New Payment and Care Delivery Models
Summary
Today, U.S. hospitals receive most of their payment for care through fee-for service arrangements. The fee-for-service model has been criticized by many health care experts for contributing to higher costs and systematic fragmentation.
Emerging payment and care delivery models are devising alternative payment systems designed to reward providers for improving care coordination, demonstrating quality improvement and providing greater transparency about care processes and outcomes. These new systems include bundled payment, value-based purchasing, accountable care organizations and patient-centered medical homes.
The 2010 Patient Protection and Affordable Care Act (ACA) includes several key delivery system reforms to better align provider incentives to improve care coordination and quality and reduce costs, and the American Hospital Association is committed to helping the hospital field lead the way in developing payment models that reward high-quality care and better coordination between providers.
Resources
The AHA is bringing together tangible resources to help hospitals transition to new payment and care delivery models, including the Database of Innovative Care Delivery and Payment Approaches, developed by the AHA's Health Research & Educational Trust. HRET created this database to aid hospitals in understanding the scope of existing bundled payment, accountable care organizations and patient-centered medical home initiatives. It is intended to provide a sample of public and private sector programs. HRET also has compiled a collection of payment reform resources.
Additionally, a series of synthesis reports and guides that address new payment and care delivery models was released in mid 2010, with topics to date including the Patient-Centered Medical Home, Accountable Care Organizations and The CMS Bundled Payment Acute Care Episode Demonstration Project.
Health Care Reform and Care Delivery
The 2010 ACA includes pilot programs designed to incentivize providers in adopting new care delivery models. The law calls for the establishment of a national pilot program on payment bundling for Medicare by 2013 and a Medicaid bundling demonstration program by 2012. Additionally, it calls for the creation of an ACO program by January 1, 2012 and the establishment of community-based interdisciplinary, interprofessional “health teams” to support primary-care providers in the creation of medical homes. In addition, the AHA's Health Reform: Moving Forward web site, accessible to AHA members, hosts a Reform Advisory that includes a comprehensive section on Key Delivery System Reforms.
Business Case
Since it is still early in the development of payment and care delivery alternative models, the business case is still being flushed out. However, there are a number of existing pilot efforts that are beginning to establish a business case.
For instance, North Carolina's Community Care of North Carolina program, an enhanced medical home model operated by the state's Medicaid program relies on nonprofit community networks of hospitals, physicians, health departments and social service organizations to manage care. Community Care of North Carolina saved roughly $3.3 million in the treatment of asthma patients and $2.1 million in the treatment of diabetes patients between 2000 and 2002, while reducing hospitalizations for both patient groups.
Medicare's Physician Group Practice Demonstration, a group of ten provider organizations and physician networks that began in 2005, incentivizes providers to coordinate care delivered to Medicare patients with cost and quality performance payments. Through year three of the program, all ten participating sites achieved success on most quality measures, and five collectively received over $25 million in bonuses as a share of $32 million in Medicare cost reductions.
In general, hospitals will need strong organizational competencies already in place to expect successful participation in ACO, PCMH and bundled payment pilot projects. HRET's ACO Synthesis Report recommends that hospitals and health systems considering ACO participation assess their capabilities in several key core competencies, including IT infrastructure, resources for patient education, team-building capabilities, strong relationships with physicians and other providers, and the ability to monitor and report quality data.
Hospitals considering participation in a patient-centered medical home pilot should consider several major barriers to implementation, including insufficient IT capabilities among primary care physicians, patient uncertainty about a gatekeeper approach, and the need for clinicians to adopt a model emphasizing shared decision-making. Still, many analysts believe that hospitals will begin a migration to embrace the PCMH model in coming years as a natural extension of clinical IT investments and increasing care coordination.
