By Robert Evans, National Director of Network Solutions, Rising Medical Solutions
In my last article, “The Accelerating Change in Paying for Care,” I discussed how value-based payment has not only emerged as the future of healthcare reimbursement, but how that trend is gaining rapid acceptance in the marketplace. In workers’ comp, we are also seeing momentum towards value-based purchasing, and our industry is ripe for transition away from fee-for-service arrangements. As with any evolutionary change, however, it will take time to build effective value-based models. The time to act is now.
A Foundation to Build Upon
There are three common initiatives in “value-based reimbursement:” pay-for-performance, accountable care organizations (ACOs), and bundled payments. With pay for performance, providers are offered incentives based on achieving favorable medical outcomes. ACOs provide a structure for pay-for-performance that uses quality and cost-savings metrics for a certain patient population. In the case of bundled payments, contracted providers accept a single payment for all or most services during the course of treatment.
Of these models, bundled payments are the logical step towards advancing value-based care in workers’ comp. The pay-for-performance and ACO models are currently geared towards group health, where value-based care can more easily take a holistic wellness approach and focus on a given patient population. The episodic nature of workers’ comp complicates a traditional holistic approach, and patient populations are a moving target. Reimbursement tied to a specific outcome or metric are also problematic given the industry’s current struggles with measuring provider performance. Rising’s 2014 Workers’ Compensation Benchmarking Study found that only 29 percent of respondents measure provider outcomes and less than 5 percent use risk/reward-based contracting strategies with medical providers. Given these challenges, bundled payments are a sound foundation from which workers’ comp can build upon today, with an eye towards tying in other value-based concepts as the industry overcomes various hurdles.
Existing Bundled Payment Models in Workers’ Comp
The notion of bundled payments is not foreign to workers’ comp. Medicare’s Diagnosis Related Groups (DRGs), which specify global rates for hospital stays, form the basis of reimbursement for many states’ inpatient hospital fee schedules. Additionally, value-based reimbursement is already offered for certain services within the industry. For catastrophic injuries, comprehensive care is available for a fixed fee. For physical therapy, programs offer case rates based on diagnoses or per-visit rates. On the surgery side, a single case rate can cover the costs of the facility, surgeon(s), anesthesia, and post-operative care.
The Value of Value-Based Purchasing
In my previous article, I addressed some of the practical benefits value-based arrangements can offer to providers, payers, and managed care organizations. Here I will outline some macro-level impacts that value-based purchasing can have on workers’ comp.
Bundled payment methodologies serve the needs of the workers’ comp market far better than a fee-for-service model. From a quality perspective, providers are contracted based on performance parameters and credentialing criteria, and are further incented to ensure optimal care and positive outcomes, if for no other reason than to keep their costs in line with pre-negotiated rates. It also promotes care coordination, as multiple providers may share a single payment and work in concert to provide exceptional treatment at a reasonable price.
Quality care and better outcomes can expedite return to work, as does timely treatment. When service volume is no longer the basis for compensation, unnecessary treatment is reduced, minimizing costs and unneeded care. For example, in Rising’s experience with bundled surgical arrangements, patients typically have an appointment scheduled in 48 hours or less. And while some argue that value-based care doesn’t discourage utilization, we’ve found that these quality providers facilitate utilization below the industry average for eligible surgical procedures.
Patient education and medical literacy are also positively impacted in a value-based paradigm. With bundled payments, workers’ comp providers should be highly motivated to engage and educate patients regarding their care. For instance, a physical therapist receiving a case rate may take extra time to ensure a patient understands an at-home therapy regimen. Likewise, a surgeon may explicitly instruct a patient regarding medication and patient responsibilities to minimize post-operative complications. Patients are empowered throughout their full continuum of care.
Value-based purchasing can also foster partnerships with providers at a critical time in our industry. With the access to care issues created by the Affordable Care Act (ACA), and a shortage of doctors that is estimated to be 46,000 to 90,000 by 2025, now is the time to stop micromanaging clinicians and establish mutually beneficial relationships. Providers succeed through increasing quality and reducing costs, and are rewarded with patient referrals in the short term and possible risk/reward reimbursement strategies in the long term.
Don’t Wait for the Silver Bullet
With all of these benefits, it is easy to envision how value-based bundled programs could be highly effective across the spectrum of workers’ comp treatment. Timely, collaborative, and better care is essential to patient satisfaction and returning workers to maximum medical improvement as quickly as possible – the cornerstone of our industry.
You might wonder how to take practical steps towards value-based purchasing, and my best advice is not to wait for that “silver bullet.” There may be no “perfect model” now, but there are certainly better models that you can utilize and build upon for tomorrow. Take whatever opportunities you can, however small, and improve or expand on them over time. For instance, identify your most trusted providers in a region or a specialty, and propose to them a bundled arrangement. You may find a positive reception, or at least begin a dialogue. It is the groundwork that you lay today that will form the basis of your future success in value-based care. The important thing is to act.
About Robert Evans
Bob has 30-plus years of experience in the areas of: strategic provider solutions, network program optimization, provider contracting, rate and discount analysis and medical economics. At Rising Medical Solutions, Bob is responsible for developing cost-effective, quality-driven relationships with hospitals, physicians and ancillary providers across the nation. Prior to Rising, he worked at Coventry Health Care (formerly First Health/HealthCare Compare) for 21 years, where he was most recently Vice President of Network Development. There, he built and managed a provider network that profitably supported commercial risk and non-risk, network lease, workers’ compensation, Medicare Advantage and specialty lines. Bob developed his foundation in the business at Evanston Hospital Corporation, where he worked for 10 years, negotiating and managing hospital and physician group risk and non-risk contracts. Bob has a Bachelor’s degree in Business Administration and Psychology from Illinois State University.
Rising Medical Solutions is a national medical-financial solutions firm that provides medical cost containment and medical care management services to the workers’ compensation, auto, liability, and group health markets.