4 Steps for Success in a Changing Payment Landscape
Oncology practices provide some valuable insights for physician practices, as well as for health systems that own practices, on how best to adapt their revenue cycle management process to a value-based payment environment.
The advance of value-based payment models has compelled healthcare providers to assume greater accountability for the quality and cost of the care they deliver. For many, simply understanding new requirements has posed a daunting challenge. In a recent survey of practices representing 800 specialty physicians, when asked about their comfort level with the Merit-based Incentive Payment System (MIPS), a full 71 percent of respondents said, “I am learning but have a way to go.” a These providers, mostly representing oncology and urology practices, understand that it is one thing to comply with new regulations and another to implement the practice transformation needed to thrive in a value-focused healthcare payment world.
They also have received little help or guidance from the Centers for Medicare & Medicaid Services (CMS) on how to do so: Although MIPS and advanced alternative payment models (APMs) document the desired outcomes and metrics that result from practice transformation, in neither case are providers presented with an operational roadmap on how best to accomplish the transition from fee-for-service (FFS) to value-based care.
Clearly, to succeed under value-based care, physicians must undertake changes that cut across every aspect of their practices, including how they deliver care and coordinate care decision-making with other provider entities beyond their practices. A key area of medical practices that requires physicians’ attention as they prepare for participation in MIPS or an APM is the revenue cycle. The revenue cycle is a core capability that powers every medical practice, and it is important not only for practice executives but also for executives of health systems that own both primary care and specialty physician practices to have a clear understanding of how value-based care is changing this core area.
These executives can gather valuable insight from looking at the experiences of oncology groups in adapting their revenue cycles to the requirements of value-based care, resulting from their participation in the Oncology Care Model (OCM), an early value-based care initiative introduced by the Center for Medicare and Medicaid Innovation (CMMI) in 2016. The lessons learned by these oncology groups warrant such attention because participation in the OCM has enabled these groups to advance further along in the migration to value-based care than other types of physician practices.
Rethinking the Revenue Cycle for Value-Based Care
For years, the physician revenue cycle could be characterized as an oasis of financial predictability amid constant industry change. Major challenges have occurred, of course—such as adapting the revenue cycle to requirements for meaningful use and preparing for the shift to ICD-10. However, fundamental revenue cycle marching orders have remained consistent: Improve the amount and speed of collections while identifying and minimizing payer denials.
Value-based care is disrupting this status quo by transforming the very foundations of the physician practice revenue cycle. The arrival of the Medicare Access and CHIP Reauthorization Act (MACRA) means that payment from value-based care contracts will constitute a much more significant portion of revenue for providers.
MACRA creates a new environment of major financial winners and losers. High-performing practices under MIPS and APMs can see payments increase by 19 percent or more, while those that fall behind could suffer up to a 9 percent drop. Meanwhile, practices that participate in APMs that include downside risk could be obligated to reimburse CMS for costs exceeding a target level.
This payment uncertainty has fallen disproportionately on specialty practices, which were the first to be subject to the core mandate of value-based payment, which is to assume holistic accountability for patients throughout an episode of care and across all settings. The introduction of high-profile APMs aimed at specialists has compelled these providers to rapidly expand their focus and transform their practices in support of new cost and quality mandates.
The Role of the OCM
The OCM exemplifies this point: More than 190 practices were accepted by CMMI to participate in this five-year program. These practices represent about 3,200 oncologists and 155,000 Medicare beneficiaries nationwide. The vision: Assume accountability for entire episodes of cancer care and drive sustained improvements in quality and cost.
To realize this vision, the OCM spelled out seven areas in which practices needed to undergo transformation, from providing patients with 24/7 access to an appropriate clinician who can access medical records to offering the core functions of patient navigation and using data to drive continuous quality improvement. In exchange, practices receive payments of $160 per qualifying patient episode per month and the opportunity to receive a share of savings generated beyond a defined threshold.
The revenue cycle processes required for programs such as the OCM—which involves not only up-front payments earmarked for specific infrastructure investments, but also the possibility of a follow-on shared savings bonus at a future date—is fundamentally different from FFS claims management in terms of the amount, cadence, and probability of income. The OCM participants found that, to optimize operations for emerging payment models while minimizing or avoiding risks, they had to be ready to transform both the core clinical and financial processes that served them during the FFS era by implementing best practices and investing in new skill sets and tools required to optimize revenue.
From Fee-for-Service (FFS) to Value-Based Revenue Cycle Management in Specialty Care
Key Steps for a Value-Focused Revenue Cycle Transformation
Although transitioning to risk-based payment models presents a significant challenge for providers, this challenge is mitigated by the fact that existing FFS revenue cycle management infrastructures and skills remain a critical part of the providers’ financial foundation. Nonetheless, change will be needed because success will depend on moving revenue cycle management from the back office to the front lines, where it can assume a much more strategic role as the organization builds new capabilities and processes to support value-based care.
The experiences of the OCM participants suggest organizations can best prepare to undertake effective revenue cycle management under value-based care by taking four steps, as follows.
