centered medical homes (PCMHs),
and new programs that bundle
payments for episodes of care such
as the Comprehensive Care for Joint
Replacement model.
The Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA)
further incentivized the shift to VBR by
giving a five percent annual payment
to providers that participate in qualified
APMs. These APMs typically involve
a group of providers accepting a
predetermined amount of money to
take care of a designate population.
The population may be centered around
a chronic condition, a disease state
or a selection of patients based on a
payer-type and location. Because the
designated provider group has a finite
source of funds; policies, practices and
treatment teams must be designed
to ensure quality care in a financiallyeffective
manner.
Each of these models requires
an understanding of the cost
drivers. In bundled payments for
joint replacements, the high cost
components are typically the cost
of the implants and the cost of care
during a prolonged recovery. In the
case of MSSP ACOs where Medicare
sets a benchmark for the cost of care
of a patient population that is chosen
because the patients have received
most of their primary care from a
particular Medicare ACO provider, the
primary driver is maintaining effective,
consistent primary care for the patients
with the most significant co-morbidities.
Every values-based model will have
its own social, clinical and conditionrelated
realities. Understanding those
and understanding what the physician
can do to address those realities
is key in determining appropriate
compensation.
Identifying permissible and effective
payment structures
There are many different approaches to
physician compensation arrangements.
They range from being primarily
transactional to true integration and
alignment of purpose and process.
Pay for performance (P4P) links a
portion of a provider’s revenue to the
achievement of a specific process
or outcome measurement or patient
satisfaction/experience. P4Ps can
be bonus payments or penalties. The
quality measures include: (1) process
measures—activities that contribute to
positive health outcomes for patients;
(2) outcome measures—for example,
whether a patient’s diabetes is under
control based on laboratory tests; and
(3) patient experience—patient
satisfaction with their healthcare
experience, usually based on surveys.
The P4P programs can result
in a transactional relationship that
does not encourage the same level
of integration as more risk-bearing
relationships that give providers more
control over certain populations and the
funds related to their care. Capitation
refers to a payment arrangement that
sets a cost and utilization budget for
healthcare services and an associated
monthly or annual payment amount to
compensate a provider. Providers can
be compensated for all or a specified
portion of care to be provided to a
defined patient population over a
defined period. Capitation is intended
to cover the expected costs of covered
healthcare services for a particular
population of patients.
A “bundled payment” refers to
a payment arrangement in which
providers are paid a predetermined
amount for all services rendered during
a defined “episode” of care, including
follow-up care, rather than a fee for
each distinct service provided. For
example, if a patient has a cardiac
bypass surgery, the payer may combine
the payments for a single episode
of care instead of making separate
payments to the hospital, the surgeon,
and the anesthesiologist.
These models are just the beginning
of the conversation. As providers
continue to advance the healthcare
delivery system through strategic
arrangements, enhanced data analytics
and predictive analytics, the ability to
show the value of physician activities
will be significantly enhanced, thereby
giving further justification for certain
elements of compensation. Professional
valuators that work with some of the
most innovative institutions are vital to
these evolving compensation models.
Those that are collecting data related
to existing value-based programs and
their historic outcomes can provide
valuable insight in the creation of an
appropriate and effective compensation
arrangement.
PPhysicians are inundated with messages
about the move from volume to value.
They are told that the new age of health
care is upon them and that the change
in reimbursement to an assessment of
quality over quantity is at the heart of
that transformation. However, the vast
majority of the payments physicians
receive for their services are still feefor
service (FFS). So when a physician
is faced with entering a value-based
arrangement it is often difficult for the
parties to determine the appropriate
compensation model. The parties
are forced to identify the elements of
physician activity that bring actual value
to the particular value-based model.
Historically, the parties have looked
to physician compensation surveys
and other reimbursement models in
their respective communities, but
these are usually insufficient tools in
the determination of compensation
in a value-based arrangement. There
are four keys to structuring physician
compensation in these arrangements:
(1) an understanding of the outcomes
sought by the value-based initiative
at issue; (2) the identification of the
specific physician activities that drive
those outcomes; (3) an assessment of
the permissible legal structures for the
compensation; and (4) a commitment
to continue ongoing reviews of the
compensation structures to ensure
effectiveness and compliance.
Understanding the desired outcomes
and what it takes to achieve them
The Patient Protection and Affordable
Care Act (ACA) was enacted in 2010
in response to the economic and
political pressure for comprehensive
health reform and cost control. The
ACA induces providers to reduce costs
by shifting from FFS to value-based
reimbursement (VBR), such that delivery
of high-quality outcomes at the lowest
possible cost becomes the benchmark.
In particular, the law established the
Medicare Shared Savings Program
(MSSP), which reimburses provider
networks or organizations based on
patient health and quality of care rather
than the number of services provided.
It also created the Center for Medicare
and Medicaid Innovation (CMMI), which
tests a number of alternative payment
models (APMs) such as accountable
care organizations (ACOs), patientcontinued
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Legal Issue
May 2019 Dallas Medical Journal 5