Changing Healthcare Reimbursement Models

Reimbursement models are changing
Will you make the most
of the opportunity?
Everyone knows that the U.S.
healthcare system is shifting towards
value-based reimbursement models.
The big question is how providers will
adapt to make the most of the new
The fact that reimbursement models are
changing is clear. By some estimates,
almost three-quarters of all care in the United States will be delivered under value-based
payment models within the next decade. Yet in a recent online poll, we found that more
than 80 percent of healthcare executives expect provider revenues to either remain flat
or decrease over the next five years.2
As with any fundamental market shift, the ensuing disruption will create both winners
and losers. The former will likely be the ones that move quickly to balance and adjust
their reimbursement models ahead of the impending change. The losers will likely be
those that do nothing at all.
Revenue Driver
Payment Type
FFS Plus
Incentives and
Bundled Payments
Accountable Care
Volume based
Targeted conditions or
Panel or population
Rate plus
Set fee for condition or
service (total payments
distributed among
responsible participants)
Set fee for
population (driven
by compliance with
quality performance
Full risk for specific
procedure or condition
Full risk
Some risk
– Dion P. Sheidy, KPMG LLP
• Do you know what factors will drive
• Have you identified and assessed which
No risk
event. For the foreseeable
future, providers will need
to balance multiple payment
models simultaneously to
ensure they are optimizing their
reimbursement today while
also building their capabilities,
experience, and infrastructure for
the future.
reimbursement in the future?
An evolving web of payment models
Fee for
“ The
transition to value-based
models is a journey, not an
Leavitt Partners, 2014
Mobile application executive poll conducted at the 2014 Health Forum and American Hospital Association Leadership Summit
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through
complexity” are registered trademarks or trademarks of KPMG International.
outcomes will be key to optimizing
reimbursement going forward?
• Have you considered how new models will
impact your business models and payer mix?
• Do you have a plan for improving your
performance against key quality indicators in
order to optimize your reimbursement?
• Do you know how you compare against your
competitors in terms of reimbursement,
quality, and outcomes?
• Have you assessed how a gradual shift
towards value-based models will impact your
revenue and cost structures?
Population health management
Population-based care delivery models aim to achieve the best possible quality at the lowest necessary cost. In a
population-based care model, providers receive a fixed payment for managing the total health of a specific population.
CURRENT STATE Volume-based reimbursement
FUTURE STATE Population-based reimbursement
•Low financial accountability for the cost of care
• High responsibility for the cost of care
•Defines population as patient who presents at doctor’s/provider’s door
• Defines population as every patient in the provider organization panel,
regardless of whether they present at the doctor’s office
•Minimal infrastructure to manage the sickest/most complex patients
•Must have the right infrastructure to appropriately manage the entire
•Culture that rewards volume and operational efficiency
•Culture that rewards the optimization of quality and cost
Taking a balanced approach
The shift to new reimbursement models will certainly be disruptive. To survive and thrive,
providers will need to strike a careful balance between optimizing reimbursement today
and preparing for the various potential reimbursement models of the future. But, more than
simply balancing the demands of the present against those of the future, this transformation
will require providers to understand the sensitive balance that must be struck between
technology, process, documentation, and culture if they hope to achieve sustainable results.
Deeper insight than ever before
KPMG has contracted with Blue Health Intelligence (BHI), giving unparalleled access to one
of the largest commercial claims database in the United States. The breadth and depth of
the BHI data creates new opportunities to assist healthcare participants in gaining insights
and improving the quality of medicine.
Insights derived from the database, as well as claims data from the Center for Medicare
and Medicaid Services (CMS), can be leveraged to help clients plan and implement
strategies related to payer/provider collaboration, predictive analytics, healthcare population
management, and the monitoring of medical device and medication safety and efficacy.
providers need to start
“ Today’s
thinking carefully, not only
about how they will adjust their
business and reimbursement
models to adapt to this everchanging payment environment,
but also about how these
changes will impact the wider
organization from clinical through
to operations.
– Michael A. Zito, KPMG LLP
Nobody knows exactly what the “optimal” reimbursement
model will look like in the future. But at KPMG, we do know
how to reduce the risk, uncertainty, and disruption of the
That’s because our people work across the payer, provider,
and government sectors to help leading organizations improve
their reimbursement positions and prepare for the future. As
such, we understand that there are many ways for providers
For more information, contact:
to optimize reimbursement; our mission is to develop an
approach and strategy that suits your organization’s growth
objectives… not our sales targets.
Our clients choose us—and stay with us—for our forwardthinking approach and practical recommendations, which help
them manage the complexities of today while preparing for the
uncertainty of tomorrow.
Dion P. Sheidy
[email protected]
The information contained herein is of a general nature and is not intended to address the circumstances of any particular
individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such
information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon
such information without appropriate professional advice after a thorough examination of the particular situation.
Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates.
Michael A. Zito, Jr.
Managing Director
[email protected]
Craig L. Wheeless
[email protected]
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network
of independent member firms affiliated with KPMG International Cooperative (“KPMG International”),
a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through
complexity” are registered trademarks or trademarks of KPMG International. NDPPS 335375