Accountable Care Organizations (ACOs) and clinically integrated networks (CINs) are two types of organizations working to address the problem of rising costs. As ACOs and CINs continue to evolve, organizations moving into value-based care (VBC) face an ever-changing landscape. This article looks at the evolution of the ACO and CIN models, what new tools ACOs employ today to promote success, and lessons learned from organizations that have succeeded in alternative payment models. It also explores what healthcare experts believe the future of alternative payment models will look like and competencies to develop to meet those changing demands.
Value-Based Purchasing / Risk-Based Contracting
Population health and value-based payment demand data from multiple sources and multiple organizations. Health systems must access information from across the continuum of care to accurately understand their patients’ healthcare needs beyond the acute-care setting (e.g., reports and results from primary care and specialists). While health system EHRs have a wealth of big-picture data about healthcare delivery (e.g., patient satisfaction, cost, and outcomes), HIEs add the clinical data (e.g., records and transactions) to round out the bigger picture of patient care, as well as the data sharing capabilities needed to disseminate the information.
By pairing HIE capability with an advanced analytics platform, a health system can leverage data to improve processes in four important outcomes improvement areas:
Social determinants of health (SDOH) data captures impacts on patient health beyond the healthcare delivery system. Traditional health data (e.g., from healthcare encounters) only tells a portion of the patient and population health story. To understand the full spectrum of health impacts (e.g., from environment to relationship and employment status), organizations need data from their patient’s daily lives. The urgency for SDOH data is particularly strong today, as value-based payment increasingly presses health systems to raise quality and lower cost. Without fuller insight into patient health (what happens beyond healthcare encounters) organizations can’t align with community services to help patients meet needs of daily living—prerequisites for maintaining good health.
Standardizing SDOH data into healthcare workflows, however, requires an informed strategy. Health systems will benefit by following a standardization protocol that includes relevant and comprehensive domains, engages patients, enables broader understanding of patient health, integrates with organizational EHRs, and is easy for clinicians to follow.
How prepared are healthcare organizations to enter into value-based care? Many may not be ready. While early value-based care adopters have focused on improving and measuring quality, they’ve often overlooked steps to bear the associated financial risk. Now that health systems can enter into alternative payment models and risk-based contracts, they need to ensure that cost is as much a priority as quality.
Health systems can achieve sustainable value-based care success by optimizing the five core competencies of population health management:
Governance that educates, engages, and energizes.
Data transformation that addresses clinical, financial, and operational questions.
Analytic transformation that aligns information and identifies populations.
Payment transformation that drives long-term sustainability.
Care transformation as a key intervention in value-based contracts.
As a performance-based incentive program, DSRIP (the Delivery System Reform Incentive Payment) is designed to help participating states reform Medicaid. To date, 13 states have implemented DSRIP and received a Section 1115 waiver from CMS to transform their Medicaid programs and align them with value-based reimbursement. These states have agreed to budget neutrality, transparency, statewide quality metrics, and frequent reporting of outcomes.
While each state’s program structure and objectives are unique, under DSRIP, participating states share three key goals:
Reducing the total medical spend.
Improving patient outcomes.
Establishing a direct link between provider performance and payment.
Since accountable care took the healthcare industry by a storm in 2010, health systems have had to move from their predictable revenue streams based on volume to a model that includes quality measures. While the switch will ultimately improve both quality and cost outcomes, health systems now need the capability of tracking and analyzing the data from both clinical and financial systems. A late-binding enterprise data warehouse provides the flexible architecture that makes it possible to liberate both kinds of data to link it together to provide a full picture of trends and opportunities.
Health systems that meet the 2018 Hospital Value-Based Purchasing Program measures stand to benefit from CMS’s $1.9 billion incentive pool. Under the 2018 regulations, CMS continues to emphasize quality. To reduce the risk of penalty and vie for bonuses, it’s increasingly critical that organizations leverage data to build skills and processes that meet more demanding reimbursement measures.
