What is MedAlign?
Essentially, MedAlign is a system to reduce the cost of an episode of care, while maintaining and increasing the quality of the outcomes for patients. MedAlign involves a payer reimbursing a physician on the traditional fee-for-service basis but also paying an additional management fee if the physician reduces the overall cost of an episode of care. The MedAlign system applies equally to primary care and specialty providers.
The payer could be an insurance company, government agency, hospital system with employed physicians, ACOs or any other entity that desires to ignite the competitive advantage offered by the MedAlign system.
Consider:
- Physicians now receive about 15% of the fees disbursed for an episode of care, but they order 100% of the care.
- In most cases, the physician and patient want quality diagnostic tests done quickly and treatment and procedures performed in an expeditious manner. Cost consideration is not foremost in the physician's mind. This is especially true if the treatment is covered by a third party payer; the co-payments/coinsurance are reasonable/affordable; the care is needed urgently to cure or prevent further harm to the patient; and even more so if the patient's maximum out of pocket costs for the year will be reached as a result of the tests and treatment.
The Physician as the "informed buyer" of healthcare
- The fundamental principle of MedAlign is that the physician, the 'informed buyer" in the healthcare system, should receive a separate management fee (an incentive payment) to manage the quality and cost effectiveness of the entire episode of care.
- The internet and other sources are giving patients a wealth of information about their condition. However, it is still the physician that orders the care after discussing all treatment options with the patient. The physician is the only "informed buyer" in the entire episode of care.
- MedAlign promotes interaction between physicians and patients not only on their care, but how to manage its quality and cost effectiveness.
- MedAlign encourages phone and email communication; use of after hours physician and nurse help lines; use of walk-in clinics and urgent care centers for non-emergency access if the PCP is not available; use of the less expensive mail order pharmacy; discussion of alternative and potentially less costly and invasive forms of treatment.
MedAlign Promotes Competition
MedAlign does not replace the current fee for service system; it is adding an incentive system for physicians. As the "informed buyer," physicians will promote competition among healthcare providers based on quality and cost effectiveness. Specialists, hospitals, pharmaceutical companies, medical devise manufacturers, ancillary health providers, etc. will strive to be the best value from both a quality and economic standpoint for the "informed buyer."
The MedAlign Management Fee (incentive payment, P4P)
- The management fee is determined as a percentage of savings within an episode of care compared to what a similar episode usually costs the payer based on benchmarks based on historical costs and nationally recognized criteria available to all parties.
- Throughout the process, MedAlign remains independent of the payer and physicians. MedAlign manages the process that determines the benchmarks, the savings achieved, and the distribution of those savings to the physicians involved. The MedAlign system accounts for high and low cost outliers, catastrophic cases and those cases costing more than the benchmark.
- Importantly, there is no risk to the third party payer - if the care is not cost effective, there is no incentive payment due the physician.