Managed Care, ACOs, and Pay for Performance systems have all been circulating in our world for years now. But for many hospital systems and long-term care facilities, adoption and management of these practices has been uneven. And research is showing that some ACOs are floundering to succeed in this new system.

That is about to change, one way or another. Managed care and pay for performance are here to stay, especially in long-term care settings.

Recent reports document that Medicare wants 30% of all payments to go through models like ACOs by the end of next year, and 50% by the end of 2018, up from about 20% now. Of course, there are already incentives and for performance in place, such as penalties for hospitals when patients get readmitted. These nudge providers to improve care, even if they’re still getting paid in a traditional fee-for-service system. The government wants 90% of all Medicare payments to include such incentives by the end of 2018. 

The government's first goal is for 30% of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide – and to do it by 2016.  Then, alternative payment models need to get to 50% by 2018. So what does this mean?

In alternative payment models, providers are accountable for the quality and cost of care for the people and populations they serve. This of course moves away from the old way of doing things, which amounted to: “the more you do, the more you get paid.” In a Patient Centered Medical Home model, instead of doctors working separately in their own silos, care coordinators oversee all the care a patient is getting.  That means patients are more likely to get the right tests and medications rather than getting duplicative tests, procedures, etc. These medical homes typically offer patients access to a doctor or other clinician 7 days a week, 24 hours a day including through extended office hours on evenings and weekends.

The second goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in 2018. Most providers will be tying at least some of their payments to quality and value— even those who are not yet ready to fully transition. Providers will need to link nearly all payment to quality and value, in some way, to see that we are spending smarter. 

As Murphy-Barron's and Fitch's paper summarizes: "Provider organizations need to be aware the managed long-term care plans are funded using a capitation mechanism in which they receive a lump sum per member from which they must pay most long-term care and other ancillary expenses. The risk shifts from the Medicaid program to the plan. Running a successful managed long-term care plan therefore requires significantly more investment in risk management, financial management, and strategic planning than do fee-for-service arrangements."

We're, of course, always advocating for the use of "good old fashioned" common-sense medicine as well as savvy use of technology to support these changes. But the one thing we know for sure is that it will take all of our efforts to find the way forward. 

Take a look at this 60-second video to see why we think telemedicine can help: