Impact Insights

Alphabet Soup of Value-Based Care

Confused by the alphabet soup of government value-based reimbursement programs coming down the pike? You are not alone. Meaningful Use, Value-Based Modifiers, PQRS, Hospital Acquired Conditions and Readmissions penalties, and others have been around for several years now and most health systems are just starting to get their arms around these programs.  But with some early success under their belts, CMS is now raising the bar.

In January 2015, the Department of Health and Human Services (HHS) announced new goals for value-based payment. By the end of 2018 they expect 50% percent of Medicare payments to be tied to alternative payment models, and 90%of Medicare fee-for-service payments to be tied to quality. The announcement of these new goals signaled HHS’s desire to rapidly accelerate value-based payment, and they encouraged private payers to follow suit by meeting or exceeding HHS goals.

With the passage of the Medicare Access and CHIP Reauthorization Act (MACRA) in April 2015, HHS put legs to those goals. Physician fee schedule rates will increase by 0.5% each year from 2015-2019. Then in 2019, based on eligibility, physicians must choose to participate in one of two value-based tracks. The fee-for-service track or Merit-Based Incentive Payment System (MIPS), or the Alternative Payment Model (APM) program, including Accountable Care Organizations (ACO) and other eligible models. MIPS will introduce opportunities and risks based on value criteria, phasing in positive or negative payment adjustments that start at 4% in 2019 and gradually increase to 9% in 2022. Exceptional performers do have the opportunity to earn up to three times the positive payment adjustment (up to 27%), but because MIPS is intended to be budget neutral, there will be winners and losers, and it is expected that a considerable number of providers will be paid less. Those that choose to enter APMs have the potential for an additional

5% annual bonus for services in 2019 to 2024, but like MIPS, APMs will also have quality reporting requirements, in which additional increases or decreases might apply. As if that weren’t enough CMS is now moving to make bundled payments for certain procedures like hip and knee replacement surgeries mandatory beginning this year.

While these changes won’t occur overnight, there are considerable preparations to be made in order to succeed in the new paradigm.  It may not be important for CIOs, CMOs, CMIOs and other executives to understand all of the details of these programs. After all, complexity has grown to a point where health systems are developing entire departments to help understand and execute on the requirements.  But it is important to know that health systems will not survive if they maintain the status quo and health system executives need to align limited resources toward their highest and best use in the new value-based world.

For clinical areas, that translates into focusing efforts on understanding current performance and leveraging optimized workflows and technology to improve performance.

Ramping up analytics for tracking quality and resource utilization metrics built into value-based programs will be critical. Most health systems are just now getting started with analytics programs and current capabilities are elementary at best. That will have to change quickly. It is no longer enough to simply be able to report out performance to government (and commercial) programs.  Health systems will need to understand its performance strengths and weakness and be able to put strategies into place to rapidly improve.

Similarly, optimizing your EHR is critical to transforming clinical care. Health systems should be focusing on maximizing EHR (and clinical workflow) efficiency and usability; clinical decision support; developing technology supported care pathways for chronic disease management; care coordination; and improving patient access and experience of care.

With rapid acceleration of value-based payment looming on the horizon, health systems can’t wait to change. Preparations need to start now, and there needs to be ongoing commitment to clinical transformation for the long-term. Organizations that fall behind now will have a difficult time catching up and are likely to find themselves on the losing end of the value-based payment spectrum. For an in depth look at key focus areas for transforming clinical care to succeed in the value-based paradigm, download Impact Advisor’s white paper Transforming Clinical Care:  Why Optimization of Clinical Systems Can’t Wait.