In the zeal to reduce healthcare costs one thing has become self-evident. Payers have been targeted as change agents due to their influence on the industry. Is it fair? Is it the right place to pioneer change? Everyone has an opinion. The truth is opinion doesn’t matter much.
ACA, patient sentiment and industry trends have shaped the current environment and the expectations are set. As the baby boomers age, Medicare and Medicaid expenses were always expected rise. However, the rate of Medicare and Medicaid is outpacing expectations. Government based health payments now exceed commercial sources giving them more power and influence.
One of the key drivers of change in this environment is moving from “fee-for-service” to “pay-for-performance” (P4P). Debate over the virtue P4P is heated, lengthy and won’t be discussed here. If this is your interest a great place to start is:
An undisputed fact is that P4P is not the traditional model for most healthcare systems. It is not the model that was used to build processes and software that run in the payer world. P4P requires significant changes to technical infrastructure. This impact has gone largely unpublicized. This problem weighs heavily on the minds of payers.
P4P requires definition of performance measures (KPI’s), many of which haven’t been well defined yet by HHS. Even if meaningful and well defined, they would still be hard to implement. John O'Shea, MD, visiting fellow in the Center for Health Policy Studies at the Heritage Foundation stated in an interview with MedPage Today’s Joyce Frieden:
"I don't know where these [alternative payment] models are going to come from," O'Shea continued, noting that in a previous job on Capitol Hill, "I did a fair amount of work developing alternative payment models for specialty care and these are not easy to design and implement."
Once KPI’s are defined all payer processes must be adapted to accommodate collecting quality data from providers, calculating KPI’s, tracking performance and paying claims based on said KPI’s.
This requires new contract vehicles, new analytics models, tools, advanced analytics software and changes to core software systems. The real cost impact of these changes won’t be known for some time. But payers have to make these changes now to meet business and regulatory requirements.
So what’s your story? How is this change affecting you? I’d love to know.
IGATE has experts to lead payers through this daunting task. With 14 years in the healthcare payer BPO/ITO world we serve some of the best names in the industry.
If you want to discuss ideas or options in moving to pay-for-performance (P4P) contact me directly or send an email to:
healthcare@igate.com
David Lung is a Director in IGATE’s Healthcare Services practice.
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