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Defining the Top 10 Terms of Healthcare Revenue Cycle Management

MACRA, MIPS, accountable care, and supply chain management are among the top terms used by healthcare revenue cycle pros.

- In some cases, definitions for terms and acronyms related to healthcare revenue cycle management can come across as fairly straightforward. Other times, they can sound more like a foreign language. A healthcare professional may find it difficult to fully comprehend various acronyms, such as MIPS and MACRA, as various agencies word their definitions/interpretation of laws slightly differently.

Providers should understand key terms linked to healthcare revenue cycle management.

Listed below are definitions as well as supporting details for phrases that come up all over the place for anyone who does a Google search on “healthcare revenue cycle management”.

Accountable Care Organization

An ACO is a healthcare organization made up of doctors, hospitals and other types of healthcare professionals that share responsibility for providing value-based care to a population of patients.

ACOs can be characterized by the coordinated care that they deliver. Coordinated care efforts can lead to a reduction in unnecessary medical care, improved health outcomes for patients and savings for providers.

ACOs are incentivized to administer quality and cost effective healthcare through value-based payment models tied to quality metrics. According to CMS, “when an ACO succeeds both in delivering high-quality care and spending healthcare dollars more wisely, it will share in the savings it achieves for the Medicare program.”

Medicare offers a number of ACO programs, including the Medicare Shared Savings Program, Advanced Payment ACO Model and Pioneer ACO Model. Across these models, there are currently 477 ACOs, according to the US Department of Health & Human Services (HHS).

Alternative payment models

Traditionally, health care providers have been paid through a fee-for-service (FFS) model. Under this model, every time a provider delivered a blood test, a CT scan, or any other service, they were paid a negotiated price for each activity. This incentivized some providers administer as many tests as possible so they could collect as much reimbursement as possible. In some cases, patients received tests and services they may not have needed.

Because the fee-for-service model continued to drain the industry financially, healthcare reformers decided to create alternative payment models, which incentivize quality of service over volume. Some of these include models include ACOs, bundled payments, and reimbursements tied to quality reporting bonuses and penalties.

Bundled payments

Bundled payments are a flat pricing structure that cover a full episode of care for patients with certain acute medical conditions.

Under this type of payment arrangement, payers compensate providers with a single payment for an episode of care, which is defined as a set of services delivered to a patient over a specific time period.

Under this model, various providers share a single payment for a variety of services they administer. Bundled payments are supposed to encourage more dynamic relationships among healthcare providers. Insurers are paying providers with bundled payments more and more for various procedures, including knee and hip replacement and organ transplants.

“CMS has rolled out its first bundled payment, which starts next week, and it won’t be the last. They’ve already begun to work with private payers on focusing on cardiac care as well as maternity care for the next bundled payment initiative.” Susan Nedza, MD, Senior Vice President of Clinical Outcomes at MPA Healthcare Solutions, said in a previous report.

Concierge medicine

Concierge medicine is also known as “retainer medicine”. In concierge medicine, patients usually pay physicians for a yearly membership or retainer fee for access to services that their insurance company does not cover, such as nutritional counseling or wellness and fitness assistance. In some cases, providers charge a flat monthly fee for services.

The model has gained popularity among family physicians because it allows them to reduce their patient loads and provide more one-on-one attention to patients. Under this model, providers also get to focus more on preventative care, while getting an increase in pay.

Some patients prefer this model of healthcare because they get to have access to their doctors twenty four hours a day. Under this model, patients are able to spend much more time asking physicians questions about their health. They also don’t have to sit in waiting rooms for hours as they have to do on occasion when going to a traditional primary care physician.

MACRA

Last April, President Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) into law as a replacement for the Medicare Part B Sustainable Growth Formula (SGR) reimbursement formula. After years of uncertainty about a growing gap between the SGR formula and the real-life costs of Medicare services, MACRA helped providers avoid a 21-percent payment gap once and for all.  The legislation represented a major bipartisan effort to enact meaningful healthcare payment reform.