Introduce forecasting based on value, not just volume. Until recently, revenue cycle forecasting depended primarily on understanding metrics related to the amount and speed of collections. That meant submitting clean, accurate claims up front, and then following through to ensure appropriate payment was received quickly. In a new era of diverse value-based contracts and revenue streams that include factors such as up-front payments, shared savings arrangements, or even potential penalties, that approach is no longer sufficient. In addition to accurately forecasting and optimizing FFS revenue streams, teams now must expand the focus of their revenue cycles to accurately projecting revenue across disparate value-based care activities on a payer-by-payer basis.
In effect, this new focus means revenue cycle management is now the first step, not the last, in maximizing financial performance.
For the OCM practices, adopting this new focus has meant evaluating their financial outlook on a forward-looking basis, both in general and especially around the beginning of each so-called “performance period”—a six-month window during which CMS tracks practice performance against cost and quality benchmarks.Questions these practices have had to address during this process include the following:
- Are we correctly identifying eligible members to bill for monthly payments and doing so in a timely manner?
- Is CMS likely to recoup any payments from us after reconciliation, and should we reserve a portion of our revenues to account for this?
- How did our practice fare against program measures during the previous performance period, and what were the financial implications?
- Are there unexpected revenue deltas from that period that we must now account for, and if so, how will we do so?
- What changes do we forecast in the drivers of cost and quality during the upcoming period, and what are the implications of those changes for our practice’s performance?
- What is the likelihood we will exceed savings targets and receive a bonus and, if we will, how much will it be?
Optimize for episodes of care across settings, not just in-office visits. As with FFS revenue cycle management, accurately determining how much revenue will result from value-focused efforts requires anticipating that some percentage of revenue will not be received because of either internal errors or inaccurate payment from payers. Because value-based contracts are relatively new, both providers and payers have yet to sort out many details regarding compliance, measurement, reporting, and payment expectations. Complicating these efforts is the fact that value-based payments are much less affected by simple codes indicating services rendered in the office than by the quality of clinical encounters across multidisciplinary teams of providers in every care setting.
In the case of the OCM, some practices incurred revenue shortfalls because they either struggled to identify appropriate qualifying chemotherapy episodes or, worse, collected per-member-per-month (PMPM) payments for episodes that CMS later determined did not qualify for payment. CMS’s attribution logic is based on a plurality of visits coded as evaluation and management (E&M) visits.
For example, a practice may not have known that a patient who had started a chemotherapy regimen was also seeing a cardiologist to manage chronic obstructive pulmonary disease (COPD) and logged more visits to that provider’s office. Because of such circumstances, CMS provided OCM participants with a reconciliation at the end of the first performance period that asked practices to return payments for episodes it deemed unqualified. Indeed, some practices were asked to return sums amounting to 30 percent or more of total PMPM payments, which proved to be a major blow. b
It turned out that the discrepancy arose from CMS’s approach, which attributed patients based on paid claims data for all E&M visits regardless of location at the practice tax identification number (TIN) level, instead of at the physician level based on a plurality of E&M codes. In other words, the practice TIN with the largest number of E&M visit claims for a patient during his or her six-month episode “owned” the patient—even if the practice did not have an oncologist. Following the reconciliation process, OCM practices provided feedback to CMS that resulted in the modification of the attribution process to ensure patients would be attributed to practice TINs where at least one or more oncologist was practicing. This example demonstrates that revenue cycle management challenges in the era of value-based care, unlike their FFS counterparts, cannot be fixed by adjusting codes and completing fields to submit cleaner claims.
Minimize clinical and financial risk, not just denials. Denial management is another aspect of traditional revenue cycle management that is transformed under value-based care models. According to traditional FFS best practices, physician practices track denials to root causes to determine whether the denial was legitimate and, if so, what errors on the claim can be corrected, what processes should be tweaked, and which staff may need to be counseled. The goal is resubmission and approval.
Value-based care presents new challenges that are intrinsically clinical in nature. Specifically, organizations must prepare to analyze episodes for issues such as deviations from care pathways or errors in outcomes documentation. Furthermore, under MACRA, Medicare FFS payment is adjusted based on the MIPS composite score, which is calculated from data in the practice’s electronic health record (EHR), among other sources. Gathering these data can be problematic for many practices with legacy EHRs. Some OCM practices are forging new connections between their revenue cycle management teams and clinical leaders to flag issues requiring immediate attention, such as gaps in care or in documentation. For example, practice leadership has increased efforts to encourage physicians to document patient comorbidities in structured EHR fields. Although comorbidities were not typically captured as part of oncology encounters during the fee-for-service era, they were revealed to have an important role in CMS’s calculation of episode target prices. Practices that fail to document comorbidities risk being assigned an unrealistically low target price that will not account for the investments in extra services that complex patients require.
To help mitigate risk and smooth out potential revenue fluctuations, practices may want to consider stop-loss insurance or savings accumulators.
