HLT 205 Week 4 Discussion Question Two

HLT 205 Week 4 Discussion Question Two

HLT 205 Week 4 Discussion Question Two

 

Define retrospective and prospective reimbursement methods. In what way did retrospective reimbursement contain perverse financial incentives? Cite reference to support your response.

When implementing healthcare bundled payment models, providers and payers have two main strategies to choose from: prospective or retrospective bundles. A prospective healthcare bundled payment model involves creating a budget when the episode of care criteria are reached. The fee is then paid to the provider organization or an intermediary like an accountable care organization to distribute to all relevant clinicians, according to a report from the Health Care Incentives Improvement Institute.

On the other side, a retrospective healthcare bundled payment model requires the fee to be calculated ahead of time and then reconciled against fee-for-service medical claims to determine shared savings after the episode of care ends.

“A fundamental question in contracting for an episode of care with an existing provider organization is whether payments for the bundle are made prospectively or retrospectively,” according to the report. “Episode of care contracting has long been seen as a potentially effective way to transfer manageable financial risk to providers through a single (global) case rate. This ‘technical’ or ‘performance’ risk transfer enables a provider organization to recognize the financial reward for delivering a complete case for less than the negotiated price.”

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Payers will need to understand the positives and negatives of these two payment systems before settling on a particular reimbursement plan. In a prospective payment, report authors from the Health Care Incentives Improvement Institute suggest applying a withhold in case a patient is later diagnosed with more severe medical conditions such as cancer.

In a prospective payment model, payers need to make sure to track fee-for-service claims against the bundled fee, which will help evaluate future pricing of healthcare bundled payment models. Payers should either have manual processes to complete this step or implement automated technology.

The report outlines two ways that prospective payments can be accurately priced in a bundle, which involve a flat average payment rate or one that accounts for patient severity using risk adjustment.

A retrospective payment model incorporates a reconciled budget with the health plan acting as a “financial integrator” of the fees paid out instead of putting the responsibility on one provider to be the financial intermediary.

One positive of retrospective bundled payments includes the ability of payers to work with more provider organizations since prospective payment has more regulatory hurdles for providers to overcome. Additionally, since patient behaviors and potential treatment side effects are difficult to predict, reconciling payment through a retrospective approach is more beneficial for providers.

How can insurers work with retrospective and prospective healthcare bundled payment models to achieve the greatest success? One way is to begin with retrospective bundles, which should establish a pathway to prospective healthcare bundled payment models in the future.