Top three value-based reimbursement challenges in 2015

The healthcare industry may look back on 2015 as a "watershed year," during which the switch from volume to value solidified. But the transition isn't without its challenges.

The healthcare industry may look back on 2015 as a "watershed year," during which the switch from volume to value solidified. That's according to Farzad Mostashari, MD, former U.S. National Coordinator of Health Information Technology and current CEO of Aledade, an accountable care organization (ACO) services firm.

Much of this wide-scale movement toward value began in January, when U.S. Secretary of Health and Human Services Sylvia M. Burwell set aggressive goals and a timeline for value-based payment models-effectively tying 30% of fee-for-service payments to alternative payment models by the end of 2016 and 50% of such payments to alternative models by the end of 2018, says Mostashari. Burwell’s announcement signals that the Centers for Medicare & Medicaid Services will use all of its policy powers to achieve these benchmarks, he says.

Burwell's announcement also signaled to the private sector-which includes commercial payers, provider organizations, and purchasers-that it's time to more aggressively shift from volume to value. “Almost more than any regulatory change or payment change, it’s really that seriousness of intent that was the most significant change in reimbursement in 2015," Mostashari says.

Still, he says, it’s not the buzzwords or buzz phrases-such as ACOs and value-based care and outcomes-based care-that should be the key focus for healthcare organizations. “Regardless of narrow networks or not, this is about how providers are able to manage risk. That’s the broader context."

As the value to volume shift accelerated this year, here are three of the major challenges that payers and providers faced.

Next: Challenge #1


1. Matching risk with provider readiness

One of the greatest challenges was matching the reimbursement model to organizational readiness, says David Muhlestein, senior director of research and development at Leavitt Partners. “When you’re trying to reimburse for care, you’re really trying to shift responsibility-or risk-from the payer to the provider,” he says.

Muhlestein highlights the challenge of determining the right reimbursement model to fit a provider’s capability to manage risk. “If you move too fast on reimbursements and outpace readiness, you’re going to kill it. It’s going to hurt healthcare organizations, and they’ll move away from these new payment models,” he says.

To overcome these challenges, Muhlestein says payers and providers should look at other successful organizations, such as Memorial Hermann Health System in Houston. The system has succeeded with its Medicare Shared Savings Program (MSSP) ACO-to the tune of $23 million in shared savings. The hospital also has a private payer ACO arrangement with Aetna.

Facilitating candid conversations between payers and providers as they navigate the challenges of managing value-based care has been key to Memorial Hermann’s success, says Muhlestein. “They come to the table acknowledging that nobody knows what they’re doing. Not on the delivery side and not on the reimbursement side. They’re figuring it out together. That’s setting the direction of the healthcare system, and it’s better for patients. It’s about a commitment and willingness to figure this out over time.”

Next: Challenge #2


2. Forming a strategy

“Most physicians have joined ACOs out of fear, the fear of being left behind,” says John P. Schmitt, president and managing director of Reliance Consulting Group. He’s concerned that many of these providers don’t have a strategic business plan to map out their success as an ACO.

Many of these providers had to complete an application to join the ACO, and much of their energy has been focused on living up to the requirements of the ACO. “That application it is not a business plan,” he says. “It’s a checklist of things you have to do, like reporting on quality and cost.”

The application doesn’t tell providers where they’re going in the next three to five years, and it doesn’t outline the provider’s risk pathway, he says. “Medicare has been moving at such a fast rate that these Medicare ACOs are confused.”

Putting together a business plan requires that providers determine their growth strategy and what distinguishes them in the marketplace, he says. Also key is determining who their clients are- whether they’re thinking about commercial payers or Medicare or patients.

“These are basic questions,” says Schmitt. “How are they planning to grow and take on new markets over the next one, three, or five years? That’s what a business plan would normally provide.”

Next: Challenge #3



3. Determining the right fit for telehealth

“There are new payments and billable codes with respect to telehealth, and patients are increasingly looking to take a role in their care outside the four walls of the doctor’s office,” says Joseph Johnson, managing director and partner with L.E.K. Consulting.

What remains to be figured out is how telehealth fits into the provider’s care management strategy, he says. “You can’t just leave it at the initial interaction [of the telehealth visit] and getting the billable code. You need to continue to connect and improve outcomes with that individual patient.”

Leveraging telehealth to manage chronic diseases, such as diabetes, heart disease, and obesity, will be key to success in a value-based model, says Johnson. And to be successful at that, he says, providers need to coordinate better and share data among themselves. That better coordination and sharing of data, the more value it will offer the greater health system, he says.

Schmitt also says telehealth can boost patient engagement, which can in turn, lead to improved health outcomes.

His recommendation? Have patients come to the physician’s office for their annual physical; if they have a cough or a pain and need a follow-up visit, do that via telehealth.

Aine Cryts is a writer based in Boston.