What is a value-based payment system, and how do I fit in the equation?
This post will open your eyes to the government regulation coming our way, and show you how Nurse Practitioner and Physician Assistant skills and procedures courses and their continuing education will be invaluable to your success as a provider.
This blog post is important. Not because it is filled with clinical pearls, or focused on clinical decision-making. This post is focused on the delivery of healthcare, and how your career will be shaped by what you do – on a scale never before imagined. Please take a few moments and read below, to get a general sense for what is coming our way, and how to best prepare for the change in tides. Given the length of this post, it will be best to start with a little bit of history. Trust me – you will want to read this one through to the end, as it will define the rest of your career.
Medicare started in 1964 and partnered with Blue Cross and Blue shield to create the nation’s first designated “government run” insurance plan. Over the years, Blue Cross and Blue shield have move to a private insurance model, while Medicare has functioned through government subsidy (taxes) on it’s own. Traditionally, providers have billed for, and have been paid by a system known as “fee for service.” In a nutshell, this system rewards doctors, APP’s, hospitals, and medical centers by paying them a pre-negotiated rate with private insurance, and a higher CMS (Medicare, Medicaid) rate based on the number of procedures performed and the complexity of care. The provider’s documentation assigns codes to the patient’s chart, called CPT-codes and they are converted into a dollar amount by counting the number of codes and translating them into units known as RVUs.
RVUs originated In mid 1989, when a commission was established to review physician practices, and determine a fair value to patient care, by speciality. The commission reviewed every type of procedure and diagnosis and assigned the value of a “Relative Value Unit” for that diagnosis and code. The was passed in the 1989 Omnibus Budget Reconciliation Act. Each year, the value of an RVU is changed based on reimbursement rates, efficiency, and evolution of medicine. Combined, these trends form what is known as the “Resource-Based Relative Value Payment System.” and is the hallmark of the fee-for-service reimbursement system we have used for decades.
By determining payment based on “things” providers can control (i.e. the number of visits, interpreting tests, multiple layer laceration repairs, surgeries, diagnosis, office procedures, etc) and improving the documentation of those items, more RVU’s can be assigned to patients, and more reimbursement can be earned by physicians and their practices based on the perceived complexity of care given. There was no limit to the number of RVU’s one could generate per patient, opening the door to over-billing and, by those less scrupulous physicians, fraud.
In addition to the RVU system, the federal government each year started to calculate a “sustained growth rate, (SGR)” in 1997, which influenced the total amount of payment they would budget for the entire nation. In short, the SGR was calculated to see how many people were alive, and how old they were, and how much their expected medical costs were going to be for the next year. This was then compared to the frequency of RVU’s by specialty, and annual reimbursement rates were set. For the first several years, this worked very well, because people had a reliable lifespan. Over time, and with improvements in health care, new cures, new drugs, and better management, people started to live longer, which resulted in more users of the healthcare system, and an increased cost. Healthcare became a financial victim of its own success.
Eventually, the increased number of living citizens required budget expansion, and the threat of reducing the amount of reimbursement that CMS would pay for healthcare bills. Every year the government would vote to approve increasing the healthcare budget to compensate for the increased SGR. This practice became known as the “Doc Fix” because it impacted the RVU system as a whole. This was typically a last-minute vote, and provoked annual anxiety for everyone expecting to to receive payment from Medicare and Medicaid. Aside from the physicians and practitioners being affected by the increased SGR, hospital reimbursement was put at risk every year.
While this was happening on the economic side of healthcare, The government accounting office (GAO) forecast a deficit of physicians, APPs and nurses, and painted a bleak picture with the number of baby boomers needing medical care being under-resourced in a dangerous environment with costs spiraling out of control. This, combined with major political lobbying campaigns from healthcare insurance, pharmaceutical companies, APP organizations, and hospital corporations (just to name a few) led to the consideration of healthcare reform.
The Provider Practice Essentials resource section will help you with this, and keep you off of the proverbial naughty list of APP’s who are deemed “too expensive” for the healthcare system! We want to put you and your practice in the BONUS category, and give you the tools needed to be an exceptional provider and maximize your revenue and worth to any practice setting where you work. For more information, consider joining our online member resource section or, better yet, attend one of our programs to get the most up to date information and clinical skills! Membership resources are included in your registration for one year.