Train Speed

Health care providers can no longer just say they provide quality, they must prove it, and ultimately, their reimbursement will be tied to it.

Navigating health reform

All Aboard the Health Reform Train

  • 9/6/2012

CliftonLarsonAllen posted a survey question back in May asking health care providers how they thought the U.S. Supreme Court would rule on the Affordable Care Act (ACA) and where they were on the continuum of preparation for the changes. While unscientific, about 60 percent said they were doing nothing to prepare because they believed the Supreme Court would overturn the law, and another 25-30 percent were taking a wait-and-see approach.

For those providers who thought the ACA train was derailed and did not take steps to prepare for the payment and care delivery reforms, the Supreme Court has spoken. The ACA train is on track, so the government will continue to implement, deploy, test, and clarify the law’s provisions for accountable care organizations, value-based payments, bundled payment initiatives, health care Innovations, health insurance exchanges, and payment reductions. So, it’s time to book a ticket for your journey from fee-for-service to outcomes-based reimbursement and value. Since the decision, those providers who had taken a wait-and-see approach to health reform have begun asking, “What does the ACA mean for my organization?” Our high-level advice remains unchanged over these past 2.5 years, though our understanding of the issues has continued to grow.

Prepare to deliver value

Providers can no longer just say they provide quality, they must prove it, and ultimately, their reimbursement will be tied to it. The first stop is reducing re-admissions and unnecessary hospitalizations. Continuous quality improvement is required. Remember, as all providers strive to improve quality, the benchmarks for value-based reimbursement will become more challenging to meet, and at the same time, more of a provider’s reimbursement will be tied to these outcomes. Those who don’t take action will fall further and further behind in their ability to compete on both a quality and revenue basis.

Harness health information

A significant number of providers across the country have already made major investments in electronic health records (EHR). This is just the start of the health information exchange super highway. The next challenge will be for providers to use the technology in a meaningful way and tap into health information exchanges that are beginning to take shape in each state across the country.

Organizations can use EHR to improve outcomes for their patients, track performance, and identify ways to improve and coordinate care across settings. How is your organization using electronic health records? Have staff and management received the necessary training to use technology to its fullest potential (e.g., tracking quality, developing patient profiles, and identifying best practices and areas for improvement)? In the future, generating accurate reports using EHR will impact reimbursement and contract negotiations with third party payors.

Understand costs in new ways

Do you know what it costs to deliver care for a particular diagnosis and how your quality compares to your peer group? Understanding the value of the care you deliver in relation to your peers will be critical to successful contract negotiations with new and existing payors. For example, if your organization is told to reduce its length of stay by half for the post-acute rehabilitation services for hip replacement patients, it will be important to understand what it costs to deliver that service and ensure high quality outcomes. You will also need to know the cost and outcomes at similar organizations.

Building relationships with providers across the continuum

No provider or site of service will be able to continue to be an island. A reformed environment envisions integrated, coordinated, seamless care delivery, which includes: longitudinal care plans, best practice protocols tied to the person not the site of service, communication, and successful care transitions.

The early train

  • Those providers and payors who didn’t wait for the Supreme Court’s decision have already started changing how care is delivered, organized, and reimbursed.
  • There are 31 Pioneer Accountable Care Organizations (ACOs) that over the next three to five years will take large strides toward capitated payment arrangements that place them fully at-risk for the care and costs for their assigned Medicare beneficiaries. Their behavior will impact the providers in their communities.
  • The first round of penalties is being assessed on hospitals around the country whose readmission rates were too high for heart attack, heart failure, and pneumonia. Publicly identifying “poor performers” may influence consumer decisions, but it may also encourage providers to improve performance. The challenge for hospitals is navigating the mixed message surrounding these penalties — the penalties themselves (up to 1 percent of Medicare inpatient payments) will have a considerably smaller financial impact than the loss of inpatient revenue from successfully reducing readmissions.
  • In addition to the penalties, the Centers for Medicare and Medicaid Services (CMS) are proposing modifications to the way providers will be paid. This will push provider payment toward “value based” versus “volume based” reimbursement. This is evident in the newly deployed value-based payment (VBP) approach for hospital inpatient services, the proposed VBP modifier for physician services scheduled for 2015, and the VBP programs in development for skilled nursing facilities and home health agencies.
  • The formation of public and private health insurance exchanges will potentially apply additional pressure on providers to find cost efficiencies.
  • New alliances are forming among employers, providers, and health plans to address population health, wellness, best practices, and consumer/patient engagement to achieve different health outcomes.
  • Health care innovation grants available through the Center for Medicare and Medicaid Innovation are creating opportunities to test new ideas or determine the scalability and replicability of smaller successful projects.

What’s coming down the track?

Although we now have a better sense of the route for this journey, the details about what’s on the horizon may only become visible as we embrace the trip. For instance, ACOs are getting a lot of media attention, and the mergers and acquisitions seem to suggest the big will get bigger. But do providers have to be “big” to be successful and survive in the future? Will there be a role for a thriving, local, community-based provider? If so, what track should they be on?

Some are also wondering how far payment reform will actually go. In other words, will all medical conditions have shared savings, bundled payment, or some other form of new payment mechanism tied to it, or will fee-for-service, in some fashion remain in the future?

Although many details are not yet clear, at least we are moving forward. The Patient Protection and Affordable Care Act signed into law in March 2010, was intended to fundamentally change how we deliver, organize, and pay for care. While the Supreme Court ruling on June 28, 2012, did not necessarily endorse a route, it did affirm that the ACA train will continue on its journey. Private payors — health insurance plans — have already begun implementing and testing alternative payment methodologies around the country. Now it’s time for all members of the health care community to get onboard.