In the rapidly changing healthcare landscape, payers are asking providers to shift from volume-based care that is a fee for service to a value-based reimbursement structure with a population health approach. This evolution toward value-based reimbursement benefits the patient, the healthcare provider, and the payer. Value-based reimbursement encourages healthcare providers to deliver the best care at the lowest cost. In turn, patients receive a higher quality of care at a better value.
The looming and dramatic shift
With value-based reimbursement slowly dominating healthcare revenue, the demand for technological solutions that support the new payment structure increased. The shift from volume- to value-based health care compensation will assuredly affect urology group compensation arrangements and productivity formulae. For groups that can implement change rapidly, efficiently, and harmoniously, there will be opportunities to achieve the goals of the Patient Protection and Affordable Care Act while maintaining a successful medical-financial practice.
The initial focus of the service is large urology practices, which see a larger percentage of Medicare recipients than other physicians. They face significant disruption this year as the Centers for Medicare and Medicaid Services pursues its goal of converting reimbursement to the Merit-Based Incentive Payment System, with half of all payments in alternative payment models by 2018.
Integrating the medical billing providers and Urology practitioners to move together towards value-based reimbursements
Moving forward with value-based reimbursement, providers in the physician group needed to work together. However, the fee-for-service environment permitted providers to retain their individual practice management processes.
Instead of rewarding volume-based patient care, new value-based payment models will seek to reward quality metrics in terms of cost, quality, and outcome measures. If not strategically outlined and planned, these largely untested models have the potential to upend urology stakeholders’ traditional patient care and business models and drive suboptimal, and possibly incorrect, behavior across medical practices.
Although some urology leaders are actively preparing for the transition to value-based care, others are hesitant and are taking more of a “wait and see” approach, electing a reactive versus a proactive strategy.
Some of the key challenges that Urologists during transitioning to value-based might face are:
Keeping a tab on a variety of quality measures
For many years, providers have submitted quality measures for programs such as Hospital Inpatient Quality Reporting, Hospital Outpatient Quality Reporting, and Physician Quality Reporting System. The fact that these measures are now tied to penalties and incentives is new. These new value-based models require providers to prove that they’re meeting quality standards and benefitting patients while cutting costs.
Providers need sophisticated analytics to help them measure financial and quality performance for each patient population. They don’t want to learn that their reimbursement is going to be poor when it’s too late to do anything about it. Providers want to know in the first quarter so they can improve their performance before the end of the year.
It’s one thing to handle this level of performance analysis for a single patient population or a single quality measure; it’s another story altogether when you consider how quickly the number of measures a health system must track multiplies.
Integrating value-based payment models into free fee environments
Value-based payment contracts are in their infancy and most are structured according to a shared savings model. Shared savings arrangements vary, but they typically incentivize providers to reduce spending for a defined patient population by offering them a percentage of any net savings they realize. The Medicare Shared Savings Program is the most well-known and standardized example of this new model.
Tracking performance in this kind of arrangement is a significant challenge for health systems because it requires keeping track of two very different payment systems simultaneously. Medicare continues to reimburse health systems on an FFS basis; then, at the end of the year, shared savings bonuses are calculated.
Medicare benchmarks each provider against the rate of increase for the overall FFS population. If a hospital did better than the FFS population, they get a piece of the savings. Hospitals must operate in the FFS world while attempting to anticipate this value-based bonus.
The ability to measure performance at this level of granularity will require much more sophisticated IT capabilities than most health systems have.
Optimizing margins when revenue drops
The transition from FFS to value-based reimbursement will take years—and it will hurt in the short run. Meeting value-based goals requires hospitals to reduce utilization among their populations, therefore reducing their procedure volume and revenue. During the transition period, total revenue will likely decrease because the pressure on a hospital’s FFS revenue will increase faster than it can grow its revenue through value-based reimbursement. And that is scary.
It’s time for the “unified” action plan
Urology practitioners should work and understand better of how the value-based models work, including associated incentives, risks, and potential financial impacts to their respective health care footprint. Urology leaders who ask difficult questions in order to address outdated and legacy-based compensation structures will gain early advantages that will enable them to compete more effectively in the future. When the imminent reimbursement market shift toward value-based patient care models arrives, those who have not done their due diligence will be significantly disadvantaged.