One of the biggest trends defining the health care sector over the last decade has been the slow-but-steady march toward value-based care and alternative payment models.
Broadly, supporters of such models say they better link providers’ care quality and outcomes to reimbursement, or more appropriately compensate based on patients’ complexity and clinical needs. Shared-savings models, pay-for-performance agreements, global payment arrangements and bundled payments, where providers receive a single payment for all services related to a treatment or condition over a specified period, are examples.
Critics, on the other hand, say convoluted assessments of value put undue burden on providers and could be a vehicle to limit what payers pay out to providers.
These issues came to life in the autism space recently, demonstrating the struggle of turning the theory of value-based care into a reality.
Walnut Creek, California-based Catalight is an autism therapy network manager. Recently, the nonprofit took steps to roll out a case-rate reimbursement program, but, ultimately, opted not to do so.
Often, behavioral health providers will point to monthly case rates as a way to ensure the stable revenue needed to expand nonclinical support services or other innovations. A long-standing worry of several behavioral health executives, though, is that alternative payment models such as case-rates or bundling will be used as cost-containment measures, in turn limiting provider revenue.
In June, Catalight sought to rework contracts with a handful of clinicians and groups focused on high-hour early intervention, intensive or severe autism case treatment. In place of their fee-for-service contracts, Catalight pitched a case-rate system that, in effect, capped the hours the providers would be compensated, regardless of extenuating circumstances such as the severity of a patient’s conditions.
But Catalight has taken the case-rate offer off the table with the providers, Autism Business News has learned. At the beginning of August, impacted providers were told that Catalight would no longer offer case rates.
The organization stopped its fee-for-services contracts with these providers and has not restored them after tabling the case-rate effort, sources told ABN.
A representative of Catalight told Autism Business News that the organization took this approach with a “very small number of providers” with “costs vastly beyond our network average.”
“Given the case rate offers were not accepted, we have worked diligently with each of these providers to manage continuity of care for families,” the representative said. “We are not and do not have any plans to move our provider network from fee-for-service. Fee-for-service is the standard practice in the industry and our fee-for-service contracts do not have a monthly cap, nor are they capitated.”
None of the autism therapy providers initially approached accepted the potential case-rate offer.
Catalight’s decision to effectively cover fewer hours, in some cases, via a case-rate concept aligns with the organization’s overall philosophy about care. It emphasizes parent-led applied behavior analysis (ABA), for instance, and maintains that good clinical outcomes can come from fewer hours of treatment than is the norm in the industry.
While no longer in action, several provider and advocacy groups who spoke to ABN on background shared concerns that the case-rate program could have been expanded beyond the handful of providers affected.
Additionally, providers and advocates pointed to a state-based parity law passed in 2020 that requires insurers to adhere to the clinical guidelines established by the “nonprofit professional association for the relevant clinical specialty.” Some said the case rates would have capped the number of hours and violated clinical care standards.
Catalight didn’t comment on why it halted the case-rate effort.
Catalight’s primary source of revenue comes from its Catalight Care Services (CCS) entity, according to its latest federal financial report. CCS brought in 98%, or about $320 million, of Catalight’s revenue in 2022. Through CCS, Catalight contracts with the health care titan Kaiser Permanente. However, CCS is largely focused on the San Francisco Bay area.
Kaiser Permanente is one of the largest nonprofit health plan providers in the U.S. It also deepened its footprint in California’s Medicaid program, Medi-Cal, with a contract that took effect at the beginning of the year.
While the case-rate system and other alternative payment models have been frequently met with pushback in the behavioral health space, they’ve caught on elsewhere in health care.
The Medicare-certified home health space is a prime example. Historically, physical therapy services were a revenue driver for home health agencies, and many providers would deliver as many physical therapy services as possible to maximize payment.
In 2020, the U.S. Centers for Medicare & Medicaid Services (CMS) implemented the Patient-Driven Groupings Model (PDGM), which prevented volume-based reimbursement for physical therapy services. Instead, PT reimbursement was tied to patient characteristics and what CMS determined to be clinically appropriate for a particular episode.
