Public and Private Payments to Providers Flashcards by Jonathan Robinson

Under FFS, what are the physician and patient incentives?

Increase utilization
- Patients get more services
- Providers make more

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

Describe a PPO and cost sharing

Managed care modification to FFS

low cost sharing in network
high cost sharing out of network

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

Describe a HDHP

a PPO plan with higher deductible, may qualify for health savings account

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

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)

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

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)

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

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

How well did you know this?

Not at all

Perfectly

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?

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

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