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Exploring blended payments

We asked VBC thought leaders to share their experiences of fee-for-service and value-based reimbursement models. 

 

While value-based payment models are on the rise in the U.S, primary care practices still receive the majority of their payments via fee-for service. In 2022, 70% of primary care physicians reported receiving fee-for-service payments, versus just 46% for value-based payments. Although many health systems are now transitioning to the value-based care model, this transition can’t happen overnight – meaning some combination of both value-based and fee-for-service models is inevitable. In this article, we’re going to explore so-called blended payments in value-based care, and ask whether organizations should persist with them long-term.

 

Are value-based care and fee-for-service incompatible?

 

Value-based care and fee-for-service are often considered to be polar opposite reimbursement models. While the fee-for-service model sees providers receive payment for each service they deliver – regardless of the quality of care or patient outcomes – value-based medicine follows the equation of ‘value = quality ÷ cost’.  That means, under the VBC reimbursement model, providers are rewarded for delivering high-quality care and positive patient outcomes – while effectively managing costs. 

 

In the highly-politicized U.S healthcare landscape, it’s possible to see value-based care and fee-for-service medicine as philosophically incompatible. “The difference is the basic premise of having a transactional relationship with a healthcare provider, versus putting the responsibility of the outcome of that relationship on the healthcare provider,” says Dr. Rayny Ramirez, CEO, Community Medical Group. “At the clinical level, doctors can care less about financials and cost. Doctors just want to be doctors.”

 

Blended payment: a marriage of inconvenience

 

The transition to value-based healthcare slowed during the turmoil imposed by the COVID-19 pandemic, but this was never a rapid process to begin with. Medical Economics describes how the industry has “inched toward” value-based healthcare over the last decade “on an incremental basis”. This slow shift has left many organizations in a kind of limbo, forced to operate blended payment models comprising both value-based and fee-for-service payments. Although a marriage of convenience, these blended payment models could potentially explain recent criticism of VBC success rates, says the Chief Clinical Officer of a leading at-risk physician group who prefers to remain anonymous.

 

“I wonder if they’re trying to do both,” she tells us. “I wonder if they’re trying to do this treadmill of fee-for-service and – ‘oh yeah, I have to slow down to see my VBC patient’. It’s impossible.”

 

“I always equate it [blended payment] to a cross-training sneaker: it’s not good for running, it’s not good for playing tennis. If you want to run, you wear a running shoe, and if you want to play tennis, you wear a tennis shoe.”

 

Both of our experts have experienced the blended payment method first hand, and both have questions about its efficacy as a long-term solution. 

 

“I’ve been in an organization that’s fee-for-service, I’ve been in an organization that is value-based, and I’ve been in an organization that is both at the same time – or trying to be both at the same time – which is kind of crazy,” says Dr. Ramirez. 

 

“It is really hard to do both well,” the CCO agrees. “And I think that’s why some providers don’t necessarily see the value in value-based care – because they just see the documentation requirements and preventative care checklists, and say ‘this is harder medicine’. They’re not looking at the outcomes.”

 

Reaping the benefits

 

Both of our interviewees extol the virtues of working for dedicated value-based care organizations over the blended model. “I love our health center because we’re just a running shoe!” the CCO laughs. “I think certain providers say their VBC programs haven’t been successful because they’re living with one foot in each world.”

 

Dr. Ramirez agrees. “It’s all relative to how you measure the value of VBC,” he tells us. “In my previous stewardship – with a different organization that provided care for senior patients – we were able to improve or extend life by an average five years in seniors with a certain number of conditions. Potentially the costs are higher, but what’s the price of living five more years?”

 

Both parties are realistic regarding the challenge of transitioning to value-based care. “I’m not going to pretend that there aren’t more rigorous documentation requirements in value-based care,” the CCO says. “The documentation is intimidating. And it wasn’t something that providers learned in medical school… If you’re used to commercial documentation, you might be like, ‘this is a burden’.”

