Managed Care Negotiations and Strategies

We’ve all heard the prediction that “fee-for-service is dead.” It may not be dead, and it may never entirely disappear, but it is clearly an antiquated and imperfect system of compensating care, because it rewards providers for volume alone, and ignores quality and efficiency. Understanding alternative models of reimbursement is critical to every player in the healthcare industry. Such models may be divided into two categories: Shared-Savings models and Risk-Sharing models.

The Shared-Savings Model, exemplified by Accountable Care Organizations (ACOs), rewards providers who meet certain quality metrics and achieve documentable savings as compared to a base year or cost-level. It leaves intact the fee for service reimbursement structure, but offers a carrot for those providers who practice “better” medicine.

Risk-Sharing models can take several forms. ACO participants who desire a higher percentage of shared savings can agree to take financial risk, meaning they will be assessed a penalty for failing to achieve a certain level of care and efficiency. Soon, ACO members will have no choice but to take risk. Other Risk-Sharing models eliminate fee-for-service reimbursement altogether, compensating providers a fixed amount for an episode of care or a bundled payment. Providers who work within these models are essentially paid a set amount in exchange for providing the full panoply of care required for a particular disease state or surgical intervention.

At Frier Levitt, we have experience with Shared-Savings (ACO) and Risk-Sharing Models, and can counsel providers through the unique challenges associated with each.

Contact us for additional information.