Healthcare Reimbursement Moving from FFS to Hybrid FFS/Fee-for-Value

On Friday morning, Jacque J. Sokolov, MD, gave the keynote presentation on The Future of Healthcare: Optimization of Clinical/Business Models in Uncertain Times. Dr. Sokolov is chairman and CEO of SSB Solutions, Inc., a healthcare management consulting firm based in Scottsdale, Arizona.

Dr. Sokolov focused on regulatory and legislative uncertainties surrounding healthcare in the United States, as well on the evolution of the fee-for-service (FFS) model to hybrids of FFS and fee-for-value models. He also touched on the need to optimize multiple clinical and financial models simultaneously.

The focus on uncertainties included an outline of five things relevant to the Trump administration executive order on the Affordable Care Act (ACA): (1) the order offers broad guidance, authorizing states and agencies to make changes “to the maximum extent permitted by law”: (2) the order may signal the end of the individual mandate included in the ACA; (3) Medicaid waivers could also be expanded under the ACA, giving states more flexibility in implementing the law; (4) the order encourages the creation of interstate insurance markets; and (5) some taxes in the ACA, including taxes on health insurers and on pharmaceutical companies, could be undone under the order.

Turning to healthcare reimbursement, Dr. Sokolov illustrated the continuum from the implementation of the ACA in 2010 to current market dynamics: “Regulatory and market forces are causing major changes in reimbursement. Savvy hospitals and physicians are preparing,” he said. The changes include the need to optimize FFS while bridging the shift to fee-for-value, a transition from employer to the individual, and public and private exchanges for purchasing plans.

The focus on the price/value relationship in healthcare benefits and services will be intensified, Dr. Sokolov added. He noted that Medicare Advantage plans and Medicare Access and CHIP Reimbursement Act (MACRA) will influence every provider in a model incorporating parts of both FFS and fee-for-value plans; the pace of the transition is unclear at this point.

The presentation shifted to a description of a model employed by One Memorial Hermann in Houston, Texas. The model the importance of optimizing access and costs by delivering care at correctly sized venues, from main campuses to satellite acute care facilities, large ambulatory sites, physician specialty centers, and retail spaces. Other models mentioned by Dr. Sokolov included Summit Health Management in New Jersey, and the Rochester, Minnesota Area Foundation/Mayo Clinic destination medical center.

The US Veterans Health Administration is also redesigning its model for delivery of healthcare nationwide. The VA has designed a program consisting of four regions; each region will cover multiple states. All services will be consolidated into a single initiative, called Community Care Networks (CCN). There are an estimated 95 million veterans in the initial pool of those eligible for CCN coverage. The plan carries major implications for hospitals in the private sector and physicians willing to accept additional VA referrals, Dr. Sokolov said.

In summary, Dr. Sokolov stressed the need to prioritize key initiatives to “preserve and grow a dominant regional healthcare footprint with a critical mass of patients, facilities, and technology.

“Be prepared for a zig-zag expansion pathway which will require multiple starts and stops to ultimately develop numerous successful models/milestones.”

Jacque Sokolov, MD. The Future of Healthcare: Optimization of Clinical and Business Models in Uncertain Times. 2017 Fall Managed Care Forum. October 27, 2017.