Medicaid overutilization a concern? Deny, reduce, or bundle payments
A growing number of states are implementing policies to deny or reduce payments for hospital-acquired conditions or potentially preventable readmissions. Exactly how much does this save?
"In most cases, the data is just becoming available as to the care and cost impacts of these reforms," says Deborah Bachrach, JD, a senior program consultant with the Center for Health Care Strategies in Hamilton, NJ. "However, states report that these reforms are already producing better data." This is critical to measuring quality and outcomes, as well as cost-effectiveness.
"We still largely live in a fee-for-service environment, where we reward more activity," says Sandeep Wadhwa, MD, former chief medical officer with the Colorado Department of Health Care Policy and Financing. "For a long time, that's been viewed as actually promoting safety, but there are disadvantages to just paying for things."
One is that overutilization is encouraged. "We should really reserve the hospital for when the benefits clearly outweigh the risks," says Dr. Wadhwa. "We are developing payment policies that are both disincentives as well as incentives."
Inadequate payment system
Jed Ziegenhagen, the department's rates manager, says that the current health care payment system is "generally inadequate. It is not fair to the taxpayer, the provider, or the patient."
The Colorado HealthCare Affordability Act provided a number of reforms to the Medicaid health care system. This includes updating and modernizing hospital payment methodologies and providing an incentive pool for hospitals that meet performance targets in the areas of reducing readmissions, patient safety, tobacco use, and unnecessary emergency department utilization.
Hospitals will no longer be paid for same-day readmissions. "But, there is also some bonus money for bringing down your readmission rate, which is almost pure margin," says Dr. Wadhwa.
The concept of a bundled payment for a single admission was part of the Medicare Acute Care Episode (ACE) demonstration in 2009. "What's being talked about in health care reform is a warranty for health care, with a payment for an entire episode. The doctor and hospital bear the risk if a hip replacement or asthma patient comes back and is readmitted," says Dr. Wadhwa. "There are grants in the law around bundled payments involving hospitals. Many of them will include readmission as one payment."
Dr. Wadhwa says that health care reform's inclusion of quality initiatives, including preventing avoidable admissions, "sends a message of validation. There are so many ways our partners are hearing about this. That helps to legitimize that we're not off on some tangent. It's an exciting time to be promoting a system that is promoting efficiency, as well as patient safety."
In addition, the Center for Improving Value in Health Care (CIVHC) was established, with a broad, multipayer focus. "This will benefit Medicaid as one of many Colorado payers," notes Mr. Ziegenhagen.
One of the target areas of CIVHC is payment reform designed to reward outcomes rather than volume. An important tool to support that aim is a statewide all-payer claims database, to be administered by CIVHC. This will provide information and transparency in health care pricing, utilization, and value. "Bringing that information to the health care marketplace will drive changes in behavior, including changes in payment rates and methodologies," says Mr. Ziegenhagen.
In addition, the governor's budget included two items connected to payment reform. One is the Coordination of Payment and Payment Reform, which packages a number of payment-related items. This includes a directive to the department to examine and suggest reforms to payment mechanisms for physicians, long-term care waiver services, and dual-eligibles.
"The department has an active solicitation for a contractor to assist it in implementing part of this package and is drafting language to purchase additional services," says Mr. Ziegenhagen.
Colorado's Accountable Care Collaborative (ACC) uses a model of community-driven accountable care to measure and improve health through care coordination and client management. "Included are possible payment incentives for each of the seven regional care coordination organizations that meet specified performance targets," says Mr. Ziegenhagen.
While the ACC is primarily a delivery system reform, the belief is that payment reform and delivery system reform complement each other.
"At its essence, payment reform is about providing financing and incentives for changes in behavior in the health care system," says Mr. Ziegenhagen. "Payment reform will be effective only if the learning and support environment in a robust health care delivery system enables the changes that we are trying to incentivize through payments."
Mr. Ziegenhagen adds that some of the components of federal health care reform will provide potential funding to make changes that are necessary for the sustainability of Colorado's Medicaid program.
"While there are many changes in the federal health care reform legislation, few were brand new," says Mr. Ziegenhagen. "We have been working on some projects that are aligned with what came out of the federal health reform legislation. The department is working to assess which of the numerous grant funding and other opportunities in health care reform will best pair with our homegrown efforts."
Contact Mr. Ziegenhagen at (303) 866-3200 or [email protected].
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