 

Accurate documentation starts with education. Clinicians, MAs, coders and other staff must buy into the increased burden of documentation necessitated by the switch to value-based care, before learning the many intricacies of risk adjustment and HCC coding. The DoctusTech HCC coding education app applies active learning theory to engage clinicians at 90%, and encourage lasting behavior change with 75% knowledge retention. It’s the preferred method of HCC education for 9/10 clinicians – ensuring users not only retain the valuable information they’re taught, but that they’re motivated to keep learning for the long term. 

 

If you need help managing the transition to value-based care, get in touch and arrange a demo of the DoctusTech app today.

 

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VBC Industry Insights From HCP-LAN’s Annual Report

Values-based healthcare reimbursement has been adopted more quickly in some healthcare sectors than in others.

 

According to the LAN’s latest APM Measurement report, 40.9% of US healthcare payments—representing over 238 million Americans and more than 80% of the covered population—were generated through value-based reimbursement programs last year. Population-based payments and downside risk agreements were included in these programs, in addition to upside risk agreements.

 

In addition, almost one fifth (19.8%) of all healthcare payments made last year were in some way tied to value or quality of care while still being based in fee-for-service. The remaining 39.3% of payments were strictly fee-for-service.

 

Despite the fact that the healthcare industry has adopted value-based reimbursement, adoption is often glacially slow. But values-based reimbursement has been adopted quicker in some segments of the healthcare system.

 

Where progress is occurring.

According to the APM Measurement report, Medicare and Medicare Advantage are leading the charge in value-based reimbursement – no surprise there.

 

Just 15.0% of traditional Medicare payments and 38.0% of Medicare Advantage payments were fee-for-service in 2020, down from 2019 data showing 14.1% of traditional Medicare payments and 46.0% of Medicare Advantage payments being fee-for-service.

 

In both programs, the proportion of value-based reimbursement in two-sided risk alternative payment models continue to increase year over year. In traditional Medicare, 24.2% of payments were part of some two-sided risk model, compared to 20.2% in 2019. In Medicare Advantage, the percentage of payments in two-sided risk models increased from 28.6% in 2019 to 29.3% in 2020.

 

Insight: Medicare Full Risk grew by 20% between 2019 and 2020.

Medicare Advantage Full Risk grew only 3% in the same period.

 

Despite fee-for-service payments making up 59.0% of Medicaid payments in 2019, value-based reimbursement adoption increased from 10.6% to 14.5% in 2020.

 

Insight: Value-Based Reimbursement adoption grew 36% 2019-2020

 

According to the report, private payers covered 62% of the lives represented in the LAN’s data, but only 10.8% of payments made in 2020 were from two-sided risk models, while over half (51.5%) were from fee-for-service.

 

In addition, a higher proportion of payments to providers from private payers (11.1%) in 2019 was tied to two-sided risk models. Furthermore, 53.5% of payments were fee-for-service, as shown in the report.

 

 

How to accelerate value-based payment and risk

Industry experts at the 2021 LAN Summit concur that a lag in value-based reimbursement adoption is shown by the results of the 2020 APM Measurement report. However, there is speculation that risk-based models will be adopted more rapidly over the next few years.

 

According to the report, 87% of respondents believe that alternative payment model activity will increase; none of them believe it will decrease. In addition, the majority agreed that adoption would lead to higher quality, more accessible care, as well as improved care coordination.

 

Despite the payors’ perspectives, provider willingness to take financial liability, their capability to implement models, and their interest and willingness are still the greatest barriers to value-based payment adoption.

 

An “exponential” increase in the level of cooperation between payers and providers has occurred, and more providers are bringing to us the idea of entering into risk arrangements, Shrank said. Because of the outbreak, he thinks more people will be open to working in risk arrangements.

 

However, payers still must offer the right incentives to incentivize providers to participate in value-based reimbursement and eventual downside risk.

 

Keeping the momentum going with value-based reimbursement and risk adoption in healthcare requires leadership, buy-in, and aligned incentives.

https://hcp-lan.org/apm-measurement-effort/2022-apm/

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How Hospitals Can Tackle Surges With Value-Based Care

With the flu season ramping at unprecedented rates, and a new surge of RSV coming when COVID-19 numbers are rising again, the topic of a healthcare surge emergency is back in the headlines. What the New York Times is calling a “Tripledemic” is threatening to overwhelm providers and hospitals yet again. During the peak of the pandemic, hospitals experienced a surge in demand for physical resources and personnel that lasted nearly two years.  And just when things started to adjust back to some recognizable norms, the question is again on everyone’s mind: “How do we tackle a surge?”

