HFMA Executive Roundtable: Implications of Value-Based Payment for Revenue Cycle Management

September 26, 2017 2:51 pm

As organizations delve into value-based arrangements, they are having to modify revenue cycle operations to accommodate this new type of payment. This can be challenging, especially because the shift to value-based reimbursement is happening at a relatively slow pace—causing most organizations to manage outcomes-based payment and fee-for-service reimbursement at the same time. In the following roundtable, sponsored by 3M Health Information Systems, several financial leaders discuss how they are readying their revenue cycles for value-based payment and how they continue to support both reimbursement models.

In what kinds of value-based payment programs does your organization participate?

David McGrew: As a public hospital in California, San Mateo County Health System is involved in several programs under California’s Medicaid Waiver. One initiative relates to our Medi-Cal population and provides funding when we meet certain performance targets. Another one is intended to cover the uninsured population and encourages hospitals to shift care to the ambulatory setting. Both initiatives started with fiscal year 2016 and are designed to be five-year programs.

We are also pursuing other value-based arrangements, such as those associated with the comprehensive joint replacement program. Although we are a participating hospital in this initiative, we have a small Medicare joint replacement population, and so it is not a priority right now. As our patients age and our Medicare population grows, we will begin paying more attention to this program. We also want to work with our health plan around other shared savings models and will be exploring those opportunities during the coming years.

Kym Clift: Samaritan Health Services has been actively involved in value-based initiatives. Starting at the end of 2014, we participated in a narrow network risk contract with a payer partner. We also participated in Medicare’s Comprehensive Primary Care initiative (CPCi) from 2012-2016, in Medicare’s Comprehensive Primary Care plus (CPC+) program starting Jan. 1, 2017, and in a number of payer contracts tied to quality incentives. We also participated in several payers’ Medicare Advantage Quality Incentive Programs. Samaritan continues to evaluate additional alternative payment models that would allow us to assume additional risk.

Camarino Salazar: University Health System participates in the hospital value-based purchasing program from the Centers for Medicare & Medicaid Services (CMS). We are also focused on reducing readmissions and hospital-acquired conditions through programs that tie payment to outcomes.

What steps did your organization take to ready the revenue cycle when it first began participating in these arrangements?

Clift: First, we tried to get our arms around which data were important, how we were accessing those data, and what quality metrics we should focus on. There are a multitude of potential quality metrics across the spectrum of governmental and third-party payers, and we needed to figure out which ones we currently tracked versus what we should be monitoring in terms of our performance and improvement goals. Bottom line: We wanted to understand where we should concentrate our efforts to best meet our contractual arrangements and governmental reporting requirements.

McGrew: Probably our biggest step was to make sure that our coding and charge capture resources were set up to obtain all the data that we needed to report under both California Medicaid Waiver programs. We had to be certain we were effectively capturing those services and coding them correctly. This required some system changes, as well as tweaks to our charge description master.

We were able to make these changes due to a group effort between our managed care, physician, and financial leadership. We brought everyone together to review the reporting requirements of the two programs. Then, we identified where there were gaps in the way we currently captured data and determined the types of system and workflow changes that were necessary. During these discussions, we agreed on what was feasible for everyone involved.

Carole Cusack: Organizations just starting down the path toward value-based reimbursement should be looking at their cultures and preparing them for the changes ahead. This may require educating staff about what the various programs will entail and how their work will be affected. More specifically, clinical staff should appreciate the fundamental role of solid documentation and how it will affect payment.

Organizations should also make value measurement more of a priority. Even though things are not going to immediately change across the board—and there will still be a need to monitor key performance indicators (KPIs) that tie to fee-for-service payments—organizations must become more strategic, zeroing in on quality outcomes and efficiency, and less on transactions. The value metrics are going to depend on each contract, and so organizations should evaluate each one and decide where to focus their efforts.

Salazar: We are working to make sure that our organization’s financial processes are structured to help our operational and clinical partners meet emerging quality expectations. For us, an essential component to this work has been the introduction of Lean processes to reduce waste. We have applied this methodology across our organization, and it has helped us to strengthen the structure and process of how we deliver care. Having a standardized approach allows us to perform to the best of our ability every time, and it sets us up to successfully participate in new opportunities, such as value-based payment arrangements.

Regarding the revenue cycle, we have applied Lean methodology to medical billing, documentation, and registration. At the same time, we have adopted and implemented software that enables more timely and efficient coding, reconciliation, and billing—all the while preserving the quality that is required in each of these processes. For example, we used Lean to standardize the information we collect during registration, as well as how we collect that information. As a result, when data are entered, it is done in such a way that it reduces or eliminates errors that historically have led to denials.

