CAR 6400 – Medicare and private payers have expanded reimbursement

Subject: Business / Management
Question
Scenario:Medicare and private payers have expanded reimbursement under Accountable care organizations (ACO). You are the chief financial officer (CFO) of a hospital system that is forming an ACO to participate in these payment models. The ACO seeks to improve care coordination for its patients with chronic conditions. To provide better care management, the ACO is interested in investing in primary care physicians and physician’s assistants to provide more intensive care management services.

After formation, the ACO will enter contracts with Medicare and private insurers under alternative payment models, including shared savings, bundled payments, and global capitation. The ACO will need to determine how to set up reimbursement payments to ACO providers and consider whether financial incentives are required to ensure ACO providers deliver efficient care.To deliver health care services, an ACO needs to create a competent workforce that can provide health care to the patients that are in the ACO.

Some integrated ACO entities already have employed physicians and mid-level providers that receive salaries from the organization, whereas other non-integrated ACO entities need to invest in external relationships with independent physicians and other providers. Since ACOs do not have managerial control over non-employed providers, additional controls and incentives may be necessary to ensure that efficiency is maximized.

ACOs also need to consider the number and mix of specialists (e.g., family practice vs internal medicine) and mid-level providers (e.g., physician assistants and nurse practitioners) in delivering primary care services that can promote value. Maximizing value requires appropriate workforce decisions on supply and incentives to encourage providers to minimize costs. For this Assignment, consider the efficiency in the supply of health servicesIn a 2- to 3-page Word document that includes tables and/or calculations, make recommendations on the following:

1) number of physicians and nurse practitioners needed;

2) reimbursement method: salary or fee-for-service;

3) recommendations for financial incentives to address the challenges of supplier-induced demand and how to ensure efficiency. Interpret the net profit from the ACO contract based on your recommendations.

Explain the rationale behind your recommendations, including the impact made by your financial calculations.

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