Top 4 Healthcare Revenue Cycle, Finance Trends to Watch in 2018

December 19, 2017 - As 2017 comes to an end, hospital and practice leaders are preparing their priority lists and agenda items for next year. The top four healthcare revenue cycle and finance trends that should appear on 2018 agendas include voluntary Medicare alternative payment models, value-based care products from private payers, the Quadruple Aim, and hospital mergers.

Healthcare organizations are still transitioning to value-based care and that journey will continue into 2018. But the methods and strategies for shifting away from fee-for-service may be different as the new year approaches.

Under a new presidential administration, CMS shifted gear with its value-based reimbursement strategy. The federal agency canceled upcoming mandatory bundled payment models and scaled down existing compulsory models.

CMS Administrator Seema Verma also embarked on a campaign to reduce administrative burdens in healthcare, especially at the provider level.

In addition, new hospital merger deals were seemingly announced every day. Healthcare stakeholders are seeking the scale and capabilities needed for value-based reimbursement models.

READ MORE: Preparing the Healthcare Revenue Cycle for Value-Based Care

These trends will impact how healthcare organizations approach the value-based care transition and their revenue cycle management strategies in 2018. Below, RevCyleIntelligence.com explores the top predictions for the healthcare revenue cycle management and finance space in 2018.

Voluntary alternative payment models from Medicare

2017 marked a significant shift in Medicare’s approach to the value-based reimbursement transition.

CMS recently announced that the federal agency will focus more on voluntary alternative payment models moving forward, rather than mandatory demonstrations. The announcement came as the federal agency canceled upcoming compulsory cardiac and hip fracture bundled payment models and scaled down the number of mandatory regions in the Comprehensive Care for Joint Replacement (CJR) initiative.

“While CMS continues to believe that bundled payment models offer opportunities to improve quality and care coordination while lowering spending, we believe that focusing on developing different bundled payment models and engaging more providers is the best way to drive health system change while minimizing burden and maintaining access to care,” stated Verma. “We anticipate announcing new voluntary payment bundles soon.”

Mandatory alternative payment models drew criticism as early as 2016 when former HHS Secretary Tom Price contended that CMS overstepped its authority by requiring providers to participate in mandatory models, such as the CJR bundled payment program.

READ MORE: How to Prepare for Alternative Payment Model Implementation

Industry groups have also pressed CMS for more voluntary alternative payment models. The American Hospital Association (AHA) recently supported the cancellation of the cardiac and hip fracture bundled payment models, as well as the partial switch of the CJR model into a voluntary initiative.

Premier also agreed that Medicare alternative payment models should be voluntary to give providers flexibility with choosing the most appropriate models for their patient populations and organization.

Mandatory alternative payment model supporters counter that voluntary models would impede value-based reimbursement progress. Healthcare policy experts argued in a recent Health Affairs blogpost that “making these models optional would eliminate the ability to generate robust evidence on their effectiveness, dealing a severe blow to efforts to use bundled payments to improve care delivery in orthopedics and cardiac care, and to the chances for bringing bundled payments to scale nationally in the coming years.”

But CMS favors the shift to voluntary models as healthcare rings in the new year. The federal agency views the shift as a way to improve provider and payer collaboration on new alternative payment models.

Private payers to boost value-based care offerings

Medicare has led the way with value-based reimbursement and alternative payment models. But recent model cancelations may signify a shift in how providers engage with value-based reimbursement.

READ MORE: Key Strategies for Succeeding with Healthcare Bundled Payments

Private payers are likely to fill any gaps left by Medicare’s new position with value-based reimbursement models since employers are already demanding high-quality care at lower costs, explained Michael Abrams, Managing Partner at Numerof & Associates.

“Commercial payers are going to be responsive to employers, and employers are being crushed, along with their employees, by the cost of healthcare insurance,” he said. “Employers recognize that the answer is about driving down the cost of care and not how to spread around the cost of the premiums. As employers continue to advocate for changes to healthcare delivery that will bring costs under control, payers will be forced to turn to providers and demand innovations like bundled pricing.”

