Reimbursement models have changed over time throughout the 20th century. Learn about the changes, the differences in payment models, future strategies for the government, commercial payers and providers, as well as the return to a more ACO-focused payment model. This presentation is part of our Accountable Care Organization series.

1. The Cycle of Reimbursement Models Adele Allison National Director of Government Affairs, SuccessEHS

2. Brief History of Reimbursement Models

3. 1917 Lumberjacks of the Northwest Full Risk, Community-Based

4. The Blues Third-party Fee-for-Service (FFS), Community-based 1929-39

5. Commercial FFS Employer-sponsored Health Coverage 1940-60s

6. 1965 Government FFS Medicare & Medicaid

7. Physician Fee Schedules And Diagnosis Related Groups 1974-89

8. Partial to Full Risk Capitation, Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO) 1985-90s

9. Costs Outpacing Inflation Boomers, Increased Patient Portion, Leading to Accountable Care Organizations (ACO) 2000s

10. 2012 ACOs to be Implemented A Return to Community-Based Care

11. Reimbursement Strategies

12. Government Strategies 1

13. Legislation & Policy Move from Pay-for-Service to Pay-for-Value

14. 1997 - BBA Sustainable Growth Rate (SGR) Formula

15. 2006 - TRHCA Physician Quality Reporting Initiative (PQRI) – Defined Value

16. 2009 - ARRA EHR Adoption, Clinical Data Reporting and Evidence-based Care

17. 2010 - PPACA Value-based Modifiers, Episode Groupers, Bundled Payments

18. ISSUE Medicare Sustainable Growth Rate Formula = 27.4% Adjustment

19. Commercial Payer Strategies 2

20. Reimbursement Models Capitation, Withholds, FFS, Bundling

21. ISSUE Medicare Sustainable Growth Rate Formula = 27.4% Adjustment

22. Provider Strategies 3

23. Defense Strategies, Large Group Practice, Employment, Concierge Practice

24. Example: Full Risk, or Capitation / Provider Risk

25. ABC Health Plan Enrollees Dr. Red Dr. Blue

26. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients 500 Patients

27. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients Median Age 27 500 Patients Median Age 58

28. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients Median Age 27 100 have Chronic Disease 500 Patients Median Age 58 350 have Chronic Disease

29. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients Median Age 27 100 have Chronic Disease $10 PMPM 500 Patients Median Age 58 350 have Chronic Disease $10 PMPM

30. ABC Health Plan Enrollees Dr. Red Dr. Blue 1,000 Patients X $10 PMPM = $10,000 / Month 500 Patients X $10 PMPM = $5,000 / Month

31. ABC Health Plan Enrollees Dr. Red Dr. Blue 20 Patients / Month X $75 Average Collection per Visit $1,500 / Month FFS Cost = Good 100 Patients / Month X $75 Average Collection per Visit $7,500 / Month FFS Cost = Bad

32. ABC Health Plan Enrollees Dr. Red Dr. Blue ADVERSE SELECTION

33. Example: Fee-for-Service, or Health Plan / Employer Risk

34. Episodic Care (interventions aimed at patient cure or restoration to previous level of functioning) Vs. Over-Utilization (Excessive or unnecessary utilization of health services by patients or physicians)

35. Episodic Care

36. Episodic Care Disjointed care continuum

37. Episodic Care Disjointed care continuum Limited prevention

38. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management

39. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management Unengaged patient

40. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management Unengaged patient Conflicting care plans

41. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management Unengaged patient Conflicting care plans Treatment duplication

42. Episodic Care Disjointed care continuum Limited prevention Inadequate chronic disease management Unengaged patient Conflicting care plans Treatment duplication Poor quality and safety

43. Over Utilization

44. Over Utilization Provider paid fee for every service

45. Over Utilization Provider paid fee for every service Incents unnecessary treatments

46. Over Utilization Provider paid fee for every service Incents unnecessary treatments No accountability

47. Over Utilization Provider paid fee for every service Incents unnecessary treatments No accountability No incentive to manage chronic disease

48. Over Utilization Provider paid fee for every service Incents unnecessary treatments No accountability No incentive to manage chronic disease “ Take what I can get” mentality

49. Over Utilization Episodic Care INCREASED RISK

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