Reimbursement and Pay-for-Performance
HCS 531
November 11th, 2013
Regina Pointer
Introduction
There is a growing trend in the United States called pay-for-performance. Pay-for-performance is a system that is used where providers are compensated by payers for meeting certain pre-established measures for quality and efficiency (What is Pay-for-Performance, n.a.). We are going to be discussing what pay-for-performance is. There are different aspects of pay-for-performance which include; the effects of reimbursement by this approach, the impact cost reductions has on quality and efficiency of health care, the affects to the providers and patients, and the effects on the future of health care.
Pay-for-Performance
Pay-for-performance
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The pay-for-performance program will take health care from basic health care delivery to high-quality health care delivery. The way that this is going to affect the patient "customer" is because they are going to have an overall better experience with more attention to their overall health. The patient will also see benefits because there are incentives for patients when they live a healthy lifestyle. One of the incentives that the patient will see is in cost savings in the immediate future. Pay-for-performance is positive for all stakeholders involved within the program because it delivers on the main goal which is to increase the quality of care to patients while reducing the costs.
The pay-for-performance will also help health care providers to establish more rapport and generate a good feedback within the community because when their patient receives quality health care services then the patient is going to go back and tell their family and friends about their positive experience and recommend that health care provider to their loved ones.
Effects on Future Health Care Pay-for-performance programs are expected to expand across the United States health care in the near future, especially with the implementation of the Affordable Care Act. The pay-for-performance is going to continue to increase the quality of health care that the patient receives from their
Pay-for-performance payment model – healthcare payment systems that offer financial rewards to providers who achieve, improve or excel their performance on specified quality of care and cost measures (HealthCare Incentives Improvement Institute, N.D.)
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.
Moreover, we see that some providers are focusing on what providers do and how they get reimbursed rather than what the patient needs, which is a focus that does not prioritize quality of care and therefore does not align with the Triple Aim framework. The problem presented regarding this matter is that the health care system lacks a patient-focused care of medical conditions that puts patients and their health needs first. For example, when we think of provider reimbursement, it is not in the patient’s best interest for the system to only have a simple fee-for-service structure. A structure like this one will only lead to an increase of health care expenses. Also, it fails to incentivize high-value service, which also does not align with the Triple Aim framework health care providers should go by. It is very crucial for the health care system in the United Stated to find a better balance between medical groups reimbursement and patients needs in order to reduce the risk of overutilization.
They will now receive payments from the quality of care they provide to their patients. Those with higher based value will receive higher payments than their counterparts (Berenson 2010). I think this is very important because the healthcare system has been volume driven for so long that quality healthcare has been an issue for quite some time. In addition to value, this would definitely improve quality and efficiency needed for better patient outcomes.
Some of the projective initiatives are insurance coverage, more patients receiving long term care in medical homes that leads to new benchmarks, high quality of care that leads to greater payment across public and private sectors, narrowing disparities in health and healthcare outcomes, and effective leadership around the globe to increase the highest performance that’s possible (2012).
The U.S. spends more resources on healthcare than any other nation. Yet, the The Commonwealth Fund (2014, para. 1) claim the U.S. health system consistently ranks last or near last relative to other industrialized nations regarding health outcomes. Consequently, insurance companies are adopting a value-based reimbursement system aimed at containing costs and improving clinical outcomes (U.S. Department of Health and Human Services, n.d., para. 35).
In the United States, health care has become a huge expense and has threatened the economy; additional measures need to be taken to address the rising cost of care. An individual spends an estimated eight thousand dollars a year in health care expenditures. Therefore, we need to recognize that how a physician reimbursement for payment has a vast impact on the economy and the rising cost of health care.
The payment incentives provided to healthcare providers under the PPACA will most likely lead to improved healthcare quality. In addition, reimbursement will shift from being based on quantity to being value-based which will in turn incentivize providers to provide higher quality care.
