Guest post by Suzanne Travis, VP, regulatory strategy, McKesson.
Shifting to value-based reimbursement (VBR) is a challenging journey, and trying to proactively manage risk at the same time only makes things more complicated. However, there are simple ways a provider organization can more proactively position their organization for a shift to VBR. While there is no fool-proof method or one-size-fits-all approach, here are four strategies that can help steer providers on the right path, no matter where they are in the VBR transition process.
Start with a program that aligns with organizational goals
Participation in alternative payment and delivery models are on the rise. The American Hospital Association estimates that more than 60,000 providers are participating in a delivery system reform model — and that number is growing. The overarching goal of implementing new health care delivery system models is simple: to provide better, more efficient and coordinated care for patients. However, each model has its own nuances and can sometimes require a different approach. Healthcare organizations should be well-served to take a deliberate path to succeed in their journey to value-based care. First, look at each model to understand how it measures and incentivizes participants and the type of care delivery changes it requires. Select models where you have an alignment on goals, room for improvement, and where you can start with upside-only incentives. It’s better to engage now, when participation can be voluntary and downside risk can be deferred.
Getting started is, of course easier said than done. The American Academy of Family Physicians found that a top barrier to adopting alternative care delivery models is a lack of understanding of the elements and actions for success. There are materials and organizations out there that can help guide the transition. For example, the Global Center for Health Innovation explains the models and provides guidance on questions to ask and tools to consider. The Office of the National Coordinator recently launched the Health IT Playbook that includes a state-by-state listing of federally funded sources of technical assistance to support practice transformation activities. Don’t let a knowledge-gap deter you from achieving your goals.
Be ready to act when new opportunities arise
New payment models continue to be introduced and new cohorts are being added to existing programs. Whether you are impacted by a mandatory model, such as the Episode Payment Model CMS recently proposed, or a new voluntary program is announced, be ready to adapt. Take for example the recently announced Comprehensive Primary Care Plus initiative. Participating practices have a choice of two tracks with the same care delivery requirements, but with different financial risk components. Both tracks aim to provide funding for infrastructure and process transformation. Keeping your finger on the pulse of these opportunities and being prepared to act quickly to engage can help you enter into programs that allow you to learn with less risk. If you know what your goals are, you’ll be able to spot the right opportunity to get started.
Partner with your vendors
As providers adopt new care delivery models and take on more risk, contracted vendors should be expected to engage as partners who can work collaboratively to solve new problems.
Three major trends are driving change in healthcare, and all three will also drive IT demand. First is the movement toward managing population health in various forms. Taking on this financial and clinical risk will require processing and making decisions based on the demographic, clinical and financial data that have been filling warehouses everywhere.
Secondly there is the rise of consumerism. Individuals faced with rising out-of-pocket expenses are doing more self-directed research on their health and doing more comparison-shopping. Providers will continue to respond with medical malls, clinics aligned with retail pharmacies, telemedicine and other innovations to control costs and still deliver care.
Even though more Americans than ever are insured, high-deductible plans can affect providers’ debt and charity care. Patient-friendly point-of-service collections and finance plans will require IT investment, as will more efficient collections processes.
The third trend – the move by government and private payers toward value-based reimbursement – will continue to affect the industry in 2016 and beyond. Even though fee-for-service is still the dominant reimbursement model, the U.S. Department of Health & Human Service’s January 2015 announcement that Medicare would be “tying 50 percent of payments to these {value-based} models by the end of 2018” has seen providers taking a hard look at quality and cost of care.
While payment will increasingly be determined by quality of outcomes rather than quantity of services billed, quality and cost – the components of value – aren’t connected in a straight line. They are affected by every department in a provider system, and no system can manage what it can’t measure. If that data can be accurately collected and analyzed, it can inform decision makers not only on how successful they are at delivering quality care, but also whether the cost of delivery exceeds their reimbursement.
Guest post by Deanne Kasim, IDC research director, payer health IT.
Part of the role of being a research director is to analyze current industry trends, developments and policies and help clients navigate these IT, market, economic and regulatory changes. A post-health reform environment has accelerated the rate of change in all these areas. I recently developed a discussion of the top 10 areas of change payers need to focus on for the next 12 to 18 months (http://www.idc.com/getdoc.jsp?containerId=HI253579). The following is a brief discussion of the top three predictions.
Payers need to develop greater understanding of who their consumers are and adopt more of an omni-channel approach for reaching and meaningfully engaging different population segments.
Consumers understand how to assess the concept of value in other areas of their lives, such as researching information to purchase a new car, a major appliance, or a house. But they do not have nearly as good of an understanding on the way health insurance works, how to necessarily use it, or how to define value in insurance benefits and care choices. Health reform has forever changed the business model of health insurance and placed consumers front and center in the equation. This increased emphasis on the consumer needed to happen a long time ago and now payers are challenged to radically change how they develop, market, and administer health insurance benefits accordingly. IT tools and applications are quickly evolving to better support the consumer’s purchase decisions and use of insurance benefits, and payers are continuing to realize the potential and importance of this developing product area.
According to IDC Health Insights’ 2014 Payer Survey, payers were split between increasing the 2014 budget for consumer engagement strategies (49 percent) and keeping the budget the same (51 percent). I fully anticipate these numbers will be higher in this year’s survey, as more payers commit additional resources to the development and support of thoughtful consumer engagement strategies, processes and IT applications.
As the industry moves from pay-for-volume to pay-for-value payers need to form more “win-win” relationships with providers and this requires leadership, trust and the IT applications and analytics to support this.
The longtime practice of paying for volume is changing rapidly to pay for value, and the U.S. Centers for Medicare & Medicaid Services (CMS) continues to lead developments in pay for value methods, including a variety of value-based reimbursement (VBR) practices, pay-for-performance (P4P) and global or episodic payments. The establishment of patient centered medical home (PCMH) and accountable care organization (ACO) models, combined with the reduced reimbursement realities under the ACA, has incentivized more providers and payers to explore new, mutually beneficial reimbursement arrangements. Providers and payers will have an increasing need for analytics applications to help predict and monitor clinical quality outcomes and financial performance measures in order to make VBR arrangements work for all involved stakeholders. In addition, as payers continue to employ narrow networks as part of their public HIX business line strategy, VBR arrangements with the contracted providers can enhance the performance of both payers and participating providers.
