Payment Reform and Changing

Reimbursement Patterns

Tom Pascuzzi, MD

VP/CMO Convenience Care

Presbyterian Healthcare Services

Albuquerque, New Mexico

Presbyterian Healthcare Services7 Hospitals

400 provider Medical Group

450,000 Health Plan Members

Contracting Options

• Fee For Service

– The way we were!

– An ostrich with it’s head in the sand

• Budget Based Methodologies

– Like it or not, the way we are going!

– Capitation and Bundling payments

– Pay for performance incentives

Questions for Your Practice

• What percent of my income is Fee for

Service today?

• What percent of my income do I believe

will be budgeted in the future?

Fee for Service

• A provider is paid for providing services to

enrollees solely through fee-for-service

payments based on Medicare RBRVS

• Tied to current year rates and fluctuates

• Pressure to decrease payments through SGR

• Not working for CMS, not working for

Providers

• New models being tested

Fee for Service

• Percentage of Medicare rates

– Do you know what your conversion factor

payment is?

– Can you insure that the payer is making the

correct payment?

– How do you know if bundling and denials are

occurring?

– Do you think the FFS model is going to change?

What is Coming? Change!

Payment Reform

Patient Protection and Affordable Care Act

• Establishes several demonstration programs

to test and evaluate new health care delivery

and payment models

• Effort to improve care coordination and

quality while reducing the rate of spending

• ACO’s, Bundled Payments and Medical

Home

PPACA

• The Innovation Center (section 3021 of the

Affordable Care Act) created for the

purpose of testing “innovative payment and

service delivery models to reduce program

expenditures …while preserving or

enhancing the quality of care” for those

individuals who receive Medicare,

Medicaid, or Children’s Health Insurance

Program (CHIP) benefits.

Estimated Financial Effects of PPACA

How is this going to be achieved?

CMS Center for Innovation

• Medicare Shared Savings Sec 3022

• Pilot Program on Bundling Sec 3023

– Bundled Payments for Care Innitiative

• Gainsharing Demonstration Sec 3027

• Community Team Health for PCMH Sec

3502

Budget Based Methodologies

• Quality measures and Pay for Performance

– Shared savings

– Pay for performance

– Bundled payments

– Pioneer ACO’s

– Global prepayment

Pioneer ACO

• Under the Pioneer ACO Model, CMS will

provide incentives for participating health

care providers who form an organization to

coordinate care for patients. Providers who

band together through this model will be

required to meet quality standards based on

patient outcomes and care coordination

among the provider team, as well as other

measures

ACO’s

• Accountable Care Organization

– Provider based

– Need for cheaper and easier access to care to

decrease ER and Admissions

– Global payment by ACO to include all visits

and all services provided

– Consider loss protection

– Shared savings models

Medicaid Expansion - Exchanges

Where does this leave YOU?

• Where the Government Goes – Others Will

Surely Follow

• Private payers are certain to come up with

their own models of budgeted care

• They have before and they will again

Budgeted Care

• Capitation from the 1990’s

– California and large market managed care

– Per Member Per Month (PMPM)

– Large groups and integrated systems

– Not popular but making a comeback in a new

cover – ACO’s

Capitation Model

• Medical Group provides all care

– Primary Care only

– Full Service

– Bundled conditions only

– Carve outs

• Utilization review is important – data driven

• Stop loss insurance may be necessary

Affordability: Rising Costs are Unsustainable

What can You do?

• Prepare yourself for global payment or

episodic are reimbursement

• Join an ACO?

• Accept Case Rate payment – S9083

• Know your risk – know your costs!

S9083 Case Rate

• Single payment one size fits all in the

Urgent Care setting utilized by many payers

and MCO’s

• Does not pay for ancillary lab or x-ray

• Risk with overutilization of services

• Works well with simple care; not for

complex care

• Must understand your cost of services

S9083 Case Rate

• Lacerations

• Fractures

• Complex medical services (IV’s and meds)

• Ask for a list of carve out codes

• Best interest of both parties to work

together for a fair payment system to

support the convenience and cost savings

Summary

• Payment reform is here to stay

• Know where your money comes from

• Review existing contracts and stay on top of

fee for service changes

• Be open to budgeted models such as global

payment and case rates

• Understand your costs of doing business

Resources

• AMA Practice Management Center

– Pathways for Physician Success Under Healthcare Payment and Delivery Reforms

Harold D. Miller

– Evaluating and Negotiating Emerging Payment Options, 2012

• Health Reform and the Decline of Private Physician Practice Merritt Hawkins

• www.innovation.cms.gov

• www.advisory.com