Commercial Payers and Value-Based Reimbursement

Like it or not, value-based reimbursement is here. With all the focus around Merit-Based Incentive Payment System (MIPS) and what will happen to Medicare reimbursements, it is easy to forget that the government payers are not the only ones getting involved in the movement. Commercial payers have jumped on board in the transition away from fee-for-service and are embracing fee-for-value at an escalating rate. This means that even if you are not a Medicare or Medicaid provider, you still need to prepare for the shift to value-based care in order to maximize your reimbursements.

Let’s take a look at some examples of how commercial payers have embraced fee-for-value over the past few years. 

 In 2012, Horizon Healthcare Innovations, a Horizon Blue Cross Blue Shield of New Jersey company, began providing a “care coordination” payment to help practices transition into medical homes.

AmeriHealth New Jersey and United Healthcare provide primary-care doctors with monthly per-patient care management fees, in addition to fee-for-service payments in cooperation with CMS through the Comprehensive Primary Care (CPC) initiative.

In 2008, Blue Cross Blue Shield of Massachusetts developed its Alternative Quality Contract (AQC), setting an annual budget for provider groups to meet all the healthcare needs of their patients while still hitting quality targets.

In 2011, CaroMont Health and Blue Cross and Blue Shield of North Carolina (BCBSNC) implemented a bundled payment arrangement for an entire knee replacement.

Health Partners programs in the upper Midwest withhold one to five percent of a provider’s revenue, returning it based on reaching quality, satisfaction, and efficiency targets.

United Healthcare in Illinois rated providers based on quality and efficiency and gave a five percent increase on their contracted rate to physicians who met United’s goals.

Blue Cross Blue Shield of Minnesota is shifting focus from treating chronic and acute illnesses to prevention and is making payments based on value determined by the total cost of care and outcome measurements.

Humana has a Provider Quality Rewards program based on nine HEDIS measures for breast, colorectal, glaucoma, nephropathy screening, and diabetes metrics. It looks at historical practice data in smaller practices and offers providers rewards for improved quality over baseline scores.

More and more, private payers are either copying the Medicare models for value-based reimbursement or developing their own systems. What they all have in common is that they tie provider’s performance on measures of quality and efficiency to payment increases or other incentives, often incorporating a physician report card to compare the provider’s or the practice’s performance.

Whether your practice contracts with Medicare and Medicaid, private payers, or a combination you need to be ready for the shift to a system that pays for value rather than for volume. Over the next few years, your compensation will increasingly be linked to quality of care, patient satisfaction, outcomes, efficiency, and costs, whether you are billing government or private payers. Value-based reimbursement is here and it is time for all of us to prepare our practices to survive and thrive under the new system.