Performance Based Pay by Medicare

Performance based pay by Medicare is changing health care as we know it.

This isn’t something that might happen down-the-road.  The WHEN has already been established and much of the effects permeate our delivery systems now.

In unprecedented fashion, Sylvia Mathews Burwell, Secretary of Health and Human Services, made history by actually setting goals and publicly announcing very specific timelines to this major shift in how Medicare will reimburse for services.

What is “Performance Based Pay”?

  1. It’s a major shift in how Medicare will reimburse for services (many other insurances are likely to follow suit).
  2. It will center around paying for outcomes rather than arbitrary procedures.
  3. Payments will eventually be “Bundled” per case replacing the traditional fee-for-service model.

Secretary Burwell and the agency hosted a public roundtable on Jan. 26 where she announced a detailed timeline. HHS wants to transition 30 percent of payments to the new models by end of 2016. And 50 percent by end of 2018.

We need to change the way we deliver care, we need to change the way we pay providers, and finally, we need to change the way we distribute information,” Burwell said.

What are “Bundled” payments?

You will be given a set amount to get a patient better. So lets say Mrs. Jones, a 67 y/o with right hip pain stemming from degenerative joint disease, comes to your clinic to be treated. You might be given a flat rate ranging from $300 to $900 to get the patient better. The amount will depend on variables reported such as  the category of functional impairment as well as the severity of the impairment. The faster you get the patient better, the more money you can make. But medicare will also track your performance and outcomes so if you typically perform better, your clinic will receive higher rates than the clinic next door that is not.

In the traditional model of fee-for-service, payers have been paying for “nuts-and-bolts” and not always getting the car. They want to start paying only for the car.

What can physical therapists do?

  1. Remove all “fluffy” treatments from our clinical repertoire.

    Items that are temporary or palliative at best such as ice, heat, ultrasound, electrical stimulation, and ‘fluffy exercises’ should be used sparingly on acute cases and be weaned off quickly. This will help decrease the average duration of the typical session as well.

  2. Pursue higher learning. Integrate concepts from other art forms.

    The future is demanding that therapists get patients better faster. Be open to new and more innovative ways to treat. Integrate more functional movements into your sessions. Borrow from the arts of yoga, martial arts, pilates and tai chi. At the same time get training on how to duplicate patients before you discharge them in order to keep your schedules full. Clinical excellence courses offered by IndeFree can help therapists develop these skills.

  3. Track comparable signs every session.

    Being goal centered will be vital. Knowing where a patient is in their functional (or clinical) goal will help you get them better faster. Make sure to choose a sign that is in alignment with what the patient is wanting to be able to do. Lean away from mere goniometric numbers. Be more creative, functional, and challenge them more. This will help enhance the patient’s motivation which will be important as well.

  4. Create a formal Educational or Learning resource phase to your clinical system.

    It will be more imperative than ever before that you get patients better faster. Learn motivation techniques to gain increased compliance from your patients.

  5. Don’t waste time.

    Efficiency must be prioritized. Look for better ways to more efficiently communicate with physicians and the medical community. Minimize documentation time yet don’t leave yourself vulnerable to audit or scrutiny. Apps such as can help.

    Douglas Henley, M.D., EVP and CEO of the AAFP, participated in the roundtable with Burwell and strongly supports the slated alternative payment models. “The current singular focus on fee-for-service payment must end and be replaced with better alternatives such as blended or prospective global payment models which promote value over volume and pay differently and better from primary care,” Henley said.

  6. Secure a higher volume of patients.

    The case rates will require a lower average sessions-per-case. This will require that the typical private practice secures a higher volume of patients. The successful clinic will have mastered the skill of promoting to the public. They will understand how to duplicate their patients before discharge. They will have a wider reach to draw patients from. Honing your marketing, advertising, PR and promotion skills will be essential to success.

  7. Prepare to offer remote sessions via Skype or Google.

    Get familiar with technology now. Performing remote sessions with patients via Skype or Google (Telehealth) will be a necessary component in our new delivery models. Video educational modules will be essential in automating patient instruction and education procedures.

    performance based pay

The Good News!

These new HHS goals and deadlines are meant to improve physician payment methods, promote innovation in care delivery, and encourage information sharing among medical professionals and patients. These new models will help replace the inadequate and deficient system of therapy caps and kx modifiers. The potential for greater opportunities and reward for therapists in private practice can increase.

Overall, participants at the HHS roundtable event were optimistic that establishing clear goals to move to new payment models is a good step toward rewarding performance over volume.

“Maybe a year from now, five years from now or 10 years from now, we can point to this day and say, ‘This is when we began to get it right,” Henley said.

Performance based pay, bundled payments, and value over volume are more than buzz words. They are strategic changes already taking place in the world of health care. Positioning yourself for a brighter future by preparing now, might be a wise decision. Associations like IndeFree can help therapists make the necessary transitions easier. Learn more.

What do you think about the changes that are occurring, good…bad? Share your thoughts below.

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James Ko

I believe... "It's not the strongest practices that survive and grow, nor the most intelligent, but the ones most adaptable to change." I'm a physical therapist, private practice owner, and founder of IndeFree Association. I like reading James Patterson, Nicholas Sparks, enjoy golfing and playing guitar. I love playing with Mac and Cozy! For over 15 years, I've helped thousands of practices grow and succeed. This is my dedication.

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