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CAP paper details FFS alternatives

Posted on September 19, 2012 | No Comments

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Implementation Briefs
Key Developments

A new report issued by the Center for American Progress (CAP) examines three alternatives to fee-for-service payments: 1) Bundled payments, 2) Patient-centered medical homes, and 3) Accountable care organizations.

The report compiles and highlights recent data from organizations testing these reform options. This report also includes new findings from our conversations with a variety of health care providers and payers who are implementing these reforms. Together, these data and feedback highlight key lessons, strategies for success, and implementation challenges that can help guide the movement away from the current payment system to one that emphasizes value and patients.

Each of the three payment reforms highlighted in this report—bundled payments (fixed amounts paid to health care providers for a bundle of services or all the care a patient is expected to need during a period of time), patient-centered medical homes (redesigned primary care practices that focus more on preventive care, patient education, and care coordination between different health care providers), and accountable care organizations (groups of health care providers who agree to share responsibility for coordinating lower-cost, higher-quality care for a group of patients)—is designed to lower costs both for payers and patients and to improve patient outcomes and experiences.

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Health care delivery systems that reward providers for coordinating and improving care hold promise for slowing the rise of health care costs for the most vulnerable patients, according to a new study by Dartmouth researchers published in the Journal of the American Medical Association (JAMA). To learn how such models, such as accountable care organizations (ACOs), are likely to perform for patients with severe health conditions, researchers from the Dartmouth Atlas Project and The Dartmouth Institute for Health Policy & Clinical Practice studied the Medicare’s Physician Group Practice Demonstration (PGPD). The study focused on the care provided to patients covered by both Medicare and Medicaid, also known as “dual eligible” patients. The nation’s 9 million dual eligibles comprise 20 percent of the Medicare population but account for 31 percent of its spending, and comprise 15 percent of the Medicaid population but 39 percent of its spending. The study highlights the potential benefits of the ACO model for dual eligible patients. Dartmouth’s analysis of Medicare spending for PGPD patients found that the participating health systems achieved their savings largely by reducing hospital stays. An accompanying analysis of quality indicators also showed that quality of care did not decline.
The Affordable Care Act (ACA) introduced bundled payments, which provides payment for all of the care a patient needs over the course of a defined clinical episode. The goal of bundling payment is to encourage doctors, hospitals, and other health care providers to work together to better coordinate care for patients both when they are in the hospital and after they are discharged. An article recently released by Health Affairs evaluates the initial "road test" of the PROMETHEUS Payment, one of the bundled payment pilot projects. The pilots have taken longer to set up than expected, primarily due to the intricate payment model and the fact that it builds on the existing fee-for-service payment system. Although participants were hopeful regarding the success of the bundled payment program, the report found that desired benefits may take some time to materialize. To read CMS's Fact Sheet regarding Bundled Payments, click here.
Patient-centered medical home models offer accessible, coordinated, comprehensive care focused on the needs of the patient. One of the most notable attributes of medical homes is the care coordination, which, if executed effectively, results in better health outcomes, reduced waste and duplication, and higher patient satisfaction. Yesterday, the Patient-Centered Primary Care Collaborative, an arm of the Commonwealth Fund, released a guide outlining seven key strategies to help health systems measure care coordination within medical homes. The seven strategies are 1) Work with a broad stakeholder group to reach consensus on measures; 2) Clarify purpose of measurement: quality improvement, accountability, evaluation; 3) Use standardized measures; 4) Incorporate patient feedback in assessing quality of care coordination; 5) Develop a tracking system that facilitates ongoing monitoring of performance; 6) Build and nurture relationships with providers outside of your medical home--the "medical neighborhood"--to facilitate data sharing, monitoring, and improvement; and 7) Use the data to improve care coordination. Share results at the practice and care-team levels.
While a primary aim of the Affordable Care Act (ACA) was to increase access to affordable health insurance coverage, a critical, although less publicized, component of the law is a series of provisions designed to improve health care quality and efficiency and to advance the concept of “value-based purchasing.” The Agency for Health Care Research and Quality (AHRQ) defines the concept of value-based purchasing as holding “providers of health care accountable for both the cost and quality of care.” AHRQ notes that “value-based purchasing brings together information on the quality of health care, including patient outcomes and health status, with data on the dollar outlays going towards health. It focuses on managing the use of the health care system to reduce inappropriate care and to identify and reward the best-performing providers. This strategy can be contrasted with more limited efforts to negotiate price discounts, which reduce costs but do little to ensure that quality of care is improved.”
An earlier Implementation Brief provided an overview of the Medicare Shared Savings Program (MSSP) for Accountable Care Organizations (ACOs), which was established by §3022 of the Affordable Care Act (ACA) by adding §1899 to the Social Security Act. On April 7, 2011, the federal Centers for Medicare and Medicaid Services (CMS) published a proposed rule implementing the MSSP. This proposed rule was accompanied by several additional policy documents:
The health reform law requires the Secretary of HHS to establish a Medicaid demonstration project “to evaluate integrated care around a hospitalization.” Specifically, this project aims “to evaluate the use of bundled payments for the provision of integrated care for a Medicaid beneficiary . . . with respect to an episode of care that includes a hospitalization . . . and for concurrent physicians services provided during a hospitalization.”
The law introduces ACOs on a voluntary basis by directing the Secretary of Health and Human Services to establish a “Pediatric Accountable Care Organization Demonstration Project.” This demonstration project would authorize a participating state to allow certain qualified Medicaid providers to organize themselves into an ACO for the purposes of receiving incentive payments “in the same manner as an accountable care organization is recognized and provided with incentive payments” under the health reform law’s Medicare ACO pilot program. The Medicaid ACO demonstration, akin to the Medicare ACO pilot, is aimed at reducing expenditure growth and improving health outcomes.
Introduces Accountable Care Organizations on a voluntary basis by directing the Secretary of Health and Human Services to develop a “Medicare Shared Savings Program.”
The Centers for Medicare and Medicaid Services (CMS) of the U.S. Department of Health and Human Services (HHS) has formerly announced the Bundled Payments for Care Improvement initiative. This initiative, authorized by the Affordable Care Act (ACA), proposes that various provider reimbursements for multiple services a person may receive during the normal course of an illness or injury be bundled together into one payment. The initiative allows broad flexibility for providers to determine which services may be bundled, as well as what share of the single payment may be allocated to each provider. CMS intends for this initiative to improve care coordination and reduce costs in Medicare, and has issued a Request for Applications (RFA) from interested parties on the four (4) different proposed bundling models. For more information on bundled payments, click here.