Alignment of Incentives in Healthcare

Last month we looked at the importance of aligning the incentives of practice owners and therapists as well therapists and patients. But, what about payers and healthcare providers?

Outpatient rehabilitation services have typically been paid for using permutations of fee for services. The more services delivered and the more times delivered, the higher the payment for the patient’s care. If you were going to design a payment system for healthcare, you certainly wouldn’t want to go about it that way. Add in the reality that the person receiving the treatment is often paying only a portion of the fee, and you have a system that is ripe for billing and payment abuse. Ideally, you would want the therapist to share some risk with the payer that would result in more efficient and effective therapists being paid more than those who aren’t.

Over the years, payers and health policy makers have tried a number of strategies to undo the current system that rewards volume over results. First it was fees schedules, then capitation, then capped-fees-per-day or month or year. Now it’s ACOs and bundled services. Other methods include concurrent utilization review, prior authorization and pre-payment reviews. Attempts have been many and the need is real, as we have seen during the debate related to Obama care.

Specifically in rehabilitation, the need for reform became a central tenant of the Balanced Budget Act (BBA) of 1997 to replace the arbitrary therapy cap on outpatient physical therapy services under Medicare. This served as a mandate from Congress to CMS to revamp payment for outpatient therapy services. CMS has been searching for a solution since that time. Moving toward a system that replaces pay for volume with pay for results has been slower than glacial migration. In order to pay for results, one has to be able to reliably identify results. In 2007, Medicare took the step to require therapists to use outcomes, tests and measures to record the functional improvements made by patients as a result of treatment.

Unfortunately, very few therapists complied. Partly as a result of our non-compliance and the Middleclass Tax Relief Act of 2012, therapists must report changes in patient function over the course of care beginning July 1, 2013. The hope is that this will begin to provide CMS with the data necessary to begin to reform payment for therapy services. Apparently, they really mean it this time because if you don’t report, you won’t get paid.

Amidst all of the hullabaloo about the requirements to report non-payable G-codes and severity modifiers, the real message may well be getting lost. Reform is coming and CMS is going to use our reported data to do it. Frankly, this scares the heck out of me. Therapists have been such poor compliers with requests to report and measure outcomes that I fear the quality of the reporting may not reflect our patients’ realities. That will mean an inaccurate payment system going forward and a poor alignment of incentives for therapist with payers.

Therapists must give Functional Reporting their best efforts or we will be saddled with a payment system that doesn’t reflect reality—and it will be our own fault. If you understand the requirements, help those around you that don’t. If you don’t understand the Functional Reporting, learn it now by checking out our Functional Limitation Reporting webinar here. If you don’t care…please find another profession!

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