New approaches to enticing hospitals and physicians to collaborate on incentives for cost-saving were discussed by experts this week at HFMA's ANI 2007.
The dilemma of trying to fix a broken healthcare system lies in the need to achieve savings for hospitals while increasing physician incentives and reimbursements, the speakers noted. Effective programs must be put in place to strike this balance.
A presentation titled, "What Financial Incentive Demonstrations Reveal About Hospital-Physician Collaboration and the Future of Reimbursement," outlined several recent approaches and discussed their viability for the future of healthcare delivery.
There are several key drivers to changing the compensation model for physician services, said Ken Smithson, MD, vice president of research for Irving, Texas-based VHA, Inc. These include:
- skyrocketing healthcare expenditures
- the growing number of uninsured
- the pending insolence of the Medicare Trust Fund coupled with the retirement of Baby Boomers
- the failure of the sustainable growth rate formula to curtail Medicare Part B program expenditures.
Smithson presented a graph projecting the Hospital Insurance Trust Fund Balance as a percentage of annual expenditures. "As you can see, it resembles the flight path of a dying duck," he said. The implication of the trajectory, he said, is a series of major cuts to physicians' reimbursements.
Lani Berman, director of Surgical Services and ValueShare for consulting firm Goodroe Healthcare Solutions, said there have been many models for increased collaboration between hospitals and physicians on reimbursement and incentives. Both the Centers for Medicare & Medicaid Services and the Office of the Inspector General have been conducting various demonstrations.
"We're beginning to see the federal government take this much more seriously," Berman said.
Gainsharing, a concept in which a percentage of a hospital's savings on expenditures filters back to the physicians who implemented cost-saving techniques, is an approach first attempted in the mid-1990s, Berman said. But those early programs lacked regulation and guidelines.
More recently, CMS and OIG have implemented gainsharing models with fundamental differences such as how and when physicians can be compensated. Additionally, the CMS model aims to be budget-neutral and includes caps for physician compensation, unlike the OIG model.
"We are working with OIG, and we are requesting that a new model be considered," said Berman. That model will likely combine elements of both approaches, while ironing out some known flaws.
"The solution to this dilemma is very simple: we need to look at better ways to align the economic interests of physicians and hospitals," Berman said. "The key is finding a way to balance these public reporting initiatives... to set the providers up for success."