How Encouraging Provider Collaboration and Financial Incentives Can Improve Outcomes for Persons With Severe Psychiatric Disorders.

This Open Forum addresses the challenging situation involving decisions about when to hospitalize patients for psychiatric care. Because the evidence base for when to hospitalize patients is incomplete, current practice is to hospitalize only patients who are in crisis. This Open Forum provides a suggested set of payment options that can provide financial incentives to change practice patterns and lead to better clinical outcomes.

Bundling post-acute care services into MS-DRG payments.

Objective: A bundled hospital payment system that encompasses both acute and post-acute care has been proposed as a means of creating financial incentives in the Medicare fee-for-service system to foster care coordination and to improve the current disorganized system of post care. The objective of this study was to evaluate the statistical stability of alternative designs of a hospital payment system that includes post-acute care services to determine the feasibility of using a combined hospital and post-acute care bundle as a unit of payment.

Methods: The Medicare Severity-Diagnosis Related Groups (MS-DRGs) were subdivided into clinical subclasses that measured a patient's chronic illness burden to test whether a patient's chronic illness burden had a substantial impact on post-acute care expenditures.

Adjusting Medicaid managed care payments for changes in health status.

Risk adjustment of managed care organization (MCO) payments is essential to avoid creating financial incentives for MCOs adopting enrollee selection strategies. However, all risk-adjustment methods have an inherent structural flaw that rewards preventable deterioration in enrollee health status and improved coding of disease burden. We propose a payment adjustment to offset this flaw.

Achieving cost control, care coordination, and quality improvement through incremental payment system reform.

The healthcare reform goal of increasing eligibility and coverage cannot be realized without simultaneously achieving control over healthcare costs. The reform of existing payment systems can provide the financial incentive for providers to deliver care in a more coordinated and efficient manner with minimal changes to existing payer and provider infrastructure. Pay for performance, best practice pricing, price discounting, alignment of incentives, the medical home, payment by episodes, and provider performance reports are a set of payment reforms that can result in lower costs, better coordination of care, improved quality of care, and increased consumer involvement.

Redesigning the Medicare inpatient PPS to reduce payments to hospitals with high readmission rates.

A redesign of the Medicare inpatient prospective payment system (IPPS) that reduces payments to hospitals that have high-risk adjusted readmission rates is proposed. The redesigned IPPS uses a readmission performance standard from best practice hospitals to determine the risk-adjusted number of excess readmissions in a hospital and determines the payment reduction for a hospital based on its excess number of readmissions. Extrapolating from Florida Medicare 2004-2005 discharge data, the redesigned IPPS is estimated to reduce overall annual Medicare inpatient expenditures nationally by $1.

Developing a prospective payment system based on episodes of care.

A patient-centered approach to defining episodes of care around a hospitalization can provide the basis for creating expanded bundles of services that can be used as the basis of payment. Paying by episodes of care strengthens the incentive to providers to deliver care efficiently. A hospital-based episode of care prospective payment system can be phased in over time by gradually expanding the services and the time period included in the episode.

Reforming the primary care physician payment system: eliminating E & M codes and creating the financial incentives for an "advanced medical home".

The problem faced by primary care physicians is that they can only maintain or increase their (inflation adjusted) incomes by increasing the volume of visits and associated services. The fundamental flaw in a fee-for-service system is that only paying for individual services creates incentives for more services. This article offers a very different approach to paying primary care physicians that will result in both significantly higher incomes for these underpaid professionals together with incentives for creating a medical home.

Standardize concepts, not tools for quality improvement.

Pay for performance has become a new mantra in the ongoing efforts to improve the quality of healthcare and stabilize healthcare costs. In response to complaints of employers and others, numerous organizations have emerged to try and standardize the tools used to measure quality. This article maintains that such an approach will not lead to improvement in quality.

Redesigning Medicare inpatient PPS to adjust payment for post-admission complications.

Under the Medicare diagnosis-related group (DRG) based inpatient prospective payment system (IPPS), payments to hospitals can increase when a post-admission complication occurs. This article proposes a redesign of IPPS that reduces, but does not eliminate, the increase in payment due to post-admission complications. Using California data that contained a specification of whether each diagnosis was present at admission, and applying a conservative approach to identifying potentially preventable complications, the impact of post-admission complications on DRG assignment was determined.