Provider Service Volume is No Longer King

By: Valerie Shahriari

As the shift from fee for service to value based payment develops, one thing is crystal clear:  volume is no longer king.  Prior to 2010, medical providers were being paid on the amount of services that they rendered. The more patients that they treated, the more money they made. That certainty has disappeared with value based compensation and outcomes are now driving the compensation.  To be successful, a provider must learn to bend both the quality and cost curve.  In short, providers must increase quality while decreasing costs.

When contemplating negotiating or entering into a value based contract, the first thing to consider is the amount of financial risk that your practice or healthcare business can take on.  The four main types of financial payments are:

Payment Structures

The best way to determine which payment model best suits your needs is to hire a qualified financial healthcare analyst who will be able to generate financial risk modeling.  A provider will then have a common starting point to negotiate as well as a better understanding of the issues, risks, and potential cost savings involved. 

After financial risk has been evaluated, the next area to consider is which quality metrics to include in the value based contract.  Unfortunately, there are no easy answers for this.  In fact, there are likely more questions than answers at this point.  One certainty is that wherever CMS goes, the rest of the payers are likely to follow.  Under the Medicare Access and CHIP Reauthorization Act of 2015, the Secretary of Health and Human Services is directed to consolidate components of the three specified existing performance incentive programs into a new Merit-based Incentive Payment (MIP) system under which physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists would receive annual payment increases or decreases based upon their performance as measured by standards the Secretary shall establish according to specified criteria.  This new model is still a couple of years away from implementation but will be important to follow as it will likely be the guidepost for many payers to follow.

Additionally, the Center for Medicare and Medicaid Innovation is also testing numerous models that have a wide range of quality metrics outlined and these too will inspire managed care payment models that will be implemented on a larger scale.  When reviewing these metrics, the provider’s focus should be centered on what the practice does well.  What is it that your practice or business does each and every day really well that makes a difference in the lives of your patients?  This is where the opportunity lies!

One thought on “Provider Service Volume is No Longer King

  1. Pingback: How to Get Managed Care Companies to Pay For Your Practice’s Improvements | Florida Healthcare Law Firm Blog

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