The Cycle of Reimbursement Models

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Reimbursement models have changed over time throughout the 20th century. Learn about the changes, the differences in payment models, future strategies for the government, commercial payers and providers, as well as the return to a more ACO-focused payment model. This presentation is part of our Accountable Care Organization series.

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The Cycle of Reimbursement Models

  1. 1. The Cycle of Reimbursement Models Adele Allison National Director of Government Affairs, SuccessEHS
  2. 2. Brief History of Reimbursement Models
  3. 3. 1917 Lumberjacks of the Northwest Full Risk, Community-Based
  4. 4. The Blues Third-party Fee-for-Service (FFS), Community-based 1929-39
  5. 5. Commercial FFS Employer-sponsored Health Coverage 1940-60s
  6. 6. 1965 Government FFS Medicare & Medicaid
  7. 7. Physician Fee Schedules And Diagnosis Related Groups 1974-89
  8. 8. Partial to Full Risk Capitation, Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO) 1985-90s
  9. 9. Costs Outpacing Inflation Boomers, Increased Patient Portion, Leading to Accountable Care Organizations (ACO) 2000s
  10. 10. 2012 ACOs to be Implemented A Return to Community-Based Care
  11. 11. Reimbursement Strategies
  12. 12. Government Strategies 1
  13. 13. Legislation & Policy Move from Pay-for-Service to Pay-for-Value
  14. 14. 1997 - BBA Sustainable Growth Rate (SGR) Formula
  15. 15. 2006 - TRHCA Physician Quality Reporting Initiative (PQRI) – Defined Value
  16. 16. 2009 - ARRA EHR Adoption, Clinical Data Reporting and Evidence-based Care
  17. 17. 2010 - PPACA Value-based Modifiers, Episode Groupers, Bundled Payments
  18. 18. ISSUE Medicare Sustainable Growth Rate Formula = 27.4% Adjustment
  19. 19. Commercial Payer Strategies 2
  20. 20. Reimbursement Models Capitation, Withholds, FFS, Bundling
  21. 21. ISSUE Medicare Sustainable Growth Rate Formula = 27.4% Adjustment
  22. 22. Provider Strategies 3
  23. 23. Defense Strategies, Large Group Practice, Employment, Concierge Practice
  24. 24. Example: Full Risk, or Capitation / Provider Risk
  25. 25. ABC Health Plan Enrollees Dr. Red Dr. Blue
  26. 26. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients 500 Patients
  27. 27. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients Median Age 27 500 Patients Median Age 58
  28. 28. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients Median Age 27 100 have Chronic Disease 500 Patients Median Age 58 350 have Chronic Disease
  29. 29. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients Median Age 27 100 have Chronic Disease $10 PMPM 500 Patients Median Age 58 350 have Chronic Disease $10 PMPM
  30. 30. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients X $10 PMPM = $10,000 / Month 500 Patients X $10 PMPM = $5,000 / Month
  31. 31. ABC Health Plan Enrollees Dr. Red Dr. Blue 20 Patients / Month X $75 Average Collection per Visit $1,500 / Month FFS Cost = Good 100 Patients / Month X $75 Average Collection per Visit $7,500 / Month FFS Cost = Bad
  32. 32. ABC Health Plan Enrollees Dr. Red Dr. Blue ADVERSE SELECTION
  33. 33. Example: Fee-for-Service, or Health Plan / Employer Risk
  34. 34. Episodic Care (interventions aimed at patient cure or restoration to previous level of functioning) Vs. Over-Utilization (Excessive or unnecessary utilization of health services by patients or physicians)
  35. 35. Episodic Care
  36. 36. Episodic Care Disjointed care continuum
  37. 37. Episodic Care Disjointed care continuum Limited prevention
  38. 38. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management
  39. 39. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management Unengaged patient
  40. 40. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management Unengaged patient Conflicting care plans
  41. 41. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management Unengaged patient Conflicting care plans Treatment duplication
  42. 42. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management Unengaged patient Conflicting care plans Treatment duplication Poor quality and safety
  43. 43. Over Utilization
  44. 44. Over Utilization Provider paid fee for every service
  45. 45. Over Utilization Provider paid fee for every service Incents unnecessary treatments
  46. 46. Over Utilization Provider paid fee for every service Incents unnecessary treatments No accountability
  47. 47. Over Utilization Provider paid fee for every service Incents unnecessary treatments No accountability No incentive to manage chronic disease
  48. 48. Over Utilization Provider paid fee for every service Incents unnecessary treatments No accountability No incentive to manage chronic disease “ Take what I can get” mentality
  49. 49. Over Utilization Episodic Care INCREASED RISK
  50. 50. For more information about industry trends, visit www.successehs.com for white papers, articles, blog posts and more! Click here for our industry blog

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