In addition to repealing the SGR, MACRA included a new model for value-based reimbursements known as the  Merit-based Incentive Payments System (MIPS).

Medicare Shared Savings Program

The Medicare Shared Savings Program facilitates coordination and cooperation among providers as a way to reduce costs and improve the quality of care for Medicare beneficiaries. With this program, providers, hospitals and suppliers are able to share in savings by joining or forming an ACO.

The MSSP allows accountable care organizations to participate in an upside risk-only track, which allows ACOs to accrue financial bonuses for meeting quality goals without being responsible for penalties. The vast majority of MSSP ACOs have chosen to participate in this less risky arrangement, although a small percentage of participants are also financially accountable for their failures to meet stringent quality benchmarks.

CMS has made the MSSP a centerpiece of its value-based reimbursement efforts, and has recently committed to several major overhauls of the program that will attempt to address concerns about inadequate metrics and difficult goals.

MIPS

Starting in 2019, MIPS will be phased in the healthcare system over the course of five years. MIPS is a consolidation of the following pay-for-performance programs: the Physician Quality Reporting System (PQRS), Value-Based Modifier (VM), and EHR Incentive Programs.

MIPS and APMs aim to address measure gaps that these initiatives currently have. They also focus on care coordination, patient outcomes and population health, while also trying to integrate patient-generated health data (PGHD) in care plans.

Eligible providers will have the option to participate in alternative APMs. They will be judged based on four performance categories – quality, resource use, clinical practice improvement activities, and the meaningful use of certified EHR technology. Scores that provider’s receive will influence what financial bonuses or penalties they receive. The score will also be used to determine and apply a MIPS payment adjustment factor for 2019 onward. Providers can receive a positive, negative or zero payment adjustment.

Price transparency

Price transparency is important in the healthcare industry, as consumers with increasingly high deductibles and out-of-pocket copayments continue to demand more information about costs that will allow them to make better decisions. .  

In many cases, it’s difficult for providers to give consumers accurate data about costs because they also negotiate with payers on pricing. Providers in an ACO have to deal with multiple payers and price variations.

A lack of price transparency creates issues for everyone involved in a revenue cycle. Many would argue that price coordination among payers and providers is just as important as important as care coordination for realizing healthcare reform through accountable care.

Supply chain management

The healthcare supply chain is the series of steps it takes to acquire resources, track and manage supplies, and deliver goods and services to the final consumer. Supply chain management is one of the most complex aspects of the revenue cycle, as they deal with a number of factors including hospital supplies, data management, healthcare and payments.

Players involved in supply chain management include doctors, insurance companies, hospitals, regulatory agencies and other healthcare professions. To make things even more complicated, everyone involved does not always have the same goals.

Clinicians may prioritize their own particular preferences or perceptions of need, while financial managers may focus more on reducing redundancies, hoarding, and stockpiles of out-of-date products. Conflicting interests within a supply chain can lead to inefficiencies and even fraud.

Value-based reimbursement

Value-based reimbursement is any payment that is directly tied to care quality or patient outcomes.  They are driven by Medicare, Medicaid, and commercial payers. Because value-based reimbursement shifts the costs of excess or unnecessary care back onto the providers, healthcare organizations are financially incentivized to stay within certain spending limits. This is intended to produce higher quality healthcare without redundancies, inefficiencies, or fraudulent services.

HHS has previously reported that 85 percent of hospital Medicare payments would be linked to performance and value by the end of this year, but the challenges of the value-based transformation are many.

It’s not easy for providers to shift toward value-based reimbursement, as value-based models are arguably more complex than FFS models. Moving away from FFS toward value-based reimbursement requires providers to change their revenue cycle support operations. In many cases, providers don’t have health IT systems that would help them make this transition by performing advanced analytics, population health management, and care coordination.

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