Implications for cost and access of site-of-service referrals for ancillary medical services in a US Medicaid population: analysis of claims data from Maryland, USA.

OBJECTIVES: Through analysis of claims and payment data, we quantified several implications of shifting ancillary healthcare services from regulated, more expensive to unregulated, less expensive sites. We also quantified the implications of this shift on access to services, with a focus on differences in access between rural and urban patients for a Medicaid (disadvantaged) population in Maryland, USA. DESIGN: Using a dataset of all Medicaid claims records for 1 year, we identified and extracted all bundles of regulated and unregulated ancillary services. Geospatial computing was used to approximate transportation costs required to access services. Including transportation enabled us to estimate net savings of any added transportation costs. We used location-allocation optimisation models to find the optimal sites to minimise net costs. SETTING: Coverage area included Medicaid patients throughout the state of Maryland. PARTICIPANTS: All rural and urban members of this Medicaid cohort. PRIMARY AND SECONDARY OUTCOME MEASURES: Change in payer costs and member travel times on shifting ancillary bundles from regulated to unregulated sites. RESULTS: Procedure cost and travel time differentials between regulated and unregulated sites strongly correlated with the percentage of procedures referred to regulated sites. Shifting regulated bundles to unregulated sites, while imposing the constraint of no increase in travel time, reduced expenditures by 15.9%. This figure exceeded 30% if no limit was placed on travel-time increases. CONCLUSION: With reasonable constraints on allowable travel time increases, shifting ancillary service bundles from regulated to unregulated sites can benefit both patients and payers in terms of cost and access.

Managing prior approval for site-of-service referrals: an algorithmic approach.

OBJECTIVES: Many payers and health care providers are either currently using or considering use of prior authorization schemes to redirect patient care away from hospital outpatient departments toward free-standing ambulatory surgical centers owing to the payment differential between these facilities. In this work we work with a medium size payer to develop and lay out a process for analysis of claims data that allows payers to conservatively estimate potential savings from such policies based on their specific case mix and provider network. STUDY DESIGN: We analyzed payment information for a medium-sized managed care organization to identify movable cases that can reduce costs, estimate potential savings, and recommend implementation policy alternatives. METHODS: We analyze payment data, including all professional and institutional fees over a 15-month period. A rules-based algorithm was developed to identify episodes of care with at least one alternate site for each episode, and potential savings from a site-of-service policy. RESULTS: Data on 64,884 episodes of care were identified as possible instances that could be subject to the policy. Of those, 7,679 were found to be attractive candidates for movement. Total projected savings was approximately $8.2 million, or over $1,000 per case. CONCLUSIONS: Instituting a site-of-service policy can produce meaningful savings for small and medium payers. Tailoring the policy to the specific patient and provider population can increase the efficacy of such policies in comparison to policies previously established by other payers.

Implementing Value-Based Primary Care Delivery in Federally Qualified Health Centers.

Federally Qualified Health Centers (FQHCs), like many health systems, are in transition toward alternative/advanced payment and reimbursement models. Gradually, fee-for-service reimbursements will be replaced by value-based payments with shared accountability for patients' health care outcomes. This article provides a description of an FQHC Primary Care Collaborative (FPCC) model and preliminary outcomes. This collaborative is an advanced payment model resulting from a partnership between Priority Partners Managed Care Organization (PPMCO), Maryland Community Health System, LLP, and 7 Maryland FQHCs. The FPCC model builds on shared measurable health care outcomes to establish an advanced care delivery model that is tailored to the needs of providers and their patients. PPMCO provided prospective payments to the 7 FQHCs based on their patient population size and total historical cost. Each FQHC had specific health outcomes targets for each fiscal year (FY) to maintain funding. Although FQHC implementation approaches varied, the FQHCs used their payments primarily for outreach and care coordination resources, and to develop processes and structures to improve care delivery outcomes. A 3-year assessment of this program revealed a 35% reduction in emergency department visits and an 11% reduction in hospitalizations for Medicaid beneficiaries across all 7 FQHCs. The FPCC 3-year investment of $4.4M yielded a cumulative cost savings of $19.4M, resulting in a cumulative 3:1 return on investment. There is limited evidence for implementation and outcomes of non-state, Medicaid payer-specific, advanced payment models in FQHCs. This article provides a collaborative framework other Medicaid managed care organizations can adopt and build on.