Providers should embrace value-based reimbursement opportunities from private payers, he added. Healthcare organizations will be able to attract patients by offering affordable, high-quality care under alternative payment models and private payers will be more willing to partner with organizations engaging in value-based care.

“In the end, laggards will be driven by market competition to play catch up, and commercial payers will choose to work with innovators, not those hanging on to the status quo,” Abrams stated.

Private payers are slowly offering more value-based reimbursement opportunities. Only 17 percent of medical groups in a recent AMGA survey reported having no access to commercial risk-based plans in 2017. That number of down from 70 percent of medical groups with little to no access to risk-based plans in 2015.

In the next year, payers are likely to offer additional value-based reimbursement opportunities as providers demand risk-based models. Providers anticipate 37 percent of their commercial revenue to stem from a risk-based alternative payment model by 2019.

Addressing the Quadruple Aim

The healthcare industry has focused on achieving the Triple Aim of value-based care, which is improving the patient experience and advancing population health at the lowest cost possible. But as the new year starts, executives and providers are starting to add a fourth goal: improving provider experience.

As healthcare organizations implemented the workflows and capabilities necessary to achieve the Triple Aim, providers started to see their administrative responsibilities significantly increase. From quality reporting and stricter clinical documentation requirements to coding and risk stratification, providers complained that workflows aligning with the Triple Aim detracted from direct patient care.

By February 2017, administrative burden, stress, and lack of time were the top three challenges for physicians, an American Medical Association (AMA) survey found.

Healthcare CEOs also cited administrative burden as a top contributor to physician burnout in a recent Health Affairs blogpost.

“Professional satisfaction for physicians is primarily driven by the ability to provide high-quality care to patients in an efficient manner,” they wrote. “Dissatisfaction is driven by factors that impede this effort, including administrative and regulatory burdens, limitations of current technology, an inefficient practice environment, excessive clerical work, and conflicting payer requirements. High levels of physician burnout can thus be seen as an indicator of poor performance by the underlying system and environment.”

Innovative healthcare organizations are now addressing the Quadruple Aim, which includes improving provider experience and satisfaction.

One of these organizations is Massachusetts-based Reliant Medical Group. The organization is achieving the Quadruple Aim by redesigning their facilities with a “patient at the center, provider at the center” design in mind. Providers share workspace in a central room to promote team-based care.

The medical group not only reported patient outcome, patient experience, and spending improvements after the redesign, but provider satisfaction increased. One provider at the medical group reported that her average daily work performed after hours fell by almost 30 minutes despite that fact that she treated over 3.7 more patients.

Advanced practice clinicians also reported workflow improvements. The clinicians can now collaborate with physicians in real-time, rather than waiting for email and request responses.

Hospital mergers and acquisitions to continue

2017 was the year of hospital mergers. The healthcare industry is on track to exceed the number of hospital mergers announced in 2016, which was 102 announced transactions, Kaufman Hall recently reported.

As the year ends, healthcare organizations are showing no signs of slowing down with merger and acquisition activities. Organizations already announced several major deals set to close in 2018, such as the proposed mergers of Beth Israel Deaconess Medical Center and Lahey Health, Advocate and Aurora Health Care, and Dignity Health and Catholic Health Initiatives.

Ascension Health and Providence St. Joseph Health are also reportedly discussing a possible merger, which would create the largest hospital chain in the country.

Value-based care spurred healthcare organizations to merge in 2017, explained Kaufman Hall’s Managing Director Anu Singh.

“Through partnerships, healthcare organizations are seeking economies of scale initially in areas such as support services, supplies, information technology, and purchased services, and over the longer term by rationalizing service distribution across the system,” he stated. “In addition, organizations are seeking new capabilities for a value-based, consumer-oriented health system, such as data analytics, care coordination across the continuum, retail or urgent care centers, and telehealth, among others.”

The hospital merger trend is likely to continue, if not increase, in 2018 as healthcare organizations adopt additional value-based care models and transition to risk-based arrangements. Informal partnerships between hospitals and other healthcare organizations should also emerge, Singh stated.

“We expect consolidation to continue, with an increase in alignments between similarly sized organizations and a continued increase in creative partnerships that allow opportunities for collaboration without a full merger,” he said.