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Home / News & IndustryManaged Care Insight and Analysis
Updated: February 23, 2010
Focus Will Be On Data In The Emerging Era Of Value-Based Models Of Reimbursement

Despite the continued prevalence of the traditional fee for service reimbursement models as the primary method of payment, over time healthcare reimbursement will "give way" to value-based models of reimbursement.

But, for a value based reimbursement model to be developed and succeed, it will require a fair amount of data, according to a leading expert on payor and provider contracting.

"We believe that integrated delivery systems that have access to hospital data, ancillary department data and outpatient data are going to be the best suited organizations to be able to help define what episodes of care funding should be," said Russell Foster, a principal with pmpm Consulting Group.

Providers will require that level of data for the matching of revenues and expenses to make sure thatthe reimbursement which is received under such a model is equitable and covers the cost of services.

Russell also believes organizations that are not integrated and do not have access to the data in those hospital records are "going to be put in a position of needing to align with partner hospitals and with other providers and ancillary providers to be able to attract and gather the data elements that are needed to be able to understand and define what a case rate might be or a bundled payment amount might be to be successful."

He also acknowledged that inherent in this are the legal issues surrounding the sharing of data when "you have disparate organizations that are not otherwise aligned."

The question of privacy and access to the data is going to be an issue and should be reviewed by attorneys to determine how that might be improved, he added.

It will be difficult to end up with an all-inclusive case rate that includes inpatient claims, outpatient claims, and ancillary claims, if providers cannot access the data elements needed to define what those costs should be.

IHDN’s Positioned For Performance Measures

"It’s also true that in an integrated delivery system, the organization is probably better prepared and structured to redefine performance measures and guidelines to institute care management systems that are needed to be able to operationalize some of these payment reform models," Russell said.

Demonstrating value to an employer is going to be especially important, Foster said, as the industry goes through this evolution. "It’s pretty clear that employers need payment reform."

Employers need lower premium costs to continue to cover their employees and dependents. And, they also need healthier employees, who stay at work, who have fewer absences or illnesses. It is going to be "incumbent on health providers to demonstrate to them that they have a quality and efficient program, and that the providers can deliver that type of care in a cost-effective environment."

If organizations are not in a position to demonstrate the value proposition, it will be difficult for them to hold their membership over time, Foster warned.

Foster made his remarks during a recent audio conference on managed care contracting, "Managed Care Payor-Provider Contracting: New Directions, Risks and Strategies," sponsored by the Managed Care Information Center. A CD-ROM of the program including all slides and handout materials is available. For more information, visit

Address: pmpm Consulting Group, 1425 River Park Drive, Suite 230, Sacramento, CA 95815;

  This article was taken from:
The Executive Report on Managed Care

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