The Affordable Care Act is solidified with the election – Healthcare providers will need to accelerate their plans for payment reform

The recent reelection of President Obama solidifies the future of the Patient Protection and Affordable Care Act (PPACA). A number of healthcare providers (hospitals, physicians, post-acute services, etc.) sat on the sidelines awaiting the outcome of the Presidential election to determine if they needed to start rethinking their business model and what changes are required. Now that we have the answer the PPACA is here to stay, healthcare providers are starting to reassess how they need to redefine their businesses and strategic business relationships.

An underlying principle that all healthcare providers will base their strategic planning against is that the demand for healthcare will rise and the level of reimbursement will decline.  Various payment models are being tested by CMS, and we can expect more variations over the next year or two. With the power of the PPACA, CMS can rapidly adopt a payment model that demonstrates effective results reducing costs and make it a requirement for all healthcare providers. Over the past few years, CMS has been reducing the number of Medicare payer intermediaries and requiring them to re-engineer their systems to support new forms of reimbursement such as bundled payments. Commercial payers have also been evaluating these new payment models and investing in transforming their technology and processes to support the upcoming changes.

Healthcare providers should start immediately, if they are not in process, on the following in preparation for participation in CMS pilot projects or initiatives associated with new forms of reimbursement before they become the industry standard. Waiting for a final decision by CMS before taking action will put a provider at a disadvantage and may not survive in the new world of healthcare delivery. Commercial payers will follow along with CMS’s framework of provider reimbursement.

Here are the actions healthcare providers should start doing now:

  • Measure the total cost of care at the diagnosis and patient severity (comorbidity and complications) level from ambulatory to acute through post-acute care
  • Measure the variation in cost of care delivery and outcomes at the patient, physician and treatment care path
  • Identify the practitioners that deliver the most cost effective care in ambulatory, acute and post-acute services
  • Engage with each one of these entities to develop best practice models for each patient disease state and encourage all clinical service delivery components (ambulatory, acute, post-acute) to participate in adopting and improving these models
  • Develop business models and incentives to encourage high quality care and outcomes at a lower cost
  • Identify how your information system infrastructure will need to be changed or used differently to support capturing and measuring performance in conjunction with processing a new form of reimbursement

I would like to hear how prepared healthcare providers are for the upcoming changes due to the PPACA and what they are doing.

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