the 1990s?
How widespread is the use of Capitation in 2019?
QUESTIONS:6
BUNDLED PAYMENTS FOR PHYSICIANS: PHYSICIAN CAPITATION
POWERPOINT 10; READINGS 1.B. AND TEXTBOX.
Is it possible to improve the attractiveness of Capitation if you carve out selected high value physician services and pay the fee-for-service, in addition to the Capitation?
Are traditional Capitation systems adjusted to accurately reflect that some patients (like those with multiple. chronic conditions) will use a lot more medical resources than the average patient?
PAYING FOR NON-PHYSICIAN SERVICES IN HOSPITALS :
POWERPOINT 10; READINGS 2.A., 2.B., AND 2. C.
Be familiar with the concept of and the unique characteristics of Hospital Chargemasters.
What is the difference between a Per Diem hospital payment and a DRG hospital payment? Be able to describe two (2) differences?
Do Per Diems and DRGs cover Physician costs associated with a hospital stay?
What is one (1) way in which a Per Diem payment is more attractive for health insurance plans than a DRG payment?
What is one (1) way in which a DRG payment is more attractive for health insurance plans than a Per Diem payment?
CONCLUSION
