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Healthcare Business News
Dave Gans, MGMA-ACMPE senior fellow, industry affairs

Practice Makes Perfect: Preparing for shared-risk reimbursement models

By Dave Gans
Posted: October 15, 2012 - 11:30 am ET

In June, the MGMA-ACMPE released the results of a questionnaire that ranked members' most-pressing practice management challenges. In this edition of "Practice Makes Perfect," we'll tackle No. 2 on that list: Preparing for reimbursement models that place a greater share of financial risk on the practice.

One of the many hot topics at our upcoming annual conference in San Antonio will be the changing healthcare environment and how practices can—and should—prepare for new payment methodologies. The federal government and commercial insurance companies are in the midst of changing the way they pay hospitals and doctors. Some of these changes are the result of the Patient Protection and Affordable Care Act as well as market forces. These changes will affect practices in all settings, and it's important to prepare for reimbursement models that place a greater share of financial risk on the practice.

Physicians may soon be at financial risk as payers test and adopt new payment methods. The CMS and private insurers are proposing models to replace separate payments to hospitals, doctors and other providers with a single bundled payment, and we are seeing multiple definitions of bundling. A common type of bundled payment involves a single payment for all services furnished before, during and after a hospitalization, including outpatient diagnostic tests, inpatient facility costs, drugs, supplies and the professional services of every physician involved in the patient's care.

In addition, the CMS and many insurers are testing variations on the capitation payment concept that was widely used in the health maintenance organization craze of the 1990s. Commonly referred to as "global payment," this reimbursement method pays a set amount per patient (usually adjusted by demographics) and the provider accepts responsibility for a predetermined set of services regardless of the costs.

Both bundled and global payment reflects a sea change from the traditional fee-for-service payment system. Payers hope that bundled and global payments will create incentives for primary-care physicians, specialists and hospitals to better coordinate services and share accountability for the cost and quality of services. They hope the new payment systems will improve the care their beneficiaries receive while lowering the total cost of care by eliminating redundant services.

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These new payment methods require doctors to think in new ways and will challenge the information systems of even the most sophisticated fee-for-service practice. Bundled and global payments change a practice's profit calculation from emphasizing service volume to operating efficiency. In this new payment environment, practices that gather the right information and provide high-quality, lower-cost care will be the most profitable. The most successful practices will:
  • Utilize appropriately
  • Work to provide better quality to their patients
  • Focus on patient satisfaction
  • Strive for better patient outcomes
To maximize revenue, successful practices will need to optimize productivity and increase efficiency. They also will need to use their electronic health records to demonstrate their quality to patients and payers by tracking the appropriate patient-experience, quality and clinical-outcomes measures. The healthcare system is evolving rapidly. Part of this transformation can be attributed to federal healthcare reform and private insurance company initiatives to change payment methods. It is important to realize that what practices do now to enhance productivity, improve efficiency and expand the capabilities of their data systems to prepare for these changes is critical for their future health. And the more time practices devote to understanding and examining these potential changes and what they might mean for the organization, the more likely it is that they will be prepared for reimbursement models that place a greater share of financial risk on the practice.

Dave Gans

Senior fellow, industry affairs


Englewood, Colo.

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