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

Value-Based Care News

Slow and Steady Still the Motto for Value-Based Reimbursement

Industry experts agreed that provider organizations will slowly adopt value-based reimbursement in 2018, but innovators will benefit from taking on risk-based, holistic models.

Value-based reimbursement and alternative payment models

Source: Thinkstock

By Jacqueline LaPointe

- The healthcare industry has boarded the train to value-based reimbursement. But recent roadblocks have provider organizations pumping the brakes with the shift away from fee-for-service, explained industry experts Doral Jacobsen, MBA, FACMPE, MGMA Consultant, and Michael Abrams, Co-Founder and Managing Partner at Numerof & Associates.

“Over the course of 2017, the policy uncertainty issuing from Washington left many healthcare administrators paralyzed about what to do next,” Abrams recently told “In particular, the cancellation of several mandatory bundled pricing programs in favor of voluntary versions raised questions about the future of value-based care, just as many administrators were beginning to accept value-based care as inevitable.”

As a result, ‘slowly’ has been the operative word for the value-based reimbursement transition, he added.

Policy uncertainty and healthcare reform modifications have provider organizations slowing swapping out traditional fee-for-service for value-based reimbursement, according to Numerof’s most recent State of Population Health survey.

“Data from over 400 healthcare executives across the country indicate that the sector is moving towards value, but tentatively,” Abrams said. “Responsibility for population health is being consolidated into a single position (instead of being a diffuse responsibility), sometimes with staff to support the effort. But in terms of results, most delivery organizations receive ten percent or less of total revenues through value-based programs or contracts, and this did not increase meaningfully in 2017 over the prior year.”

READ MORE: Best Practices for Value-Based Purchasing Implementation

While the efforts to implement value-based reimbursement are slow-moving, policy uncertainty and healthcare payment reform changes should not deter providers from embracing value-based payments in 2018, Jacobsen stated.

“Even though there have been efforts to ‘pump the brakes,’ many initiatives are still on course and it is just a matter of identifying what works and what doesn’t,” she explained. “Both the developing and testing of innovation models is time-consuming and the ‘starts and stops’ are part of how we determine the right recipe for viable models. The focus should continue to be on the cost and quality and how that focus impacts outcomes. There is no indication that these efforts will stop but it is evident that finessing these models will continue to be necessary.”

In addition, provider organizations may feel more uncomfortable transitioning to value-based models because policy uncertainty may have peaked in 2017, especially with a new HHS Secretary taking the lead in early 2018, Abrams added.

“The confirmation of Alex Azar may mark a change in course,” he elaborated. “Azar has left the door open to a return to mandatory requirements. More broadly, he’s committed to having Medicare pay for outcomes. That implies continued movement towards reimbursement mechanisms that factor cost and quality into the mix, but how that translates into future policy remains to be seen.”

With industry experts urging provider organizations to push forward with the value-based reimbursement transition, what should healthcare stakeholders expect in 2018?

READ MORE: How to Prepare for Alternative Payment Model Implementation

Jacobsen says more alternative payment models that span the entire care continuum.

“The sheer volume of models to consider will increase,” she said. “We are seeing more models focused on outcomes driven by early interventions born in ambulatory settings. We will see models for episodes of care that are not focused on the ‘inpatient’ setting but ones centered on managing chronic conditions executed by ambulatory care teams. We will likely see more models that center on connecting the dots between cross-functional care team such as integrating behavioral health with primary care.”

Developing alternative payment models that include a broader range of services beyond just the hospital setting is a top priority for CMS in 2018. For example, the federal agency recently announced the Bundled Payments for Care Improvement (BPCI) Advanced model. The newest Medicare bundled payment model expands on the original BPCI initiative by including three care episodes that will trigger the bundled payment in both the inpatient and outpatient setting.

In July 2017, CMS also expressed interested in creating a value-based reimbursement structure for patients with behavioral health conditions, such as substance abuse disorders, mental disorders in the presence of co-occurring conditions, and Alzheimer’s disease and related dementias.

As CMS tweaks and creates new alternative payment models, Jacobsen pointed out that these models are likely to include “upfront dollars” that will allow providers to implement unconventional care management strategies, such as incentivizing family members to attend care team meetings at a visit for advanced care planning.

READ MORE: Examining the Role of Financial Risk in Value-Based Care

These value-based reimbursement models will promote a “holistic approach” to healthcare, she continued.

MACRA will also push provider organizations to partner with delivery systems across the care continuum for value-based reimbursement success, Abrams added.

“Although the financial consequences of MACRA for individual physician reimbursement won’t be felt until 2019, the program will in the meantime drive most employed and many independent physicians into alternative payment models (APMs) that link reimbursement to performance,” he said.

“Combining these systemic programs with voluntary federal bundled payment programs across a range of therapeutic areas suggests a broad effort to encourage change in the way providers look at the activity of healthcare delivery,” he continued. “It will provide opportunities for those organizations who are already efficient to monetize that capability through participation. It will also increase the experience base for value- and risk-based care models across the delivery segment with new concepts like care coordination and collaboration with post-acute providers.”

However, federal programs may not quicken the value-based reimbursement transition pace in 2018. CMS continues to manage MACRA using a transitional period, meaning eligible clinicians do not have to fully participate in MACRA this year to avoid a penalty.

“Government has put programs in place that encourage behavior change at a pace compatible with the most reluctant provider,” he explained.

Provider organizations will be more motivated by financial challenges to adopt alternative payment models that drive down costs and increase profitability.

“Reimbursement from government and commercial payers continues to decline,” Abrams remarked. “Costs for labor and supplies typical of an expanding economy are increasing. Margins even in FY2015-16 showed deterioration. Median operating income at not-for-profit and public hospitals declined from 3.4 percent to 2.7 percent. Demand for care and a buoyant investment sector may help keep some provider organizations in the black, but such results are not sustainable.”

Value-based reimbursement models could help to boost profitability in the face of these financial obstacles.

“Payers and providers are likely to get more serious about building capabilities and implementing such models in the year ahead, if for no other reason than to build a defense against the for-profit threat,” he said. “Barbarians are at the industry’s gates, and time is running out. The next few years will be crucial. This year could be a pivotal one for new models of care.”

Among these new models of care are risk-based alternative payment models, Jacobsen elaborated.

Provider organizations are hesitant to take on downside financial risk. About 82 percent of Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs) are still in non-risk-based tracks in 2018 and most Medicare providers will participate in MACRA’s non-risk bearing program, the Merit-Based Incentive Payment System (MIPS).

However, risk-based models are key to progressing the value-based reimbursement transition and provider organizations willing to experiment with risk now will benefit in the future.

“Risk-based arrangements will increase in 2018 and practices that proactively position themselves to bear more risk will have more opportunity and will be part of developing the framework,” she stated. “At the end of the day, practices that have more of a holistic/systematic alignment will be better positioned to explore these models. These will not go away and in likelihood will expand. Risk is a powerful alignment tool and is critical for value-based initiatives.”

2018 may not be the year that provider organizations dive into value-based reimbursement, industry experts agreed. Coming off of a year filled with pump the brakes efforts and policy uncertainty has some provider organizations still dipping their toes into the new payment model.

But organizations making an effort to implement additional value- and risk-based alternative payment models will have a leg up as the industry inevitably moves to value-based reimbursement.


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