Merit-Based Alternative Payment System

Retrospective reimbursement method was based on actual cost the providers assumed the previous year. On this method rates were evaluated retrospectively and costs were used to determined the amount paid to the provider and had no incentive to control cost. On the other hand, prospective reimbursement methods can determine in advance how much a provider is going to get compensated. (Shi & Sing, 2017) The way retrospective reimbursement contain perverse financial incentives happened when institutions increased their profits by increasing costs and this system payment method was based on costs. Due to this issue the method was changed to the prospective to avoid abuse of the system.

First implemented in 1985 by Aetna (previously U.S. Healthcare), P4P programs were used to reward top performers and improve outcomes (Bruno, 2012). The incentives were meant to improve the quality of patient care by basing incentives on patient outcomes. Conversely, fee-for-service reimbursements are based on the treatments and set limits on the amount reimbursed for services. Because of these limits, incentives for use of pharmaceuticals and non-invasive procedures can impact how physicians practice.

A mixed payment system combined with physician monitoring, will provide physicians with incentives to consider costs and benefits of different treatment options, which will lead to an efficient level and quality of care. (1,2)

The Affordable Care Act created a new approach to care which is called the Accountable Care Organization. ACO is a system of doctors and hospitals that share a financial and medical responsibilities. If the ACO is successful in meeting quality and cost savings targets, these organizations qualify for financial incentives or shared saving from Medicare programs. The goal of the ACO is to coordinate

Since 1984, Medicare patients have been serviced under the prospective payment system of the Medicare program. Under this system, primary care providers are reimbursed for their services using a fixed payment for each patient that is determined by the patient’s diagnosis-related group at the time of the admission. Therefore, under the prospective payment system a hospital’s reimbursement is unaffected by the actual expenditures that are required to care for a patient.

Medicare Access and CHIP Reauthorization Act is a bipartisan federal legislation signed on April 16, 2015 amended as title XVII of the social security act to reform the payment methods that Medicare pays to the physicians for the services rendered by creating Quality Payment Program (QPP) which repeals the Sustainable Growth Rate (SGR) formula for Medicare part B payments, reauthorization of the Children’s Health Insurance Program and implements a rewarding system to physicians for value of care rather than on the volume of services by combining the existing physician quality reporting programs under the Quality Payment Program. The main emphasis of MACRA under this Quality

In today’s seemingly ever-changing world of healthcare regulation, medical professionals are burdened with many compliance requirements. On October 14, 2016, the Department of Health and Human Services released its final rule implementing the Quality Payment Program as part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Starting January 1, 2017, clinicians who are reimbursed by the Centers for Medicare and Medicaid Services(CMS) are required to participate in the Quality Payment Program (QPP). (Centers for Medicare & Medicaid Services, 2016) The QPP replaced the Sustainable Growth Rate formula with the new payment structure in which clinicians are rewarded for delivering high quality care. There are now two pathways for

The base payment is determined first. The base payment is the per encounter rate set for each hospital based on historic claims data. In 2015, the Capital Base Payment was $434. This reimbursement is the recognition that hospitals need to upkeep facilities and aims to cover the indirect costs. The base payment is multiplied by the GAF Index (Geographical Adjustment Factor), which determines the capital base payment on location of the hospital. Hospitals submit claims data to CMS, who then audit the claims. Once approved, a DRG is assigned to the

One major trend in the healthcare environment is the shift from volume based reimbursement towards value based reimbursement. Many provider practices remain on a volume based or fee for service reimbursement plan. This system tends to reward high quantity of services with less regard for the quality or performance of the service. However, with a renewed focus on value, reimbursement plans

It covers people who are 65 or older, and it will also cover an individual under the age of 65 with certain disabilities or disease. There are four different categories within the Medicare health insurance such as part A, B, C and D. As one goes up the order the services within each category changes based on one’s need. Along with ACA and the programs such as the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) and Modernization Act has authorized CMS to pay hospital that report “designated quality measures a higher annual update to their payment rates”3, which engages hospitals to work towards value-based care. For every fiscal year CMS can place new rules and measures to determine the incentive payments for given hospital based on the reporting. Therefore, not obeying the rules of CMS will impact hospital’s incentive payments. The participated hospitals must report data to CMS, the data reported than can be used to put new measures in fiscal year so that enhancements can be made to value-based care.

Centers for Medicare and Medicaid Services (CMS) adopted the Medical Severity Diagnosis Related Groups (MS-DRGs) for use in the Inpatient Prospective Payment System (IPPS) in the fiscal year 2008, which ran from October 1, 2007 through September 30, 2008. CMS was influenced by the Medicare Payment Advisory Commission (MEDPAC) and the hospital community to use a severity adjusted DRG system.

My organization has policy on Mid-Level Reductions. If the member is seen by a NP or PA we will allow the following reductions: CMS: 15% reduction applied to physician fee schedule for mid-level providers. DHS: 10% reduction applied to physician fee schedule for mid-level provider s. Given complexity of combined fee schedule for members with dual eligibility, apply 10% reduction to physician fee schedule for mid-level providers for all product lines.

Depending upon the age of the patient population I would recommend that they take the offer based on the high PMPM rate. This would prepare the practice for the potential of serving older and sicker patient population. This statement is especially true looking to the future, analysts have expressed concern that the costs of treating chronic disease will become even more burdensome as the population ages and the Baby Boomer generation reaches retirement age because the risk of chronic disease increases with age” (Garrett & Martini, 2007, p. 51).

The final score can rank between 0 and 70. For example, zero points result in a 4 percent deduction, 3 points result in no payment adjustment, between 4 and 69 points result in a small positive payment adjustment and 70 or more results in a modest positive payment adjustment and a performance bonus (Hayden and Coffin, 2017). Therefore, this educational program will explain how to accumulate points and the exact math behind it, as well as what quality measures are needed by the administrators in order to give their physicians the highest reward. The program will also explain to the administrators what quality measures they should report on in order to give their physicians the greatest amount of points. For example, if our group has a high Adenoma Detection Rate then our administrator should report it as one of our 6 measures. Consequently, the greater score our facility receives, the higher the reimbursement will be, as well as the possibility of receiving a bonus.

In addition, United Health Group developed Primary Care Physician (PCP) Incentive Program to motivate physicians to provide high-quality, cost effective care. This program provides physicians’ practice with the opportunity to earn a bonus payment by meeting a core subset of UnitedHealthcare 's traditional quality and cost-efficiency criteria. Another incentive program is Patient-Centered Medical Home (PCMH) Program. The PCMH program provides enhanced payments for primary care providers that implement the medical home model of care.