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Design & Pricing > Provider Payment Arrangements > Flashcards

Provider Payment Arrangements Flashcards

1
Q

Provider Payment Arrangements

Types of Risks (List, Define)

A
  • Utilization Risk: Change in utl resulting from payment model and profit impact
  • Technical Risk: Contract’s technical elements not matching population/circumstance
  • Insurance Risk: Normal variation in demand for services over time and difference in utl
  • Performance Risk: Relates to inefficiency, suboptimal quality, and high cost of care
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2
Q

Provider Payment Arrangements

Types of Payment Models

A
  • FFS
  • Global Cap
  • Shared Savings
  • DRG/Case Payments
  • Bundled Payments
  • Reference Pricing
  • Provider Excess Loss (PEL) Reinsurance
  • Pay-for-Performance (P4P)
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3
Q

Provider Payment Arrangements

General Pricing Process

A
  1. Select and review target population
  2. Revisit service delivery model to make sure it is appropriate for population
  3. Select payment model
  4. Projecting and model cash flows
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4
Q

Provider Payment Arrangements

Quality Domains

A
  • Access to Care
  • Structure of Care (Appropriate providers)
  • Process of Care (Screenings)
  • Outcome of Care
  • Experience of Care (Surveys)
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5
Q

Provider Payment Arrangements

Factors Considered by Actuaries when Modeling Program Payments and Cash Flows

A
  • What unintended behaviors may occur due to incentives created by payment model?
  • What other factors would jeopardize achievement of forecasted results?
  • How will results achieved during model test be replicated?
  • Will structure of payment model change over time?
  • Will there be phased-in approach?
  • How will the payment model promote continuous improvement of services?
  • What key factors may affect this progression?
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6
Q

Provider Payment Arrangements

FFS Risks

A
  • Utilization = As utl increases, provider profit increases
  • Technical = Low
    • Easy to design and implement
  • Insurance = Low
    • Not at risk for year-to-year variation of population
  • Performance
    • Risk if claim admin don’t monitor nonspecific codes
    • Payer Performance Risk = Providers choose higher cost, clinically equivalent treatment
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7
Q

Provider Payment Arrangements

Global Cap Risks

A
  • Utilization = As utl increases, provider profit decreases
  • Technical = High
    • Responsible for paying claims
    • Allocate money among various physicians
  • Insurance = High
    • Actual costs of members are higher than average included in cap rate
  • Performance
    • Risk for financial responsibility of patient’s care
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8
Q

Provider Payment Arrangements

Shared Savings Risks

A
  • Utilization = Depends on contract
  • Technical = High
    • Calculation and distributing shared dollars
  • Insurance = High Medium
    • Cost of mbrs can be > benchmark due to yearly variation
    • New costly procedure
    • Changing demographics
  • Performance
    • High for 2-sided models
    • Low for 1-sided
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9
Q

Provider Payment Arrangements

DRG/Case Rates Risks

A
  • Utilization
    • Admits increase, profits increase
    • LOS increases, profits decrease
  • Technical = Low-Medium
  • Insurance = Low
    • Risk of higher than average LOS
  • Performance
    • Discharging patients too early = increases readmits
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10
Q

Provider Payment Arrangements

Bundled Payments Risks

A
  • Utilization
    • Episodes increase, profits increase
    • Providers must decrease preventable services to make profit
  • Technical = High
    • Gain-sharing between physicians and hospitals
    • Defining episode and treatment is complex
  • Insurance = Medium
    • Risk of higher than average episode cost
  • Performance
    • Consistent communication between care team
    • Gain-Sharing based on quality outcomes
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11
Q

Provider Payment Arrangements

Reference Pricing Risks

A
  • Utilization
    • Mbrs less likely to utilize as OOP share increases
  • Technical = High
    • Educating PHs on reference price
  • Insurance = Medium
    • Shifts risk away from insurer/provider; Patient is responsible for costs above reference price
  • Performance
    • If patients don’t understand arrangement, they can be unhappy
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12
Q

