Coming Reimbursement Formulas for Health Systems
authors Lynne Jeter
Many health systems are headed to specific formulas for behavioral health parity. One primary accountable payment model (APM) involves a base payment layer with four funding models, according to Dale Jarvis, CPA, managing consultant for Dale Jarvis & Associates LLC, based in Seattle, Wash. Jarvis specializes in the development and implementation of health services payment models and service delivery designs to support the American healthcare system’s transition from fee-for-volume to fee-for-value.
Model 1: Capacity Funded Services, also known as the “fire department model.” It’s generally paid in one-twelfth monthly increments, based on a budget that supports sufficient staffing and other resources to field necessary capacity to meet potential demand. It covers services where volume may fluctuate, but staff must be available to meet the need, such as crisis lines, community health teams, and crisis triage/stabilization. Relevant pay-for-performance (P4P) measures include response/access time, client/family satisfaction, referring party satisfaction, resolution of problem, and care transition success.
Model 2: Fee-for-Service, also known as the “payment for volume model.” Payment is made for every authorized and approved service at an agreed-upon rate. Even though the money follows the client, the incentive is to provide more service with no differentiation in payment tied to whether the service is needed or useful. Services that can be easily billed in units of service and don’t fit another payment model, as a last resort, include emergency room services, urgent care clinics, respite and care. In a mature system, the list is quite short. Applicable P4P measures include response/access time, client/family satisfaction, achieving behavioral health outcomes and health outcomes, and provide care within Utilization Management Guidelines without over-serving.
Model 3: Case Rates/Bundled Payment covers the cost of a defined episode of care. It may be in the form of a single lump sum for short duration episodes or monthly installments for longer-term episodes. These services include inpatient care, detox services, health home services, specialty behavioral healthcare and specialty medical care. Relevant P4P measures cover the same issues as Model 2, with one exception: providing care within Utilization Management Guidelines without underserving.
“For example, if I have diabetes, payers are paying a clinic that’ll treat my diabetes as bundled payment for all my diabetic care, rather than paying on a fee-for-service basis,” explained Jarvis. “If I have a serious mental illness, payers are paying a bundled per month payment for all community-based services that I’d need over the course of a month. Typically, my primary care physician wouldn’t be part of that bundle, but my psychiatric medication management and any kind of counseling session I had, case management services would all be bundled.”
Model 4: Sub-capitation is a per-member-per-month payment to an accountable care organization (ACO) or comprehensive provider that represents the average anticipated cost of providing a defined benefit package to anyone in the enrolled population who needs particular care. Relevant P4P measures cover the same issues as Model 3.
In the bonus/shared savings layer, there are two groups of outcomes: system-wide and individual. In the system-wide outcomes, there must be follow-up after hospitalization; a reduction in inpatient admissions per 1,000; and a reduction in the increase in total health spending per person. Regarding individual outcomes, a depression score under 10 is measured by the PHQ-9 tool, and answers whether a chronic condition like diabetes is under control.
“In the P4P/Outcomes process, identify the most important outcomes to measure,” Jarvis suggested. “Then develop the benchmark metric for each goal (outcome). Identify the baseline metrics for each measure per provider. Measure frequently. You earn your bonus if you show improvement or hit the benchmark.”
Dale Jarvis & Associates