Optum to Establish Per Diem Payments Rather than Fee-for-service
Written by Editor   
Thursday, July 16, 2015 02:25 PM

IMPORTANT – Quick Brief:  Texas will be among the first states in which Optum (UnitedHealthcare) will implement mandatory per diem reimbursement rather than fee-for-service. Watch for provider notification letters prior to the October 1, 2015, planned implementation date.

The per diem is basically a set fee for all services performed on a day.  So on the first day of service where you will typically see an exam, x-ray, treatment and therapy, instead of a payment for each service, it will be a single aggregate payment.  This per diem amount will be the same on the second and subsequent visits where the normal protocols may be only a spinal manipulation. “Select DME procedures reimbursed separately."

 

Payment reform for healthcare has been gaining momentum. From the Patient Protection and Affordable Care Act (PPACA) effort to advance payment away from fee-for-service reimbursement, to the Centers for Medicare and Medicaid Services (CMS) announcement that half of its Medicare payments would flow through alternative payment models by 2018, payment reform is coming whether providers are prepared or not.

Legal teams associated with the chiropractic industry have been meeting with Optum.  It is reported that beginning in October of this year, Optum will begin to transition chiropractic providers from a fee-for-service payment to a per diem model.  Texas is slated to be included in the first phase of implementation.  This change will be implemented in phases and letters will be sent to providers in advance of implementation.  

Chiropractic attorney’s had questions regarding such implementation.  One observer reports:

"They are coming in with the attitude that they can just do this without any discussion at all.    They inform you that they are the largest health insurance carrier in the United States and this is what is going to happen."

"The 'per diem’,” this participant reported, "is basically a set fee for all services performed on a day.  So on the first day of service where you will typically see an exam, x-ray, treatment and therapy, instead of a payment for each service, it will be a single aggregate payment.  This per diem amount will be the same on the second and subsequent visits where the normal protocols may be only a spinal manipulation. … It appears that with the exception of DME, anything a chiropractor would perform on the day of service will be one set amount." 

"We asked about out of network, … that is still unclear, but it appears that the out of network will not be "per diem" payments.    We asked about non-covered services and maintenance.   Again they … indicated that those would not be covered under the per diem structure and the DC could charge fee for service to the patient.    We asked if there was going to be one set fee for the entire United States.  … they finally indicated that they were considering regional modifications. They also stated that California, Colorado, Kansas and Missouri were already on this per diem payment structure.” 

The following are quotes from the presentation provided by Optum: 

"Over time, payers should largely eliminate stand-alone fee-for-service payment to medical practices because of its inherent inefficiencies and problematic financial incentives. – The National Commission on Physician Payment Reform March 2013.”

"Fee-for-service couples payment to something providers can control – how many of their services, such as MRI scans, they provide – but not to the overall cost or the outcomes. Providers are rewarded for increasing volume, but that does not necessarily increase value. – Harvard Business Review.”

HHS and UnitedHealthcare on Payment Reform: 

"HHS has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018.  This is the first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments.”

"In just a few short years, debates on provider payment reform have emerged from technical obscurity to national prominence. Payment reform is now seen as self-evidently fundamental to U.S. health reform, quality improvement and cost containment. No national health policy prescription is complete without the exhortation to move from a health care system that pays for volume to one that pays for value.”

Optum represents that  75% of its Optum Provider Network is already on a per diem reimbursement schedule.  This includes:  All Physical Therapists and Doctors of Chiropractic practicing in CA, CO, FL, KS, and MO.

Optum claims the benefits of this move to be:  Currently there are three tiers in their network:  Tier 1-Advantage, that does not require a utilization review (UR) process; Tier 1, that uses a minimal UR process; and Tier 2, that uses a comprehensive UR process.   Optum reports that there will be “increased eligibility for Tier 1 Advantage and T1 participation with 6600 providers moving to a higher Tier, resulting in a reduction or elimination of clinical administrative requirements.”  They report that 3600 providers would be moving to T1A, and 3000 providers moving to T1.

Optum also claims a more simplified administration with "decreased CPT coding policy/change impact" and "overall no aggregate reduction in reimbursement."

Optum states that "A flat rate payment made to a chiropractor for all in scope covered services provided on a single date of service [is an] incremental step toward industry transition away from fee-for-service payment models [as required by the] Affordable Care Act, Centers for Medicare and Medicaid Services, and the Commercial Industry."

This presentation states that it “applies to UnitedHealthcare programs” and that it “includes evaluation and management and radiology’ and that “select DME procedures reimbursed separately."

They report that a “phased deployment beginning October 2015” will be preceded by a "Provider notification letter  90 days prior via mail."

Texas is one of four states listed in this presentation that is anticipated to begin the implementation of per diem reimbursement on October 1, 2015.