Provider Payment Arrangements

PEL Reinsurance Risks

A
  • Utilization
    • Lower for health system
    • Higher for reinsurer
  • Technical = Varies by contract
  • Insurance
    • Provider has risk for higher than average costs that fall below limit
  • Performance = depends on contract
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13
Q

Provider Payment Arrangements

P4P Risks

A
  • Technical
    • Measuring quality metrics = complex
  • Performance = increased
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14
Q

Provider Payment Arrangements

Medicare FFS Allowed Amounts

A

Combo of Geographic Practice Cost Index (GPCI) and Relative Value Units (RVU)

RVU Components

  • work/practice cost (w)
  • Facility/cost of living (f)
  • Malpractice (m)

Medicare Allowed Amount = sumproduct of GPCI and RVUs * Conversion Factor

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15
Q

Provider Payment Arrangements

Pioneer ACO Model

A
  • For organizations already providing some aspect of care coordination
  • Structure = similar to 2-sided MSSP
  • Program has more risk and more reward
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16
Q

Provider Payment Arrangements

Considerations While Negotiating Commercial ACO Contract

A
  • Target Costs
  • Risk Adjustment
  • Trend
  • Shared Savings
  • Attribution categories
  • Random variation
  • Stop loss
  • Data and Reports
  • Quality
  • Infrastructure
17
Q

Provider Payment Arrangements

Basic Steps for Pricing Bundled Payment

A
  1. Obtain claims data
  2. Select DRGs/conditions for which cost of services will be bundled
  3. Define episode (Anchor stay, post-discharge period)
  4. Define exclusion criteria
  5. Estimate the cost of the bundle
  6. Identify savings opportunities
18
Q

Provider Payment Arrangements

Disadvantages of Bundled Payments

A
  • Difficult to administer and too costly for some providers
  • Claims data doesn’t indicate severity of disease
  • Data includes only costs that are reimbursable
  • Changes in treatment should be factored into price
  • Can be variations in cost of devices
  • If doctor is responsible provider, they choose where procedure happens
19
Q

Provider Payment Arrangements

Issues with Pay-For-Performance

A
  • Unintended incentive to avoid most severely-ill patients
  • Gaming system by miscoding
  • Selecting patients on basis of likelihood of positive outcome
  • Compliance with treatment protocols rather than need
  • Unmeasured objectives could be ignored
  • Contract may not generate enough revenue at risk to cover costs
20
Q

Provider Payment Arrangements

Functions of PCMH

A
  • Comprehensive care
  • Patient-centered
  • Coordinated care
  • Accessible services
  • Quality and safety
21
Q

Provider Payment Arrangements

Best Practices in Provider Payment Arrangements

A
  • Understand exposure, volatility, probability, severity, time horizon, and correlation to risk
  • Actuary = quantify and model risk
  • Payment Reform Team = understand utl/tech/insurance/performance risk
  • CFO: set budget to maintain ROI of payment model
  • Clinicians: Provide high quality care to achieve good outcomes
  • Policymakers = address systematic issues
22
Q

Provider Payment Arrangements

Qualities Inherent in Organizations that Succeed Under Payment Reform

A
  • Highly integrate system
  • Effective care management
  • More efficient health system than rest of market
  • Select and restricted networks
  • Collab between providers and payers
  • Reasonable methods to establish cap/episode payments
  • Equitable allocation of capitation payments among providers
23
Q

Provider Payment Arrangements

How Have the Mechanics Improved of Payment Models that Incorporate Provider Risk?

A
  • More clinical integration
  • EMR
  • Widespread use of clinical guidelines
  • Health plan incentives to transfer risk
  • Refined risk adjustment methods
  • Experience from current success and past failures
  • Quality and cost pressure on providers to transform health care system
  • Increased transprency

Design & Pricing (64 decks)

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