The Shift to Value-Based Payments in Anesthesia and Healthcare

By November 9, 2015Health

Healthcare providers and hospitals are in the midst of a significant change to the way they do business in the United States.  The traditional model of fee-for-service payments, under which health care providers are paid for each service rendered (lab test, office visit, procedures), is quickly being replaced with a new approach.  Under what is broadly termed the “value-based payment” model, payments to healthcare providers are tied to patient outcome, rather than simply on volume of services provided. While individual programs may vary in their details, value-based payments incentivize providers to deliver higher quality care and outcomes for their patients by tying payment to performance.

The ultimate goal of any value-based payment program is to reduce wasted health care dollars while at the same time improving patient health.  The U.S. has for some time, spent a greater percentage of its wealth on healthcare than any other industrialized nation; in 2012, nearly 17% of GDP (gross domestic product) in the US was spent on healthcare. Yet, despite spending significant resources on healthcare, the U.S. does not have the healthiest citizens. In one study comparing the U.S. to 10 other industrialized countries, the U.S. was ranked a dismal last place.  In fact, it is estimated that for 2015, the life expectancy in the U.S. will again be below the average for industrialized nations. Modifying the way healthcare is delivered and paid for is one approach being used to improve patient outcome and health in the U.S.

Both private and public health payers are embracing the idea of value driven reimbursement.  The Affordable Care Act (ACA) authorizes health insurance programs to utilize a value-based insurance design. Value-based insurance plans are designed to encourage insured beneficiaries to purchase lower-cost coverage and services, while encouraging providers to stop using wasteful services. More private payers are moving to value-based reimbursement models such as pay-for-performance (P4P) programs, under which providers are rewarded for meeting pre-established measures for quality and efficiency.

Other value-based reimbursement models include the use of Accountable Care Organizations (ACOs) and bundled payments, which are single payments that covers services delivered by two or more providers during an episode of care or during a specified time period. Such “episode of care” payment models are becoming increasingly common. These models require communication and cooperation across disciplines in order to provide quality care efficiently. Anesthesia providers are familiar with working with other disciplines and managing a spectrum of diseases in different settings. As a result, these providers can be particularly useful members of healthcare teams paid under an episode of care payment method and can help increase the value to both providers and patients.

In addition, both federal and state based payment systems are using value-based theories in constructing reimbursement schemes.  The Centers for Medicaid and Medicare Services (CMS) is moving quickly towards a value-based model. One method is known as the “Value-Based Payment Modified Program”. This program adjusts payments under the Medicare Physician Fee Schedule (MPFS) to a physician or group of physicians based on quality and cost of care provided. Adjustments can be positive, negative or neutral; thus, providers who provide high quality care at a lower cost can receive a positive payment adjustment while those providing low quality care at a high cost receive a negative adjustment. Determination of quality and cost is made through standardizing performance measures and creating benchmarks for comparison.

Physicians who receive payments under Medicare plans should be aware of another important value-based model of reimbursement.  Under the ACA, “eligible” healthcare providers (those who provide services under the Medicare Physician Fee Schedule) are incentivized to participate in a CMS qualified Physician Quality Reporting System (PQRS). This system encourages eligible providers to report information about their quality of care to Medicare in an effort to create databases of clinical data that can provide evidence-based information to inform best treatment practices and cost effectiveness. For providers of anesthesiology services, the National Anesthesia Clinical Outcomes Registry (NACOR) is the qualified PQRS. As with other physician reporting registries, NACOR provides a database of case data that can be used for purposes of quality improvement and benchmarking. Eligible providers of anesthesiology services who are covered under the reporting system include, Doctors of Medicine and Doctors of Osteopathy, but also Physician Assistants, Nurse Practitioners, Certified Nurse Anesthetists and Anesthesiologist Assistants.

What are the “quality measures” reported to NACOR or other types of quality reporting systems? The types of measures change annually and vary by specialty. Generally, quality measures will include areas such as patient safety, communication and care coordination, clinical care, and efficiency and cost reduction. Anesthesia core measures are based on the consensus recommendations of the Anesthesia Quality Initiative (AQI) and the Multicenter Periopoerative Outcomes Group (MPOG). For anesthesiology, measures are divided into interoperative, PACU Discharge, and Post-Op and measure various outcomes that could happen at each stage of patient care. There are many resources available to assist providers who are new to PQRS and who may be unclear about how to take quality measures or how to report data.

The move to value-based payments is intended to provide greater quality of care to patients. But what impact does this reporting system have on healthcare providers? While the reporting systems are considered “voluntary,” participation (and non-participation) does have a financial impact. Beginning in 2015, CMS will apply a negative payment adjustment to individual EPs and PQRS group practices that did not report on quality measures for services rendered in 2013.  All providers who meet reporting requirements for 2015 can avoid a negative payment adjustment in 2017. Providers failing to report in 2013 will receive a negative adjustment for 2015 and will be paid -1.5% less than the Medicare Physician Fee Schedule (MPFS) for that particular service. Starting in 2016, the adjustment will be -2.0%.  By penalizing providers who fail to participate, CMS seeks to encourage the reporting of quality information from eligible providers.

To thrive in the new healthcare paradigm, healthcare providers must become familiar with the change in payment models and understand how the latter works.  Participation in Quality Improvement initiatives is not only important for patient care but also for financial reimbursement in the current health care maelstrom.  Doing so will help keep healthcare practices financially sustainable and will also help them thrive in the competitive marketplace through measurable improvements in quality and cost of care.