Steven Shill

Q: What should providers know about the new revenue recognition standard, ASC Topic 606 Revenue from Contracts and Customers?

A: That it will require entities — nursing home providers included — to determine revenue recognition based on five steps: identifying the contract; identifying separate performance obligations; determining the transaction price; allocating the transaction price to separate performance obligations; and recognizing revenue when the entity fulfills performance obligations. All public entities must comply by 2018, with private ones following suit the next year.

Q: How are value-based reimbursements challenging under this?

A: Value-based reimbursement models — such as mandatory bundled payments — financially incentivize providers to administer the greatest quality of care and encourage partnering with nursing homes with high quality ratings. In the value-based world, the provider “supply chain” in its entirety is contractually intertwined. 

Q: What should providers discuss with their hospital partners?

A: Healthcare organizations should take a comprehensive inventory of contracts with other providers and review their revenue cycle management. They also need to decide on an effective data-sharing method with partners.