To thrive under value-based payment, healthcare systems must understand CMS’s four quality domains, and their associated measures, for 2018:
Patient- and Caregiver-Centered Experience of Care/Care Coordination
Efficiency and Cost Reduction
The shift from fee-for-service to value-based reimbursements has good and bad consequences for healthcare. While the shift will ultimately help health systems provide higher quality lower cost care, the transition may be financially disastrous for some. In addition, the shifting revenue mix from commercial payers to Medicare and Medicaid is creating its own set of challenges. There are, however, three keys to surviving the transition: 1) Effectively manage shared savings programs to maximize reimbursement. 2) Improve operating costs. 3) Increase patient volumes. With an analytics foundation, health systems will be able to meet and survive today’s healthcare challenges.
Influential healthcare financial trends in 2017 emerged in three areas:
Transitions in payment.
Disruption from familiar players and newcomers.
Emerging data skillsets.
Uncertainty has been a common theme for 2017. Organizations continue waiting for clarity on the future of the Affordable Care Act (ACA), while working to implement value-based care. Changes from established healthcare organizations as well as the arrival of prominent newcomers (e.g., Amazon) add to the unsettled outlook, as do emerging data skillsets.
Amid the uncertainty, however, healthcare is clearly continuing on the path to patient-centered care. Organizations best positioned for 2018 will understand their performance in 2017’s top three healthcare financial trends as they evaluate their preparedness for the coming year.
Chilmark’s 2017 Healthcare Analytics Market Trends Report is a trove of insights to the analytics solutions driving the management of population health and the transition to new reimbursement models.
The report reviews the analytics market forces at work, such as:
The need to optimize revenue under diverse payment models.
The increasing importance of analytics in general, and a platform in specific, that can aggregate all data.
Continuing confusion about how to react to MIPS and APMs.
The growing importance of providing a comprehensive set of open and standard APIs.
The need for better tools to create analytics-ready data stores.
The report is also a succinct guide to the 17 leading analytics vendors (which represent EHR, HIE, payer, and independent categories) with the most promising products, technology, and services offerings in the market.
When it comes to transitioning to value-based reimbursement, health systems consistently ask two questions:
Why should I invest in reducing utilization when 90+ percent of my business is still fee-for-service (FFS)?
Where do I start?
This value-based reimbursement road map can help systems transition from barely surviving to successfully arriving (while respecting both shared-risk and FFS worlds):
Stop #1: Surviving— If you don’t get paid for the risk you take on, then you can’t survive long term.
Stop #2: Sustaining—Numerous clinical interventions occur in hospitals that systems can focus on to help improve the bottom line.
Stop #3: Succeeding—Build out competencies on a smaller population with aligned incentives so you can negotiate deeper alignment with key payers.
Stop #4: Arriving— The ultimate destination, where the lines between traditional healthcare delivery and public health are blurred.
Although healthcare is far from arriving at the value-based reimbursement destination, it can use this road map’s pragmatic strategies for heading down the right road.
Against the Odds: How this Small Community Hospital Used Six Strategies to Succeed in Value-Based Care
The constant thread weaving through every healthcare organizational strategy should be adherence to the Triple Aim. But with uncertainty generated by the changes at the federal level, healthcare organizations may be tempted to put their value-based care plans on hold. This article explains why that’s not necessary and lists six strategies for thriving under a fee-for-value model:
1.) Use Leadership and Team Structure to Support Improvement
2.) Drive Down Costs
3.) Reduce Unnecessary Waste
4.) Encourage the Learning Organization
5.) Prioritize Patient Education
6.) Track Data and Outcomes
This blog cites one small medical center with odds stacked against it, and how it is managing to not only weather the changes, but also distinguish itself by staying true to the values of the Triple Aim.
Two variables are required in the value-based healthcare equation if it is to add up to a profitable contract. One variable, optimizing the care for the patient population, is commonly included and is a focus for most healthcare systems involved in managing population health. However, a second variable, getting the right dollars in order to care for that population, is often overlooked. And yet this variable is easier to attain. It’s a matter of appropriately assessing the risk of the population by addressing inaccurate diagnoses coding. Here, we offer four methods for solving this variable: identifying high-risk gaps over time, persistent diagnosis tracking, identifying code adequacy, and identifying likely diagnoses.
