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How Alternative Payment Models Are Changing Patient Care

February 18, 2016

Alternative_payment_model.jpgHealth care reform brought significant change to the medical practice, from changes in documentation requirements to transformative shifts in the payment paradigm. Arguably, these alternative payment models will impact care delivery more than most of the reforms in the health law. 

This year promises to be a year of even more change, as the Department of Health and Human Services aims to tie some 30 percent of all traditional Medicare payments to alternative payment models and connect 85 percent of its fee for service payments to quality and/or value metrics.

Considering that as late as 2011, virtually all Medicare payments were strictly fee for service, this represents a seismic shift. These changes are closely aligned with trends in commercial payments, which tied over 40 percent of in-network payments to performance measurements last year. 

Last spring, the American Medical Association and the RAND Corporation completed an in-depth report on how these new payment models and quality metrics are affecting both the frontline providers and the medical practice as a whole. The findings were enlightening, if not entirely surprising to anyone who has been involved in health care administration in the past few years. 

Mark W. Friedberg, MD, MPP, the study’s lead author and a scientist at RAND, said the report showed that “changing the payment system probably isn’t enough to ensure that patient care will improve.” Instead, success depends on aligning the practice’s incentives, both financial and non-financial, with the new payment models, and ensuring an adequate level of provider support. 

Structural Changes at the Practice Level

Among the most significant findings affecting health care practices:

  • There has been a dramatic increase in strategic mergers and partnerships between practices and hospital systems in order to lower the costs associated with IT infrastructure and support personnel needed to successfully compete under the new payment models. 
  • Practices are moving toward a team-based approach to care delivery, with a greater focus on non-physician providers, allied health professionals, and case managers. 
  • The balance of care delivery between primary care and specialty providers is shifting in response to shared savings and capitation models. 
  • Large investments in upgraded data management systems, including powerful EHRs and new analytics tools, are necessary to adequately track performance metrics and map paths for improvement. 
  • The multiplicity of alternative payment models and their associated non-clinical paperwork and administrative requirements are placing a heavy burden on health care providers, driving down individual productivity. 

Face-to-Face Care Remains Unchanged

At the physician level, the new payment models are not significantly changing face-to-face patient care, in part because practice administrators have separated individual physician compensation from the financial incentives in the alternative pay schemes. The report indicated that practices used non-monetary incentives, such as performance feedback and provider education, to effect change in the clinical decision-making process. 

Interestingly, a not insignificant percentage of physicians expressed an interest in linking their compensation to quality, performance, and efficiency of care metrics. Overall, none of the practices surveyed reported a negative impact on overall finances as a result of the new payment models; revenue remained neutral or increased slightly. 

Ongoing Challenges

Operational changes designed to align clinical practices with the new payment strategies are frequently hobbled by inadequate, incompatible, or unavailable data. Even as practices invest in more powerful and complex health information technology, payers are failing to support the alternative payment transition on their end. In addition, performance and quality metrics vary by payer, making it difficult to adequately track and report compliance. 

If your revenue cycle is in chaos as a result of the alternative payment models, M-Scribe’s coding, billing, and revenue cycle management experts can help you implement the processes and technology you need to stay ahead of the curve. Contact us today for a consultation. 






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