All major commercial payors have deployed value-based reimbursement systems and are preparing to expand their use during the next year. This creates a compelling need to align primary care physicians, physician specialists, hospitals, pharmacies, and post-acute providers under the new wave of value-based reimbursement systems used by Medicare and commercial payors.
Various sources indicate that United Healthcare and Wellpoint are seeking to tie over half of their payment contracts to pay-for-performance models within the next one to two years. The value-based reimbursement methodologies used by Medicare, United Healthcare, Wellpoint, Cigna, Aetna, and Humana include shared savings programs, quality metric requirements, acute and post-acute payment bundling, reference-based pricing, and hospital readmission payment penalties for various forms of cardiovascular disease, lung disease, and surgery.
Chronic obstructive pulmonary disease (COPD) and various types of cardiovascular disease are high priorities for insurers because they drive high hospital readmission rates. These chronic diseases are among the most expensive to treat on an ongoing basis. Heart failure is the most common reason for hospital readmissions under the Medicare program. According to the Care Continuum Alliance, average heart failure medical costs can be $2,700 per member per month.
At the provider level, clinical co-management arrangements, and similar pay-for-performance programs, are ideal partnership models to formally align providers under value-based payment arrangements. Hospitals and health systems frequently utilize clinical co-management arrangements to align physician and hospital goals as an alternative to acquiring a physician practice, or in conjunction with a business purchase such as an ambulatory surgery center. With provider alignment programs, a hospital will engage physicians and/or other providers through a contractual arrangement to provide certain management services with the intent to enhance services through the continuous achievement of quality improvement goals.
Some hospitals have also entered into performance program arrangements with pharmacies and post-acute providers in an effort to reduce inpatient readmissions. Home health agencies and skilled nursing facilities are key to preventing orthopedic surgery readmissions, while pharmacies and primary care physicians are key to managing high readmission rates for patients with COPD, heart failure, and diabetes. Pharmacists are often overlooked members of the medical team, but there are several very successful programs involving pharmacists at Nationwide Children’s Hospital, North Bay Regional Health Centre, and Kaiser Permanente.
While the duties and goals are mutually determined by the parties for management arrangements, the scope of the duties may vary widely from limited (human resources and back-office focus) to very robust responsibilities similar to those provided by national management companies. A robust set of management duties may dictate relatively higher base management fees or incentive payments. Often the agreement will contain a combination of both base fees and incentive fees tied to achieving clinical goals. Patients, providers, insurers, and employers all benefit as quality goals are achieved and continuously updated over time.
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