Optimize the revenue cycle in real-time. With value-based care programs tied to defined performance periods, revenue cycle leaders will have fewer second chances to remediate issues that cause practices to lose revenue. It therefore is critically important that these leaders detect issues and intervene while cost and quality improvements are still possible—and do so on a consistent and ongoing basis. If a practice waits until the end of a period to analyze results and only then finds it has fallen short of cost-saving and quality targets, it runs the risk of being dropped from an APM program or otherwise penalized.
The consequences of being slow to analyze results are exemplified by the OCM-participating practices that received reconciliation reports from CMS asking them to return PMPM payments. A more proactive approach might have spared them this outcome.
New Marching Orders for Revenue Cycle Management Analytics
A common theme across the emerging value-based revenue cycle management landscape is the need for a new generation of analytics that can answer increasingly complex questions while optimizing cash flow around new payment models. The mainstay metrics of FFS revenue cycle management—e.g., net collection ratio, payment per encounter, and days in accounts receivable—still apply for those contracts specifically, but a new approach is needed on the MIPS and APM fronts.
Specifically, practices with value-based contracts must have a tighter grasp on metrics that demonstrate the cost-efficiency and quality of care across all comorbidities and care settings. Such metrics not only represent reporting requirements of emerging programs, but also are the key to managing performance with an eye on savings bonuses.
Most specialties will want to track unnecessary utilization of emergency departments and avoidable inpatient admissions, identifying root causes with the goal of changing workflows and reducing these high-cost events. In specialties such as oncology, which treat populations fighting malignant diseases, appropriate referrals to end-of-life care also will be important to monitor. When it comes to MIPS, practices also should remember that the measures they choose to report will matter greatly. They must attempt to anticipate their areas of best performance and bring tracking of those measures to the forefront.
For most practices, mastering new MIPS and advanced APM metrics entails harmonizing disparate clinical and financial data (through the EHR, claims, and more), analyzing performance in real-time, and then comparing results with payer cost-and-quality benchmarks and the performance of industry peers to predict revenue outcomes. The output must be organized into actionable dashboards that enable all the leaders of the practice who are responsible for value-based care success to come together to identify outliers and remediate them before revenue is impacted. Practices participating in the OCM are undertaking the following new initiatives to foster these analytic capabilities to help promote high-level performance under the value-based care model.
Curating data to ensure reliability. Integrating data sources is difficult enough, but practices must also ensure the resulting data is fully harmonized. That requires not only technology interventions, but often manual ones. Much EHR data, for example, is either unstructured or structured but inconsistently entered. A vanguard of OCM practices have tackled this challenge with a dual approach. They have implemented health information exchange technology to extract and harmonize data across systems, while tapping expert resources to manually complete and curate source data as appropriate. They have augmented this effort through clinician education to maximize the quality of data from the start.
Moving from reports to actionable insights. For maximum benefit, practices must increasingly align their analytics with specific measures and metrics in value-based payer programs, with a focus on identifying opportunities to improve performance. For example, leading OCM practices have adopted risk stratification tools to identify and target high-risk patients, at both population and individual levels. This visibility has enabled them to prescribe preventive steps, from increasing navigation resources to implementing targeted protocols to manage avoidable adverse effects.
Shifting to near-real time and predictive analytics. At this early stage of the value-based care evolution, most health insurers are likely to provide practices with retrospective data, too late for them to anticipate results. It therefore is incumbent on practices to develop the data analytics capabilities to monitor performance against measures in near-real time. For example, practices participating in the OCM are employing sophisticated models that leverage both historic data and near-real-time activity in the practice to anticipate outliers in areas such as resource utilization and adverse events. This could include a patient with lung cancer and multiple comorbidities who is being treated with a chemotherapy agent with known serious side effects, such as anemia, fever, and acute dehydration, putting the patient at high risk for a hospital admission due to treatment side effects. Proactively identifying such higher-risk patients and treating the chemotherapy side effects (e.g., hydration, colony-stimulating factors, anti-nausea medication) in the ambulatory setting provides a more cost-effective solution, not to mention a better experience for the patient.
In this way, practices can minimize issues months in advance using care management and other interventions before the problems affect performance.
A New Role for Revenue Cycle Management
Some revenue cycle leaders may be tempted to view the arrival of value-based care as the latest in a series of operational and process-related challenges to confront their organizations. However, the value-based care transformation is far more fundamental, not to mention more beneficial clinically and financially, for practices and patients alike. It compels revenue cycle management teams to move to the forefront, taking on a more critical, and pivotal, role that requires them to develop competencies in complex revenue forecasting and risk management. Armed with a new level of data and insights, they can more effectively partner with clinical counterparts to optimize the financial health of the healthcare organizations they serve.
Charles Saunders, MD, is CEO, Integra Connect, West Palm Beach, Fla.
a. Integra Connect, “ Specialty Practices Unprepared for MACRA Requirements, According to Integra Connect Data,” press release, Sept. 6, 2017.
b. Integra Connect, “ OCM Practices React to Performance Period 1 Results, Plan to Contest MEOS Recoupment,” Blog, April 23, 2018.