Public and Private Payments to Providers Flashcards
Under FFS, what are the physician and patient incentives?
- Increase utilization
- Patients get more services
- Providers make more
Explain supplier-induced demand
- FFS
- Physicians influence on patients demand
- amount of demand that exists beyond a market in which patients are fully informed
- Patients often uninformed about if they really need a treatment
Describe a PPO and cost sharing
Managed care modification to FFS
- low cost sharing in network
- high cost sharing out of network
Provider and patient perspective on PPO
Provider perspective:
physicians participate/ accept lower fees in network because PPO guarantees volume (revenue)
Patient Perspective:
Limited provider network= pay a lower premium
This could attract healthier people
Describe a HDHP
a PPO plan with higher deductible, may qualify for health savings account
Describe an HMO
compare to PPO
how unique
the 2 staff models
how are they paid?
type of managed care plan that is more restrictive (small networks and use gatekeepers) than PPO because physicians pay = capitated
IPA: Independent Practice Association not employed by HMO but negotiate PBPM
Staff Model: employ physicians
Majority of physicians have some form of a managed care contract (usually a mix)
Gatekeepers: Reduce utilization
Describe point of service (POS)
How is it different from a HMO?
type of managed care plan that is less restrictive HMO and slightly more generous (allow out-of-network and higher cost sharing)
Rank plans from least restrictive to most restrictive
HDHP, HMO, FFS, POS, PPO
Rank plans from least restrictive to most restrictive
- FFS
- PPO
- HDHP
- POS
- HMO
Provider incentives under capitation? Any disadvantages?
what setting is capitation used frequently?
Provider incentives:
-
Reduce patient utilization relative to FFS
- Increases in services provided comes out of provider’s bottom line
- Rewards prevention (keeping patient healthy)
- Disadv: may underutilize care
Capitation used more often for large group practices, primary care
FFS vs Capitation incentives
FFS
- Incentive to encourage more services
- Physician loses if they keep their patient healthy
Capitation
- Incentive to skimp on care (reduce utilization)
- reward physician for emphasizing prevention healthcare
Medicare Payments to Hospitals historically? Problem?
Medicare Payments to Hospitals historically? Problem?
- Cost-based retrospective payment for inpatient services
- Problem:
- Hospitals had an incentive to increase patient utilization because they would be reimbursed for all cost incurred
- Similar to incentives under FFS
Medicare payment system to hospital now?
Medicare payment system to hospital now?
Inpatient Prospective Payment System (IPPS)/DRGs: system put in place since 1984 where there is fixed price per hospital admission with payment varying based on diagnosis (DRG)
Incentives for hospitals under IPPS/DRGs: Quick and sicker
Incentives for hospitals under IPPS/DRGs: Quick and sicker
“Quicker and sicker”
Quicker refers to the incentive to get a patient out quicker, with a shorter length of stay to cut costs
Sicker refers to the incentive to classify a patient as relatively sicker (higher DRG weight), with the CCs or MCCs to, in turn, get a higher payment
What happened when hospital payments were switched from Cost-based retrospective payment to Inpatient Prospective Payment System (IPPS)/DRGs?
What happened when hospital payments were switched from Cost-based retrospective payment to Inpatient Prospective Payment System (IPPS)/DRGs?
- fixed payment per admission reverses incentives towards providing extra inefficient care during admission (compared to cost-based retrospective reimbursement)
- Same argument w/ incentives of FFS vs Capitation
Inpatient Prospective Payment System (IPPS)/DRGs impact on LOS? Problem with the system?
Inpatient Prospective Payment System (IPPS)/DRGs impact on LOS? Problem with the system?
-
Impact:
- Evidence shows reduction in LOS per admission (not the overall #) cost did not lead to worse outcomes
-
Problem with IPPS/DRGs
- Hospitals still have no incentive to reduce the number of admissions
- More admissions= More revenue
Calculation of IPPS/DRG: payment =
market basket updates? (base rate)
ACA adjustments goal?
Calculation of IPPS/DRG: payment = base rate X DRG weight X Adjustments
- Base rate increases = “market basket” updates
- Accounts for increases of input prices
- ACA made downward productivity adjustments
- Goal: to reduce spending i.e. lowering growth rate
- specified smaller increases to the base rate by essentially assuming that the hospitals can be more productive in their use of these inputs
Calculation of IPPS/DRG: payment adjustment
_ variation
Indirect _ _ (IME)
_ Share
Hospital _ Reductions Program (downward adjustment aka penalty)
Hospital _ Purchasing Program
Calculation of IPPS/DRG: payment adjustment
Geographic variation
Indirect Medical Education (IME) for costs of resident training
Disproportionate Share (DSH) for Medicaid/uninsured patients
Incentivize low readmission rates aka Hospital Readmissions Reductions Program (downward adjustment aka penalty)
Incentivize better quality (Hospital Value-Based Purchasing Program)
What is Medicare’s payment system to physicians?
Describe it.
what is bill balancing?
