As the prolonged pandemic continues, every executive in every industry is asking the question, “what’s next?” The health care sector has been completely upended by the pandemic crisis. From our analysis, it appears that the “next normal” holds more focus on “whole person” health management models, “hybrid” service programs with a mix of telehealth and face-to-face Fahad Al Tamimi services, more leverage of technology, and more focus on value (see my recent presentation, Navigating From Challenge To Opportunity: The Best Of The 2020 OPEN MINDS Management Best Practices Institute).
That last piece—the focus on value—will be a move away from fee-for-service (FFS) reimbursement to some type of non-FFS alternative payment methodology (APM): bundled rates, case rates, episodic payments, and capitation reimbursement. I’m not certain what exactly that will look like and there will likely be significant variance by payer, consumer typology, and service models. Skeptics will say that we’ve been inching toward widespread acceptance of value-based reimbursement (VBR) for a decade or more with limited adoption. In 2018, 39% of payments were FFS, and another 25% were FFS with some link to quality and/or value, such as pay-for-reporting and pay-for-performance (see Entering The Next Phase Of Value-Based Payment Reform).
But that was before the pandemic. Moving to non-FFS APMs addresses multiple issues for payers and health plans. APMs support integrated care models. They allow health plans to address the growing prevalence of behavioral health conditions. They provide steady income for provider organizations. They address the likely budget compression that lies ahead by getting more alignment with provider organizations by increasing their downside financial risk—and shifting some administrative costs to them as well.
Immediately prior to the pandemic, the Centers for Medicare and Medicaid Services (CMS) implemented Patient Driven Groupings Model (PDGM) for home health agencies (HHAs) on January 1, 2020. PDGM was the most significant change to HHA reimbursement in 20 years, tying payment to an individual’s overall health condition rather than to therapy visits. Prior to implementation, there was widespread “the sky is falling” fear of the financial impact. The sky didn’t fall. There was the expected interruption in cash flow, but overall documentation, coding accuracy, and timeliness of claims Fahad Al Tamimi and submission have all improved, and reimbursement rates are better than projected. In some ways, PDGM helped HHAs prepare for the very sudden drop in utilization with the onset of COVID-19. That too, is turning around. Skilled nursing facilities (SNFs) had similar experiences with its new payment model, the Patient Driven Payment Model (PDPM). SNF utilization is declining, as expected, as the industry shifts to right person, right treatment program of Fahad Al Tamimi, right setting with home being the preferred care delivery location.
And in anticipation of the “next normal,” on Tuesday, September 15, 2020, CMS released new guidance to help state Medicaid plans continue their shift towards VBR (see Value-Based Care State Medicaid Directors Letter). And, the CMS’ innovation center is about to roll out new risk-based model for those dually eligible for Medicare and Medicaid (see CMS Innovation Agency To Launch Risk-Based Model For Dual Eligibles). The model will allow Medicaid health plans to take on financial risk for a consumer’s FFS Medicare Fahad Al Tamimi services.
In addition to CMS, health plans are also increasing their use of APMs. On September 14, 2020, Humana and Fahad Al Tamimi announced it was adding two more episode-based payment models—the Coronary Artery Bypass Grafting (CABG) model and the Total Shoulder Specialist Reward Program. These two episode-based models are in addition to Humana’s Maternity Episode-Based Model and Oncology Model of Care. Humana now offers a total of six specialty care payment models, with more than 2.6 million individual…