Advocacy Center   |   Collaborate   |   Data Portal   |   Print Page   |   Contact Us   |   Sign In   |   Join AAOE
News & Press: Industry News

How to Prepare for the Transition to Value-Based Reimbursement

Tuesday, May 16, 2017   (0 Comments)
Posted by: John Martin, Katz, Sapper & Miller
Share |


Three Questions to Address

In the healthcare industry there is a great deal of discus­sion about the shift to value-based reimbursement models.  At times it seems like the only constant is the continually changing regulatory requirements. So what does a practice need to do to succeed under value-based care and reimbursement? What can a practice do to prepare?

To understand the implications of today’s healthcare landscape, it is important to have some background on value-based reimbursement.

Value-Based Care, Value-Based Reimbursement

The new healthcare reimbursement formula is being driven by the Institute for Healthcare Improvement’s Triple Aim, and it is likely here to stay. The new formula prioritizes improvements in care quality, patient satisfaction, and the health of populations while simultaneously calling for reduction in the cost of care. Because the clinical care paradigm has shifted dramatically, the reimbursement paradigm will have to shift in equally dramatic fashion. Measuring units of service is easy; measuring the value of care is more complex.

Question 1: How is value-based care defined?

Value is loosely defined as improving care quality, improving patient satisfaction, and improving the health of populations. For purposes of this article, value is defined as measures that have practice components, facility components, and blended components. It should be noted that care quality and patient satisfaction are two very different components of the formula. For example, providers can deliver top-tier quality but have an extremely unsatisfied patient due to circumstances not related to their care. Similarly, a patient can have a satisfying experience while having an unfortunate clinical outcome.

Action: To navigate the transition to value-based care, there are three initial steps practices should consider:

  1. Begin working with their primary hospital(s) to establish quality measures that are both facility-based and provider-based.
  2.  Set standards to improve the working environment of the clinicians; many times patient satisfaction will improve because worker morale has improved.
  3. Set clinical standards that clearly define how patients are to be treated by caregivers.

Question 2: How is value-based care reimbursed?

The transition to value-based care has led to the establishment of bundled payments as a form of value-based reimbursement. Diagnosis-related groups (DRGs) and ambulatory payment classifi­cations (APCs) were the government’s early attempts at bundling reimbursement for condition and setting specific healthcare services. In each case, similar services were bundled into a DRG (inpatient) or an APC (outpatient) code and billed as a complete unit, not as separate component parts. The bundling of services was designed to curb healthcare spending by paying a set fee for specific diseases, disease processes or procedures. In terms of reimbursement, it did not matter to Medicare or other commercial payers how much a pro­vider consumed by way of additional resources because the fee for that service was fixed. Bundled payments are similar to DRGs and APCs – but on a much larger scale. Rather than grouping like inpatient or outpatient services, all services, as well as group provider types, are combined across the complete continuum of care.

Under Models 2 and 3 of the CMS bundled payment initiative, CMS continues to reimburse providers based on the CMS fee schedule. At the end of a reporting period, actual expenditures are compared to the Medicare target price.  Providers may receive a bonus payment or be required to make a repayment to the Medicare system based on their financial performance. Under Model 4, CMS makes a single prospective payment to the hospital. Non-hospital providers submit “no-pay” claims to Medicare and are paid by the hospital out of the bundled payment.

Value-based reimbursement models are challenging to providers because patients are all but guaranteed similar or improved access to care at a lower price point.

Action: Providers can help ensure their success under these new models by doing the following:

  1. Identify like-minded care providers to partner with across the entire continuum of care; doing so will help ensure collaboration in improving patient care and driving out excess cost.
  2.  Begin working with hospital(s) to help identify areas for cost reduction.

Question 3: How must care delivery change?

Where does this leave providers of high-quality, cost-effective healthcare? Every aspect of care is being considered for improvement – from clinical operations to new and chang­ing provider relationships.

Clinical Operations

New healthcare models and initiatives will require providers to improve clinical operations by designing an optimized pro­cess as though starting from scratch. Once new processes are designed, providers must implement them quickly and establish metrics to monitor the results to ensure that the desired outcomes are being achieved. Collecting data now will help ensure proper reimbursement in the future.

Providers should create integrated management teams that include physicians, non-physician caregivers, and administrators from all aspects of the care delivery process. These teams will be responsible for enabling the participants to work together more effectively to improve care, modify processes, set quality and cost metrics, mea­sure results, manage provider behavior, establish and apply best practices, and more. Providers have to work together to improve care processes and develop closer re­lationships with payers to help drive the course of change.

Changing Relationships

Historically, hospitals, physicians, and insurance compa­nies have been focused on their own individual goals and objectives. In a value-based system, these key stakeholders must be more partner-oriented to ensure their success. As the reimbursement model shifts to a value-based system, hospital-physician integration and alignment will increase as well. Alignment strategies are evolving from medical directorships and call pay arrangements to service-line co-management arrangements and more integrated alignment structures such as bundled payments and ACOs.

Physicians and physician groups who historically sup­ported several hospitals are finding it harder to do so in today’s environment. At a group level, it is possible for a group to support more than one hospital, but it is not prac­tical for the individual doctor. The individual doctor must be familiar not only with the electronic medical record (EMR) system used by his or her practice but also with the EMRs of each facility or institution with which he or she works. For most physicians, it is simply too much.

While seemingly simple on the surface, success in a value-based environment requires hard work and the dedication of all those involved in the care delivery process.

Action: Providers can employ corporate initiatives to help ensure operational and relational success in a value-based environment.

  1.  Work together: Create an environment where hospital administrators and providers work together to identify issues, prioritize those issues, and develop new and better processes and protocols.
  2.  Empower decision-making: Hospital leaders need to have a clearly identified decision matrix that describes the level to which the group can make and implement changes before higher approval is required.
  3.  Support physician involvement: Physician involvement cannot feel like lip service to the provider.  Physicians need to be supported, reactions to their recommendations must be explained, and alternative solutions and compromises must be found.

Transitioning from transaction-based to population-based reimbursement is not easy, but with careful planning, providers can ensure they are prepared to successfully navigate the transition from volume to value.

Membership Management Software Powered by YourMembership  ::  Legal