 

According to Shereef Elnahal, MD, president and CEO of University Hospital and former Commissioner of New Jersey’s Department of Health, hospitals and health systems often lose money during their peak seasons. Supply shortages are largely due to the fact that most hospitals use a fee-for-service payment model.

 

Hospitals that charge on a fee-for-service basis are paid based on the volume of patients they treat, not the quality of patient outcomes. Because of this, hospitals usually operate at full capacity in order to reap the greatest rewards. When patient volumes rise during peak seasons, however, hospitals have little margin for error.

 

According to static payment rates for inpatient care, hospitals may struggle with seasonal demand. In order to keep up with surges, health systems may have to hire more staff or order more supplies, which leads to increased expenses despite no increase in revenue.

 

During flu season, primary care physicians often augment their workforce by up to 30 percent and still face financial challenges and capacity limitations. Across all healthcare facilities, staffing shortages have become worse as a result of the COVID-19 pandemic, which increased the need for healthcare professionals.

 

Rather than relying on simply adding more headcount, health systems needa model that can easily adjust healthcare delivery to fit any situation, including increased patient capacity and pandemic surges. Creating a value-based payment model may give health systems more flexibility when dealing with demand surges.

 

According to the quality of care, providers are compensated using value-based payment models, not the quantity. This approach may inspire health systems to improve staffing procedures. In contrast to dividing physicians’ time in a way that will lead to the highest number of completed services, health systems might focus on patient needs and health outcomes in order to address them.

 

Physicians using a value-based model are less likely to refer patients to specialty care facilities if those referrals are not medically beneficial.

Because of Maryland’s value-based all-payer model, which reimburses hospitals using global budgets for inpatient episodes of care, hospitals in the state were able to manage the influx of patients during the pandemic far better than neighboring states with different models.

 

A study from JAMA Network Open noted that the all-payer model also decreased surgical spending and surgical complications. Providers can save resources and supplies for busy periods if they are reimbursed based on outcomes rather than quantity of services.

 

Patients may be able to avoid expensive hospital stays, saving staff time and resources, if they have access to healthcare services at home. Hospitalization rates may also be lowered by using home-based primary care services.

 

In addition, health systems could leverage telehealth services to assess patients and determine if an in-person visit is required. According to the authors, telehealth use could improve access to care and save hospitals money.

 

Patients may also be able to manage their acute conditions from home using remote patient monitoring technology.

 

Surges can also be a contributing factor to physician burnout. That is why reducing physician workload (blog post) should be a part of hospitals’ strategy of dealing with patient surges.

 

The DoctusTech Mobile App is based on our successful HCC education and retention strategy, which relies on clinical vignettes customized to the clinicians’ weaknesses and strengths, which are sent to their mobile phones every week. With an engagement rate of 90%, DoctusTech App results far exceed any other learning tool, technology, or strategy.

 

After using the app for HCC coding education, clinician RAF accuracy is consistently increased based on the learning data.

 

What methods does the app use to accomplish this?

 

Our app gamifies the learning experience, connects clinicians with one another, allows them to compete for real prizes, and provides administrative support. In addition, the most advanced HCC code search tool in the world is available. Clinicians earn 25 CME hours every year as they learn HCC coding in a non-boring app!

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DoctusTech Helps Value Based Care

Value-Based Care is a natural movement toward the benefit of the patient with a reduction in costs by aligning all incentives in the right direction. And as providers make the shift, patients will be encouraged both by the motive behind the transition as well as the improvement in their overall health and the reduction in the costs of their care. Truly, Value-Based Care has the potential to be a significant win-win for patients and providers. And in the end, isn’t that why you spent all those years pursuing your medical training?  Value-Based Care is for patients, and for the providers who care for them.

The market is now moving towards building value-based care drivers to all types of patients outside of Medicare Advantage. It’s unlikely a brand new risk model will be born for commercial patients. Therefore, all physicians will need to understand the risk adjustment models and the implications of documentation accuracy for reimbursement.

