Scenario: Medicare and private payers have expanded reimbursement
under Accountable care organizations (ACO). You are the chief financial officer
(CFO) of a hospital system that is forming an ACO to participate in these
payment models. The ACO seeks to improve care coordination for its patients
with chronic conditions. To provide better care management, the ACO is
interested in investing in primary care physicians and physician’s assistants
to provide more intensive care management services. After formation, the ACO
will enter contracts with Medicare and private insurers under alternative payment
models, including shared savings, bundled payments, and global capitation. The
ACO will need to determine how to set up reimbursement payments to ACO
providers and consider whether financial incentives are required to ensure ACO
providers deliver efficient care.
As the CFO of
the ACO in the provided scenario, recommend strategies for reimbursement and
utilization management. Defend your recommendations.
o How might you
set up the reimbursement payments to ACO providers, considering the alternative
payment models (i.e., fee for service, shared savings, bundled payments, or
global capitations)?
o What
utilization management controls might you add to align the interests of ACO
providers?
References
Zelman, W. N., McCue, M. J., Glick, N. D., & Thomas, M. S. (2014). Financial management of health
care organizations: An introduction to fundamental tools, concepts and applications (4th ed.). San
Francisco, CA: JosseyBass.
McClellan, M. (2015). Accountable care organizations and evidencebased
payment reform. Journal of the American Medical Association, 313(21), 2128–2130.
Expert Solution Preview
Introduction:
The formation of an Accountable Care Organization (ACO) to participate in alternative payment models such as shared savings, bundled payments, and global capitation requires careful consideration of reimbursement and utilization management strategies. As the CFO of the ACO, it is important to set up reimbursement payments to align the interests of ACO providers with the goals of the organization. In addition, utilization management controls should be implemented to ensure the efficient delivery of care by ACO providers.
1. How might you set up the reimbursement payments to ACO providers, considering the alternative payment models (i.e., fee for service, shared savings, bundled payments, or global capitations)?
Reimbursement payments to ACO providers can be set up in different ways depending on the alternative payment models chosen. For instance, fee-for-service payments can be used to compensate providers for each service delivered. The shared savings model allows for the distribution of savings achieved by the ACO to its providers, while bundled payments allow for a fixed amount to be paid for a bundle of services. Lastly, global capitation models can be used to compensate providers based on the number of patients they are responsible for.
To ensure efficient care delivery, it is recommended to use a mix of reimbursement models that incentivize providers to deliver high-quality, cost-effective care. For example, shared savings and bundled payments may be used to incentivize providers to reduce unnecessary services, while fee-for-service may be used to compensate providers for necessary services that must be delivered. Moreover, global capitation can be used to incentivize providers to manage their patients’ health by offering preventive care services that can reduce the need for costly medical interventions.
2. What utilization management controls might you add to align the interests of ACO providers?
Utilization management controls should be implemented to align the interests of ACO providers with the objectives of the organization. These controls may include utilization review processes, such as prior authorization and pre-certification requirements. Additionally, clinical guidelines should be developed and implemented to ensure that care delivered by ACO providers is evidence-based and adheres to best practices. Utilization management can also include provider performance measurement and reporting to identify areas for improvement and incentivize providers to deliver high-quality care. By aligning the interests of ACO providers with the goals of the organization, utilization management controls can improve the efficiency and effectiveness of care delivery while controlling costs.
