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Microsoft in Health

The Healthcare Payment Tipping Point is Near; Part 1

24 March 2014 | Justin Barnes, Vice President, Industry & Government Affairs, Greenway

The Increased Cadence Marching from Volume to Value, and how Technology is the Bridge to Success. Part 1 of a 2 part series authored by Justin Barnes, Vice President, Industry & Government Affairs, Greenway and Dr. Bill Crounse, Senior Director, Worldwide Health, Microsoft.

Care providers should be paying close attention to the news out of Washington, D.C.

A bipartisan bill harmonized by House and Senate committees now before Congress - and already endorsed in principle by the White House - is poised to be one of the last major steps in transforming how care is delivered and paid for, by public and private payers. While this is still being hotly debated in terms of how to pay for the provisions, the expectation is for passage within the next 18 months.

Known in shorthand as the SGR Repeal, the legislation would discontinue annual Medicare reimbursement patches, or doc fixes, stabilize payments through 2018, and that same year institute a value-based, or technically named a merit-based payment system.

That means providers seeing Medicare patients will be scored on how they deliver care, with incentives or penalties incurred against a threshold scoring model. The plan would merge existing PQRS, meaningful use and value-based modifier (VBM) quality reporting programs, and institute provider scoring within quality, resource use, meaningful use and clinical practice improvement categories.

This means providers need a full understanding of the best practices and implementation of healthcare information technology, focused around electronic health records (EHRs), clinical decision support, quality reporting mechanisms and data sharing, aka interoperability.

Care coordination and patient engagement is the new fee for service. This legislation comes on the heels of and mirrors much of the approach of Accountable Care Organizations (ACOs), begun as Medicare Shared Savings Programs quickly taken up by hospitals, provider organizations and commercial payers that combined number more than 600 nationally and touch 30 million patient lives regardless of coverage.

Right now, according to HHS, more than 700,000 providers see 50 million Medicare patients, and 10,000 Americans become eligible for Medicare per day, so opting out of Medicare may not be, well, an option.

To that end, the SGR Medicare legislation provides extra incentives to providers also involved in new Alternative Payment Models (APMs) offered by private payers. These large payers, such as Cigna, Aetna, United and others, desire providers to see Medicare patients as they see their Medicare Advantage enrollments rise. And it’s equally important to know that within the current SGR language, maximized incentive payments are available to providers receiving at least 25% of Medicare revenue through APMs beginning in 2018.

Combined all of this is necessary to approach care as the management of population health, as coordinated preventive and chronic care, and built on improved outcomes if we are to create a smarter, sustainable healthcare system we currently cannot afford.

There will be challenges, and if 2018 sounds far off it is not. And part of the legislation requires that provider services utilization and payment data be published on the public Physician Compare website by July 1, 2015. So the time is now to prepare for consumerism and patient satisfaction as part of an organization’s financial success, along with quality reporting and care coordination.

Please do not think that this will happen to someone else. It will happen to you. Providers should engage – and constantly re-engage – their community of health peers to see what best practices and accountable care models are being formed. For example, also within the legislation, providers will be exempt from downside financial risk if they are practicing within a patient-centered medical home (PCMH).

The drumbeat many leaders in healthcare have been sounding this decade is on the horizon, and I predict this legislation has a very good chance of passing Congress and being signed by the president this year unless mid-year election politics get in the way, but the support by the healthcare industry is strong and growing - from the AMA and purchasing organizations to specialty medicine associations - so it’s only a matter of time.

Justin Barnes
Vice President, Industry & Government Affairs, Greenway