Modeling financial outcomes and quantifying risk in episode-based payment models

• Published in: The American journal of managed care Vol. 27; no. 8; pp. e278 - e286
• Main Author: Johnson, David C
• Format: Journal Article
• Language: English
• Published: Jamesburg MultiMedia Healthcare Inc 01.08.2021
• Subjects: Activity based costing; Cancer surgery; Codes; Cost control; Health administration; Hospitals; Laparoscopy; Medicare; Monte Carlo simulation; Patients; Perioperative care; Prospective payment systems; Prostate cancer; Reimbursement; Stakeholders; Value-based care
• ISSN: 1088-0224; 1936-2692
• DOI: 10.37765/ajmc.2021.88729

ABSTRACT Objectives: Health systems and provider groups currently lack a systematic mechanism to evaluate the financial implications of value-based alternative payments. [...]we highlight practical applications for the model to help facilitate stakeholder engagement in the transition to value-based payment models. Health systems and provider groups lack structured, systematic mechanisms to assess the potential impact on institutional and provider finances.7,8 Current strategies estimate health system reimbursement under an alternative model relative to FFS. Because internal production costs are neither well understood nor systematically tied to reimbursement, such analyses provide an incomplete picture of the true financial implications of transitioning to value-based payments.9 Health care organizations must understand the impact of adopting alternative payments in the context of true costs to deliver care.10 Thus far, uncertain financial implications have stymied stakeholder enthusiasm around EBP models.11 We propose a health system–driven framework to systematically evaluate the impact of adopting EBPs for discrete episodes of care.