Preparing for managed care
Edward J. Tromczynski
The Centers for Medicare & Medicaid Services is working with Managed Care Organizations (MCOs) to deliver a more cohesive and/or higher level of care throughout the continuum. A related goal of MCOs is to deliver care at a lower cost, allowing CMS to invest in services for a broader base of patients/residents. Unfortunately, managed care cost reduction initiatives have the potential to reduce your revenue by $500K annually.
What Exactly Is Managed Care?
Essentially, managed care is a coordinated care model aimed at improving healthcare while reducing costs to Medicare. A variety of definitions and descriptions of managed care exist, such as:
“Managed care plans are a cost-effective use of health care resources that are intended to improve health care access and assure quality of care.”(1) – CA.gov
“Managed Care Organizations are groups of doctors, clinics, hospitals, pharmacies and other providers, a network, who work together to take care of their members' health care needs.”(2) – Colorado.gov
Potential Impact of MCOs on Your Facilities
With a clearer understanding of what managed care is, it's important to realize that the cost reduction component being implemented by MCOs could represent from $500,000 to $600, 000 less in annual revenue.
Consider the sample set of reduction metrics:
- A minimum of 50% of skilled residents will be managed by an MCO program.
- A minimum of 50% reduction in Average Length of Stay (ALOS) per skilled resident.
- A minimum of 20% reduction in reimbursement for skilled residents managed by the program.
Some Pro-Active Solutions
Savvy healthcare providers are adjusting their strategic plans accordingly. Proven solutions include:
Reduce Unnecessary Hospital Readmissions and Prevent a Loss in Revenue – Choose an advanced clinical solution that includes a robust Disease Management suite to reduce unnecessary hospital readmissions, premature mortality, and associated costs. Simply put, provide better clinical services and improve reimbursement from increased revenue opportunities.
Focus On Clinical Outcomes to Better Leverage MCO, ACO and Bundled Payment Networks - Products and services that improve clinical and financial outcomes are becoming increasingly valuable in today's healthcare environment. The ability to measure and compare improved clinical outcomes with county, state and national averages provides a significant competitive advantage. The deployment of a technology-driven Disease Management solution can be leveraged to negotiate a more advantageous agreement with an MCO.
Select a Product/Service that Markets Facility Outcomes to Key Referral Sources – In conjunction with a plan to reduce unnecessary readmissions and improve clinical outcomes, deploy technology solutions that include a strong clinical marketing/referral component. In this way, your facility has the opportunity to increase the skilled resident census and improve the Skilled ratio through an enhanced referral program supported by key referral sources, i.e., local hospitals, physicians groups, rehabilitation centers and other influential healthcare community members.
So … What Does All This Mean to My Facility?
The advancement of Managed Care Organizations and other care initiatives, including Accountable Care Organizations (ACOs) and Bundled Payment programs, represents an opportunity to improve quality of care and lower cost of services, all of which is very positive. However, it's important to consider your business model in terms of supplementing the potential reduction in revenue. An advanced Disease Management program can provide a substantial advantage in addressing the challenges.
Determine if your facility can survive the potential loss of up to $600,000 of revenue on an annual basis. If the answer is no, adjust your clinical and financial outcomes strategies accordingly. Feel free to reach out to us at COMS about your strategy.