Accountable Payment Models
In all healthcare systems, the Payment Model is the method by which Money, Risk and Reward are transferred from the Payor to the Provider. This section describes four Accountable Payment Models that can be used for Value-Based Purchasing:
It’s also important to note that each of the four Payment Models should generally be accompanied by a Pay for Performance (P4P) layer to ensure adequate provider accountability for cost and quality. Pay for Performance is described in detail in the section immediately below.
Thus, it’s more accurate to say label the four Accountable Payment Models that can be used for Value-Based Purchasing as:
It’s also important to note that each of the four Payment Models should generally be accompanied by a Pay for Performance (P4P) layer to ensure adequate provider accountability for cost and quality. Pay for Performance is described in detail in the section immediately below.
Thus, it’s more accurate to say label the four Accountable Payment Models that can be used for Value-Based Purchasing as:
- Capacity-Funded + P4P
- Modified Fee for Service + P4P
- Case Rate/Bundled Payment + P4P
- Sub-Capitation + P4P
But Wait! What about Arizona’s Block Payments
The Arizona Behavioral Health system has a long history of using Block Payments to pay for some of the publicly funded behavioral health services. We have NOT included Block Payments on our list because we consider them to be a combination of Capacity Funded and other Payment Models. Let us explain.
Block Payments fund a program based on an agreed upon budget that includes sufficient staffing and other resources to support the clients served by that program. Some of these programs fall into the category of what we define as fire department like programs where it is important to field necessary capacity to meet potential demand such as crisis lines, access lines and mobile crisis teams. We believe that the Arizona RBHAs should use the term “Capacity Funded Payments” for these types of services and stop calling this type of payment for this type of service Block Payments.
The remainder of these programs should be moved from Block Payment to one of the other three Payment Models in order to better align with Value-Based Purchasing Payment Models. This may be as simple as a name change for some programs. For example, it appears that Health Choice Integrated Care has revised how they do Block Payments so that the mechanics fits the exact definition of Sub-Capitation.
Cleaning up the language will help the RBHAs better describe how and where they are already doing Value-Based Purchasing and where they need to continue their payment reforms.
The Arizona Behavioral Health system has a long history of using Block Payments to pay for some of the publicly funded behavioral health services. We have NOT included Block Payments on our list because we consider them to be a combination of Capacity Funded and other Payment Models. Let us explain.
Block Payments fund a program based on an agreed upon budget that includes sufficient staffing and other resources to support the clients served by that program. Some of these programs fall into the category of what we define as fire department like programs where it is important to field necessary capacity to meet potential demand such as crisis lines, access lines and mobile crisis teams. We believe that the Arizona RBHAs should use the term “Capacity Funded Payments” for these types of services and stop calling this type of payment for this type of service Block Payments.
The remainder of these programs should be moved from Block Payment to one of the other three Payment Models in order to better align with Value-Based Purchasing Payment Models. This may be as simple as a name change for some programs. For example, it appears that Health Choice Integrated Care has revised how they do Block Payments so that the mechanics fits the exact definition of Sub-Capitation.
Cleaning up the language will help the RBHAs better describe how and where they are already doing Value-Based Purchasing and where they need to continue their payment reforms.
Value-Based Purchasing Accountability Matrix
The four Accountable Payment Models combined with Pay for Performance (P4P) layers are designed to work together to increase provider accountability in ways that are described in the following diagram.
The diagram, which lists the four Payment Models in the columns, examines each from five perspectives:
- Cost Accountability: The Payment Model determines whether Financial Risk related to Cost, Individual Utilization, Case Mix and Penetration are transferred from the Payor to the Provider. It is also important to consider Provider/Payor Safeguards when Case Rates/Bundled Payments or Subcapitation is paid. The narrative in row 1 summarizes these hydraulics. The Risk/Reward Equation material immediately below and the Extra Credit Section of this Toolkit go into greater detail on this topic.
- Access Accountability: All four payment models ideally should contain performance standards related to Access that are connected to the Pay for Performance (P4P) design. This is explored further in the Pay for Performance Section of this Toolkit.
- Utilization Accountability: Three of the four payment models create a Provider incentive for underutilization. To address this, the Value-Based Purchasing Plan should contain performance standards related to Utilization that are part of the Pay for Performance (P4P) design. This is explored further in the Pay for Performance Section of this Toolkit. With the Fee for Service Payment Model, overutilization is a concern, and Preauthorization for High Cost Levels of Care should be considered.
- Quality Accountability: All four payment models ideally should contain performance standards related to Quality that are connected to the Pay for Performance (P4P) design. This is explored further in the Pay for Performance Section of this Toolkit.
- Adequate Flexibility: Value-Based Purchasing only works if the Payment Model has sufficient flexibility to ensure the right care in the right setting by the right person. This is generally a design element of three of the payment models – if the Purchaser doesn’t overregulate the system. This is discussed in the Infrastructure Section of this Toolkit. This is not a part of Fee for Service and extra effort must be made to add greater flexibility to that payment model.
