New payment models gain traction

MANAGED HEALTH CARE EXECUTIVE asked Cynthia Ambres, principal in the advisory practice of KPMG as a partner in their Global Healthcare Center of Excellence, about the future of payment reform.

Q: As we move away from fee-for-service, how will payers and providers negotiate payment in the future? 

A: We are already beginning to see a shift in payment structures as providers and insurers try to attach true value (outcomes data and patient satisfaction/compliance) to payments. Until all sources of reimbursement- government and commercial-align their payments to value markers, we will not see a broad adaption of this change agenda.

Q: How should payment be designed to differentiate between primary care and specialty? 

A: Bundled payments, is one method that is finding traction. This allows providers to be the ‘directors’ in patient care and appropriately removes the payer from piece-meal decision making and interventions into clinical care that are better orchestrated by the delivery system.

Q: What's the most difficult part of payer/provider negotiations? 

A: We are shifting our focus, finally, to give increased value and ultimately payment to primary care areas. This allows the physicians that are responsible for sorting out the myriad of issues that might face a patient as they age and experience health challenges across the continuum of their lives to be fairly compensated. The primary care provider must be paid appropriately for their time and expertise as they work with their patients as partners in their care, helping them make informed decisions and making care more efficient through coordination. This also recognizes the true value of the cognitive work that is required to be an excellent physician that sees the patient more holistically rather than a series of organ systems. The specialist still holds value of course, but there must be a notable shift of payment distribution toward the generalist. We must also involve both the primary physician and the specialist in the risk equation, so that both have skin in the game to make care more affordable.

There are many barriers to moving the needle here. We are accustomed to adversarial provider-payer relationships, short term contracting without necessary commitments from either side, and we have difficult bundling costs because historically we have not defined cost very well in most cases. It is important for payers and providers to have on-going discussion and planning meetings that are not attached to the contract cycle but rather to a goal of long term improvement and sustainability. Longer contracts, embedded with quality outcome goals and metrics, ultimately designed to assign bilateral risk, are essential to align incentives. Activity based costing will redefine the pricing platforms and increase the ability to develop bundled payments that will drive provider accountability for both quality and cost.

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