Why is HCC Coding Important for Value-Based Care?

HCC coding’s importance is less about the impact on revenue and more about the shift towards VBC models, which have consistently shown better clinical outcomes at lower costs. And Hierarchical Condition Category Coding is the language clinicians use to document the diagnoses of chronic conditions and the complications and various disease states that contribute to risk.  

Why should doctors care about HCC coding?

Doctors should, first and foremost, care about patients – and they do. But as a mechanism of that care, doctors must diagnose with specificity and document with accuracy in order to provide care and the revenue that affords that care. And HCC coding is how that is done. HCC coding is the documentation foundation for most of the value-based care arrangements used today. With “value-based care” usually being equated with Medicare Advantage, in coming years we believe that VBC will be incorporated into nearly all types of financial models.

HCC coding falls under the broader term of Risk Adjustment (RA) models for prospective payment. These models are designed to determine risk scores and assign a fee according to the patient’s level of risk.

In the Medicare Advantage world, these models use certain demographic and HCC codes to assign a risk score to patients known as an RAF. The assumption is the sicker the patient, the higher the RAF, the more dollars it will take to care for this patient during any given year. Therefore the RAF score of any patient population will determine the prospective payment Medicare disburses.

This prospective payment model based on RAF does 2 things:

  1. Aligns physician incentives. Currently, clinicians make money from taking care of sick patients. The sicker the patient, the more visits, tests, surgeries they have to do, and the more they are reimbursed. In this model, clinicians are incentivized to keep patients healthy and therefore require LESS tests and surgeries.
  2. Spurs clinical innovation the right way. Right now, pharmaceuticals and medical hardware companies are all trying to find ways to treat diseases. The newer the drug or medical device, the more revenue they make. In this model, healthcare groups are incentivized to find new ways of preventing the disease progression from ever needing the latest drug or newest medical surgery equipment.

How can DoctusTech Help?

We provide a modern learning tool for the modern clinician, using gamification, competition, real prizes and administrative oversight to see who is engaging and who needs a little extra help. Also, our app deploys all the subtle nudges and complete with the most advanced HCC code search tool on earth.

DoctusTech helps clinicians learn HCC coding through clinical vignettes in an app that is fun and engaging. Diagnosing with the appropriate HCC code is a critical skill for modern clinicians who care for patients in a value-based care arrangement.

You cannot treat what you do not accurately diagnose, and you cannot afford to treat what you do not appropriately code. Without the correct diagnoses and accurate documentation and coding, caring for patients with complex disease will be unsuccessful, leading to increased avoidable hospitalizations and increased cost to the organization.

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The Intricacies of Value-Based Care: A Step by Step Guide

Value-Based Care is a game-changing advancements for patients and the providers who care for them. Value-based care is revolutionizing  the healthcare industry and aligning incentives more and more each year. The concept of pay-for-performance, patient-centered care, and outcome measures have all been developed with the intention of providing more value to patients and healthcare providers alike. These new standards are also a response to the Affordable Care Act’s emphasis on cost containment and value in healthcare services. Therefore, it is no wonder that many hospitals and medical practices have adopted a value-based approach when considering how best to meet the needs of patients and the business needs that make care happen. However, navigating this new territory can be challenging without proper guidelines.

 

What is Value-Based Care?

Value-based care (VBC) is a system of payment designed to change the incentives for healthcare providers, so that they are rewarded for providing high-quality, cost-effective care. In VBC, providers are reimbursed based on the relative value of their services. The amount a provider is paid is based on the quality and outcomes of the services provided as well as their costs. Similar to the H and R Block tax model, providers are rewarded for going above and beyond what is expected of them. VBC providers are rewarded for providing high-quality and cost-effective care, whereas higher cost or decreased patient outcomes  can result in  financial penalties. 

 

This is a significant change from the fee-for-service model that has long been the primary financial model for  healthcare. In the fee-for-service model, healthcare providers are reimbursed based on the number, kind and cost of procedures and services provided to patients. More expensive procedures make providers more money, even when not medically necessary. And care that is shown to benefit the health of the patient but does not directly result in revenue for the practice is not financially viable and often gets overlooked (e.g. care-coordination, regular nurse follow-ups, ancillary services, nutrition, transportation, counseling, remote patient monitoring, and so many more).

