Healthcare providers from medical practices to hospitals are shifting to a value-based care model that utilizes alternative payment models (APMs). Find out how this will affect the healthcare industry.
Value-based care model is beginning to reshape healthcare
For medical practices, hospitals, and other healthcare providers, a value-based care model is fast becoming necessary. What has been an option that some have experimented with will likely become essential as the Department of Health and Human Services (HHS) pushes healthcare providers to use value-based alternative payment models (APMs) in the pursuit of healthcare reform. APMs are a two-sided risk model in which providers may realize a gain or loss based on how well they manage a patient’s care. In the coming months, many healthcare organizations will commit to APMs, which will bring major shifts in operations, financial management and mindsets as providers seek to improve patient outcomes while conserving costs.
According to the journal Health Affairs, the only providers using value-based payment a few years ago were physicians employed by health systems or large, multi-specialty practices. The situation is changing rapidly now. One reason for this is the Bundled Payments for Care Improvement (BPCI) Advanced program, which the Centers for Medicare & Medicaid Services (CMS) introduced in 2018. Along with HHS, CMS wants to create an affordable, accessible healthcare system that puts patients first. It hopes that APMs will support that goal by combining payments for services from physician groups, hospitals and other providers into a single bundled amount. That figure is calculated based on the expected costs of all items and services provided to a beneficiary during a period of care. CMS believes that the model will encourage providers to be more efficient while they improve coordination of care and its quality.
In the Chicago area, CMS says that 76 providers are using the BPCI Advanced model during its initial test phase. Similarly, nine providers in the Rockford area, five in northwest Indiana and five in the Milwaukee area are testing these models. Nationwide, acute-care providers were the first to experiment with the majority of bundled payments. Now, the updated BPCI program is seeing a nearly even split of participation between acute-care providers and physician groups.
By design, BPCI Advanced expects physicians to oversee the bundles, which first go to the attending doctor, followed by the operating physician and finally the hospital physician. Consequently, all doctors involved in a patient case will need to coordinate their actions to manage the bundles and share any savings.
With doctors in charge, so to speak, health systems will likely reinforce their physician networks to compete with other providers, insurance companies, healthcare-related retailers, primary networks and stand-alone physician groups. Networks may consolidate as a result, to build volume and resources so that they can better manage patient care while realizing the most benefits from APMs.
Not Ready for Prime Time
The healthcare sector will see major shifts in how it operates, yet most providers have a long way to go to fully adopt the value-based model. According to the Health Care Payment Learning & Action Network (LAN), a public-private partnership dedicated to the transition to APMs, 34% of healthcare payments in the United States were tied to APMs in 2017. Although that is a 23% increase since LAN was founded in 2015, it means that the vast majority of healthcare providers still follow older models. Just over 28% of commercial providers use APMs, while 25% of Medicaid providers and nearly 50% of Medicare Advantage providers do so.
Managed Care notes that commercial intake is particularly uneven, with 57% of commercial dollars still tied to the most commonly used model—fee-for-service—without connecting it to quality or value. According to Carter Paine, president and COO of naviHealth, which oversees provider coordination for most of the BPCI Advanced episodes, “If you look at fee-for-service, in most cases, you’re five times more likely to go to [a long-stay facility] or to inpatient rehab versus a Medicare Advantage member.”
How Providers Can Prepare for the Value-Based Shift
There are three areas that will be important for healthcare providers to evaluate now.
Data and its Analysis
The value-based model and the coordination it requires point to a greater need for transparency and excellent performance management. Accurate data will be key. Kurt Skifstad, PhD and CEO of ArborMetrix, advises healthcare executives to review their organizations and networks and identify changes that must be made, and then determine how they will obtain the necessary data, report it, and analyze it. “The fidelity of this performance management information flow and how it’s managed lays the foundation for organizations to drive higher margins, optimize patient outcomes, enhance patient and provider satisfaction, and strengthen negotiating positions with payers,” he told Managed Healthcare Executive.
Confirm that data is meaningful and timely. Rather than beginning with whatever data is available, healthcare executives should seek out data that will meet their value-based and bundled-payment objectives. Report that data in a timely and transparent fashion to physicians, communicate quality objectives clearly, and link physician performance with financial incentives and comparison with their peers. Data analytics tools are essential, especially for maximizing revenue from claims in a value-based model. They also let providers monitor performance in real time and improve their claims-management systems as needed.
Population Health Management
Understanding a patient population and how it impacts performance is key. Patient populations are often complex, so taking a fresh look at them will help providers anticipate the kind of care to provide to generate positive health outcomes and receive value-based reimbursements. Performing patient risk stratification and comprehensive population health management are two ways to prepare. Determine the number of patients who will need regular engagement for chronic disease management, for example. Also look at how many patients in general have not visited a primary care provider in over a year.
Collaboration with Major Payers
A well-functioning relationship between provider and payer is more important than ever. Healthcare providers should be able to discuss the mechanics of bundled payments with payers. Given their vantage point, payers should be able to help hospitals, physician groups and other providers determine quality and performance outcomes. What’s more, providers need to know how they are being measured and how much potential payments could be. The Healthcare Financial Management Association points out that strong managed-care contracts not only preserve revenue but enhance patient satisfaction through access to comprehensive treatment and services. Reaching an agreement with a payer requires preparation, collaboration, and compromise, the group says. When a provider prepares to negotiate, it should consider the kind of relationship it wants with a payer. One-time negotiations or short-term relationships have a different focus than long-term relationships possibly involving new products or payer-employer affiliations, for example.
Value-Based Care is Already Working
The team approach inherent in value-based care is already producing positive results. Blue Cross Blue Shield’s (BCBS) Blue Distinction Total Care program, which is a network of value-based care programs, has seen measurable improvements in the management of chronic conditions such as cardiovascular disease. It has also sparked an increase in preventive medicine; Total Care has led to a 35% decline in growth of medical costs from doctors and hospitals who participate in the program.
“BCBS companies’ local value-based care programs collectively build strong partnerships with doctors, nurses and hospitals,” BCBS senior vice president Kari Hedges says, resulting in “measurable health care improvements that help our members receive the right care in the right setting at the right time, while making health care more affordable.”