Three Pay­ment Trends to Know For Suc­cess in 2019

Af­ter a land­mark year in health­care, the chal­lenges ahead for health sys­tems await

Modern Healthcare - - News -

To­day’s com­pet­i­tive en­vi­ron­ment isn’t lim­ited to other lo­cal health­care sys­tems. New mar­ket re­al­i­ties have dis­rupted the in­dus­try to change the way care is pro­vided, and the set­tings where it’s de­liv­ered to bet­ter man­age costs, and en­gage physi­cians and con­sumers. In or­der to suc­ceed, health sys­tems need a clear strat­egy for tran­si­tion­ing to risk-based pay­ment mod­els, align­ing and en­gag­ing with physi­cians, and build­ing the ca­pa­bil­i­ties that po­si­tion their or­ga­ni­za­tions as the best choice for care.

What ma­jor pay­ment trends will dis­rupt health­care in 2019?

SG: First, al­ter­na­tive pay­ment mod­els (APMs) are sat­u­rat­ing the in­dus­try among both com­mer­cial and pub­lic pay­ers. The value-based pay­ment move­ment is at a tip­ping point and health sys­tems are in­creas­ingly tran­si­tion­ing to take on more risk. In fact, the Health­care Pay­ment Learn­ing and Ac­tion Net­work (LAN) has a goal to tran­si­tion 50 per­cent of U.S. health­care pay­ments to APMs by 2018. This isn’t a far­fetched am­bi­tion given that 34% of all health­care pay­ments were through APMs in 2017, ac­cord­ing to LAN. More­over, 12.5% of those pay­ments were for two-sided risk ar­range­ments. With nearly 1,300 en­ti­ties par­tic­i­pat­ing in the Bun­dled Pay­ments for Care Im­prove­ment (BPCI) Ad­vanced model and the uptick in Medi­care Ad­van­tage par­tic­i­pa­tion, th­ese moves will con­tinue.

Sec­ond, risk-based pay­ment mod­els are cre­at­ing a new com­pet­i­tive land­scape at a rapid pace. Be­cause APMs largely give pref­er­en­tial treat­ment to physi­cian par­tic­i­pants, BPCI Ad­vanced has en­gaged hun­dreds of new physi­cian en­trants in in­pa­tient and out­pa­tient episodes. Fur­ther, Medi­care ac­count­able care or­ga­ni­za­tion (ACO) pro­grams, such as the Medi­care Shared Sav­ings Pro­gram, will also likely fa­vor physi­cian par­tic­i­pants to achieve greater sav­ings and by al­low­ing them more time in up­side-only tracks. Th­ese pro­grams and oth­ers are putting physi­cians that have wo­ken up to the ben­e­fits of-value-based pay­ments in the driver’s seat.

Third, em­ploy­ers are be­com­ing a more ac­tive and force­ful driver of change, putting pay­ers in an un­com­fort­able spot as they seek to cut out the mid­dle­man and con­tract di­rectly with high-value health sys­tems. With em­ploy­ers pay­ing for care and providers man­ag­ing it, in­sur­ers sim­ply be­come added cost with­out value.

How will th­ese de­vel­op­ments af­fect health sys­tems?

SG: Com­pet­i­tive forces and new pay­ment re­al­i­ties driven by this ad­min­is­tra­tion will con­tinue to push providers to move up the risk con­tin­uum. At the same time, health sys­tems are quickly ac­cu­mu­lat­ing value-based con­tracts with com­mer­cial and pub­lic pay­ers. But many lack a bird’s eye view across their APM con­tracts and a stan­dard­ized way to eval­u­ate the to­tal amount of risk they face. The im­pli­ca­tion is that health sys­tems are leav­ing rev­enue on the ta­ble by not con­nect­ing front­line care de­liv­ery work streams to the aligned met­rics they need to de­liver. Win­ners in this en­vi­ron­ment must have a paced strat­egy for build­ing the ca­pa­bil­i­ties needed to suc­ceed in risk-based mod­els.

All roads lead to the physi­cian. Con­ven­ers like hos­pi­tal­ist groups and even in­sur­ance com­pa­nies have new busi­ness plans to in­vest in physi­cian groups and cre­ate their own high­value net­works. Th­ese com­pa­nies have the po­ten­tial to pull physi­cians away from health sys­tems and es­tab­lish them­selves as the owner of the net­work, such as for an ACO or bun­dles. The short-term im­pli­ca­tion of this is that they will profit from the sav­ings and re­designed care de­liv­ery pro­cesses they over­see, leav­ing the hos­pi­tal as a cost cen­ter. In the longer term, it will po­si­tion them to ne­go­ti­ate with in­sur­ers and em­ploy­ers in man­ag­ing APMs.

Lastly, di­rect-to-em­ployer con­tracts are unique and can be seen as a new source of rev­enue for the health sys­tem. In many cases, they are also fo­cused on a dif­fer­en­ti­ated con­sumer ex­pe­ri­ence. In this new com­pet­i­tive en­vi­ron­ment, health sys­tems need to be think­ing about ways to be­come the choice provider in their lo­cal mar­ket.

Who will be po­si­tioned for suc­cess?

SG: Health sys­tems that act now and have an ef­fec­tive strat­egy for build­ing the ca­pa­bil­i­ties needed to suc­ceed in risk-based mod­els and align with physi­cians. Premier is help­ing health sys­tems de­velop and im­ple­ment well-paced strate­gies for suc­cess in APMs, based on their unique mar­ket con­di­tions. Ul­ti­mately, health sys­tems are best po­si­tioned to win in this en­vi­ron­ment, but they must be proac­tive in se­lect­ing the mod­els that make the most sense and se­quenc­ing them for max­i­mum value.

Shawn Grif­fin, MD Vice Pres­i­dent, Clin­i­cal Per­for­mance Im­prove­ment and Ap­plied An­a­lyt­ics Premier, Inc

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