 

The Basics of Value-Based Care

Value-based care is centered around the idea that quality and cost should be the focus in providing healthcare services. As such, it is the responsibility of healthcare providers to optimize the care they provide in terms of both quality and cost. This can be achieved by looking at the overall cost of care, rather than just the cost of the single procedure. The shift from volume to value in healthcare has been occurring over the past two decades. There have been many policy changes and legislative initiatives aimed at reducing healthcare costs by focusing on quality. Key indicators of the shift from volume to value include: The Balanced Budget Act of 1997; The formation of the Medicare Payment Advisory Commission (MedPAC); The creation of accountable care organizations (ACOs);  The Affordable Care Act (ACA).

 

Key Strategies for Transforming to a Value-Based Care Environment

While the overarching goal of value-based care is to reduce healthcare costs while maintaining or improving quality, there are several strategies that providers can employ to make this transition. 

 

  • Look at the big picture: Value-based care requires providers to look at the big picture of healthcare costs, which includes both the costs of the care being provided as well as the costs of delivering the care itself. 
  • Focus on the patient: Value-based care should focus on patients and how they can expect to be treated. The focus should be on patient satisfaction scores and more personalized care. 
  • Improve the care delivery process: By improving the care delivery process, providers can reduce errors and make it easier for patients to receive the care they need.

 

Who Is Responsible for Value-Based Care?

A number of different stakeholders are responsible for enacting value-based care at each step along the continuum of care. At the patient level, patients themselves play a critical role in the success of VBC. Patients should be providing honest feedback on the quality of care they receive and the outcomes they experience. Healthcare providers are responsible for coordinating the collection of data, assessing the value of the care they provide, and reporting on the outcomes of their services. Finally, payors are charged with using the information from providers to make risk-adjusted payments.

 

Identifying the Right Measures and Outcomes

As previously discussed, VBC providers are reimbursed based on the relative value of their services. The amount a provider is paid is based on the quality and outcomes of the services provided as well as their costs. In order to determine the relative value of a particular service, providers must first select the appropriate outcome measures. 

 

In selecting outcome measures, providers should consider the following: 

  • Is this outcome measure important to patients? 
  • Is this outcome measure accurate? 
  • Is this outcome measure feasible to collect?

 

Other Strategies to Consider: Staffing, Infrastructure and Technology

Beyond the strategy of selecting the right outcomes and measures for VBC, providers should also consider the following strategies when endeavoring to improve the delivery of quality and cost-effective care. 

 

  • Staffing: There are a number of strategies that providers can employ to improve staffing outcomes, such as considering the optimal staffing mix, providing on-the-job training, and leveraging digital technologies to improve efficiency. 
  • Infrastructure: In addition to factors such as the condition of the building, providers should also consider the functionality of their facilities, such as the accessibility of their services or the location of their facilities. 
  • Technology: Providers should also consider the technologies they have in place, such as EHR systems, scheduling software, HCC coding education apps, and diagnostic equipment.

 

Conclusion

There are many benefits to adopting a value-based care approach. VBC providers are beginning to see improvement in outcomes, such as fewer avoidable hospitalizations, reduced readmission rates, increased patient satisfaction scores, improved quality scores, and lower mortality rates. Furthermore, providers who embrace VBC are actually seeing  bottom-line financial benefits, as they are rewarded for providing high-quality, cost-effective care. However, adopting a value-based care approach is not without its challenges. In particular, providers must be willing to take a critical look at their current practices and begin to change where necessary. Along the way, providers should be transparent with their patients about the changes they are making, the things that are being actively improved, and the over-arching WHY behind their shift to Value-Based Care. 

 

Value-Based Care is a natural movement toward the benefit of the patient. And as providers make the shift, patients will be encouraged both by the motive behind the transition as well as the improvement in their overall health and the reduction in the costs of their care. Truly, Value-Based Care has the potential to be a significant win-win for patients and providers. And in the end, isn’t that why you spent all those years pursuing your medical training?  Value-Based Care is for patients, and for the providers who care for them.

