Tuesday, 26 May 2015 22:17

HIMSS Undercurrent: Reimbursement Reform to Define the Provider Network

Written by Jennifer Searfoss

As an attendee of HIMSS15, it was hard to decipher key trends and takeaways through the noise, energy, and enthusiasm of over 43,000 attendees taking over Chicago. Yet through the overwhelming congestion of slick marketing and similar product tag lines, the conference aimed at health information technology consumer and software developers provided key insights into where the market is going.

Last year, the buzzword of the event was "population health." How were health systems going to capture data? How were these groups going to move from being reactive medical providers to entities with insight and the ability to predict which patients need more assistance and resources to keep them healthy and out of the emergency department or hospital? Software vendors offered their "solution" to the problem; yet of course, each had its own limitations. What quickly became clear, however, was the necessity that health systems gain knowledge and insight into how to manage population health well using a certain flavor of predictive analytics offered by their vendors of choice.

This year, the underlying current of HIMSS was more subversive, and something people didn't want to talk about out loud. As a big fan of The Usual Suspects, I felt like I was chasing Kevin Spacey's Kaiser Söze: a name you make reference to in hushed tones for fear of his wrath. I felt like I could skirt around the issue in discussions but could not outright ask people "will solo and small medical practices go out of business in three years?" Simply put, the answer is yes, unless these small businesses find the resources to evolve now.

Scalable Model: The Withhold

The White House and Congress have been anything but subtle about their vision of the national Medicare network. If you hadn't noticed, President Obama's signature healthcare legislation includes the word "affordable." In very clear terms, the Administration, the House, and the Senate agree that for a sustainable healthcare marketplace to exist in both the public and private sectors, costs must come out of the system. And at this point, they believe that market reform should happen through disincentives.

Their approach for Medicare is an age-old model of reimbursement – the withhold. It was much more popular in the 1980s and 90s, but it's still around. Cumulatively, if you consider the readmission targets and penalties, meaningful use, the physician quality reporting system, and the value-based modifier, it works out that Medicare providers, participating or not, are paid at 90 percent of Medicare unless they respond. Admittedly, Medicare is not very responsive, with a two-year lag in provider inaction, but the line is drawn in the sand. Act or you won't receive full reimbursement.

Medicare Penalty Timeline and Cumulative Effect
Reporting period 2013 2014 2015 2016
Penalty year 2015 2016 2017 2018
Failure to report quality data -1.5% -2% -2% TBD
Failure to adopt EMR -1% -2% -3% -3% or more
Failure to coordinate care as well as your peers Large groups Up to -2% Large groups Up to -2% Large and mid-sized groups Up to -4% Up to -4%

And remember, all of this is on top of the 2-percent sequestration reduction to help balance the federal budget. So reimbursement is already at 98 percent of what should be paid.

The Medicare program has one remaining incentive area outside of the pilot shared savings models. The VBM uses the withhold to "rob from Peter to pay Paul" for physicians and group practices that not only report quality data, but do so better than their peers and figure out how to coordinate care in such a way as to reduce their overall cost to Medicare for their attributed beneficiaries and improve healthcare outcomes. Here, the federal government tossed some very broad goals to the industry, urging them to innovate to solve the problem.

Starting next year, non-physician practitioners in groups of two or more (or solos) will be included in the 2016 base year for 2018 adjustment. Until then, the VBM calculation will only consider services performed by physicians for this separate adjustment.

Scalable Model: Fee Schedule Bonus

Until this year, Medicare offered longstanding bonuses for early change adopters for each of these initiatives. PQRS bonuses began nearly 10 years ago, in 2006, for providers that submitted rudimentary quality data. Medicare found that few participated, so the carrot-and-stick model has matured to its current status.

Several large carriers are using this carrot model to incentivize their network participants to hit defined targets on behavior change. One national carrier, UnitedHealth, announced in January that in 2015 it plans to move 20 percent of its network to value-based models to save over $43 billion, up from $36 billion in 2014. Their goal is to have nearly $65 billion in payments to physicians and hospitals on an alternative model of payment by 2018. The health carrier has cited 1-6 percent in overall savings from these approaches.

Health plans accrue big costs when their network refers patients to non-participating providers and ancillary services, and when prescriptions are written for brand-name drugs. Those two areas are low-hanging fruit to begin with, intended to reduce the spending curve by rewarding ordering and prescribing clinicians for choosing lower-cost, in-network providers or generic/lower-tier drugs on the formulary.

Other models being used by health plans across the country are primary care medical homes, accountable care organizations, and bundled payments.

Still, reform doesn't spell the death of fee-for-service.

In talking with industry bellwethers, no one sees the fee-for-service model being completely eliminated. More likely, reimbursement reform will lead to blended models, through which certain predictable episodes of care will have a bundled rate that is forced either by contract or bundled codes and supplemented by care coordination payments and fee-for-service payments for certain types of services.

And while fee-for-service will stick around, it won't be the same as it was in the past. The withholds and incentives will still tie to the rate.

So it's past time for providers in all settings and locations to get to know this model. The train has left the proverbial station; our challenge now is to not get run over.

About the Author:

Jennifer is the founder and CEO of SCG Health. Previously, Jennifer was the vice president of external provider relations for UnitedHealthcare, a Minnesota-based health insurance company. From 2007 to April 2011, she established and led the Provider Communications & Advocacy Unit. This enterprise asset reviewed and approved communications for the commercial, Medicare, and Medicaid participating providers in the UnitedHealthcare network. She also solicited direct feedback on how to improve payor operations from the physician and hospital community, which resulted in higher provider satisfaction rates with the national insurance company during her tenure at UnitedHealthcare. Prior to this, Jennifer served as the external relations liaison for the Washington, D.C.-based Government Affairs Department of the Medical Group Management Association (MGMA). As the external relations liaison, Jennifer coordinated MGMA advocacy efforts with other specialties and medical organizations. She also was the government affairs representative for the Eastern and Southern Sections. She began her work with MGMA in August 2001. She currently serves on the board of the Maryland Medical Group Management Association and is a clinical adviser for Informatics in Context.

Contact the Author:

This email address is being protected from spambots. You need JavaScript enabled to view it.

Comment on This Article:

This email address is being protected from spambots. You need JavaScript enabled to view it.

Last modified on Wednesday, 27 May 2015 01:07