The Centers for Medicare & Medicaid Services (CMS) is moving aggressively to shift healthcare payments from the traditional volume-based fee-for service model towards value-based payment models, also called value based reimbursement (VBR). This shift is focused on reducing the cost of health care in the U.S. while also giving healthcare providers incentives to improve their quality of care. These models require a risk-adjustment methodology, so payment can be adjusted based on the burden of illness of eachss individual.
What does this mean?
That means that within the same community, one patient may have a different payment rate than another based on a number of factors related to the amount of risk, or rather, work, it would theoretically take to maintain that patient’s health. Because CMS requires written proof from a qualified healthcare clinician to support the risk assigned to each patient, the crux of the HCC payment model is accurate and frequent data capture. The documentation must support the presence of the patient’s chronic or serious medical condition and include an overview of the provider’s plan for disease management. And in order for CMS to continue to recognize the patient’s condition, an assessment must occur at least once a year.
CMS’ four categories of payment models
The four categories provide a roadmap of sorts on how to progressively move from strictly fee-for-service with no link to quality, towards population-based payment models.
| Category 1 | Fee-for-service with no link of payment to quality • Limited in Medicare fee-for-service · Majority of Medicare payments are now linked to quality |
| Category 2 | Fee-for-service with a link of payment to quality · Hospital value-based purchasing · Readmissions/Hospital-acquired Condition (HAC) Reduction Program · Merit-based Incentive Payment System (MIPS) |
| Category 3 | Alternative payment models built on fee-for-service architecture · Accountable care organizations (ACOs) · Medical homes · Bundled payments (e.g., CMS Comprehensive Care for Joint Replacement) |
| Category 4 | Population-based payment · Eligible Pioneer ACOs in years 3-5 |
The many models of VBR
VBR comes in many shapes and sizes. The models will be put into place for different care settings and different patient types.
- Capitated payment
- Bundled payments
- Pay-for-performance and quality reporting programs
- Shared savings and shared risk models
For a complete analysis of Hierarchical Condition Category (HCC) and the improving the Quality of Patient Care, join industry veteran Gail Ann Madison Brown, where she discusses the current quality programs that will be combined and streamlined into the Medicare Access and CHIP Reauthorization Act (MACRA).
