Ongoing developments in Washington have led many to question the future of healthcare reimbursement programs like Value Based Purchasing, Bundled Payments and other population health-driven initiatives.
Behind the drama of D.C. lies a bigger question for hospitals and health systems: Could the various forms of ACA repeal - “letting Obamacare fail,” a bipartisan fix, or whatever Congress actually ends up deciding - really mean a shift back to fee-for-service?
We spoke with George Whetsell and Dr. Douglas Monroe with Prism Healthcare Partners. Their answer? Regardless of what happens with the ACA, don’t bet on private insurers returning to fee-for-service reimbursement any time soon.
The Payer’s Perspective — Defending King’s Landing
One key to success under evolved payment models is to avoid or prevent everything that adds unnecessary cost to an episode of care.
“Think about it from a payer’s perspective. You’ve come up with all of these elegant ways to put downward pressure on waste, and it improves your margin. Why would you give that up?” asked Mr. Whetsell, co-founder and managing partner with Prism.
“Even if CMS were to abandon PQRS, VBP, Readmissions Penalties and Core Measures tomorrow, I’m not sure that private payers — including the premium ones — would follow suit by abandoning their metrics,” Mr. Whetsell continued. “They know a surgical amputation is very high cost compared to managing a diabetic patient appropriately in clinic. Now that they have figured out how to measure it, why would they ever want to pay for an avoidable inpatient procedure, infection or retained foreign body again?”
We Will Hang Together or We Will Hang Separately
The best tea leaf readers have known for a while that market forces would push hospitals and physicians closer together.
“Insurers are looking at roll-up metrics, like cost per beneficiary through the charge data. Not only can they track a hospital’s or system’s cost per beneficiary, but they can track that across hospitals and systems, and compare the costs for similar patients to one another,” said Douglas Monroe, MD, a physician with Prism.
“High-performing hospitals and health systems leverage collaboration between management, nursing, physicians and ancillary staff to identify problems and implement evidence-based solutions. The metrics vary between payers, so it’s really about lots of smaller projects reducing your global cost per case, as well as improving outcomes. That’s why everyone is talking about physician and clinician engagement,” says Dr. Monroe. “The doctors and other clinical staff are critical to controlling those clinical quality metrics, maximizing reimbursement with government and private payers and reducing unnecessary costs. It’s remarkable how external threats produce alignment.”
“This Too Shall Pass” — It Hasn’t Worked for Baseball, and It Won’t Work Here
“If you haven’t seen “Moneyball,” you should check it out since the concept is quite similar to healthcare’s evolution to clinical performance metrics,” Mr. Whetsell remarked.
In the movie, based on a true story, Brad Pitt and Jonah Hill track and draft baseball players based on performance metrics that defy previously held notions of quality. The insights from analytics helped teams in Oakland and Boston effectively reduce costs and increase performance. The phenomenon of data-driven baseball lives on today, with the Astros and the Dodgers currently leading their leagues.
“Healthcare is obviously more complex than baseball, and the performance measures are still evolving. But private payers now know how to use the metrics to their advantage, and it’s clear they will continue to do so in increasingly sophisticated ways. They have significant incentives to get better at it, plus a powerful lobby in Washington,” said Mr. Whetsell.
Many top performing payers are integrating clinically and pursuing various programs like High Reliability, Robust Performance Improvement and others to increase quality, reduce costs and position for transitioning reimbursement.
“Those programs are great and really effective when used appropriately,” said Mr. Whetsell, “But they don’t give you the nuts and bolts of how to use structure and processes, how to adapt your analytics and reporting systems. Many organizations just don’t know where to start.”
How to Mount an Effective Defense: Improving Your Wall
Physician and clinical engagement — a hot topic right now — is vital to clinical improvement efforts.
“So many folks talk about ‘physician engagement’ or ‘physician alignment.’ Alignment to what? Engagement with what?” asked Dr. Monroe. “There are a lot of definitions of Clinical Integration out there, but the one I like best is this: The extent to which management, physicians and clinicians collaborate to improve clinical performance.”
“By working together to identify, prioritize, plan, improve and sustain metrics, you can achieve high performance. This collaborative system between physicians, clinicians and management is predicated on a structure and processes that work in concert to produce small-scope, high volume improvement projects that compound over time, and have a real effect on your bottom line and on clinical metrics like mortality and hospital-acquired infections,” said Dr. Monroe.
“Improvements like that impact things like CMS Star Ratings, but they also increase your ability to negotiate favorable rates with private payers. Your performance will be compared to regional and national benchmarks, so it doesn’t do much good to be a middling swordsman. It’s a race to the top, and those left behind may be in peril.”