By Tina Morey
Recently, America’s Health Insurance Plans (AHIP) gathered some of the nation’s most innovative plans and providers together to discuss their accountable care models with the expectation to share outcomes, successes and failures. The hope was to spur on creativity for possible duplication in other markets.
Among the models, several common themes emerged, including collaboration between the plans and providers, focus on the triple aim and creating long-term relationships. Many of the groups discussed the change from a combative payer/provider relationship to one of a partnership in an effort to optimize each organizations bottom line. In fact, there were several groups represented whose pilot was multi-stakeholder — multiple plans, providers, employer groups, etc. Competition was put aside for the best interest of the community.
As elements of the Accountable Care Act (ACA) are being ramped up, it is useful to understand their origin. CMS has a long history of supporting many types of payment reform demonstrations and the new bundled payment system is a good example.
Bundled payments are a new payment methodology in the ACA and this system is based on the Acute Care Episode (ACE) demonstration project. The ACE program pays a flat bundled rate for 9 orthopedic and 28 cardiac procedures. This fee includes hospital care, physicians and outpatient follow up and rehab. There are 22 quality measures reported each quarter to CMS. Physician payments can be increased by 25 percent if certain cost reduction targets and quality goals are met. The Baptist Health System in Texas participated in the ACE project and immediately began to receive gain sharing payment from Medicare that ranged from $65 to $6,000 per admission.
Other CMS demonstrations have shown that bundling payments improves care for patients, and leads to better health, better care and lower costs.
This post is part of a new series designed to highlight the most significant new reports on health care management or policy–ranging from government reports to health care business studies.
We will highlight reports that may be useful to the thoughtful and busy health care leader. Our health care programs at the Opus College of Business emphasize leadership, organizational transformation, and operational excellence. The reports we select will reflect these themes and can be helpful in strategy formulation, operations improvement and leadership activities.
This series will show you at a glance what you need to know about current developments in health care management and policy.
Modest Acceleration in U.S. Health Care Costs According to the S&P Healthcare Economic Indices
August 18, 2011
One of the key drivers of the federal budget deficit is Medicare. Most actuarial assumptions that Congress uses to predict future costs show Medicare costs rising much faster than inflation. However, this S&P report shows that Medicare cost inflation has had a remarkable decrease. If this cost inflation remains low, it seems reasonable that the federal government can resist significant reductions to provider payments or increased contributions from beneficiaries.
A recent report from the Minnesota Department of Health (MDH) reported that health care spending in Minnesota grew by 3.8 percent in 2009, the slowest growth rate since 1997. The report found that Minnesota continued to spend less on health care per person in 2009 than the nation as a whole ($6,913 vs. $7,590). Also, according to the report, health care spending in Minnesota accounted for 14.1 percent of the overall economy. Nationally, that figure is 16.5 percent. This meant that Minnesota could spend over $5 billion of its wealth on private sector job creation and other growth strategies – instead of health care – which will give Minnesota companies a completive advantage over other firms in the United States.
Another interesting result of these findings is the potential impact on Paul Ryan’s (R-WI) plan for Medicare. Rep. Ryan proposes that each Medicare beneficiary would receive a “premium support” amount which beneficiaries would use to go to the market and buy insurance. If this amount is the same nationally, Minnesota seniors will be able to buy excellent plans with broad benefits while seniors in states like Texas or Florida will need to buy plans with minimal benefits and high deductibles.
For the past 5 to 10 years, Minnesota providers and government have made investments in many of the key cost control features of the Affordable Care Act (ACA), including: integrated provider systems, substantial investments in HIT, and the broad use of comparative effective research through the Institute for Clinical Systems Improvement.
This new data from the MDH provides hope that as the ACA becomes more fully implemented, the rate of health care inflation will subside – not only in Minnesota, but nationally as well.