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The future includes value-based reimbursement

December 1, 2015
by Brian Albright
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The entire U.S. healthcare industry is poised for a massive shift in how providers are paid for their services. By 2018, the Centers for Medicare and Medicaid Services (CMS) plans to transition 50 percent of all reimbursements to value-based models. In the private sector, the Health Care Transformation Task Force, made up of insurers and providers, has pledged to convert 75 percent of their business to value-based payments by 2020.

Experts agree that the prevailing fee-for-service model, which pays for more care rather than good care, must change, but there is no broad agreement as to how the system can get from here to there. For now, frontrunners are experimenting with reimbursement models, looking for keys to saving money and improving care.

Behavioral health

How the trend will translate to behavioral healthcare is still an unknown, but pilot projects underway through CMS, as well as initiatives launched by private payers and managed care organizations are pointing the way.

Clearly, the fee-for-service infrastructure will be difficult to retool. Many providers benefit from the existing volume-based model and fear that any change will negatively affect their solvency. Few are prepared to stake their revenue on standardized quality measures—which in behavioral health are still in development.

“There’s also a dearth of data available on quality,” says Suzanne Delbanco, PhD, executive director of Catalyst for Payment Reform, a non-profit focused on reimbursement reform. “There has to be agreement on measures. If quality will be a component, we need to make sure that data and infrastructure to collect it are there.”

Another question on everyone’s mind is how sustainable these new payment models can be for the long-term. As value-based reimbursement permeates medical care—primary care particularly— behavioral health providers might find themselves caught in the current of new delivery models and new types of partnerships.

“You have to think about how your services fit into the rest of healthcare spending,” says Adam Falcone, a partner in the health law practice group at Feldesman Tucker Leifer Fidell LLP, in Washington, D.C. “In a value-based model, this is an exchange between a buyer and a seller. You have to demonstrate value, collect data and have the ability to manage the total cost of care.”

New payment models emerge

There are two basic payment models emerging that could be adopted in behavioral health: Global payments and bundled payments.

The global payment model has some traction, and it requires providers to manage comprehensive patient costs with zero-based budgeting. This cost-based model is used to determine a per-patient, per-month spending rate. In some cases, there is a shared savings layer that provides financial bonuses to clinics that hold costs below a defined baseline. The distinction is in the grouping of care costs into a fixed payment for fixed population for a specified period of time.

A classic example might be Medicaid managed care. A state would contract with a managed care entity and pay it a per-patient, per-month rate. The managed care entity would then allocate the money in the best way possible across the population and the services needed.

Global payment is sometimes called “capitation,” but the difference from the old model is that quality measures and bonuses are now part of the structure.

Bundled payment is already available in behavioral health. The Medicare and Medicaid Prospective Payment System (PPS) that exists for Federal Qualified Health Centers and Rural Health Centers is a bundled payment approach, based on the average cost of all allowed services per-patient, per-episode, with episodes comprising many individual services. The 2014 Excellence in Mental Health Act is expected to establish a similar PPS for the emerging Certified Community Behavioral Health Clinics (CCBHCs), which still have another year of planning to complete before pilot projects begin.

Bundled payments can also be thought of as episode or case rates. They are predetermined payments that cover the average cost of all services required for a specific episode of care. This model provides financial bonuses for providers who can achieve the outcome at a lower than expected cost.

However, according to Delbanco, the most common scenario right now is a more simple pay-for-performance (PFP) model, which keeps prevailing payments the same for providers but includes limited bonuses based on meeting quality milestones.

 “Evidence on those systems is mixed,” Delbanco says. “There are instances where it has improved quality, but little evidence that it can help contain costs. Better quality care is more expensive in most cases.”

She adds that there has been little movement on the type of bundled payments outlined in the Prospective Payment System.

“There’s been more talk than action on bundled payments, but it’s a promising area because it has been proven to improve quality and contain costs,” she says.

Pilot projects underway

There are a number of programs underway in both primary and behavioral health that will hopefully prove out just how sustainable this pay-for-value approach will be for providers.

In Oregon, for example, the state’s Alternative Payment Methodology (APM) pilot is an attempt to align payment with whole-person care through patient-centered primary care medical homes. In some settings, primary care practices have embedded behavioral health professionals in their on-site teams in order to provide warm hand-offs and referrals.