Question

Which type of insurers have utilized shared savings models (category 3) the most? Regarding payer mix, what implications would this have for a healthcare organization?

Answer 1

The basis of the current system of healthcare delivery in the US:

• More fee-for-service
• The insurer takes more of a financial risk than anyone
• Focus on volume, and not value

Accountable Care Organization (ACO) is a financial joining between insurers and HCP's

Shared savings - the HCP is "investing" in ACO and can directly impact the success based on his work.

Capitation is a guaranteed salary to an HCP to take care of a set number of patients; An ACO is similar in that both can make money by increasing patient health & outcomes

The three payment models of ACA:

Capitation: Guaranteed salary for flat service
Bundled Payments: Single payment covers multiple services
Shared Savings: All money saved for the financial year is shared with all members

Some issues that can arise with ACO systems in healthcare delivery:

• Turnover
• Patient Mix
• Significant Incentives

Patients that "turnover" switch insurance providers, so the benefits from preventative care would not be seen by the ACO. ACO's will see more profits if they have healthier patients, so some target just healthy consumers, leaving the more needy out.

The reward for ACO's may not be enough to change an HCP who is in an FFS (and thus more lucrative) practice, causing there to be a shortage of HCP's for ACO healthcare delivery systems

ACO's: Shift risk onto provider to balance the care given with the compensation received.

*Payer mix is health care jargon for the percentage of revenue coming from private insurance versus government insurance versus self-paying individuals.

The mix is important because Medicare and Medicaid pay hospitals less than what it costs to treat patients. Medicare runs about 80 per cent of costs. Medicaid payments run about 60 per cent of costs.

Practice with a payer mix shifted in favour of private payers will collect reimbursement at a higher and faster rate than a payer mix shifted in favour of public payers. Therefore, your cash flow is affected by the mix of payers your practice is working with, and the amount of time it takes to receive each reimbursement.