(4) Consumers will control more of their health care dollars. An increase in individual and high-deductible health plans will force consumers to be more active in their own health care and will lead to more consumer decision making. Providers will be required to adapt to increased demand for evidence-driven medicine and provide greater data and transparency.
(5) Providers will be financially challenged. Quality through coordination and evidence-based medicine, not gatekeeping, is the answer. Put another way, better care will lead to better health, which will lead to lower costs. This transition from fee-for-service medicine will be wrenching--evidenced by recent practice closings and the growing trend toward consolidation.
As the sweeping transformation in health care takes hold, several models appear to be taking shape. Each has its strengths and weaknesses and each presents opportunities and risks, but the following three deserve serious analysis and represent different points on the risk spectrum:
-- Bundled payments model: calculates total historical payments for the various components of a bundle and then discounts or at least holds constant that amount, placing the responsibility for cost and quality control in the hands of the collective providers.
-- Accountable Care Organization (ACO) model: seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients.
-- Capitation model: sends a fixed per-patient prepayment of premium dollars to a provider in return for medical services.
Let's take a closer look at each.
Bundled Payments. These are largely proven, but their track record in driving significant volumes has generally been marginal. Success is visible more clearly in terms of cost controls. Think of them as a middle ground between fee-for-service reimbursement and capitation. Nonetheless, bundled payments offer several important advantages:
(1) Providers can benefit from cost savings from any payers included in the program.
(2) Providers can derive enhanced volumes from private insurance and cash patients, who are drawn by the cost clarity and discounts. Medicare volume enhancement is driven by physician participation as well as patient desires.
(3) Physicians and hospitals can develop tighter relationships as they seek to collaborate in this new way.
(4) Silos get broken down--enhanced provider collaboration has been noted among specialties that are required to come together.
(5) Greater coordination of care will likely lead to higher quality and more satisfied patients.
(6) All payers will benefit from contracted case savings.
The critical success factors to make bundled payments work, however, include appropriate episode selection, thorough and thoughtful bundle definitions, accurate cost analysis, willing and committed partners, and the infrastructure to manage the process.