Provider Payment Arrangements Flashcards
Provider Payment Arrangements
Types of Risks (List, Define)
- 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
Provider Payment Arrangements
Types of Payment Models
- FFS
- Global Cap
- Shared Savings
- DRG/Case Payments
- Bundled Payments
- Reference Pricing
- Provider Excess Loss (PEL) Reinsurance
- Pay-for-Performance (P4P)
Provider Payment Arrangements
General Pricing Process
- Select and review target population
- Revisit service delivery model to make sure it is appropriate for population
- Select payment model
- Projecting and model cash flows
Provider Payment Arrangements
Quality Domains
- Access to Care
- Structure of Care (Appropriate providers)
- Process of Care (Screenings)
- Outcome of Care
- Experience of Care (Surveys)
Provider Payment Arrangements
Factors Considered by Actuaries when Modeling Program Payments and Cash Flows
- 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?
Provider Payment Arrangements
FFS Risks
- 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
Provider Payment Arrangements
Global Cap Risks
- 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
Provider Payment Arrangements
Shared Savings Risks
- 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
Provider Payment Arrangements
DRG/Case Rates Risks
-
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
Provider Payment Arrangements
Bundled Payments Risks
-
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
Provider Payment Arrangements
Reference Pricing Risks
-
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
Provider Payment Arrangements
PEL Reinsurance Risks
-
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
Provider Payment Arrangements
P4P Risks
-
Technical
- Measuring quality metrics = complex
- Performance = increased
Provider Payment Arrangements
Medicare FFS Allowed Amounts
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
Provider Payment Arrangements
Pioneer ACO Model
- For organizations already providing some aspect of care coordination
- Structure = similar to 2-sided MSSP
- Program has more risk and more reward
Provider Payment Arrangements
Considerations While Negotiating Commercial ACO Contract
- Target Costs
- Risk Adjustment
- Trend
- Shared Savings
- Attribution categories
- Random variation
- Stop loss
- Data and Reports
- Quality
- Infrastructure
Provider Payment Arrangements
Basic Steps for Pricing Bundled Payment
- Obtain claims data
- Select DRGs/conditions for which cost of services will be bundled
- Define episode (Anchor stay, post-discharge period)
- Define exclusion criteria
- Estimate the cost of the bundle
- Identify savings opportunities
Provider Payment Arrangements
Disadvantages of Bundled Payments
- 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
Provider Payment Arrangements
Issues with Pay-For-Performance
- 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
Provider Payment Arrangements
Functions of PCMH
- Comprehensive care
- Patient-centered
- Coordinated care
- Accessible services
- Quality and safety
Provider Payment Arrangements
Best Practices in Provider Payment Arrangements
- 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
Provider Payment Arrangements
Qualities Inherent in Organizations that Succeed Under Payment Reform
- 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
Provider Payment Arrangements
How Have the Mechanics Improved of Payment Models that Incorporate Provider Risk?
- 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
