Alternative Payment Report

Most delivery system reforms, like ACOs and medical homes, are coupled with non-fee-for-service payment methodologies.  A brief from PWC’s Health Research Institute explores in a relatively superficial manner the use and growth of these methods, which include bundled or episode-based payments for treatments for certain conditions and various risk-based approaches for taking responsibility for all of a patient’s care needs.   (PWC Report)   CMS has indicated that it hopes to have more than 50% of payments in a value-based reimbursement model by 2018 and 90% at least partly dependent on quality improvement efforts.  In addition to CMS’ efforts, many private payers are also implementing more risk-based payments  According to PWC’s survey, however, over 50% of current physician reimbursement is still fee-for-service based.  Many provider organizations have understandably been reluctant to fully commit to moving away from fee-for-service, fearing impacts on revenue and greater administrative expense and complexity.  They may not have a choice for long.  This summer CMS told over 800 hospitals that they will only be paid for knee and hip replacements via a bundled methodology.  Several other procedures are bundled on a voluntary basis, for now.  Early results suggest most hospitals lose money on the bundles.  The report gives several examples of providers and employers who are pushing more at-risk payments, and the challenges arising under these methodologies.  For providers, at-risk payments for complex conditions mandate an ability to coordinate care across multiple settings and to figure out how to share the at-risk payment.  And since it is highly likely that at least some of the time they are going to lose money, having financial resources to sustain taking at-risk payments over several years is critical.