Many healthcare organizations are entering, or are planning to enter, into some type of at-risk contract, be it a bundled payment program, a Medicare Advantage plan, or an ACO. In order to manage these contracts most effectively, integrating external and internal claims data in to the EDW is critical. Aggregating data in to an EDW from internal, disparate, clinical, administrative, and financial systems is the first critical step to identify opportunities for quality improvement. However, external data from organizations such as CMS and commercial payers, along with benchmarking and consumer and demographic data, also has the potential to improve the quality of care, increase patient satisfaction, and lower costs. In the new world of at-risk contracts, integrating external and internal data enables leaders to successfully oversee, manage, and strategically plan for future at-risk arrangements.
In the new world of value-based care, success is defined as consistently delivering excellent, value-based care, and improving patient outcomes, long-term. Making the vision of value-based care a reality will require a cross-functional team, focused on healing the entire patient according to the principles of advanced care management. Recognizing the needs of the whole patient, instead of only focusing on the specific condition, especially in a shared-risk arrangement, can have a profound effect on everyone, most importantly the patient. To achieve success the entire team, including physicians, nurses, social workers, psychiatrists, and social workers, must work together and coordinate their efforts. Building a genuine and trusting relationship between the patient and care team is the cornerstone of ACM programs. Helping a patient feel better can inspire them to be an active part of their treatment plan. A successful ACM strategy can inspire the care team to drive long-term, tangible change, leading to improving outcomes for the organization and the patient.
The bill repealing SGR and replacing it with a more reliable payment schedule will alleviate physicians having to wonder whether their Medicare reimbursement rate will be slashed each year. However, it has also accelerated the need for providers to adopt value-based reimbursement (VBR). While the transformation won’t happen overnight healthcare organizations can, and should, begin preparing now. The following steps will make the transition easier: 1. Get educated and involved; 2. Understand the new law; and 3. Most importantly, providers should consider ways to take advantage of the upcoming 5 percent bonus. Providers that are already participating in VBR arrangements should consider how to increase the volume of their VBR business. Those that have not yet embraced VBR practices need to start immediately. Having a solid roadmap by the end of 2015 will ensure for a successful transition to a value-based system.
The need for healthcare analytics has expanded greatly over the last few years, especially with the rise of value-based healthcare. CIOs are finding they must adapt quickly to keep up with the transition. A report from Gartner entitled “Transitioning to Value-Based Healthcare: Building Blocks for Effective Analytics” recommends that organizations view analytics as a program, not a project, and defines the Logical Data Warehouse (LDW) as the most important concept a CIO must understand.
CMS has announced a new, more aggressive timeline for implementing Medicare fee-for-service (FFS) payments to value-based reimbursement. While this transition is needed gaps in several areas of the VBP models are causing angst among provider organizations. Healthcare organizations can begin to improve quality and lower costs today as CMS works to address the challenges associated with these models. An EDW is key in enabling organizations perform the sophisticated analysis and tracking to meet the requirements set by CMS successfully.
Almost 90 percent of healthcare spending is associated with traditional pay-for-service contracts. But value-based purchasing encourages effective and proactive healthcare delivery. The Cayman Islands Health Services Authority started their value-based purchasing program, even agreeing to a 3 percent reduction in payments for selected diagnoses and procedures. The list of patients the system start with includes: Inpatient procedures (knee replacements, hip replaces, hip and knee replacement revisions, and hip and knee arthroscopy), Outpatient procedures (cataract removal, perinatal care, hysterectomy, and maternity), Chronic conditions (asthma, diabetes, end stage renal), and Acute conditions (upper respiratory infection). The US healthcare system should set a goal to have 80 percent of healthcare dollars going to value-based contracts by 2019.
I spent many years of my career as a healthcare finance executive in the state of California, where I had the opportunity to participate in several groundbreaking pay-for-performance (P4P) initiatives. However today, things have grown much more complex and intimidating. Health systems have to report on Medicare quality measures that determine important incentives and penalties. Add to this the host of private payers who have established their own value-based programs, all of which require different metrics. In this post, I discuss 4 lessons learned for success in VBP: 1) assessing your performance 2) education programs, 3) your analytics strategy, and identifying areas for clinical quality and cost improvement.
Surviving Value-Based Purchasing in Healthcare: Connecting Your Clinical and Financial Data for the Best ROI
Reducing healthcare costs is a major driving force in bundled payments, home-centered medical care, and accountable care organizations. But each new delivery model is built on the premise of reducing revenue per patient. So how can a health system win? Find out what you can do financially survive in today’s environment.