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Value-based Reimbursement Transition in the US

  • December 2015
  • -
  • Frost & Sullivan
  • -
  • 54 pages

Market Due Diligence and Strategy Considerations

The US healthcare industry is undergoing a major transition toward value-based care, affecting all its stakeholders. Centers for Medicare and Medicaid Services (CMS) are steering this transition by developing policies and alternative payment models that affect all reimbursements for healthcare services. This document provides insight into CMS’s 2018 goals for this transition, the pathway adopted to achieve those goals, and current progress towards achieving these goals. Financial performance of various industry stakeholders including physicians, providers, and the Accountable Care Organizations as well as anticipated short term trends for the CMS implemented programs are highlighted. The document includes case studies that throw light upon innovative business models designed by healthcare vendors that support providers undergoing this transition.

Background
- Payment reform has been the highlight of the US Healthcare industry in recent years.
- The journey from fee-for-service (FFS) to value-based reimbursement (VBR), as is evident by now, is slow and one that requires overcoming many hurdles.
- However, the industry is lumbering on under the mandates and guidance of public and private payers who are looking at value-based care as a means to reduce costs and improve efficiency in the healthcare system, while simultaneously improving patient care and outcomes.
- Most crucial guidance comes from the single largest healthcare payer in the US—the Center for Medicare & Medicaid Services (CMS).
- The Department of Human & Health Services (HHS), for the first time, has set specific goals for CMS payments in categories 2 through 4.

CEO’s Perspective
1 Most penalized providers continue to receive penalties in coming years under Readmissions Reduction and Value-Based Purchasing.

2 While all 900,000-odd physicians are likely to be financially affected by value-based care in 2017, they continue to find ‘meaningful use demonstration’ difficult, with costs and efforts outweighing benefits.

3 Pioneer model of Accountable Care Organizations is expected to continue disappointing members, while Medicare Shared Savings risk-free track gains additional momentum. Next-Gen model holds great promise.

4 Other Alternative Payment Models, such as Primary Care and Bundling are still in infancy and would require time beyond 2018 to contribute significantly to the transition to value-based care.

5 While all stakeholders, including vendors in the healthcare space, are adapting to this transition, the CMS-stated 2018 goals seem difficult to attain given current progress.

Table Of Contents

Value-based Reimbursement Transition in the US
Executive Summary
Research Scope
Key Questions Addressed
CEO's Perspective

Background
Background
Tiers of Value-Derived Compensation
CMS-Announced Value-Based Care Goals
CMS Targeted Payment Transition

Pay-for-Performance Providers
Category 2—P4P for Providers
Re-admissions Reduction—Provider Impact
Value-Based Purchasing—Historical Provider Impact
Value-Based Purchasing—FY 2015 Provider Impact

Pay-for-Performance Physicians
Category 2—P4P for Physicians
Value-Based Modifier—Physician Impact
Value-Based Modifier—CY 2016, 2017 Physician Impact
EHR Meaningful Use—Physician Impact

Alternative Payment Models
Categories 3 and 4—Alternative Payment Models
Accountable Care Organizations Landscape
CMS Established ACOs
Categories 3 and 4—Other APMs

Other HHS Activities
Other Activities Impacting Healthcare Stakeholders
Impact on Healthcare Vendors

Risk Sharing Pricing Models in Health IT
Health Catalyst Risk-Sharing Contract in Pop Health
Health Catalyst Risk-Sharing Business Model Example
athenahealth
Sanitas

Population Health Management
Population Health Management, Central to VBR, is Difficult Business for Providers
Health Catalyst Led Operational Efficiency Program Yielded Benefits Worth $74 Million for Texas Children Hospital
Catholic Health Partners Transitioned to PCMH and Achieved ACO Success through Explorys' PHM Platform

Conclusion
Summary
Conclusion
Legal Disclaimer

Appendix
Abbreviations
Hospital Value Based Purchasing Program— Parameter Weightage

The Frost and Sullivan Story
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