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What's
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In the traditional fee-for-service model, physicians are paid for performing a specific set of discrete activities which are largely confined to patients visiting them in their offices when they are sick. The coding mechanism they use for billing is a quantity-based list that tracks how many organ systems the physician examines, or what questions he asks the patient about their symptoms, or for some other quantity-based measure. This encourages the doctor to classify every healthcare question or issue to become a visit, and for the doctor (the most highly paid worker in the office) to perform most of these tasks himself because that is what is billable. This is contrary in a couple of ways to what is needed to provide good, efficient care in that it encourages reactive care (having the physician only thinking of patients when they are in front of him--because doing homework on patient’s cases when they aren’t in the office is not billable), and causes the practice to think of their jobs as taking care of one patient at a time (when they come into the office), assembly line style.
Fee-for-Service Billing Models There are several inherent problems with the fee-for-service care model. Electronic health records are built to support the fee-for-service environment in that they optimize billing for separate services, making the transition to any other billing system more difficult. But healthcare providers need to be viewing the bigger picture--the healing relationship the healthcare provider can have with the patient--and paying for separate discrete services simply does not fit with this idea. There is another issue which many consumers of healthcare services have experienced, and that is the very complicated billing that often occurs. Bills from service providers and accounting statements from the insurer arrive weeks and sometimes many months after the patient’s corresponding episode of care. And as some individual’s or group’s health plans change on an annual basis (including their annual out-of-pocket maximums, co-pays and deductibles), bills that are generated and sent out sometimes months in arrears can further complicate matters. And with each provider billing separately for each service provided, and in a language few consumers can understand, billing can become very complicated and confusing.
So, What are the Alternatives? While the rationale for the fee-for-service model is fairly easy for the patient to understand (they just go to the doctor and pay for each service rendered—pretty much like all other consumer-driven purchasing) it does, however, encourage providers to think on a task oriented, per-service basis, thus increasing costs. And it does make for some complicated billing. A change was needed as healthcare costs have skyrocketed under fee-for-service, and the best way to do this was and is thought to be by changing the basic structure upon which healthcare is built. Changing the way providers bill for the care they provide is seen as the most efficient way to curb escalating costs and provide better quality care, and this could best by accomplished by ending the incentives that exist for providers in the care they provide.4
Let's take a look at the options to fee-for-service billing models, starting with: Value-Based Care
Shifting the focus from “Volume” to “Value”
Introduces financial incentives to reduce
costs
Historical patient data becomes important
The term given to this goal is “value-based care”. And there are several ways it can achieved. Value-based care shifts the care delivery focus from ‘volume’ to ‘value’ and introduces financial incentives aimed at reducing costs. In this model, physicians must think about the entire patient experience among all care settings and between episodic visits. And this requires data. Lots of it.
Population Health Management is the term used to describe the health outcomes of a group of individuals. Data is collected on patients of every type, and from those patient-care experiences a set of standards are developed which can help providers and insurers provide care that is focused on the outcome, as opposed to the current visit, and at a lower, pre-determined cost.
CMS has released a huge amount of data regarding the delivery of care, including data on population health, patient referrals and physicians and hospital practices. And while this data has been used to make progress on various fronts in the healthcare delivery system, like reducing in-patient days and the adoption of generic drugs, there has not been a noticeable reduction on overall costs. And in an analysis of this information, the Institute for Medicine has estimated that 1/3 of all healthcare dollars spent are being wasted on care that could be performed more cost-effectively.5 This data is a necessity for the provider contemplating participation in a value-based care payment model. Providers need to know their costs, and risks, for all patient types for which they will be exposed. As we will discuss in the capitation section, providers need to know with the greatest possible amount of accuracy, what their costs have been (and will be) with similarly stratified patients, but having different comorbidities.6 As an example, it might be fairly easy to cost-effectively care for one asthma patient, while another might utilize many more resources, costing the provider a lot more money. As I just mentioned we are going to discuss capitation as well as several value-based care models, defining what each is, as well as the pros and cons associated with each.
Shared Savings - Accountable Care Organizations
An accountable care organization (we’ll call it an “ACO”) is a network of physicians, hospitals and other providers that give coordinated, high quality care to their populations through a special arrangement with Medicare and some commercial insurers. CMS designed the ACO program in an effort to incentivize providers to care for their patients with the most appropriate care—providing that care at the most appropriate time in their episode (basically to provide only those services the patient needs, when they need them). Medicare ACOs, more than 730 of them currently operating in the United States as of 2019, therefore, try to decrease unnecessary or redundant services (and reduce medical errors) in an effort to provide episodic healthcare at a lower cost (as measured against a benchmark that Medicare establishes specifically for each ACO).7 |
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