Medicare Payments to Provider/Physician’s - RBRVS (Resource-Based Relative Value Scale)
Overview: CMS administers a fee schedule and physicians can choose to participate in assigned fee or choose patient-by-patient
Bill balancing: charging more than what medicare pays
Medicare’s old payment system to doctors? What are the 2 problems?
Medicare’s old payment system to doctors? What are the 2 problems?
UCR system: use usual, customary, and reasonable
How UCR was determined
- Medicare program would determine what the average fees were for physician services in a geographic market and set UCR at that average
Problem 1: local private-market based UCR fees were inequitable for primary care v. specialty physicians
Problem 2: physicians were balance billing w/ no limits on fees
RBRVS (Resource-Based Relative Value Scale) fee schedule primary and secondary goals
RBRVS (Resource-Based Relative Value Scale) fee schedule primary and secondary goals
Primary goal: Use Relative Value Units to determine the “True cost” of a physician’s service
Secondary goal: reduce balance billing via 109.25% limiting charge
RBRVS calculation: Three main resource components? What does the VBM do? CF?
RBRVS calculation: Three main resource components?
- Work
- practice expense
- Malpractice (insurance)
What does the VBM do?
Value-Based Modified: adjustments based on composite score on quality and cost
CF?
Conversion Factor: convert RVUs to $
What did the BBA (before RBRVS) do to Medicare’s payments to doctors?
Goal?
Problem?
Solution?
What did the BBA do to Medicare’s payments to doctors?
- implemented SGR for RBRVS conversion factor
Goal?
- Create annual updates that would be “sustainable” off into the future.
- if actual spending exceeded the target for spending, then the fee schedules’ annual conversion factor update would be lowered a bit to get back onto the target
Problem?
-
Negative updates (payment cuts)
- Higher growth in volume= exceeding target spending
- Slowed growth in GDP
Solution?
- Doc fixes
- legislation to put off the SGR’s formulaic reduction
Medicare 4 Payment Reforms?
_ payments
ACOs and Medicare _ _ program
Medicare _ and _ reauthorization act (MACRA)
Comprehensive _ _ + (CPC+) Medical Home:
Medicare 4 Payment Reforms?
Bundled payments
ACOs and Medicare shared savings program
Medicare access and CHIP reauthorization act (MACRA)
Comprehensive Primary Care + (CPC+) Medical Home:
ACA: Describe Medicare’s bundled payments
Goal?
Challenge?
Incentives (2)?
ACA: Describe Medicare’s bundled payments
- Bundled payments: providers receive aggregate bundled payment for longer episode of care (shared by docs and hospital)
Goal?
- Bundled payment covers preoperative, operative, and post-operative care for 90 days and spans multiple providers (hospital and physicians together)
Challenge?
- Requires that hospitals and physicians come together to define payment split
Incentives (2)?
- Efficient and coordinated care to reduce readmission
- No additional payment for readmission within 90 days
Describe ACOs and Medicare shared savings program
Describe ACOs and Medicare shared savings program
- ACO form contracts with CMS and is made up of collection of PCPs, specialists, and hospitals (all connected via EMR)
- share savings
The potential problem with ACOs?
solution?
The potential problem with ACOs?
- ACOs try to reduce spending by skimping on care, rather than trying to fix inefficiencies
Solution?
- ACO receives reward or penalty based on whether actual FFS spending was lower or higher than benchmark amount (prospective risk-adjusted target level of Medicare spending per beneficiary)
- Tied to quality metrics
ACO challenges?
- ACO patients
- shared savings
- power
ACO challenges?
- Patients can go outside of the ACO, but ACO responsible for the care
- Hospitals and physicians have to cooperate to split savings
- Antitrust/competition issues on provider consolidation
- Bargaining power- charge higher prices for private
Do providers lose money in ACOs?
No, potential to make more from additional shared savings bonus
while their revenue decreases, their costs incurred decrease even more
What is MACRA? What did it do (2)?
Medicare access and CHIP reauthorization act MACRA
Repealed SGR formula for physician payments
created 2 doctor payment systems for 2019
-
Merit-Based Incentive Payment System (MIPS)
- FFS via RBRVS fee schedule w new adjustment based on quality score
-
Alternative Payment Models (APM)
- CMS will make capitated payments w physician’s savings based on quality
Describe Comprehensive Primary Care + (CPC+) Medical Home
Track1?
Track 2?
(CPC+) Medical Home
CMS partner w/ commercial plan and state Medicare plans to allow PCPs to choose Track 1 or Track 2
Track1:
- supplement current FFS w/ care management fees
Track2:
- Replace FFS RBRVS payments w/ hybrid of fixed PBPM and lower FFS & higher management fees
Describe CPC+ Medical Home payment risk adjustment
Risk adjustment through person-level risk scores
- The fees in each track are an average
- The fees range based on patient person-level risk scores
- The sicker the patients are predicted to be, the higher the payments
- Goal: mitigate the incentive to avoid sicker patients
Rank payments Private, Medicaid, Medicare
cost-shifting phenomenon?
Private> Medicare> Medicaid
cost-shifting phenomenon: Time periods in which the public payments go down, the private payments go up, and vice versa