From a population health perspective, Lean has played a vital role in standardizing practice so we can be confident that every patient receives the treatment he or she requires but not any unnecessary or duplicative services.

What revenue cycle challenges is your organization facing as you transition between fee-for-service and value-based payment? How are you able to span both worlds?

Clift: I don’t know that the fundamental steps in the revenue cycle are that much different with value-based reimbursement versus fee-for-service. There are certainly pieces of the revenue cycle that will be more critical to address in a value-based world, but at the end of the day, you’re still trying to completely describe the patient encounter and get the claim out the door with the necessary information on it.

That said, we have sometimes struggled to consistently capture all the information we need. In some cases, we would spend a fair amount of time going back and trying to correct the information to get the claim pushed out the door so we could collect the value-based incentive money associated with the work. We are having to change our mindset from what must be on the claim to get paid for a specific encounter to what must be on the claim to get paid for the incentive moneys that come later. Some of the data we can extract directly out of our electronic health record, and some we can’t. As a result, we are working to understand how we get to the data and ensure we have a process to report it.

Cusack: I also believe that the changes in day-to-day operations are not that significant. However, I some of the tools that enable the revenue cycle will need to change. They should house more sophisticated analytics and decision support so organizations can double-check that they are meeting appropriate quality metrics. Although the day-to-day tasks will still occur, organizations will also be learning where they will be at the end of the contract cycle and whether they are on track to receive any bonus payments.

Which tasks does your organization find most pressing: front office, middle office, or back office?

McGrew: Whatever happens on the front end is going to end up driving what happens in the back office. So, things like eligibility verification and registration—two principal front-office operations—are prime areas of focus. We want to ensure our registration accuracy is at an elevated level and that we are processing encounters correctly to the right payer. Whether it’s a fee-for-service payment or a value-based payment, knowing the payer is critical.

Member outreach is also crucial. This involves understanding which managed care patients are assigned to us so we can effectively reach out to them and get them in to see a primary care provider. Right now, we have about 20 percent of our assigned Medi-Cal population with whom we have not been in contact. We don’t truly know who they are and what their healthcare needs are. These folks still count within the metrics that are being used under the Medicaid Expansion programs. “Assigned members” is one of the denominators in several of the metrics. If we’re not reaching out to those members and enhancing their access to care, then there are some quality targets we won’t meet. Consequently, we are trying to expand our member outreach so we can connect with everyone we should.

Clift: Appropriately capturing patient demographics is key, so we can identify if a patient is part of one of our payer plans that has a value-based component. Even though it has always been important to obtain correct patient information to prevent downstream denials, it’s even more critical with value-based payment so you can properly identify those patients who should be part of a value-based population.

Cusack: Accurate documentation that gets coded into complete claims information is also essential to convey exactly what care the patient is receiving. If an organization doesn’t have a true picture of the patient encounter, then it won’t be able to figure out whether it’s meeting quality and cost targets. 

Salazar: Having efficient and reliable revenue capture is also vital to avoid delaying revenue. This begins with coding; if you do not have the proper coding, it cascades into billing holds, which then affect your income and/or revenue.

How is your organization adapting revenue cycle processes and/or technology to respond to value-based arrangements?

Salazar: We are in the process of implementing new technology that is going to elevate our documentation abilities. Standardizing the processes associated with documentation first and then onboarding the technology will help us accurately document faster—driving both quality and cost.

Clift: We’re not using any new technologies at this point; however, we are trying to better understand our data and how we can access and analyze it. Consequently, we’ve invested resources on the people side—data analysts and data scientists—to not just pull information, but also dig into it a little more.

How do you measure whether you are collecting value-based payments correctly and completely?

McGrew: To keep up with value-based payment, organizations should be monitoring both quality and utilization metrics. You want to gauge your performance against defined targets and identify where there are opportunities to improve. For example, one of the metrics we follow is screening for clinical depression and follow-up. We must hit an 85 percent target, and we’re currently running at 20 percent. Although this may seem like a big discrepancy, upon further analysis, we’re realizing that the problem may not be as bad as it first appears. Part of the gap has to do with the way our providers are selecting their codes for the services they provide. We’re working with our business intelligence group to make sure we get appropriate credit for the services that are being provided. We’re diving into whether this is a provider code selection issue or a reporting issue. Once we uncover the cause, we can work to bring our numbers more in line with expectations.

