Experts predict reimbursement changes for 2016

While the progression toward value-based care that continues among payers and providers across the country is new, the attraction to limited networks is a return to the past. In 2016, payers and providers will continue to navigate new and old ways of providing high-quality patient care, while keeping an eye on cost.

More hospitals that initially refused to give up fee-for-service contracts are starting to concede that value-based payment is unavoidable, says Howard Kahn, principal and consulting actuary with Milliman, where he works primarily with commercial payers on Medicare Advantage risk management contracts. “Hospitals are saying, ‘We can’t stay out forever or we’ll end up losing volume going forward,” says Kahn.

2016 should prove to be a year when the movement toward alternative payments and value-based care continues apace, he says. “The ball is already rolling. The hill is getting steeper and steeper, to the effect that you’re seeing these alternative payment arrangements everywhere throughout the United States.”

Driving the shift toward value-in addition to U.S. Secretary of Health and Human Services Sylvia M. Burwell’s announcement in January 2015 about tying 90% of all traditional Medicare payments to quality or value by 2018-are regulations on the state level that require providers to have a certain percentage of their business in value-based or alternative payment arrangements, says Kahn.

Providers will have to continue to wrestle with living in the fee-for-service and value-based worlds, says Stephen Linesch, senior vice president of administration and development at CAPG, a trade association for physician organizations around the country. Value-based arrangements will dictate the level of care for everybody, even if value-based contracts cover only 10% of a provider’s patients, he says.

Bundled payments

Interest in payment for episodes of care and bundles of care will continue in 2016, says Kahn. “I haven’t seen any [contracts] in ink just yet, but a lot of organizations are thinking about commercial bundles right now,” he says.

Still, these are challenging arrangements because they currently don’t make a lot of financial sense for providers, Kahn says. With Medicare, bundled care is a more natural fit. There are certain services Medicare pays for on a regular basis, such as hip and knee replacements, which make sense to bundle.

Limited networks

Amidst so much change, there’s also a return to solutions from the past, says Ira Rosenberg, president of Managed Care Resources, a consulting firm. Increasingly, payers are trying to return to limited networks, and that should moderate healthcare costs, he says.

Limited networks are no silver bullet, however, and he cautions payers and providers against creating networks that are too restrictive. That’s because with too small a patient population, it may be difficult to assess risk.

Also important to keep in mind, he says, is the Centers for Medicare and Medicaid Services (CMS) guidance on minimum network requirements, which have been updated for 2016. CMS is saying that if payers are going to enter into a limited-access program, they need to fulfill minimum network requirements, which means that patients need to be able to access specialists and hospitals within a reasonable amount of time. If providers can’t ensure access to services for patients within a certain distance of their homes, those patients will have to go outside the network, Rosenberg says. Then providers lose on two fronts: On managing cost and on the delivery of service.

“That’s what you’re seeing in more of these capitated arrangements, where providers are taking risk but that risk may come with a lot of things that aren’t under their control,” says Rosenberg.