Movement away from fee-for-service reimbursements has begun

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.

René Letourneau

René Letourneau

Among health plan executives, there’s a lot of talk about moving from volume to value. But identifying what this expression means in practice can be challenging because health plans all define value differently and they are developing ways to deliver more value to their employer and consumer customers.

In fact, the movement to value-based payment is so challenging that while hospitals, physicians, and other providers understand the need to move away from fee-for-service, many are unsure of how to do it, are unable to do it, or are trying to figure out how best to do it, according to a recent article in MedPage Today.

Despite the challenges, some payers and providers are in fact shifting away from volume-based payments, commonly known as fee for service, and adopting value-based payment methods, as René Letourneau, a senior finance editor with HealthLeaders Media, reported in a recent cover story, Restructuring Reimbursements. She found, for example, that a group of hospitals contracting with a health plan had agreed to have 15 percent of their income based on patient outcomes.

As the health plan executive explained, “If you want to change behaviors, you’ve got to change incentives.” Letourneau explained that the risk of not being paid 15 percent of their contracted reimbursement rates if they do not meet certain outcome measures appears to be motivating hospitals to find ways to deliver better care. Here’s Letourneau’s explanation of how she reported this story.

1 thought on “Movement away from fee-for-service reimbursements has begun

  1. Robert C. Bowman, M.D.

    1. The last decades have demonstrated that designers have not been able to innovate without cost cutting as the major focus. Reform plans intending quality have required across the board cuts in reimbursement to be able to pay for “value” – not recognizing that value is more about the 99% of a patient’s life outside of health care rather than the less than 1% of life involving health care.

    2. Primary care and basic services remain fixed at rates too low for sustainable practices and made worse by required higher cost of delivery and across the board cuts. This will result in more departing primary care and primary care where needed as well as movement to practices with few Medicare, Medicaid, low pay, and no pay patients.

    3. A decline back to lower Medicaid rates appears likely after 2 years, reducing revenue and representing a cost to change back. This is only one of many Medicaid problem areas.

    4. Performance based reimbursements are shaped to lower outcomes by social determinants and patient situations found where workforce is already thin – a reverse Robin Hood tax. Designers implemented designs despite knowing that providers serving patients with disparities would be impacted. Rural hospitals are 3 times more likely (9% rural, 3% urban) to have the top penalty of 1 – 2% Medicare withhold and next year this will go to 2 – 3%. Remaining hospitals in counties with lower concentrations of physicians have even higher top penalty rates. Numerous health status and behavioral characteristics are worst in counties lowest in concentrations of clinicians and health spending – along with lower income, lesser education, lower social organization…

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