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How Scores Determine Provider Payment

Recently in an article on episode of care purchasing written for the New England Journal of Medicine, Rob Mechanic of Brandeis University, noted that several software firms “are developing ‘engines’ to automatically convert fee-for-service claims into episode-based payments”1. He also observes that these types of investments are needed to make episode payment administratively feasible, reliable, economically sustainable, and scalable. The realization that new types of technical solutions are required for payment reform is becoming widespread.

An Evidence-Informed Model for Payment Reform

Ideas about how to pay providers to improve quality and reduce costs are ground zero for many current discussions about national health reform. A variety of solutions are being touted to correct the widespread deficiencies and increase value in our health care system—with concepts like “Accountable Care Organizations” and “medical homes” getting a lot of attention.

Since the publication of Crossing the Quality Chasm, the quest for significantly improved health care quality for all Americans has been joined by a wide variety of stakeholders. Beginning with the Institute of Medicine, virtually all recent commentators on quality acknowledge that for real change to occur, we need a different payment model.

The Patient Protection and Affordable Care Act (ACA) includes a number of delivery system and payment reform initiatives that hold much promise for bending the cost curve.

The legislation provides for mandatory programs like value based purchasing, pilot and demonstration programs like bundled payments, and voluntary opportunities like Accountable Care Organizations (ACOs). But, the ACA also provides for a close to unlimited potential for the Center for Medicare and Medicaid Innovation (CMI) to affect both payment and delivery system reform.

HCI3’s ECR® Per Member Per Month (PMPM) Opportunity Estimator is designed to show you the potential savings opportunities you could realize by reducing potentially avoidable complications (PACs) if you shifted from a fee for service (FFS) model to a PROMETHEUS Payment® model. The estimator does not require you to calculate any of your own data, all estimates are based on your number of covered lives and actual national benchmarks.

The failure of existing payment systems to produce optimal quality has been decried far and wide, perhaps most importantly by the Institute of Medicine, calling for a new payment system for the 21st century. Pay for performance (P4P) programs have emerged over the last few years as one step on that pathway. But they are generally regarded as transitional at best and suffer from some inherent limitations. And then there is the ethical issue of why providers should be paid extra to do what they should anyway.