WASHINGTON – Provider reimbursements calculated under the fee-for-service methodology have been the subject of industry-wide disdain for a variety of reasons related to physician risk, the high cost of care, and quality concerns.
A new report pushes an alternative model based on risk-adjusted cost assessment and quality outcomes. Both fee-for-service and capitation have failed to improve coordination or high-quality outcomes for patients, the report’s authors said.
Providers should instead be paid using evidence-informed case rates (ECR), the report contends. 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.
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,” de Brantes said. He noted that some conditions 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,” said de Brantes.
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 Payment, the not-for-profit corporation that developed the ECR model, 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.
Part of the ECR’s potential for adoption lies with the fact that, unlike some models, it doesn’t require scrapping fee-for-service altogether.
“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.”