Coming Reimbursement Formulas for Health Systems

Behavioral health parity is the goal, says leading industry specialist.

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.”

 

LINKS:

Dale Jarvis & Associates

More in Business

Business  May 04

Reimbursement Parity for Behavioral Health

This payment specialist says reimbursement reform has been slow, but signs point to change starting to come more quickly.

Business  Apr 07

Planning for Long-Term Care

“A man who procrastinates in his choosing will inevitably have his choice made for him by circumstance.” – Hunter S. Thompson

Business  Apr 06

At the Crossroad of Innovation & Operations

How can healthcare organizations best innovate in the swell of industry change?

Business  Feb 29

‘Trigger Tool’ Available for Hospitals and SNFs

How can ‘trigger tools’ identify adverse events?

Business  Feb 29

Staffing Predicaments of Full Open Enrollment

How will staffing change with full open enrollment?

Business  Feb 08

Challenging Population Health Management Issues

The nation’s leading forum on innovations in population health is slated for March 7-9 in Philadelphia.

Regulatory / Compliance  Feb 08

RAC is Back

After a pause in the action while CMS tweaked the RAC program and began the interview process for new auditors, RACs are back … with…

Clinical  Feb 08

The 7th Character

How important is the 7th character for Medicare/Medicaid claims?

Business  Jan 26

Taken for Granted: A New Era in Care – the New SSM Health Saint Louis University Hospital

Patient-centered design will enhance the new state-of-the-art academic facilities.

Clinical  Jan 26

New Outpatient Care Center Under Construction in South St. Louis County

Washington University School of Medicine in St. Louis and Barnes-Jewish Hospital (BJH) are building a new outpatient facility in south…

Business  Jan 19

From Medicine to the Business World

Hospitalist, intensivist and entrepreneur relishes helping other women succeed.

Business  Jan 15

Cybersecurity and Healthcare

The NIST Cybersecurity Framework is aimed at protecting the nation’s data.

Business  Jan 15

Washington University Alumni Have Human Periscope at Events

Washington University alumni now have a new proxy at St. Louis business mixers.

Business  Jan 15

Midwest Healthcare Leaders Converge To Discuss Cutting-Edge Innovation

Physicians, investors and entrepreneurs directly exchange ideas at unique business mixer in heart of America.

Business  Jan 06

Evidence-based Design: Marrying Form & Function on the Front Line

Evidence-based design experts know that outfitting healthcare facilities is about much more than just selecting attractive furnishings…

Business  Dec 15

Chef’s New Cookbook Helps Chemotherapy Patients Eat Their Way Through Treatment

Cook identifies what to adjust to make flavorful food for cancer patients.

Business  Dec 15

Taken for Granted: A Journey Through St. Louis Healthcare

In a city of world renowned healthcare, expansion is moving rapidly.

Business  Dec 14

No Correlation Found Between Length of ER Stay and Mortality Rates

How much does ER and ED overcrowding affect trauma patient care?

Business  Dec 11

Retirement Funding Strategies for High Income Earners

All retirement plans are not created equal. High income earners have to do a little homework to find the best solution to maximize…

Business  Dec 11

MGMA Conference Tackled Evolving Practice Needs

The recent MGMA annual meeting in Nashville proved there’s no room for ‘business as usual’ in today’s evolving healthcare…

Clinical  Dec 11

New Amniotic Allograft Storage Breakthrough Enriches Healing Potential

Advanced stem cell preservation is giving researchers and physicians multiple options.

  Load more content