In July 2009, the Massachusetts Special Commission on the Health Care Payment System recommended that, within five years, global payments should become the predominant form of provider payment in the state. Instead of fee-for-service reimbursements, providers would receive prospective payments for all or most of the covered care they provide to their patients, along with financial rewards for “the provision of accessible and high quality care.” (Click here for the full report.)

The medical groups that comprise Atrius Health have had years of experience with different types of global payment – as well as fee-for-service – so we've written a series of brief reports to share what we've learned. Our goal is to demystify global payments and help facilitate system-wide change. This first report looks at some of the “essentials” behind global payment contracts. We'll add details about how global payments work, financially and clinically, in future reports.

New Tools and Safeguards Support Payment Reform

The first prerequisite in global payment is for a provider organization that can take responsibility for the health care of a defined population of patients and manage an annual budget for all the care they receive, including ambulatory care, hospitalization and prescription drugs. Patients must be connected to primary care physicians who can provide or coordinate all of their care, working in collaboration with specialists and other institutional and non-institutional providers. Further, the entity has to have enough patients to accept the financial risk of operating within a fixed budget, along with the expertise and infrastructure needed to manage risk.

We've come a long way from the hugely unpopular capitation plans of the 1990s, when many doctors across the country were asked to accept fixed annual payments for each patient under their care. While today's global payment methods incorporate some of the same principles, we now have many more of the tools and safeguards needed to make them work on behalf of patients and providers. Some examples that we'll discuss in more detail later in this series include:

• Risk adjusters: Insurers and providers have access to increasingly reliable predictive tools that can be used to “risk adjust” global payments to account for the illness burden and likely costs of caring for a provider's patients.
• Health information technology: Electronic medical record systems don't just replace paper records, they enable decision support that makes care safer and more reliable; give providers a more complete picture of which of their patients are getting treated for what, by whom and at what cost; and help identify patients who would benefit from outreach and care management.
• Evidence-based performance measures: Linking global payments with substantial performance incentives helps to align the interests of patients and providers around improving outcomes of care and the overall care experience. Scores of credible performance measures are available for assessing both ambulatory and inpatient care, with many more in the works.

Designing Patient-Centered Care

Global payments are not just about fixing fee-for-service incentives that encourage the overuse and misuse of services without regard to quality, they should also drive positive changes in the way that health care is organized and delivered. Although Atrius Health doctors don't consider insurance type or payment methods when treating our patients, we've found that global payments allow physicians to stay focused on improving their patients' health rather than on how many patient visits they have. Patients benefit from increased teamwork and coordination and from our ability to invest in programs that aren't reimbursable under fee-for-service. Finally, the data and analysis developed to support global payments enable us to gain a better understanding of the major drivers of cost and quality, and to make long-term investments in improving value and the patient experience.

September 23, 2009

This article is for general information purposes only and is not intended as legal or other professional advice. ŠAtrius Health. All Rights Reserved.

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IN THE NEWS
Gene Lindsey, MD, President & CEO of Atrius Health, offers his perspective on payment reform.

FOR MORE INFORMATION
Marci Sindell
Chief External Affairs Officer
275 Grove Street, Suite 3-300
Newton, MA 02466
Phone: 617-559-8323
Fax: 617-559-8099
marci_sindell@atriushealth.org

Coming up next in Examining Health Care:

How health plans and providers develop global payments and quality incentives.