Published on 25 March 2013
Physician Payment Reform: Preparing for Value-Based Reimbursement

Primary care is shifting to payment based on providing higher quality, lower cost health care. New payment models – such as patient-centered medical homes (PCMH) – replace or supplement traditional fee-for-service payments with per-member per-month payments, and emphasize coordinated care, quality measurement, and accountability. Some models offer cost-sharing, as with the Medicare Shared Savings Program for Accountable Care Organizations (ACO).

In fact, payment reform will affect more and more physicians whether they want it or not. Medicare’s new value-based payment modifier will become mandatory in 2015 for practices with at least 100 physicians. Medicaid and private health plans are also experimenting with value-based payment. As accountability increases, and fee-for-service rates decrease, small- and medium-sized practices might have trouble keeping up.

Proactive Steps to Prepare for Physician Payment Reform:

Physicians can take steps to prepare themselves for the shift to quality-based payments, and an excellent article in the February 2013 edition of Physicians Practice is a great resource. Aubrey Westgate does a great job of describing ways physicians can be proactive, and of collecting advice from a number of experts in the field, including me.

Here is a quick overview of the article’s main points:

1) Keep Up with Payors’ Value-based Payment Opportunities

The most common quality-based payment models health plans use are PCMHs, ACOs, and bundled payments. The Centers for Medicare and Medicaid Services (CMS) also has launched a Comprehensive Primary Care (CPC) initiative, which involves not only Medicare and Medicaid but also major private-sector payors.

Even if payors in a certain area don’t yet offer physicians those options, they will soon. Physicians should keep their eyes on what opportunities they have to take advantage of new payment incentives. For more information, see my recent series on payment models and cases.

2) Self-Assess your Practice’s Readiness for Value-Based Payment

Before a practice launches into value-based payment, it should first know how it performs on existing quality measures. For example, many payors already keep track of how well physicians care for patients with chronic diseases, and how often they adhere treatment guidelines.

“We’re starting to see more and more where reimbursement is going to be not just value-based or performance-based, but it’s also going to be increasingly expected that physicians follow evidence-based guidelines or they will be nudged to follow those increasingly.”

- Kip Piper, in Physicians Practice, February 2013, “Getting Paid for Value, a Proactive Approach

Practices should also know how they compare with other practices in the area, and in the article I suggest physicians ask health plans for any comparison information they have.

3) Set Expectations, Improve Performance

There are several clear ways physicians can build bona fides in quality-based health care, even before payors begin to implement physician payment reform. Physicians can:

Again, even if pay0rs are not yet demanding additional quality and accountability, physicians should start preparing for payment reforms to come eventually. It would be much more difficult for a physician practice to change its business model hastily, as fee-for-service revenues decline and payors demand greater accountability.

“That switching out, it’s like going on the interstate and having to switch out the engine of your car while still driving down the road — it’s very hard to adapt.”

- Kip Piper, in Physicians Practice, February 2013

About Author

An expert on Medicaid, Medicare, and health reform, Kip Piper, MA, FACHE, is a consultant, speaker, and author. Kip Piper advises health plans, hospitals and health systems, states, and pharma, biotech, medical device, HIT, and investment firms. With 30 years’ experience, Kip is a senior consultant with Sellers Dorsey, top specialists in Medicaid and health reform. He is also a senior advisor with Fleishman-Hillard and TogoRun. For more, visit KipPiper.com. Follow on Twitter @KipPiper, Google +, Facebook and connect on LinkedIn.

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