5 Ways Payers and Providers Can Thrive Under Health Care Payment Reform
News In the current health care economy, the Medicare Access & CHIP Reauthorization Act of 2015 presents a sink-or-swim opportunity.
Folks, the penny has officially dropped. Health care payment reform is here, and it has teeth.
Medicare Access & CHIP Reauthorization Act of 2015 (MACRA), the more boisterous younger brother of the Affordable Care Act of 2010—aka “Obamacare”—mandates a large-scale transformation, from fee-for-service to pay-for-value health care delivery. MACRA is not the gentle nudge of ACA’s “try it, you might like it” risk-sharing arrangements. MACRA is the in-your-face, get-it-together-or-get-out-of-town ultimatum.
In 2015, the U.S. government finally recognized that spending 20 percent of our national GDP on health care was unsustainable. The solution: an edict for providers to participate in value-based contracts with shared risk, or wave goodbye to 18 percent of Medicare revenue.
I don’t know of many payers or providers that can sustain an 18 percent haircut. This means change. Big. Fast. Painful. Change.
However, on this day of reckoning, there is hope. There are battle-tested methods, to not only survive, but also thrive under capitated payment regimes. In fact, an elite few have been doing it for years, with top payer-provider partnerships increasing profitability by 300 percent under appropriate risk-sharing arrangements.
Here are five things that have been key to their success:
1. Don’t avoid risk, manage it
During a previous, failed attempt at value-based care in the 1990’s, the running joke among payers and providers was to set up enrollment desks on the tenth floor of a building without elevators, to avoid the risk of taking on “sicker” beneficiaries.
Thanks in part to an improved risk adjustment factor (RAF), which increases budget for chronically ill patients, providers can successfully manage sicker panels with room for quality and financial improvements. Today, smart enrollment desks are landing outside of dialysis units, because managing, not avoiding risk, is profitable.
2. Documentation and coding count
As mentioned, RAF ensures that payers and providers receive an appropriate budget to care for “sicker” beneficiaries. However, providers must document accurately, consistently and in a timely manner, to receive the proper budget, so coding counts.
The approximately 80,000 diagnosis codes of ICD10 present a unique challenge of translating complex encounters into billable outputs, but, luckily, there are established vendors that support documentation to ensure proper compensation, freeing doctors to focus on patient care.
3. Data is your best friend
Along with new risk-adjusted payment rules and better documentation, the proliferation of technology has created immense pools of granular health data, which enhance capabilities to manage health across large populations. Properly curated data can direct care to where and when it matters most.
Not only can data improve each individual encounter, in aggregate, patient data can enable health care providers to identify and improve disease trends, care coordination, referral patterns and documentation.
4. Embrace practice transformation
Prevent instead of react. Having access to the right information at the right time enables pro-activity to nip long-tailed challenges in the bud. Actively manage your panel, even outside of the practice. Lastly, be ruthlessly efficient; optimize workflow, work at the top of licensure, leverage generics and much more.
5. Show me the money
Provide the right incentives. The highest performing payer-provider partnerships define proper incentives to change behavior and move the needle so that all parties benefit. Payers and providers should work together to carve out the right areas to share risk, and set targets that make sense.
A message to payers: reward your providers for all activities that help, even if they fall outside of traditional RVUs. If you want behavior change, put your money where your mouth is. Lastly, constructing the right incentives for quality is crucial—if left unattended, poor quality can sink the ship.
Of the $5 trillion spent on health care delivery each year, more than $1 trillion is waste. Connectivity and efficiency will eliminate this waste. Those who adapt, who improve coordination and efficiency, will become more profitable than they are today. And those who maintain the status quo will be the way of the dinosaurs. Terms that are vaguely familiar today, like medical loss ratio, will mean everything tomorrow. Health care delivery, as we know it today, will not exist.
The triple aim is not an “impossible trinity.” Implementing data sharing, proper incentives and practice transformation requires time and resources, but, in the end, supports better patient care and will generate significant payouts. Don’t sweat the decision, because it’s no longer a choice. Rather than fear the change, lead the change—and thrive.