Sn 105-03 Provider Reimbursement

Front 1

NEW TYPES OF PROVIDER REIMBURSEMENT

Back 1

Episode-Based Global Fees and more...

Front 2

Contact Capitation

Back 2

 used for large SCP groups.
 hybrid of Ffs and Capitation.
 SCP is paid a lump sum per unique, nonduplicated patient per year.
 Payment amount is adjusted for:
 diagnosis
 severity
 age/sex
 budgeting (all specialists’ payments reduced/increased pro rata)
 Carve-outs for difficult cases, if medically necessary.
 The SCP Group must have good:
 patient profiling
 peer review
 internal management/organization
 for example, IPA's.

Front 3

Advantages of Contact Capitation

Back 3

To specialists
 Similar to Ffs
 easy to understand.

To the MCO
 Encourages specialist to be cost-efficient
 Makes SCPs involved in Disease Mgmt and Preventive Care

Front 4

Market Share Capitation

Back 4

 Used only for specialists.
 Pays groups of specialists pro rata to market share.

Front 5

Advantages of Market Share Capitation to the MCO:

Back 5

 Fewer data items to track than in Contact Capitation.

Front 6

Disadvantages to the MCO:

Back 6

 only used for large groups of specialists
 Can’t be used for newly-formed groups
 Only works for single-specialty groups

Front 7

Direct Contracting Between Physicians and Employers

Back 7

 Avoids the middle man (the MCO)
 The provider group must include PCP’s, SCP’s, and a hospital.
 The employers self-insure and use stop-loss reinsurance.
 Reimbursement is Fee-for-service.

Front 8

Gainsharing

Back 8

 Incentive/bonus arrangement between a hospital and its physicians.
 Rewards physicians for developing clinical guidelines which:
 improve quality
 reduce practice variation
 reduce cost
 Illegal under federal programs

Front 9

Reimbursement for Internet Consultations

Back 9

 Reimburses e-mail at a flat dollar amount.
 Allows doctors to keep up with their chronically ill patients

Front 10

Quality-Based Incentive Arrangements

Back 10

Problems with incentives based on cost/utilization:
 denial of care
 legal liability

Front 11

Better incentive/bonus arrangements are based on:

Back 11

 Quality
 preventive care
 patient satisfaction
 HEDIS reports
 Compliance
 practice guidelines
 proper referrals /documentation
 advice given
 Efficiency
 e-commerce use
 Penalties for lawsuits

Front 12

Fee Incentives

Back 12

 flat fee to encourage physician behavior, e.g. for using the MCO’s DM program.
 can also be used for:
 preventive care use
 proper documentation
 good reporting

Front 13

OBJECTIVES IN CHOOSING A REIMBURSEMENT METHOD TO PAY PROVIDERS
A reimbursement method should:

Back 13

 Align the physicians’ incentives to match those of the MCO
 encourage Quality and Compliance
 discourage Over-utilization or Under-utilization

To discourage under-utilization (denial of care):
 Don’t use capitation
 Don’t use too high a withhold
 Use incentive programs with Pools of Doctors
 Base bonuses on factors besides low costs /utilization
(as described above)
 be Competitive
 make physicians Happy (ease of recruiting)
 be Equitable
 Be simple to understand
 Not put providers at too much risk

Front 14

Other Recommendations to an MCO in dealing with Providers

Back 14

 use Peer Review
 Give feedback to physicians
 Make doctors aware of the risks (especially for capitation)
 Develop good relationships
 Create clinical guidelines
 Collect accurate, timely data
 quality measures
 Negotiate good contracts. Terminate poor contracts.
 Avoid legal liability exposure.
 Avoid internal conflicts between providers
 Strong leadership.

An exam question may be worded as follows: “Describe provider reimbursement methods by which an MCO can provide quality care while still meeting its financial obligations.” This question refers to the above two lists.

Front 15

Results of Having a Good Provider Reimbursement System and Relationship

Back 15

 Quality
 Meeting all financial obligations
 High managed care penetration
 Easy recruit of new physicians; growth of the provider network

Front 16

REASONS FOR FAILURE
Reasons why a hospital, PPM, or Specialist Group might fail under a capitation contract

Back 16

 Accepting too low a rate
 failure to accurately predict costs, demographics
 Catastrophic cases; severity mix, case mix
 high administration costs
 Accepting too much risk (drug use or referrals)
 Not understanding the risks
 Mismanagement of funds
 poor medical information systems
 Misalignment of financial incentives (of the doctors vs. the MCO)
 Failure by MCO to give proper feedback
 For PPM’s:
 All of the above, plus:
 Too much focus on new acquisitions, not efficiency and quality.
 physicians’ productivity dropped


A PPM (Physician Practice Management company) is a for-profit organization that buys and owns physicians’ practices.

Front 17

THE FUTURE OF THE HEALTHCARE INDUSTRY

Back 17

The future of the Healthcare Market – 2 Possible Structures

Front 18

Vertical Integration

Back 18

 a multi-provider group contracts directly with employer groups
 No middle-man
 best reimbursement method: Global Capitation.

Warnings:
 the payment system must align the incentives of all member providers
 Would require legislative changes.

Front 19

Horizontal Integration

Back 19

 “Focused Factories” for each type of disease
 Easier for consumers to compare prices.
 best reimbursement method: Global Fees.

Front 20

The future of Defined Contribution (DC) health plans
Trends will include:

Back 20

DC plans are employer health plans in which the employer makes a fixed dollar or fixed percentage contribution towards the cost of ees’ insurance.

 Greater ee choice of health plans (but this is difficult for small groups)
 Direct contracting between physicians and employers (to lower costs)
 Giving consumers more control
 increased use of the Internet
 to educate ees
 to compare prices
 to automate enrollment
 To provide medical care
 on-line support groups
 e-mailing with doctors

Front 21

The future of Provider Reimbursement

Back 21

 Vertically Intergrated systems — Global Capitation.
 Horizontally Integrated systems — Global Fees.
 Internet services — FFS.
 Blending of methods will be common
 Incentives based on quality/compliance/efficiency, not just cost.
 Risk adjustment will be used more


Done.