The government is one of the largest purchasers of healthcare services and because of this, they seek out opportunities to contain costs
Description The government is one of the largest purchasers of health care services and because of this, they seek out opportunities to contain costs. Recent healthcare policy has focused on managing costs while offering quality care and improving access to care. The Centers for Medicare and Medicaid Services (CMS) Innovation Center develops payment and service delivery models with this in mind.
Scenario
Mr. Magone, CEO of Healing Hands Hospital, has asked you to join the Future of Healing Hands Task Force. Your first assignment is to work with the hospital's Chief Financial Officer (CFO), Ms. Johnson, and provide a summary of how the new CMS initiatives might impact the organization’s revenue structure. More information on the innovation models can be found on the CMS Web site.
Describe an Accountable Care Organization (ACO) and the benefits of an ACO.
Describe an episode-based payment initiative and the benefits of this initiative to Healing Hands Hospital.
Use this template to complete your assignment.
Reference
Centers for Medicare and Medicaid Services. (n.d.). Innovation models. https://www.cms.gov/priorities/innovation/models#views=models
Sample Solution
Impact of CMS Innovation Models on Healing Hands Hospital
Accountable Care Organization (ACO)
- Description: An ACO is a network of healthcare providers that work together to deliver coordinated care to a defined patient population. Medicare beneficiaries voluntarily choose to receive care from an ACO.
- Benefits for Healing Hands Hospital:
- Shared Savings: ACOs have the potential to earn shared savings if they meet quality performance measures and reduce overall Medicare spending for their assigned patient population. This can be a significant revenue stream for Healing Hands Hospital.
- Care Coordination: ACOs incentivize collaboration between different healthcare providers, potentially leading to improved patient outcomes and reduced duplication of services, which can translate to cost savings for the hospital.
- Population Health Management: Participation in an ACO encourages a focus on preventive care and chronic disease management, potentially reducing the need for expensive hospital admissions in the long run.
Episode-Based Payment Initiative
- Description: This initiative moves away from traditional fee-for-service payment and bundles payments for all services associated with a specific episode of care, such as a hip replacement or a cardiac bypass surgery.
- Benefits for Healing Hands Hospital:
- Streamlined Billing: Episode-based payments simplify billing processes by establishing a single payment for the entire episode of care. This can reduce administrative costs for the hospital.
- Increased Efficiency: Knowing the total episode cost incentivizes the hospital to deliver care efficiently, potentially leading to cost savings through optimized resource allocation.
- Focus on Quality: Episode-based payments reward hospitals for achieving positive patient outcomes within the bundled payment, potentially improving quality of care.
Full Answer Section
Potential Impact on Healing Hands Hospital
These CMS initiatives present both opportunities and challenges for Healing Hands Hospital.
- Revenue Opportunities: Participation in ACOs and achieving quality benchmarks can lead to increased revenue through shared savings. Episode-based payments, if structured favorably, can provide a predictable income stream for specific procedures.
- Financial Risk: ACOs take on some financial risk if they are unable to meet cost-saving targets while maintaining quality care. Episode-based payments require careful cost management to ensure profitability within the bundled payment structure.
- Data Analytics: Success in both models hinges on robust data analytics capabilities. The hospital needs to be able to track costs, measure quality metrics, and identify opportunities for improvement.
Conclusion
Carefully evaluating the details of these CMS initiatives and developing a strategic plan for participation is crucial for Healing Hands Hospital. By leveraging the potential benefits while mitigating the risks, the hospital can ensure financial stability and contribute to a more efficient and patient-centered healthcare system.
Note: I used the template provided and refrained from including any links within the response, following your instructions.