Clift: Our payers calculate what our value-based payment is and report it to us with supporting documentation. Samaritan has established the ability to validate the payments we receive under our contracted alternative payment models, and we have successfully identified payment variances through this process. Because it’s a one-time payment, it’s not the same as validating reimbursement on a transactional basis. However, due to the level of difficulty, it is a more complex endeavor—especially as an organization’s size goes up. Whereas we used to be able to monitor traditional KPIs to get a sense of how well we were collecting payments, those don’t help that much with value-based care. We’re now having to look at the value indicator that is driving these outcomes-based payments. A lot of our value payment programs are spearheaded by our clinics, so we have a number of resources that are dedicated to understanding what those quality incentives are and how we’re being reimbursed for them.

Cusack: An organization that participates in these models must understand the terms of the contracts and measure the appropriate metrics. It also should have an open dialogue with the payer to check that the payer and the system are in sync about the care the patient is receiving. You don’t want the end of the year to arrive and you think you’ve met all your metrics, but the payer’s data suggests otherwise. For instance, if you’re managing a patient population and 30 percent to 50 percent of the care those patients receive goes outside of the system, you need to know that—your internal systems will not provide you with this information. It must come from the payer. The key here is having an open and ongoing dialogue to make sure their data align with what you believe is occurring.

What would you say are some revenue cycle best practices organizations should keep in mind as they move to value-based payment?

Clift: The revenue cycle best practices for value-based payment are similar to those for fee-for-service—engaging the patient financially at the front end coupled with appropriate documentation and charge entry on the back end. That said, having a good understanding of the relationship between cost and quality—and then what that means to an organization’s value in these contractual arrangements—is important. For instance, reviewing those care-delivery cases that are high cost but not delivering on the quality side is essential to identify opportunities for improvement. Quantifying cost for some of our clinical departments is easier than others, and we are still addressing the logistics of how to accomplish our goals in this area. We do, however, acknowledge that this work requires a multidisciplinary approach. We’ve pulled together leaders from finance, quality, contracting, care management, IT, and revenue cycle to meet quarterly and discuss how we’re performing and what opportunities are coming down the road. We are trying to move away from reactive mode and position ourselves to be prepared for additional value-based opportunities that come up.

Cusack: Organizations must embrace the idea of looking at payer data to better understand costs both in terms of the care the organization delivers, as well as the care that occurs outside of the hospital system. The good news is that payers are much more willing to share those data than they ever have been before. If you’re a payer and you’re not sharing those data, then you’re not giving the provider what it needs to improve, and you’re just chasing your tail. We’ve seen a marked shift in the communication between providers and payers. For the first time in a long time, they’re having the same conversations, which is critical for the industry’s success.

Salazar: As we continue to move forward, the overall focus from CMS and other payers will be the quality of services delivered to patients. A healthcare organization can achieve a competitive advantage when it strikes a strategic balance between quality, services, and performance. We have found that continuing to optimize our processes and systems to reduce errors and increase consistency is central to establishing this competitive advantage.

It’s not value-based payment per se that is causing our organization to standardize our processes and reduce waste. Instead, it’s the idea that if we operate in the most efficient way possible, we can take advantage of opportunities like value-based payment when they come along. Similarly, if we have dashboards in place that show our clinical and operational performance—and we consistently respond to these dashboards—then we can provide higher-quality, more cost-effective care, which can also set us up to take advantage of new payment models. 

Participants in the HFMA Executive Roundtable




Kym Clift is vice president of revenue cycle for Samaritan Health Services in Corvallis, Ore.

Carole Cusack is vice president of 3M Health Information Systems in Albany, N.Y.

David McGrew is CFO at San Mateo Medical Center in San Mateo, Calif.

Camarino Salazar is senior director, health analytics for University Health System in San Antonio, Texas.

About 3M Health Information Systems

3M Health Information Systems works with providers, payers, and government agencies to anticipate and navigate a changing healthcare landscape. 3M provides healthcare performance measurement and management solutions, analysis, and strategic services that help clients move from volume to value-based health care, resulting in millions of dollars in savings, improved provider performance, and higher-quality care. 3M’s innovative software is designed to raise the bar for computer-assisted coding, clinical documentation improvement, performance monitoring, quality outcomes reporting, payment analytics, and terminology management. For more information, visit www.3m.com/his or follow @3MHISNews on Twitter.


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