The FEHBlog attended the federal government’s collaborative Health Care Payment Learning and Action Network (LAN) summit in Tyson’s Corner Virginia on and off for the past two days.  The event was very well attended.  The speakers were enthusiastic.  The LAN’s objective is to achieve the HHS’s Secretary’s “moonshot” objective of paying 50% of healthcare providers using alternative payment methods (“APMs) by 2018.

HHS already has reached the Secretary’s low hanging fruit objective of a 30% APM payment level by this year. This initiative is begin driven by both the ACA and the major Medicare law passed last year that requires HHS to replace the current Medicare Part B payment methodology by the end of the decade (or so).

APMs come in two flavors — population based payments and episodic based payments.  Population based payments are similar to ACO or PCMH approaches (as the FEHBlog understands them) — pay a facility or medical group on a fee for service basis for a determined period subject to a quality and risk adjusted global budget with gain and loss sharing.  An example of the episodic approach is the Medicare pilot to pay bundled prices (including payments for both facilities and doctors) for elective joint replacements. The LAN is developing “specs” for three episodic bundles that providers and payers can template — elective joint replacements, maternity, and cardiac care. Details can be found at the LAN website linked above.

The FEHBlog found the maternity care bundle interesting because obstetricians always have billed on a case rate basis — one price for the entire maternity and live birth — and hospitals have always included the baby’s bassinet charges with the mother’s bill. The trick is to  contractuallyknit together the two bills — assign one payment recipient — create quality metrics etc.

The FEHBlog is certain that this change is happening.  He has been reading about switching from fee for service to value based payments for about thirty years. Whether the change will lower costs remains to be seen. Stay tuned.