March 01, 2017
3 min read

Peeling away the red tape of reimbursements

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ATLANTA – “As health care providers, much of your time is spent dealing with red tape, meeting layers upon layers of requirements by the government and health care insurance companies,” Thomas Sullivan, editor and author of the popular website Policy and Medicine, said here at MedPro 360, prior to SECO.

He said health care reform will always change.

Tom Sullivan
Thomas Sullivan

The Affordable Care Act (ACA) resulted from the rising cost of health care, with millions uninsured and fee-for-service incentives, he said. With a new president and change in the House and Senate. the future is uncertain for the ACA.

Speaker of the House and Congressman Paul Ryan’s “Ryan Care” is the best reform from the current Administration, he said.

Ryan Care establishes tax credits for buying insurance, expands Health Savings Accounts, enacts high-risk health insurance pools, reforms Medicaid, includes a transition period for ACA subsidies and repeals ACA taxes and penalties, he said.

Based on a survey by the Medical Group Management Association, 82% of medical practitioners reported seeing an increase in prior authorization payments, he added.

“This will become more a part of the structure of payments” Sullivan said. “Insurance companies are looking at ways to lower costs, and prior authorization is a way to do that.”


He highlighted the four categories of value-based payment, how practitioners are reimbursed. The first category, fee for service (FFS), has no link to quality and value. This is how most providers are reimbursed currently, he said.

“You complete a procedure or exam, then bill the insurance company back for the payment,” Sullivan said.

The second category is FFS linked to quality and value, which has performance rewards and penalties, he said. It is pay-for-infrastructure and operations, pay-for-reporting and pay-for-performance based.

“If you participated in the Physician Quality Reporting System (PQRS), you were actually linking your fee for service to quality and value. The reasons they were collecting that data was that in the future they were going to use it to create quality measures and additional ways for you to be able to measure your performance,” Sullivan added.

The third category is another value-based payment, alternative payment built on FFS architecture, which uses alternative payment models with upside gainsharing, he explained. It started with accountable care organizations (ACOs), where the upside risk was shared, and everyone seemed to like it.

Now, they want to begin using downside risk, he said.

“If you’re using ACOs, and your expenses are more than they should be, there’s a downside risk,” Sullivan said.

The fourth category is population-based payment (PBP), which is a condition-specific, population-based payment model. This involves capitation, where the doctor receives a set amount of money for all patients, he explained. The other part of this model is bundle payments. For a certain surgery, such as cataract surgery, a doctor is provided a certain amount of money for all follow-up care and anything that happens post-surgery to the patient. Providers are tasked with managing the money themselves.


“They basically want you to become the insurance company,” he noted.

“What we can see with this paradigm shift is that it started with your claims data, then you had voluntary clinical reporting, then pay-for-reporting, then finally, pay-for-higher-value, then MACRA [Medicare Access and CHIP Reauthorization Act of 2015] ... but they are trying to come up with affordable, quality health care,” Sullivan said.

“Health care reform will always change, but payment reform is here to stay. The idea of paying for quality is a bipartisan deal; everyone thinks it’s a good idea, and insurance companies love it because it’s less risk for them, so it’s the time to get used to it,” he concluded. – by Abigail Sutton


Sullivan T. The future of medical payment reform and Obamacare ... Where do we go from here? Presented at: MedPro 360; March 1, 2017; Atlanta.

Disclosure: Sullivan is president and founder of Rockpointe, a global medical education company. He is also the founder of the CME Coalition, a lobbying and education organization that helps guide policymakers on continuing medical education issues. He is chairman of the MACRA and CME working group, which includes as participants the American Medical Association.