12 Value-Based Reimbursement Strategies to Cut Revenue Risk

August 20, 2015 - Value-based reimbursement is a hearty healthcare subject worth diving into as the shift from volume to value continues to evolve. Thirty percent of Medicare payments will be tied to alternative payment models, as per a recent announcement from the Department of Health and Human Services (HHS). Can healthcare providers make high quality care possible, but only with an unwavering budget firmly in place?

RevCycleIntelligence.com recently reported on 12 various value-based reimbursement strategies worth considering and implementing, including information about claims data integration and the application of financial analytics.

A newly released report from the Health Technology Transformation in collaboration with Caradigm describes 12 more value-based reimbursement strategies – such as data aggregation efforts, analysis, and predictive modeling to identify and manage the most costly/high-risk patients – utilized by accountable care organizations (ACOs) and large healthcare systems as the “impending acceleration” of the value-based reimbursement shift progresses.

As the pendulum swings towards a value-based core, recent data suggests it may be swinging rather quickly away from fee-for-service initiatives. As RevCycleIntelligence.com recently reported, 42 percent of hospitals confirm at least 10 percent of their revenue stems directly from value-based contracts; this reported amount is double from six months prior.

“The setting of target dates for the transition from pay-for-volume to pay-for-value means that provider organizations must ramp up their own preparations for adopting an approach that emphasizes population health management. But the infrastructure to do that is largely nonexistent in most current ACOs,” confirms one of the Health Technology Transformation/Caradigm report’s authors, David Wennberg, MD, MPH, CEO of the Northern New England Accountable Care Collaborative (NNEACC) and Adjunct Associate Professor at The Dartmouth Institute and of Medicine.

There are few healthcare organizations that are adequately prepared to handle future financial risk, confirm the report’s authors. Healthcare organizations “already take varying amounts of financial risk, but the percentage of their revenues coming from shared savings, bundled payments and global or partial capitation is certain to rise in the next few years,” the authors state. Forty percent of hospital patients do not need to actually be there if adequate information is acquired and things can be done differently, the report says.

“The potential upside of getting into a financial risk arrangement far outweighs the upside of any gain sharing or shared savings,” say the authors, additionally noting that slightly more than half of health plan contracts with ACOs – the startup cost of which is typically $2 million dollars – feature downside risk.

12 facets of value-based reimbursement “to know now” 

• Make sure you have enough primary care physicians and other clinicians to provide comprehensive preventive and chronic care.
• Restructure physician comp to align provider incentives with value-based care.
• Create patient centered medical homes or use existing PCMHs as building blocks for your ACO.
• Focus on care management for high-risk patients as well as other segments of the population that could become high risk in the future.
• Automate as much of population health management as you can while emphasizing human contact for high-risk patients.
• Embed care managers in practices wherever possible to create close relationships with patients.
• Don’t try to manage population health with your EHR alone, but use applications built for population health to help accomplish your goals.
• Integrate claims data with clinical data to provide breadth, timeliness, and adequate detail for analytic purposes.
• Find ways to obtain timely information from hospitals and health plans about admissions, discharges, and procedures
• Use predictive modeling to intervene with patients who are likely to get sick in the coming year.
• Use registries to track patients’ health status and make sure they get the services they need.
• Apply financial analytics to budgeting, using historical data on costs and, if possible, activity-based cost accounting.

Many healthcare executives find the shift to value-based care particularly “daunting,” the authors confirm. Nonetheless, they say an increasing number of healthcare providers is indeed prepared for the upcoming projected changes accountable care brings.

The easier option lies in simply remaining status quo and continuing to bring money in comparison with facing risk head-on, confirm the authors. “Whether an ACO is hospital-led or physician-led, it needs deep pockets to build the necessary infrastructure and hire sufficient care managers,” the report states. “[Healthcare providers] will have to become accustomed to the idea of delivering high-quality care within a budget.”