E&F - lecture 6 Flashcards
Why focusing on provider payment reform in the quest to VBHC?
- Providers respond to financial incentives and can influence demand
- Predominant provider payment methods contribute to deficiencies
- New opportunities for linking payment to value
Value based payment:
- Pay-for-performance
- Bundled payment – for specific diseases like diabetes
- Theoretically optimal VBP design model
Theoretically, VBP consists of two core components
- Substantial base payment:
Population-based payment = global payment give health care providers a spending target or budget for the care of a defined group of patients. Comprises the vast majority of the total payment and is particularly suitable to incentivize those dimensions that are difficult or expensive to measure; cost, coordination and prevention. Disadvantage: incentives might provide less services than medical necessary to keep the costs low - Small variable payment that explicitly rewards measurable aspects of value; quality
Ideally, the population based payment…
- Is a single payment to a multidisciplinary provider group
- Covers a comprehensive care package that goes beyond single conditions for a defined population
- Is fixed for a defined period of time
- Is adjusted for the risk-profile of the target population
- Includes additional risk-mitigating measures for healthcare providers
- Single payment to a multidisciplinary provider group
Why? To stimulate well-coordinated care
* Hold multidisciplinary groups (ACOs) accountable for spending and quality
* Central role of primary care physician
* Single, integrated payment removes financial barriers providers and sites
* Encourages cooperation and integrated care
- Comprehensive care package to a defined population
Why? To stimulate coordination and prevention
* Care package stretching beyond single services, diseases or treatments (whole-person accountability)
* Prevention is more effective and cheaper than cure
* Attribution of population based on region, prior utilization or affiliation with a provider group or practice
* Advantages: focus is on the whole person
- Fixed payment
Why? To stimulate cost-conscious behavior
* Budget or spending target versus actual spending on health care
* More financial risk
* Providers receive a pre amount of money, by predicting spending of a population
* Consequence: providers are exposed to greater financial risk
* When spendings are lower than the budget: savings
* When spendings are higher than the budget: losses
* This stimulates cos-consciousness
- Adjusted for the risk profile of the target population
Why? To prevent strategic provider behavior that may thwart value
* Account for systematic variation in spending
* Three purposes of risk-adjustment
o Prevents cherry picking and lemon dropping
o Fairness in payment allocation
o Providers focusing fully on optimizing value
* Providers receive a higher payment for the old and the sick and lower for young and healthy
* Risk adjustment reduces incentives for attracting low risks (cherry picking) and avoiding the high risk (lemon dropping)
- Risk-mitigating measures for providers
- Risk-mitigating measures for providers
Why? To prevent strategic provider behavior that may thwart value
* Protect providers against excessive financial risk, in particular
* systematic risk not accounted for by risk-adjustment model
* insurance risk
Limitations of P-4-P:
- Design and implementation complex
- Performance hard to measure
- Unmeasured aspects may be neglected multitasking problem!
- Leaves incentives in base payments intact
Bundled payment
a group of providers receives a single payment for a bundle of care services related to a certain condition or treatment
- Performance risk transferred to providers
- Stimulates providers to minimize costs and coordinate care well
- May also improve quality of care
- Payments may be aggregated along 2 dimensions
- In time = bundle contains all services taking place within a certain time window
- Across providers = providers may be working in the same setting or different settings
Potential dangers bundled payment
- Increase in number of bundles
- Underuse of appropriate services, p4p could help with this
- Risk selection = avoid high risks
- Upcoding and unbundling
- Compartmentalization
Can you explain why explicit financial incentives for value should be used only modesty?
health care professionals only focus on aspects that are measured (teaching to the test) risk for pay-for-performance
multi-tasking problem: not everything of value can be measured, so you cannot pay for everything that is of value
financial risk
Financial risk is the extent to which an entity bears financial accountability for healthcare spending at the margin
Spending < payment savings
Spending > payment losses
- What is an advantage of exposing healthcare providers to financial risk?
o Efficiency
o Cost-consciousness
