Course Work on Reimbursement Policies

QUESTION

Executives of healthcare provider organizations often look at reimbursement policies and methods as things that payers seek to impose upon them.  This exercise calls upon you to change that perspective and develop, rather than respond to, reimbursement policies (financial reward/penalties) that will incentivize desired provider performance.

 

The context for this exercise is that you are a senior executive within a recently formed integrated delivery system that includes a hospital and which in recent years has purchased a number of primary care and specialty physician practices. For the present, your system operates in a primarily fee-for-service environment, with some portion of your reimbursement linked to quality metrics.

 

(A)  The first specific charge for your small group is to outline what you might consider an appropriate internal reimbursement system, including a method for financially rewarding (or penalizing) different providers – individual primary care providers, specialty physicians, and hospital administrators/staff for their contributions to the delivery system’s success (financial and otherwise) in this fee-for-service environment.

 

Physicians performing within the 60-75 percentile will set the baseline based on RVU.  RVU benefits will be capped at 95% to ensure that quality remains the highest factor.  THe bonus structure will be based on RVU above base of 60-75% and will be awarded on a quality basis.  Administrator reimbursement will follow a revenue generation model that allows for a higher base payment if the revenue stream is maintained as well as delay for reimbursement is decreased.

Pt satisfaction scores and outcomes are the quality measures that will be used to evaluate the provision and care.

Clinical Practice Guidelines will be established to develop quality metrics and evaluate each case with the structure for standardization and encourage predictability in cost over time.

 

Fee for service is volume based

 

Now assume that the market environment has evolved and one or more major payers are seeking to contract with your integrated delivery system for a significant patient population (say, potentially 40-50% of your business) on a capitated or on a risk-sharing basis with both upside and downside exposure.

 

(B)  Your second charge is now to design an internal reimbursement/financial rewards & penalties system that incentivizes the different providers in your system – primary care physicians, specialty physicians, and hospital administrators/staff  — to optimize the systems performance, both quality-wise and financially, under this new reimbursement system. Be as specific as you can about what behavior/performance you are seeking to incentivize and what financial rewards/penalties you might direct toward each of the three provider types to promote such behavior. Also be sure to make it clear how these incentives differ from those you developed for a FFS environment under question (A) above.

 

Quality focused care driven.  Physician performance should remain equivalent to a FFS model.  Within the capitation system the referral base should remain within the system.  The risk sharing model will be influential within the network organization.  RVU must remain imposed.

 

Similar metrics for physician performance with increased metrics on integrated care and outcomes.

 

Weave porters 7 metrics for value based care into response.

 

 

And one final question for your small group to address:

 

(C)  Assume your integrated delivery system has indeed contracted with a number of payers to provide care for about 50% of the patients you serve on a capitated basis. Assuming they are different, what do you do about having your providers operate under two different sets of financial incentives developed in (A) and (B)? Do you think that each of these groups of providers can effectively perform when faced with two different sets of financial incentives? How would you see your internal incentive program changing moving forward?

 

 

If the two systems are different, capitated as well as FFS, then there must be a beneficial negotiation to develop a program where capitated patients would have a higher revenue.  The administrative level should be tasked to mandate that the patient mix would reflect the population mix.  The system must be integrated to reduce the delay and improve cost.  The risk to the system is increased which requires the increased reimbursement.  The Social determinants of health will affect your capitation care and increase the overall risk to the system.  Social determinants of health are the main driver of increased risk for the system in a capitated model.  The pts entire care plan is exposed when the patient is not managed initially.  Internal incentive program is being driven towards quality of care and FFS integration.

 

ANSWER

Answer A

Physicians perform within the 60-75 percentile will set the baseline based on the relative value units. RVU will be an objective measurement to measure the cost of healthcare services more accurately and help the payment provider mechanisms turn to value based health services. RVU benefits will be capped at 95% to ensure that quality remains the highest quality. The level of health care can be improved once the capitation payment is adjusted. It should also be based on the socio-economic status currently witnessed. The FFS model will be more feasible and simpler than capitation. We take the assumption that FFS encourages physicians to deliver services to maximize the income. Staff is compensated for delivering the best care to patients according to their professional standards.

The bonus structure will be based on the RVU above base of 60-75% and will be based on a quality basis. Administrator reimbursement will follow a revenue generation model that allows for a higher base payment if the revenue stream is maintained as well as delay for reimbursement is decreased. This will ensure that the hospitals and physicians are compensated largely on quality and efficiency metrics. A revenue cycle management tool is handy when it comes to issuing the health care providers with the billing process in order for them to identify issues and risks easily and to have a steady stream of revenue. The main struggle is to shift from volume based system to the new system where satisfaction scores and outcomes are the quality measures that will be used to evaluate the provision and care.

 

Answer B

The health care system should be quality focused care driven. Physician performance should remain equivalent to the FFS model. This will be achieved by applying a performance mechanism in order to improve the efficiency and increase the beneficial use of medical care. The mechanisms have incentives to the providers. It is different from the FFS model since the disadvantaged can be more satisfied with their access to health services as the providers offer quality health care will improve outcomes of patient satisfaction. The risk of sharing model will be influential within the network organization. Also, the sharing model will create room for balancing the opposing influences and complementing the disadvantages of the various techniques.

.           A higher performance mechanism will realize better quality of care as the healthcare providers are offered incentives to accomplish their goals. This will guided by the Clinical Practice Guidelines to develop quality metrics and evaluate each case with structure for standardization and encourage predictability in cost over time. For this instance, their primary goal will to be improving the preventive care and the establishment of IT. The RVU must be imposed to act as an incentive to the physicians to not only work harder but offer quality health care in order to earn more. This guarantees similar metrics for physician performance with increased metrics on integrated care and outcomes.

 

This differs from the FFS model which is volume based which leads to overprovision and inefficiency in the practice. It encourages the physicians to deliver more and unnecessary services in order to capitalize more in their income. But this method requires the physician to offer quality care in order to capitalize in their income. It creates and uncertain climate of payment for providers since it is hard to keep record of services rendered. This model will create a system where efficiency and cost-control are the driving force. The system places quality based health care over quantity used where the satisfaction of the patients and outcomes are the measures of the success of the two models.

 

Answer C

If the two systems are different, capitated and FFS, then there must be a beneficial negotiation to develop a program where capitated patients would have higher revenue. It also depends on the population of the patients in the hospital since high populations tend to provide relatively low capitation rates. In case this is the case, the patents can resolve to the FFS method in addition to capitation. The administrative level should be tasked to mandate that the patient mix would reflect the population mix. The system must be integrated to reduce the delay and increase the cost. The risk to the system is increased which requires the increased reimbursement. The social determinants of health will affect your capitation and increase the overall risk to the system. Social determinants of health are the main river of increased risk for the system in a capitation model. The care plan is exposed when the patient is not managed initially. Internal incentive is being driven towards quality of care and the integration of the FFS model.

The two methods can be complementary to each other in case one is not applicable. Both methods supplement each other especially in cases where the capitation rates are low. A maximize claim payment can be created to show features such as the relation of payments and the patients, giving time to accurately measure the projected finances.

 

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