FINAL EXAM: PROVIDER PAYMENT AND MANAGING CARE /PERFORMANCE INDICATORS
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POWERPOINT.10.PART2.PAYING.PROVIDERS.ANDMANAGINGCARE.pptxPOWERPOINT 10 – KEY POINTS POWERPOINT 10 – PART 2 KEY POINTS MANAGED HEALTH CARE: WEEK OF MAY 17, 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
SLIDE 3: OVERVIEW OF BUNDLED PAYMENTS
SLIDE 4: BUNDLED PAYMENTS – BACKGROUND
SLIDE 5: BUNDLED PAYMENTS – DIAGNOSIS RELATED GROUPS AND MEDICARE PAYMENTS FOR NON-PHYSICIAN HOSPITAL SERVICES
SLIDE 6: MEDICARE AND TBUNDLED PAYMENTS/ BEYOND DIAGNOSIS RELATED GROUPS
SLIDE 7: THE PROMETHEUS – A PRIVATE BUNDLED PAYMENT SYSTEM
SLIDE 8: THE AFFORDABLE CARE ACT AND PAYMENT EXPERIMENTS
SLIDE 9: CONCLUSION
BUNDLED PAYMENTS
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 1.B.; 2.A. AND 2.C.; 3; READING 4. TEXT BOX; READINGS 4.A., 4.B., AND 4.C.
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 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.
BUNDLED PAYMENTS: BACKGROUND - 1
BACKGROUND TO BUNDLED PAYMENTS: SEE READINGS 1.B.; 2.A. AND 2.C.; 3; 4.A., 4.B., AND 4.C.;
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 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: DIAGNOSIS RELATED GROUPS - 2
DIAGNOSIS – RELATED GROUPS: A BUNDLED PAYMENT EXAMPLE - SEE READINGS 2.A. AND 2.C.; 3; 4.A., 4.B., AND 4.C.
Medicare payments for the non-physician component of hospital services used to be based on hospital charges, or charges adjusted to consider reported hospital costs. For commercial insurers, by the late 1960s and early 1970s, the payment system for these services (with some exceptions) was centered either on charges, adjusted for actual cost and then discounted, or more frequently on Per Diem payments.
A Per Diem Payment is calculated in this way: All patient charges (adjusted for cost or not, discounted or not) for a given year at a given hospital are added up, and that total is then divided by all patient days of care provided in the hospital in a given year (Number of Patients x Average Length of Stay.) A Per Diem amount is the result of that calculation. So, if a patient stays for 10 days in the hospital, the non-physician price is 10 times the Per Diem. This method of reimbursing hospitals is still prevalent among self-insured employers and commercial insurers.
The payment methodology used by Medicare (since 1982), and often by State Medicaid plans, is a Prospective Methodology, and is very different.
The Diagnosis Related Group payment system was tested in experiments in New Jersey and Maryland in the late 1970s and the early 1980s. Maryland continues to use it as the basis of its All Payer system to this day. Medicare initiated a national version of the DRG system, and has used it to pay for hospital non-physician services since 1982.
This system helped Medicare to effectively control its expenditures for hospital non-physician services since 1982. Some health care service analysts believe that DRG payments are relatively close to actual average hospital costs for the provision of those services. Over the years the system has been revised and made more sensitive to patient differences in terms of severity of discharge diagnosis and related comorbidities. The MS-DRG system is the most current version of the DRG system and contains about 750 different patient categories and prices.
BUNDLED PAYMENTS: MEDICARE AND THE FUTURE OF BUNDLED PAYMENTS - 3
SEE READING 4.C.
Medicare: Other Bundled Payment/Prospective Payment Systems
Medicare has supported research in, and implemented, Prospective Payment Systems for Home Health Services, SNF Rehabilitation Services, Ambulatory Care Services, and Ambulatory Surgery Services
The Future: Medicare is leading the way in adjusting MS-DRG payments for quality of performance (value-based reimbursement, Pay for Performance or P4P).
It is also adjusting MS-DRG payments to encourage hospitals and hospital systems to reduce hospital-acquired patient conditions, and to reduce unnecessary hospitals readmissions within 30 days of discharge.
Finally – pursuant to the Affordable Care Act of 2010, Medicare is encouraging a wide range of experiments using Bundled Payments, and trying new and more innovative ways of defining and making those payments.
BUNDLED PAYMENTS: THE PROMETHEUS PROJECT- 4
OTHER BUNDLED PAYMENT EXAMPLES: THE PROMOTHEUS PROJECT
Information on the Prometheus Project: READ READINGS 4.A., 4.B., READING 5.
The PROMETHEUS Payment model for calculates the comprehensive price of bundles of patient care services using an evidence-based, ground-up approach. To construct payment bundles, researchers at the nonprofit Health Care Incentives Improvement Institute (HCI3) reviewed the best available clinical evidence and determined the appropriate bundle of services to be provided for an identified medical condition, or in association with a particular clinical procedure.
The cost of each individual service in the bundle is summed, then the total price for the bundle of services is risk-adjusted to reflect the clinical complexity of a given patient, and an allowance is added to cover the cost of treating potentially avoidable complications that may arise. If a group of providers can deliver care at a cost that is lower than the price of the bundled payment—primarily by closely monitoring a patient to avoid the onset of costly complications—they can generate profits to share among themselves.
PROMETHEUS differs from other bundled episode payment approaches which set the price of bundles using a top-down approach based on historical costs for treating a given condition or associated with performing a particular procedure. It builds the price of payment bundles from the bottom up.
The Prometheus approach assigns evidence-based case reimbursement rates (ECRs) to common conditions including Depression, Type 2 Diabetes, and Congestive Heart Failure, as well as common procedures such as Total Joint Replacements and Deliveries. A single ECR covers all inpatient and outpatient care associated with a given condition.
THE AFFORDABLE CARE ACT AND PROVIDER PAYMENT EXPERIMENTS
SEE READING 7.
Medicare and Bundled Payment Experiments:
Linking Payment and Utilization Management:
Penalties for Readmissions within 30 Days
Penalties for Excessive Hospital Acquired Conditions
Accountable Care Organizations
CONCLUSION
