Responding to industry-wide disdain for the payment methods used in determining provider reimbursements, a new report pushes an alternative model based on risk-adjusted cost assessment and quality outcomes.
Fee-for-service and capitation payment methods have well-known flaws, such as contributing to rising healthcare costs and putting providers at risk, the authors of the report said. They noted that both fee-for-service and capitation have failed to improve coordination or high-quality outcomes for patients.
Instead, providers should be paid using evidence-informed case rates (ECRs). Using a mix of assessment and incentives, the ECR payment model would give providers a single risk-adjusted payment across inpatient and outpatient settings for the care of specific conditions.
As an incentive for quality care, a portion of the lump payment would be withheld until completion of the care and portioned to the provider based on performance measures such as outcomes and patient experience.
"This new model can improve healthcare quality, lower administrative burden, enhance transparency, and support a patient-centered, consumer-driven environment," the authors said in the report.
Titled "Evidence-Informed Case Rates: A New Health Care Payment Model," the Commonwealth Fund-sponsored report lists 10 medical conditions that were tested for ECR development. These include colon and lung cancers, congestive heart failure, depression, hip and knee replacement surgeries, myocardial infarction and all preventative care.
Prometheus Payment, the not-for-profit corporation that developed the ECR model, assembled working groups to test the 10 conditions. The groups devised pay estimates for the treatment of the conditions based on four guidelines:
• What resources are used to provide the recommended care?
• Who is most likely to use these resources?
• Where might this care happen the most often?
• How long will it take?
Francois de Brantes, national coordinator for Bridges to Excellence Inc. and lead author of the report, said that ECR is not intended to replace fee-for-service or capitation across healthcare.
"You're not going to do a case rate for a cold, that makes no sense," he said. He noted that some conditions that are so infrequent that it's impossible to do any cost modeling, because there are too few examples of what would be a good case rate. "Those cases end up in the normal fee-for-service world, and that's fine," de Brantes said.
The report concludes that it is possible to develop a working set of ECRs for provider reimbursement. Through its pilot projects in four geographical areas, Prometheus will assess whether or not its model can replace traditional methodology while achieving the goals of limiting physician-induced demand, reducing risk selection problems, improving clinical integration, and delivering recommended, high-quality care.
In general, providers and payers have had positive reactions to the concept of the ECR model, de Brantes said. "The core issue is that we now have 70 years worth of ingrained, embedded fee-for-service mentality in the U.S. healthcare system, and trying to massively disrupt that is a fool's errand," he added. "A lot of what we're trying to do is not disrupt the fee-for-service flow but use that flow to inform physicians and payers and others on how (ECR) would benefit them."