Recently I attended a seminar where the keynote speaker started his presentation with “Fee for Service is dead” I was captivated by the realization that the reimbursement model that so many of my clients and our business relied on is dead. As I began to reflect on this I couldn’t help but reconcile the reduction in so many of the traditional Healthcare reimbursement models and the emergence of incentives like Physician Quality Reporting Standards (PQRS), Meaningful Use and Accountable Care Organizations (ACO’s).
The federal government projects healthcare spending to rise from $2.8 trillion to $4.8 trillion in the next ten years. It is not surprising that paying providers on a fee for services basis contributes to both costs and quality problems. Fee for service payments encourage the use of more payments but do little to reward high quality or superior health care. Therefore, payment reform is on the move, but unfortunately incentives alone are not enough to make a difference. Incentives need to be aligned so both providers and patients have the information necessary to improve patient health.
There is no doubt we need to change from a health care system that pays for volume to one that pays for quality and value. Evidence suggests cost and quality problems in the current health care system. As payment reform emerges in modified fee for service payments and capitation, net saving results will be unable to keep up with the rise in Americans health care cost concluding payment reform alone is not enough. Efforts to introduce Pay-For –Performance programs like Patient Centered Medical Homes (PCMHs), bundled payments, cost saving and shared risk including ACO’s have reduced gross medical spending by 4 to 4.5 percent over the last two years and generated a 2:1 return on investment while overall quality improved. While most physicians are split on any significant difference in the quality of care, most are aware of or are participating in new payment models and have the burden of implementing payment reform options.
The reality is payment reform is the responsibility of every major stakeholder including doctors and hospitals, insurance payers, state and local government, employers and patients. There is no doubt fee-for-services is in our rear view mirror and the direction payment reform needs to take. The time is now to move faster down the road to higher performance, quality and value.