Payment Reform Strategies Providers Must Consider

Blog posted by John Richter

For the past number of weeks, we have offered commentary of various aspects of the Patient Protection and Affordable Care Act (PPACA) as well as the Reconciliation Act that accompanied it. The act primarily addressed coverage and access. It did not, in my opinion, fully address the more significant issues of cost and quality—at least not yet.

The act puts into motion a variety of demonstrations, programs, and ideas that are focused on improving overall effectiveness and reducing expenses while creating incentives for appropriate utilization and better patient experiences. There are a few things we know for sure, many things about which we can speculate as to ultimate direction and a few things we know were not addressed. Here’s what we seem to know for sure:

• Health care payment reform change will start with doctors, hospitals, and insurance companies and then extend to all providers across the continuum. In short, reimbursement reform will spread across all sites of services.
• Long-term payment reform will focus on new ways to create greater value–defined as lower cost and higher value. Short-term payment reform will be designed to reduce costs with a particular focus on indicators of perceived poor quality.
• Providers will need to collaborate at a level never required before—the segmented approach to treatment coordination, chronic care management, and payment for services will change.
• Accountability for results will become normal. In other words, value will increasingly be based on the results delivered, not the process of delivering.

What does all this mean? We’re not exactly sure. Like you, we strive each day to better understand the effects of the act and its authorized programs. We are, however, able to decipher themes and have settled on several simple strategies that all providers must consider as we move toward full payment reform in the coming years.

• Operational efficiency—we know reimbursement will be less and quality expectations will be greater. We must learn from other industries and find new ways to operate. Manufacturers, for example, expect to get paid less each year and they adjust their operations accordingly.
• Reliance on technology—we must use technology to the fullest extent possible. This will allow us understand care delivery patterns and create predictive measurement systems. We will then be able to create a health information exchange across the entire continuum and monitor progress of treatment and care plans.
• Create relationships—historically, health care relationships have been very personal. Decisions about movement of patients have been largely dependent on personal relationships of physicians, hospital discharge planners, or individual providers. Given the likelihood of bundling, accountable care organizations, or value-based purchasing, it will be essential that relationships become organizational at the executive level.

Health care reform is here to stay. Timing is uncertain and there is much work to be done but the outcome is becoming increasingly clear. We must begin our preparation now to meet the challenges of the coming decade.