Value Based Payment

Closing the Gaps in Value-Based Care

May 4, 2018 9:30 am

As value-based payment programs are increasingly developed to address skyrocketing healthcare costs, their design all too often includes gaps that impede health care’s progress in transitioning its payment focus from volume to value. Moreover, efforts to plug these gaps have only led to more gaps and duplicate work. 

Consider diabetes management, for example. Value-based programs have added layers to diabetes care management that ensure patients are seen regularly by providers, but coordination is lacking for evidence-based practices. Providers may not have access to the disease management plan at the point of care, and the provider, health plan, and health system may all be on different electronic health record (EHR) systems, so patients may not receive the treatment they require. Further, payment still occurs via the fee-for-service mechanism. The coder enters information according to what was done to elicit the maximum appropriate payment. However, this practice does not always reflect the codes needed to close the gaps resulting in a claims record that reflects a healthy visit, leaving unclosed gaps even if the work was done. 

For quality management programs to avoid such gaps and function in an evidence-based world, healthcare organizations must embrace an evolutionary mindset.

The Five Preliminary Steps in Health Care’s Evolution Toward a Value Focus

Health care is in the midst of a transition to value-base care, but it has a long way to go before this transition is fully realized. To date, the industry has completed five evolutionary steps toward value. 

The first step involved the creation of quality programs such as Healthcare Effectiveness Data and Information Set (HEDIS) on the health plan side and Physician Quality Reporting System (PQRS) on the provider side. These programs provide insight into retrospective reporting and analytics to determine performance against key indicators managed by separate quality and reporting. However, these programs are completely disconnected from day-to-day care delivery and, thus, have minimal effect on workflow processes. 

The second step came as health plans began to seek new ways to control costs while improving quality and outcomes, especially for certain patient populations—and pay-for-performance programs were born. Through these programs, health plans put contractual incentives in place with providers to influence care management workflows for high-cost populations, such as patients with diabetes. Although this approach held some promise in theory, providers quickly found themselves overwhelmed by multiple, uncoordinated government and contractual measures, resulting in more frustration than change. 

The fatal flaw in these pay-for-performance programs is that providers’ incomes are still largely based on fee-for-service, and reporting against measures occurs only at year end, which means the financial incentive is negligible. In fact, the workflow changes required (e.g., spending five more minutes with each patient) could lead to significantly reduced patient volumes, resulting in a big income hit for providers. Hence, these programs have not effective prompted providers to make significant workflow changes. 

The third evolutionary step was the introduction of the idea of meaningful use of electronic health records (EHRs), which requires significant dollars and reporting for providers to achieve. The program introduced quality measures and EHR adoption measures for both hospitals and eligible professionals. The intent was to encourage adoption of EHRs and analytics tools needed to support quality management and reporting at a higher level. 

Increasing the complexity, as a fourth step, the Centers for Medicare & Medicaid Services (CMS) instituted separate, parallel, value-based programs aimed at key quality indicators such as hospital-acquired conditions (HACs) and readmissions. In both cases, the government’s steps toward value-based payment became clear and overt a CMS introduced programs aimed at promoting process-improvement measures in areas such as avoidance of infections, readmissions, and HACs, and then, a few years later, added peer-to-peer comparisons. 

This progression not only introduced up-side/down-side risk, but also ultimately resulted in establishing winners and losers. For example, the pay-for-performance measures for professionals included meaningful use eligible professional measures, value-based modifiers, and PQRS measures had resulted in a combined 9 percent of revenue at risk. On the hospital side—readmissions, HACs, and value-based purchasing—6 percent of revenue is at risk in addition to the meaningful use lump sum payments for eligible hospital measures.  

What’s more, these programs created focus for specific initiatives (e.g., keeping track of readmissions) but not systemic change in delivery models. Again, the financial impact is a deterrent to operationalizing workflow changes when the majority of provider income continues to be based on the fee-for-service model.

The fifth step was the creation of the Merit-based Incentive Payment System (MIPS), an effort to simplify what had become very cumbersome for professionals. MIPS condensed programs while introducing combined upside-downside incentives. Although the financial incentive can be up to 9 percent paid in one lump payment in future years, providers still struggle. A 2017 survey found that many providers say they would go so far as to say they would rather sell their practices than deal with the administrative burden. Transformation still seems far in the future. 

Although well-intentioned, these programs are destined to become casualties of natural selection. The emergence of accountable care organizations (ACOs) brings new thought processes, collaboration, and payment models to drive evidence-based care management workflow processes. When risk and reward are shared among insurers, providers, and patients, the incentives become significant enough for organizations to think beyond clinical. 

The Next Era Squeezes Gaps into Extinction

To be successful, healthcare organizations must go beyond care management and population health programs. The focus needs to be on the entire process that operationalizes what the patient needs with administrative and care processes, payments, coding practice, quality metrics, and communications among a multitude of stakeholders, all while ensuring provider workflows support their payment models—including fee-for-service and value-based payments—while still delivering individualized care. 

Analytics coordinated with new workflows in a way that supports high-quality, low-cost operations will be an important part of this process. And infrastructure is key. Because of the number and complexity of the measures to track, it is important to build the infrastructure for seamless collection and reporting that eliminates silos and drives ongoing refinement and success. 

To encourage the use of analytics, a pragmatic approach for the entire end-to-end process is needed, beginning with patient engagement and provider transparency. Coordination with charting, coding, and finance also are needed to ensure gaps are closed and credit is correctly attributed. Organizations should leverage stakeholders appropriately instead of creating a full care management organization or burdening providers with significant additional work that interferes with their ability to engage patients. 

Such an approach enables the whole organization to understand gap details and the work needed to close those gaps while working with a patient, charting, coding, abstracting data or scheduling patients. As legacy quality management programs become outdated in this new era, the healthcare industry must focus on a mindset that turns value based-care models into the new normal. 

Jeffrey Springer is the vice president of healthcare solutions for CitiusTech, Princeton, N.J.


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