Understanding Hybrid Payment Models as Managed Care Evolves

October 27, 2017

Jacque J Sokolov, MD, chairman and chief executive officer of SSB Solutions, outlined strategies for optimizing hybrid fee-for-service/value-based care payment models to optimize care quality.

During his presentation at the NAMCP 2017 Fall Forum, entitled “The Future of Healthcare Optimization of Clinical/Business Models in Uncertain Times,” Dr Sokolov recapped the current regulatory and legislative uncertainties impacting managed care.

He explained that President Trump’s recent executive order on the ACA could end the individual mandate  through creating exemptions for the IRS penalty, stimulate more interstate insurance options, and undo some taxes under the ACA.

According to Dr Sokolov, private insurance makes up the largest portion of estimated 2017 health care spending, at 35%, with Medicare following it at 21%. Other funding sources include Medicaid, out-of-pocket expenses, third party payers, and other insurance options—totaling about $3.58 trillion.

As a result of increased spending, reimbursement has started to shift from fee-for-service models into hybrid fee-for-service/value-based care models.

“Regulatory and market forces are causing major changes in reimbursement,” Dr Sokolov said. “Savvy hospitals and physicians are preparing.”

In order to prepare, these “savvy” payers are bridging for the shift to fee-for-value by minimizing price to maximize value. This process includes offering low premiums, pursuing population health management solutions, coordinating care of chronic patients—and in return improving patient outcomes and keeping costs down.

In order to make the most of this shift, payers should optimize multiple clinical and financial models simultaneously.

“Hospitals and affiliated physicians have an opportunity to capture incentive‐based reimbursement by entering into ‘value‐based’ contracts with payers,” Dr Sokolov said. “But to do that, they need to form a clinically integrated network or a ‘value-based’ enabled entity to execute on value-based products.”

Dr Sokolov concluded that payers, hospitals, and physicians should focus on preserving and growing regional to include the maximum amount of patients, facilities, and technology.