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Implementing Value-Based Care – A How To For Physicians

Value-Based Care

Implementing Value-Based Care is essential for today’s physician. Value-based care is a system of payment and reimbursement that rewards healthcare providers for delivering high-quality, cost-effective care to patients. There are two ways to improve the value of care: improving the quality of care (fewer complications, less re-hospitalization, shorter length of stay, better patient experience); and reducing the cost of care (more efficient services, fewer administrative costs, reduction in waste and overuse of services). 

 

What is value-based care?

Value-based reimbursement is a system that aims to reward healthcare providers for providing high-quality care at an affordable price. It is important to understand that value-based reimbursement is not the same as cost reduction. It is not about minimizing costs, but rather, it is about maximizing quality while keeping costs low.

 

Benefits of value-based care

Better patient outcomes and experience – Through improved value-based care, you will likely be able to reduce the number of complications, readmissions, and other negative outcomes that patients experience. 

 

Reduced costs – An effective value-based care program will not only result in higher quality, but will also likely reduce your costs. You will be reimbursed for all of the services you provide, but only for the ones that meet your quality standards.

 

Increased revenue – Providing high-quality care can lead to greater patient satisfaction, word of mouth referrals from happy patients, and thus, more revenue.

 

Better reimbursement – A value-based care program will be focused on providing high-quality care, so your reimbursement should be higher as a result.

 

A sustainable business model – If you want to keep your business open and sustainable into the future, you must be able to adapt to the changing needs of your patients, payers, and providers. In order to do this, you must be open to new ideas and be willing to try new strategies. The best place to start is with value-based care.

 

How to implement value-based care effectively

Start with the end in mind – Before you can implement value-based care, you need to have a clear plan and vision for what your new value-based care program will look like.

 

Educate your staff – One of the most effective ways to implement value-based care is to educate your staff. HCC coding is not taught in medical school, so clinicians will need a fast and effective means of getting up to speed. Accurate and specific diagnosis coding for risk management will ensure better patient care and improved revenue. And when clinicians understand HCC coding,  the process, the metrics, and how their work impacts these metrics, all of VBC just works better

 

Educate your patients – Another important aspect of implementing value-based care is to educate your patients about what it means and why it is important.

 

Measure the right things – The first step in implementing value-based care is to make sure that the metrics you are measuring are actually contributing to value.

 

Find ways to reduce costs – Although you want to increase revenue and improve reimbursement, you also want to minimize costs.

 

Find the right partners – Last but not least, you need to find the right partners to work with to implement your value-based care program. (We would love the opportunity to earn your partnership on educating clinicians on HCC coding, as well as integrating documentation accuracy and value-based diagnosis resources into your EMR. Get in touch to learn more.)

Measure outcomes and quality

Clinical outcomes – In order to determine if a patient is receiving high-quality care, you must be able to measure their clinical outcomes (metrics such as blood pressure, heart rate, blood sugar, or other lab values or diagnostic findings, e.g. pathology reports).

 

Patient experience – While clinical outcomes are important, they do not tell the whole story. Patients may be receiving high-quality care that is resulting in good outcomes, but they may also be receiving poor quality care that is resulting in bad outcomes.

 

Provider experience – In order to provide high-quality care, providers must receive high-quality training. In addition, they must have access to the right tools. If they do not, they will not be able to provide high-quality care.

 

Define your value-based care services

Identify your core services – Before you can define the value-based care services you will offer, you must first determine your core services.

 

Identify your add-on services – Once you have your core list of services, you can then identify add-on services that you offer patients but that are not absolutely required for them to receive care from you.

 

Assign value-based care units (VBUC) – Next, you must assign a value-based care unit cost (VBUC) to each service.

 

Create a menu of value-based care services – Once you have identified your core services and have assigned VBUCs to each one, you can then create a menu of value-based care services.

 

Summing up

Value-based care has the potential to transform healthcare in the United States. It is important to note, however, that value-based care is not a fad or trend that will quickly come and go. It is a system that has been around for decades and is continuously evolving as more is learned about what it takes to provide high-quality, cost-effective care to patients. If you want to survive and thrive in today’s healthcare environment, you must be willing and able to adapt to the changing needs of your patients, payers, and providers. The best place to start is with value-based care.