United States has no dearth of highly qualified, well-trained doctors and still the US healthcare quality fails to meet the established industry benchmarks. Institute of Medicine’s (IOM’s) 2001 Report, “Crossing the Quality Chasm”, clearly states that the American healthcare delivery system is in need of a pivotal change. (Committee on Quality of Healthcare in America (Institute of Medicine), 2001). The exasperation level is continuously rising amongst both, the patients and the providers, and yet the problem of delivering and receiving high quality care remains unaffected. In order to address this problem of healthcare quality improvement and affordability, the Patient Protection and Affordable Care Act (PPACA or Obamacare) was signed in the year 2010. The main aim behind PPACA is to improve healthcare quality and accessibility, at the same time keeping it cost efficient. To facilitate its goal PPACA is trying to achieve the cost effectiveness through reducing the Medicare price growth and regulating the quantity of care by encouraging evidence based practices. This new legislation supports the healthcare system in which the goals of both provider and the patients are better aligned with value as opposed to the quantity of services. Overall the reform under PPACA seeks to establish a direct link between the payments made to the healthcare
Historically, reimbursement has been Fee-For-Service (FFS): tied to volume of visits, hospitalizations, procedures, and tests. This reimbursement structure creates misaligned incentives and fragmented, suboptimal patient care resulting in burgeoning costs and a lack of focus on outcomes. As a result, CMS and the industry have been
With new reforms being put in place under the Affordable Care Act such as the pay-for-performance (P4P) also known as “value-based purchasing,” which is intended to help provide maintain and efficient programs to improve health care cost. Healthcare providers, hospitals, medical groups, and physicians are offered incentives for meeting certain performance goals; it also fines for increased costs and medical errors such as incorrect medication or dosages. In two different studies quality of care was found to have improved at P4P hospitals compared to non-P4P hospitals Lindenauer et al. (2007) and Grossbart (2006). However, a study by Werner et al.(2011) found no continuing benefits in quality of care. One measure being advocated for is the Hospital Readmissions Reduction Program (HRRP) to prevent hospital readmissions as a way to improve the quality of care and at the same time cut cost. If patients are readmitted within 30 days after discharges due to conditions like acute myocardial infarction (AMI), heart failure, and pneumonia, fines can be levied such as 1 percent of Medicare payments. Others include the Hospital Value-Based Purchasing (VBP) is based on how well the hospital performs compared to other hospitals or the improvement of their own performance compared to a baseline time. The goal is to encourage better outcomes for patients and improve experience during hospital stays. And the Hospital-Acquired Condition (HAC) Reduction Program motivates hospitals to increase the safety of it patients by cut the number of hospital-acquired conditions and patient safety (Medicare.gov, n.d.) (Kruse, Polsky, Stuart, & Werner, 2012)(Gu et al.,
I think if the VA or any government ran healthcare organization would adapt a pay-for-performance compensation program, the culture would change, because the employees would be more motivated to perform well; as a result, there will be an increase of quality of care provided to patients which, in return, would inhere to better medical outcomes.
The predominant system of payment to healthcare service providers had been the fee-for-service system for years. This system rewarded the providers for the intensity of their work. However, greater volume of services was not necessarily associated with better service quality. This incentive structure had policy makers concerned and thus, came the pay-for-performance into being established to improve service quality. The use of this system has been expanded by the Patient Protection and Affordable Care Act (PPACA). Many studies were performed to identify ways to make the system more effective. However, the studies had somewhat mixed results.
The reimbursement method I will be discussing is the Pay-For-Performance, which is this method that provides financial incentives to medical facilities and healthcare providers to make specific improvements and/or achieve outstanding outcomes for patients. For example physicians can receive bonuses for meeting set goals for the facility such as minimizing reoccurring preventable medical issues in certain population of patients. The CMS established 4 quality measures (process measures, outcomes measures, patient measures, and structure measures) to assess the performance of providers and medical facilities and also includes penalties for poor performance. One of the quality measures (patient measures) gives the “power” back to the consumer
As you know the reason that for CMS and other health care agencies to come up with quality incentive payments (QIP) to enforce compliance and improve quality patient care because of the rising medical costs, staggering patient safety concerns, rampant malpractice. The increasing burden of chronic disease, health insurance fraud and inappropriate pay become a heavy burden that the health care unable to bear financially and it was the impetus for incentive payments. However, some argue that incentive payments are dangerous pernicious because providers may avoid accepting patients with complicated problems and who are simply incompliant of care. Bonis, (2005) stated, ” A potentially even more pernicious outcome of QIPS would occur if providers,