changing payment models

A positive side to changing payment models   

Referral methods and payments models are shifting, and providers who understand what this means will prosper!

Referral methods and payment models are shifting, and providers who understand what this means—and what referral networks want in their post-acute providers—will prosper.

This was the theory posited to attendees of the CONNECT 2016 conference by Mark Parkinson, president and CEO of the American Health Care Association (AHCA). As keynote speaker, Parkinson noted that while risks to post-acute care providers have changed, the good news is that they now have the power to control their own destiny.

With that, he took some time to explain what he views as the most important risk today to providers—changing payment models. It’s a theme that was echoed by SNF billing managers in research conducted by ABILITY, in which “constantly changing CMS processes” were identified as a key stress point.

The shift from traditional fee-for-service (FFS) payments to payments via alternative models will impact providers in the near future, so it’s important to prepare now, said Parkinson.

Recently, AHCA commissioned Avalere Health, a Washington, D.C., consulting firm, to study the topic and discovered that, compared to six years ago, the shift from Medicare payments being mostly traditional FFS to Accountable Care Organizations (ACOs) and Medicare Advantage (MA) has transformed significantly.

In 2010, for example, traditional FFS made up 75% all payments, while payments to providers via MA was at 25%. (ACOs had not yet been fully established.) As of 2015, FFS had shifted to 54% of payments, ACOs to 14%, and MA to 31% of all Medicare provider payments.

More importantly, the analysis projects that by 2020, 40% of payments will come from FFS models, 16% will come from ACOs, and 34% will be made through MA plans. Compared to an earlier analysis by Avalere, this means that the shift will not be as dramatic as previously thought, which is good news for providers, Parkinson noted. “We believe there won’t be massive growth in alternative payment models before 2020,” he said.

What’s more, Parkinson said, even though payment models are changing, and even though lengths of stay in managed care and ACOs are shorter than traditional FFS, Avalere found that there will be more post-acute days over the next five years than there are right now. Today, there are about 91 million post-acute days in the entire country, but by 2020, that number will reach 101 million.

He cautioned, however, that it “doesn’t mean that everyone will prosper” since the payer entities continue to narrow their networks dramatically. With that, he described how referral networks have and will continue to change as alternative payment models grow: In the past, hospitals would send a few residents to every SNF in the area, with the discharge planner making the decisions. “This is not working anymore,” said Parkinson, because in most markets payers will demand data from post-acute providers that demonstrates quality and efficiency—and in every market, these data will include rehospitalization measures.

Because of this, Parkinson implored his audience to work on reducing resident readmissions. “If there is only one metric you implement, I would say that it should be rehospitalizations,” he said.

The good news is that “we now control our own destinies,” Parkinson added. “Five or six years ago, there were proposals on the Hill that would have been devastating to us. Today, we are past that and we are now at a point where providers can control their own destiny once you figure out what metrics payers care about” and implement those measures in your operations.

If you do that, Parkinson concluded, you will do really, really well.