The current disconnect between payments made to health care systems and the compensation plans of physicians employed by them is an elephant in the waiting room. Unlike the smooth pendulum swing of the 1990s from fee-for-service to global payments, there are now several new flavors of risk and most organizations are trying them all. Fee-for-service, shared savings, alternative quality contracts, bundled payments and global capitation all require a different approach to maximize value. Yet other than niche organizations that focus on one brand of risk and pair it with appropriate reimbursement, is anyone actually doing that?
In fee-for-service contracts, the main element of risk is the potential 30 day readmission penalty for the hospital within a closely aligned health care system. Managing frequent flyers in this environment may involve disease specific education and coaching, home-based interventions, remote monitoring, and discharge plans that are clear, understandable and easy to follow. After 30 days, the patient may be back to the usual brief and periodic office visits.
Bundled payments require tight communication and ruthless efficiency between the various partners in a fully integrated system. As the dollars follow the patient from hospital to skilled nursing to rehabilitation to home-based therapies, each set of providers must modify their approach to keep the arrangement profitable while also delivering quality care.
Global capitation contracts often call for deployment of a well-managed interdisciplinary team, typically caring for elderly patients in Special Needs Plans, Medicare Advantage and other such programs. Despite individually risk adjusted allowances from Medicare and Medicaid that seem generous to the uninitiated, the expense potential is there to match every penny of it, and more. The classic fee-for-service office visits won’t cut it here if you intend to stay in the black.
What happens when a health care system and/or group practice has populations in each of the above reimbursement segments? Can they afford to have busy providers treating each type of patient differently? Can they afford not to? To succeed in the new paradigm, organizations need to better connect the payment methodology in each silo of risk to the providers practicing within it.
Alignment compensation plans are a great solution in recruiting, rewarding and retaining physicians embracing the new outcomes-based reimbursement methods. Conversely, underperformers will make less than the high achievers within such a program. It basically works like this: the organization adopts a supplemental compensation plan with carrots for things like low readmission rates, high scores in patient satisfaction surveys and high quality ratings; sticks are also in play for physician behavior that generates the opposite results. Funds flowing into the supplemental plan grow tax-free, are distributed tax-free and can be used for both retirement and major expenses along the way. Fortune 1,000 companies have rewarded executive performance for decades through “non-qualified” deferred compensation arrangements and Supplemental Executive Retirement Plans such as these.
Major payers are adjusting reimbursement based on predetermined outcomes measures through the various mechanisms discussed above. Isn’t it time that we rewarded those embracing the challenge?
Dennis M. Sexton is Senior Vice President at MKA Executive Planners.
For further information contact Dennis at dsexton@mkaplanners.com or 978-395-6741.
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