Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Risk Management News

Considering Healthcare Providers’ Value-Based Risk Burdens

“The whole goal of these value-based programs is really to put financial risk in the hands of provider organizations."

By Jacqueline DiChiara

- Value-based reimbursement may not be good for revenue cycle management. Increasing levels of financial risk may be setting healthcare providers back, but to what extent and at what cost? As the payment model landscape changes, can providers keep up to RCM speed? 

Value-based reimbursement revenue cycle management

Here is a brief summary of primary challenges and opportunities to consider as the healthcare industry moves forward.

The value-based push is clearly a matter of risky business

“Medicare, Medicaid, and commercial health plans are all pushing toward paying hospitals and physicians for value, effectively pushing financial risk upon the providers,” said Joe Kuehn, KPMG’s Advisory Partner with the Healthcare & Life Sciences Practice.

“Finance departments will need to prepare to manage these challenges and have better systems to measure performance against established targets including the cost and quality of care for example, so they can manage in this new environment.”

According to KPMG research of 165 surveyed healthcare providers, 13 percent confirmed their finance function is “undeveloped” for risk management.

Twenty percent of healthcare providers said they measure risk in association with fees. Nearly 1 in 3 confirmed using data and analytics to address payer reimbursement changes.

Risk is shifting away from payer onto providers

“The whole goal of these value-based programs is really to put financial risk in the hands of provider organizations,” stated Eric Chetwynd, Curaspan’s Director of Product Strategy, to RevCycleIntelligence.com.

The game of Risk is not one provider organizations have conventionally played, he said. As risk increasingly shifts from payers to providers, it only becomes more of a focal point.

“In the [Accountable Care Organization] model, you clearly see that most organizations are going for the one-sided savings model versus the two-sided risk model. [That’s] got to do with comfort level.”

“At the end of the day, you're all managing these patients together and sharing risk together, so really engage those provider networks.”

More risk may be good for revenue but bad for stability

“Although assuming more risk gives providers unique potential for revenue growth, it also presents a host of variables and uncertainties,” said Sasha Preble, Vice President of Advisory Services for Aetna. 

“Taking on greater financial responsibility gives providers a greater incentive to deliver care in the most efficient, cost-effective manner possible. In many cases, risk can act as the driving force that pushes an organization toward the transformation needed to achieve the Triple Aim.”

“As healthcare reform continues to radically transform care delivery and payment models, provider organizations face new opportunities and new risks.”

“To mitigate the risks, hospitals and health systems must leverage new types of data, information, analysis, knowledge, and action on a broader scale than they have ever managed in the past.”

Effectively transitioning to risk may take more time than anticipated

According to the American Medical Group Association’s (AMGA) survey of 100 medical groups, there is a “definite” transition away from traditional fee-for-service payments and towards risk-based payment participation.  

Over 40 percent of those surveyed said they will be able to accept risk, but in due time – specifically within the next 3 to 5 years. Seventeen percent predicted it will take at least 6 years to achieve this goal.

“This transition will be challenging and medical groups need policymakers and commercial insurers to partner with them to offer the tools they need to be successful in a new risk environment,” asserted Chester A. Speed, JD, LLLM, AMGA’s Vice President of Public Policy.

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