AHA report offers advice about value-based payment programs
The American Hospital Association released a TrendWatch report that highlighted how hospitals and health systems are transitioning from fee-for-service (FFS) programs to value-based payments (VBPs).
“There is no single model that will work for every organization. Hospital and health system leaders should assess the personnel, infrastructure and other capabilities required for success in each model when considering the most appropriate path for their organization,” according to the report.
The reported analyzed seven U.S. hospitals and health systems that have participated in VBP models.
All payers are trying to find a way to connect payments at least partially to patient outcomes and a practice’s quality. CMS recently slammed the brakes on its hip fracture and cardiac bundled payment programs, but instead supports voluntary bundled payment programs rather than mandatory programs.
CMS Administrator Seema Verma recently said the agency is revising measures across all quality payment programs and wants to cut regulatory burdens for providers. “Our vision is to develop models that promote a patient-centered system of care within a market-driven healthcare system. Models should empower consumers to make decisions that are right for them and providers should compete around value and quality,” she said.
Alternative payment models (APMs) now make up about one-third of healthcare payments. A recent Health Care Payment Learning & Action Network report found that 29% of U.S. healthcare payments were connected to APMs in 2016. That was an increase from 23% the previous year.
Researchers in that study found that:
43% of healthcare payments went to traditional FFS or other legacy payments that weren't linked to quality;
29% went to shared savings, shared risk, bundled payments or population-based payments; and
28% went to pay-for-performance or care coordination fees.
Regardless of whether the programs are mandatory or voluntary, questions remain about whether these payment programs can always lead to improved quality and care and reduced costs.
In its report, the AHA said a key to a hospital or health system's VBP success involves an organization's "capabilities and culture" as well as market and policy forces. VBPs vary depending on payer and patient population and risk. The programs can differ from shared savings and pay-for-performance programs, which are lower risk, all the way up to partial or full capitation. These types of arrangements often need practices to expand skills and capabilities “to effectively manage additional financial risk.”
Which VBP program is best? It depends on your hospital or health system's situation. The report suggested hospitals and health systems “assess the personnel, infrastructure and other capabilities required for success in each model when considering the most appropriate path for their organization.” Plus, the higher risk VBP programs need skills and infrastructure to succeed, including “provider contracting and network management, clinical and care management, analytics and risk-financial management,” AHA said.
The AHA said healthcare organizations need to figure out whether to partner, purchase or develop these skill sets in-house or from a third party. Those decisions would likely involve available resources, timing and capabilities.
The report warned that successful VBP models can mean “intense and focused” efforts to change organizational culture “to align with new incentives.” The AHA added that hospitals and health systems may need to revamp VBP programs over time because of external and internal changes.
“Leaders will want to frequently revisit their vision and objectives to assess which model may best help them achieve organizational goals and understand the tools, information, resources and delivery network required to succeed in a particular model,” said the AHA.
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