Getting the Price Right: Approaches to Paying for Comprehensive - PowerPoint PPT Presentation

Getting the Price Right: Approaches to Paying for Comprehensive Care Robert A. Berenson, MD Institute Fellow the Urban Institute Academy Health Research Meeting New Orleans 26 June 2017

There are many ways for paying physicians; some are good and some are bad. The three worst are fee-for-service, capitation, and salary. -- Jamie Robinson, Milbank Quarterly 2001

The policy tension in considering altering payment for primary care physicians • Should increased payment and/or different payment methods address long-standing inequities in compensation across specialties and by types of services? Or • Should enhanced payments in new ways only reward improved performance? • “The flaw in current approaches is the assumption that primary care physicians will use higher FFS payments or additional PMPM payments to support uncompensated services rather than keep more of these payments in the form of increased take-home pay or invest in resources to make practice more tolerable.” – Bruce Landon, NEJM, 2014 • On the other hand, arguably, increasing the attractiveness of primary care practice, including more remuneration, would affect physician career choices relevant to an aging population, even if care for individuals doesn’t change -- adding value

FFS (a fee schedule – rather than physician determined prices) • Robinson – FFS rewards the provision of inappropriate services, the fraudulent upcoding of visits and procedures, and the churning of “ping - pong” referrals among specialists. • A more balanced assessment: • Rewards industriousness/activity • Readily compatible with benefit designs relying on patient cost-sharing • Implicitly does risk adjustment – the sicker the patient, the greater the services • It is well established, with strengths and weaknesses known (if not addressed) • But • Rewards excessive volume • Pays only for what is codified and covered for payment • Perpetuates silos of care without the need to collaborate • High transaction costs – and highly susceptible to gaming and overt fraud

Primary care capitation • Robinson – “Capitation rewards the denial of appropriate service, the dumping of the chronically ill, and a narrow scope of practice that refers out every time- consuming patient.” • Lets physicians determine how best to allocate time and resources in patient care • Lower transaction costs (until the payer requires encounter information, reporting for risk adjustment and performance measurement, etc.) • With many forces driving “more is better” – malpractice, consumerism, insurance moral hazard – payment rewarding lower spending can be a needed counter- balance • But • Potential for stinting in ways not readily detectable – what we measure is limited • Requires sophisticated risk adjustment (but probably less than in global capitation) • High cost patients can overwhelm performance on most patients • Incentive to refer out liberally, so some form of downstream spending accountability is essential, but not easy

Complementary tools to the payment method are usually needed • Risk adjustment of pppm’s, episodes, care coordination fees • Public reporting and pay-for-performance re quality • Recognition programs – such as NCQA’s for medical home • Withholds/bonuses/pay backs related to performance on spending

The most common value payment method used in various public and private demos • As described by Landon for private payer medical home demos • “A 3 -tier payment approach that maintains traditional FFS payments but then adds a fixed per-member-per-month payment as well as the potential for additional payments based on the quality of care achieved, shared savings, or both.” – NEJM, 2014 • Note that although most demos use this approach, as did CPC, there can be differences in how the pppm payment is calculated – it can be based on HCC score, # of chronic conditions, tier of PCMH recognition for medical home competencies (as distinguished from performance). • Similarly, shared savings can be based on total cost of care calculations but surrogates for spending can be used, e.g., service use that the primary care physician can manage, e.g., ambulatory care sensitive condition admissions, referral rates

Five distinct, generic payment approaches, with advantages and disadvantages

Enhanced fee schedule payment for office visits for advanced primary care • Advantages • Administratively simple • The extra payments can help address “hamster on the treadmill” demoralization and permit cross-subsidization to enhanced range of activities • Compatible with patient freedom-of-choice of provider – no assignment/attribution of patient to a practice is needed • Disadvantages • May even reinforce the perhaps antiquated reliance on occasional face-to-face visits rather than promoting other activities, including lots of communication • No real accountability that change is occurring • Current office visits definitions and documentation requirements over-emphasize history and physicals components of the visit, and downplay the varying complexity in decision-making and counselling

Additional fee schedule codes and payments for more activities • Essentially what CMS/CM has been doing in recent years with the care transition, CCCM, and in 2017 many more activity codes • Advantages • Administratively straight-forward • Uses the fee schedule power to incentivize performance of specific, targeted activities of importance • No assignment/attribution of patients to practices needed • Disadvantages • It is very challenging to clearly and crisply define many activities for a code • For many desired medical home activities, e.g., phone calls and email, concerns about payment integrity, high transaction costs relative to the payment, and moral hazard raising volume out of control • Which leads to lots of burdensome requirements even for the few new codes now recognized for payment

Standard fee schedule payments for office visits and PPPM for care management activities • A hybrid approach that attempts to mitigate the problems with pure payment methods • Advantages • Continues the engine of fee schedule payments for the core activity of office visits but creates an alternative method to compensate for medical home activities rather than relying on cross-subsidization • Easy to put into place and in common use in demos and in other countries, e.g., Denmark, the Netherlands • Disadvantages • How do you know the monthly payments won’t just be pocketed? – seems to require a certification and/or accountability component • Need to associate/attribute patients to a physician or practice – could be a positive? • May require different payment levels based on patient acuity – the burden on the practice. Pros and cons of targeted pppms only for a subset of patients

Reduced fee schedule payments for OV’s and a higher PPPM for care management activities • Advantages • A hybrid that balances incentives to mitigate the adverse effects of the pure methods – tries to establish incentive neutrality on whether to provide more or less services • Provides more emphasis – and revenues – to support advanced primary care activities but recognizes that visits remain an indispensable core component • Limits payers’ financial exposure – can do it “budget neutral” rather than requiring extra funds, with uncertain prospect for shared savings • Disadvantages • Increased expectations without concomitant payment increases if payers want to limit new spending up front • A greater requirement for effective and acceptable attribution to assure the PPPM tracks the patient to the right practice • Resistance from physicians who feel visits already are underpaid – hard to break through the fee schedule orientation physicians have • Want effective accountability when increased funds support PPPM payments

“Comprehensive” PPPM payments for all services rendered (capitation) +/- P4P • Advantages • Creates clearer primary care responsibility and locus of accountability • Strong incentive for more prudent use of resources with organizational and other innovations to reduce spending • The greatest flexibility for the practice to redesign and invest in personnel and technology to become a more effective practice • Avoids the complexity of fee schedule payments altogether • Disadvantages • Need effective, resistant to gaming, risk adjustment • Would seem to require a gatekeeper approach rather than passive attribution with unfettered freedom of choice – illegal in most states if not in an HMO • The strongest incentives to stint • Needs some form of risk to mitigate the incentive to refer care out, undermining a core purpose of the approach -- but this is challenging at the individual clinician level