Hospitals and private practices have been slow to implement a smooth transition to value based healthcare despite having over eight years to plan and execute a successful strategy (the concept became law with the passage of the Affordable Care Act in March 2010). The ACA is a massive piece of legislation addressing so much more than delivering affordable healthcare to those in need.
Value based healthcare is presented in two major sections of the ACA: Title III, Improving the Quality and Efficiency of Health Care – Subtitle A: Transforming the Health Care Delivery System and Title IV: Prevention of Chronic Disease and Improving Public Health – Subtitle A: Modernizing Disease Prevention and Public Health Systems.
This second and final part looks inside the transition and related analytics as well as a few potential results. See part one for background information, a comparison of the existing fee-for-service and value based models, and current healthcare challenges.
Inside the Transition
Under the auspices of the ACA, the CMS Innovation Center helps manage numerous programs and activities related to value based healthcare and has established estimated timelines for the various stages of transition. The Alternative Payment Models (APM) and Merit-Based Incentive Payment System are scheduled for fulfillment in 2019, but the slow industry adoption rate suggests a more realistic completion date in 2023.
According to the CMS, “Our value-based programs are important because they’re helping us move toward paying providers based on the quality, rather than the quantity of care they give patients.”
For example, the Bundle Payments for Care Improvement Advanced Initiative (BPCI), a voluntary program between its launch in October 2018 and the end of 2023, tracks inpatient and outpatient clinical episodes for efficiency and favorable outcome.
“As healthcare continues to experience tremendous change,” wrote CareCloud in May 2017, “medical groups that proactively embrace a patient-centric value-based approach to practice management are outperforming those following the status quo.”
The statement was released in conjunction with the release of the 2017 Practice Performance Index (PPI), a study produced by CareCloud and UBM Medica examining the “financial and operational performance of U.S. medical practices.” The study found three major common denominators among the highest performing medical practices:
- Preparing for reimbursement changes
- 56 percent of high-performing practices have a plan in place for value-based care versus 32% for those falling behind.
- 53 percent of high-performers expected a full or partial MACRA incentive in 2017 compared to only 35 percent for practices falling behind.
- Adopting innovative health technology
- High-performers are twice as likely than those falling behind to adopt new technologies.
More than 67 percent of high-performers track advanced population health analytics and offer consumer-centric techno-features such as patient portals, iPad-based intake forms, check-in kiosks (19%), additional payment options (21%) and telemedicine (24%).
- Improving patient experience — More than 80 percent of high-performing practices conduct patient surveys and use online review sites versus almost half of falling behind practices that collect no feedback from patients.
Other recommendations include the proper management of the Medicare Shared Savings Program, streamlining operational costs, pay for performance programs, bundled payments (where a payer delivers one consolidated payment for an episode of care to all providers), and accountable care organizations.
Pay for performance is the essence of value based healthcare because incentives reward improvements based on industry KPIs.
Analytics Are Leading the Transition
Experts across the board agree on the need for tracking a variety of key performance indicators (KPIs) to help deliver value based care, reduce operational costs and claims processing errors, and avoid penalties.
For example, voluntary revenue cycle analytics such as Hospital Inpatient Quality Reporting (IQR), Hospital Outpatient Quality Reporting (OQR) and Physician Quality Reporting System (PQRS) are now linked to compliance with laws such as the Tax Relief and Health Care Act of 2006, Affordable Care Act (2010), or Medicare Access & Chip Reauthorization Act of 2015 where the avoidance of penalties provides financial incentives.
Advanced analytics incorporating dashboards with appealing images such pie charts, three-dimensional graphs and flow 
charts present the greatest opportunity for capturing the attention of revenue cycle managers and determining critical financial processes.
On the up side, HealthIT.gov reported that 96 percent of hospitals use electronic health records (EHR) while a 2016 HIMSS Analytics survey indicated that 33 percent of providers were still processing denied claims manually despite statistics showing that automated systems result in fewer losses.
In a related matter, the Centers for Medicare & Medicaid Services (CMS) renamed the EHR Incentive Programs to the Promoting Interoperability Programs (PI) to continue improving “access to health information and reducing the time and cost required of providers to comply with the programs’ requirements.”
Population health management programs that track and segment high-risk groups represent another area for implementing positive change. The goal is to improve care quality, readmission rates and emergency department visits while cutting operational costs. Monitoring related KPIs also provides financial incentives because organizations preventing patient incidents will avoid compliance penalties.
A successful transition to value base care also entails improving front-end revenue cycle tasks translating to garnering increased patient revenue. Examples include maintaining transparency; properly explaining payment policies and patient responsibilities; physician consultations; and accurate patient data collection, documentation and registration.
Potential Benefits of Value Based Healthcare
The healthcare industry is slowly assimilating value based programs, but the commitment by government and institutions indicates that the end result will be favorable for all stakeholders. As one expert framed it, change is long overdue, but it’s driving the delivery of better care at lower cost.
The value based model is expected to deliver improved positive patient outcomes such as more informed decisions, better healthcare, and lower out-of-pocket payments. It will also reduce hospital costs and improve institutional efficiency.
Finally, it will impact late-stage revenue cycle management, including debt collections. The reduced patient contributions may translate to fewer delinquent accounts and lower average account values, but the trend of patients using higher deductibles to address financial stress in conjunction with increasing bad debt will underline the importance of applying an effective debt collection strategy.
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