A looming question in reimbursements

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Thomas Friedman
Thomas Friedman

“How much is this visit going to cost me?”

That's one of the most infuriating questions for patients to ask their doctor's office or hospital because most of the time, the short, unsatisfactory, answer to the question is “It depends.”  

The answer is contingent on many factors, such as:

  • Who is the insurer covering the policy (or is there one)?
  • The patient's plan design
  • The provider's network status  

To add to the question's complexity and the frustration of a significant portion of US healthcare patients, value-based reimbursements will further complicate the answer, as the new model muddies the question for providers “How much am I going to be reimbursed?”

The move to alternative/value-based payments is well documented from both private payers (United and Aetna both report about 45% of current claims in these models with more to come) and from Medicare (under President Obama, Medicare was scheduled to move toward 50% by 2018). These are encouraging signs for the future of the industry as the incentive to create value instead of billing by volume may reduce long-term cost growth. At a minimum, the transition should better align provider payments to clinical measures aimed at improving or maintaining patient health.

However, what is unclear is how well these changes are being communicated to the doctors and nurses – as well as other members of care teams – and how the changes will impact the day-to-day delivery of care. Value-based contract negotiations between payer and provider teams can be nuanced and cover multiple types of providers, procedures, metrics, and in many instances locations, in one contract. The team that negotiates on behalf of providers needs to know the current clinical metrics and understand how improving/retaining those results impacts the financial viability of the practice.  This is a great step away from projecting RVUs and volumes for the health care industry because:

  1. The finance-related conversations regarding practices will become woven in with practice improvement, and
  2. Practitioners at every level will need a greater business understanding of how their care delivery impacts the financial side of healthcare.  

Bonuses and increased or decreased rates will further incentivize efficiencies and in many cases, possibly reduce redundant procedures. Provider pay will eventually be more tied to if patients adhered to their medications, as opposed to how many patients were seen.

For practical purposes, negotiating the terms of value-based reimbursements cannot include every person who bills and/or delivers care, which is unfortunate as each are ultimately responsible for the success of these arrangements. Those who deliver care need to understand from a metrics perspective what needs to change regarding their roles, their interactions within their teams, or in some cases, the broader system. Beyond standard clinic metrics, these new arrangements will require different patient communication and engagement strategies to incent compliance and adherence to more clinical guidelines.  That might mean rearranging who delivers care, additional calls to patients, and/or less testing.  Accountability in care delivery between team members will also look different and will often be contingent on the value-based arrangement.

Further complicating the system is the reality that providers are now entering these arrangements with payers who each have a slightly different perspective of value-based reimbursements. Aetna, United, Anthem, Medicare, and in some cases Medicaid, all differ, in terms of metrics and amount of risk being shifted to the provider based on factors unique to the payer. 

Providers are not merely moving away from fee for service and towards risk on a single payment spectrum. In many cases, they are moving along multiple spectrums, at different speeds, while being measured on different components on each of the spectrums.

The challenge of educating providers on these changes, while they continue to deliver care upwards of twelve hours a day, is daunting. The task will be difficult no matter the size, whether for large systems, rural hospitals, or independent physicians. Some payers already have piecemeal approaches in place, but are still facing roadblocks regarding the relative newness of value-based payments combined with having to reach multiple practices.  Payers and providers have so much at stake— literally the future of American health care— and yet, many do not have a clear strategy on how to consistently educate providers to succeed in the emerging environment.  

If payers expect alternative payment strategies to be successful, then providers need access to quick and concise education on what is changing and how they will need to practice differently. All in all, if providers are going to be reimbursed based on patient outcomes and experience, providers need to understand their patients better. This sounds relatively simple, but education programs need to encompass:

  • Useful and actionable strategies to improve current clinical measures and the financial implications based on contracting

    • Not simply a spreadsheet with data

  • Methods to increase margins by appropriately leveraging staff, who can perform at the top of their license

    • This needs to be practice specific; not all practices are created equal

  • High-quality, up-to-date content to build internal expertise and improve care delivery

    • Knowledge, such as the Social Determinants of Health

The move toward value is the right approach for the healthcare industry, but as always with change, there will be bumps along the way. Some models will not work for all patients and practices, some will take many years to truly bear fruit, and some won't work at all.  

One thing is clear though, the industry cannot expect to go from new contracting and reimbursements to gains without a significant investment in provider education. If we leave out the educational component, we run the risk of eliminating models that could have been successful and setting back better ways to pay for healthcare. Hopefully, with successful models and increased payer and provider alignment, better value for patient care will lessen the frustration of the looming question, “How much is this visit going to cost me?”

Thomas Friedman is the senior product manager in payer and community health at Relias Learning.

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