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Paying for Quality in Employee Healthcare

Everyone wants good value for their money, and employers are no exception. Yet, in the U.S. we pay more for our healthcare than any other industrialized nation.

What are we getting in return? The highest rates of death due to preventable illnesses, like diabetes, stroke and heart disease.

As the costs of employee healthcare and the prevalence of chronic illnesses continue to rise, employers, insurers and the government are all looking for innovative ways to pay for employee healthcare that manage costs and improve overall employee health.

New payment models are aimed at rewarding caregivers like doctors and hospitals for delivering high quality care.

A Big Commitment To Change

At the start of this year, the Department of Health and Human Services announced an ambitious goal to do away with the traditional fee-for-service payment model in which doctors and hospitals get paid based on the volume of services they provide. The goal is to move toward an employee healthcare system that reimburses based on the quality and value of the care delivered. 1

By 2016, 30% of Medicare payments will be moved into alternative payment models that encourage healthcare providers to work together to better coordinate care such as Accountable Care Organizations (ACOs), bundled payments, and advanced primary care medical homes. By the end of 2018, that number will jump to 50% of payments.1

Lending further support to this shift, in April, President Obama signed legislation that allows Medicare to pay doctors bonuses for participating in one of these newer payment models. 2

Value-based payment designs are also on the radar of private insurers and employers. To keep down skyrocketing healthcare costs doctors and hospitals are being given strong financial incentives to head off problems that would require further treatment when it comes to surgeries or treating chronic illnesses, such as diabetes and congestive heart failure. 3

Bundled Payments In Action

A good example of this payment model in action is in the field of orthopedics. A growing trend is to reimburse a bundled, lump-sum payment to cover the entire cost of knee or hip replacement surgery, including the surgery and all follow-up care, such as rehabilitation.

If complications arise within 30 to 90 days after the surgery, the doctors and hospital are on the hook for the additional needed care and its cost.

Consumers on the receiving end of these pricing arrangements are rewarded with predictable costs and a guarantee of high-quality care.

The demand for fair prices in exchange for high quality services is becoming as important in healthcare as it is for all other goods and services. At Newtopia, we recognize the importance of putting our money where our mouth is. That’s why we offer performance-based pricing and refund employers if our corporate health and wellness program doesn’t help employees achieve outcomes that lower employee healthcare costs.

A Long Road Ahead

We still have a long way to go to figure out which value-based payment models will ultimately work and how to integrate corporate health and wellness programs that benefit the healthcare system at large.2

What is clear, however, is that employers, insurers, government and consumers will continue to demand better employee health for the price paid.

References

  1. Centers for Medicare and Medicaid
  2. New York Times
  3. Catalyst for Payment Reform
  4. Commonwealth Fund: Explaining High Healthcare Spending in the United States

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