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    NEJM: Fee-for-service prevents meaningful care coordination

    Author | Date August 15, 2014
    The fee-for-service reimbursement model is the most significant barrier preventing complex care management (CCM) in the healthcare industry, claims a perspective piece in the New England Journal of Medicine authored by experts from Massachusetts General Hospital and The Commonwealth Fund.  Population health management and care coordination focused on the sickest and highest-cost patients is the key to reducing overall expenses, but without accountable care and pay-for-performance reimbursements, providers have little incentive to do so.
    “The fee-for-service payment system is the most significant barrier to CCM adoption,” write Clemens S. Hong, MD, MPH, Melinda K. Abrams, MS, and Timothy G. Ferris, MD, MPH. “CCM services are not easily separated into discrete, reimbursable units. Even when these services are disaggregated, most are not currently reimbursed. Providers, therefore, have little incentive to adopt CCM. In fact, when these programs are affiliated with hospitals, the fact that effective CCM reduces the rate of hospitalization creates a financial disincentive.”
    Only providers who accept risk and are reimbursed though contracts based on accountability have a true incentive to reduce the number of unnecessary services, foster coordination between provider partners, and preemptively reach out to patients at risk.  While many providers are still wary of accountable care, or worry about the financial sustainability of their practices, hybrid reimbursement models are showing promise, the authors say.
    “In such a hybrid model, payers provide a care management fee (typically a per-member-per-month payment) to cover the costs of the CCM, and the provider is at risk only for the management fee,” Hong, Abrams, and Ferris write. “This approach provides an incentive to reduce avoidable use of services without requiring the provider to take on risk for the total costs of care for its patient population. Contracts under which providers take on risk for care management fees are most powerful when that risk is tied to sufficient shared savings (if the savings exceed the fees), particularly for hospital-based providers seeking to offset losses from reduced acute care utilization.”
    Another obstacle to a CCM ecosystem include fragmented delivery systems and a lack of a strong primary care foundation for patients.  With an increasing focus on the patient-centered medical home as an optimal care arrangement, providers are working towards building that foundation to allow patients to access a centralized hub of data and human help for their care.
    Improving health IT infrastructure to allow for clinical analytics, patient risk stratification, and population health management programs is also key to developing a nationwide system of healthcare that reduces costs and addresses the needs of the highest-complexity patients, the paper concludes.
    “We still have much to learn about best practices for improving care for patients with complex conditions, including how best to identify them, risk-stratify them into coherent clinical groups, engage them and their families, provide CCM services, and develop performance metrics that are both sensitive to change and meaningful to patients, families, and providers.”
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