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Although value-based payment models offer several advantages compared with fee-for-service models, practices are sometimes reluctant to try them due to concerns about the additional documentation and workflow changes they require.
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Health care in America traditionally is paid on a fee-for-service basis, with doctors billing and getting reimbursed for each service they provide. But in recent years, growing numbers of doctors and payers have been experimenting with value-based payment models, under which doctors are paid based on how well they care for patient populations while controlling costs.A 2020 survey by the Health Care Payment Learning & Action Network found that slightly more than 60% of health care payments included some form of quality and value component, up from 11% in 2012.
Although value-based payment models offer several advantages compared with fee-for-service models, practices are sometimes reluctant to try them due to concerns about the additional documentation and workflow changes they require. According to a session presented during Medical Economics® Fall 2022 Physician Bootcamp, a strategic approach combined with the right technology can help ease the transition to value-based care.
How value-based insurance contracts can increase revenue and give physicians more time to provide better care to patients, as well as how to get started.
How documentation and reporting requirements are different in value-based insurance contracts.
How your electronic health record (EHR) can and should make value-based success easy, by design.
MEET THE PANELISTS
Sara Pastoor, M.D., M.H.A., FAAFP
Director, Primary Care Advancement
Manisha Goud, M.P.H.
Vice President, Practice Innovation
Fee-for-service medicine, in which doctors get paid for individual services, has long been the foundation of America’s health care system. But in the last decade or so, alternative payment models, in which provider reimbursements are based on patient health outcomes, have begun to emerge and grow in popularity.
In part, that’s because these alternative payment models offer several advantages versus fee-for-service medicine, said Sara Pastoor, M.D., M.H.A., FAAFP, director of primary care advancement for EHR vendor Elation Health. Pastoor defines value-based delivery models as those in which “providers are rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives in an evidence-based way.”
Among the advantages that value-based models offer are the monthly capitation payments many payers provide to enable doctors to practice population-based care. “Because you’re getting predictable monthly cash flow, you have more flexibility when it comes to delivery design,” Pastoor explained. “That means you don’t have to think about, ‘Am I going to get paid more to manage a patient’s problems in person compared with a telehealth visit or a telephone call?’”
Pastoor added that the assured regular income also improves practices’ financial resilience, noting that practices with value-based contracts fared better at the height of the COVID-19 pandemic than those that relied entirely on fee for service.
Current payment models fall into four broad categories along a spectrum according to their reliance on fee for service and their focus on patient outcomes, Pastoor explained. First is straight fee for service with no link to quality and value. Next is fee for service with limited financial incentives based on patient outcomes.
The third is alternative payment models built on the fee-for-service architecture, including those that offer either shared savings or shared risk. Finally, there are population-based models, in which doctors are paid partially or entirely on a capitation basis.
“Under full capitation, the primary care provider owns the entire patient care journey, including outcomes and total costs of care,” Pastoor explained. “The better the outcome and the lower the cost of care, the more money the doctor stands to make. The goal is to eliminate unnecessary and sometimes even harmful care and drive down costs while improving the health of the population under the provider’s care.”
Pastoor cited data showing that straight fee-for-service payments declined from 62% of all payments in 2015 to 39% in 2020, whereas population-based payments, which were too small to be measured in 2015, accounted for 7% by 2020. “While population-based payments are on the rise, we do see that (fee for service) is still the main driver of how health care providers are being paid,” she said.
One of the keys to success using value-based models is a patient’s risk score, which Medicare — the nation’s largest payer — uses to relatively measure the costs of meeting the patient’s care needs, explained Manisha Goud, Elation Health’s vice president of practice innovation. Medicare assigns a risk score, also called a risk adjustment factor, to every beneficiary based on the patient’s health condition and demographic factors. The higher a patient’s risk score, the more the provider is paid to manage their total cost of care.
Goud added that in addition to determining per-patient reimbursements, risk scores can be used to identify high-risk patients with the greatest need for care. EHRs can help with that task by creating an algorithm that enables doctors to risk stratify their population based on each patient’s overall health and demographic characteristics. “Then you can stratify your patients according to risk and direct resources to those in the highest-need tiers,” she said.
A good way to begin transitioning to value-based care, Goud suggested, is by participating in Medicare’s transitional care and chronic care management programs, both of which have specific billing codes and time-based requirements associated with providing and billing for care. She added that EHRs can help build templates for tracking the time requirements and matching the correct code to the type of service provided.
In addition, Goud recommended joining a primary care-focused accountable care organization (ACO). “We’ve found that ACOs have been key to reducing administrative burden (of value-based programs) on primary care practices and can support your success in care delivery as you navigate the changing payment and delivery landscape,” she said.
Takeaways & Solutions
When choosing an ACO to join, look for one with the incentives and culture focused on the needs of primary care, rather than on those of a hospital system.
Use risk adjustment scores as a tool for stratifying patients according to the complexity of their needs. A high score could indicate the need for additional resources.
Risk adjustment scores are refreshed at the start of every year based on demographics and diagnostics data from the previous year’s claims. That means a patient’s health conditions must be assessed and coded annually to maintain their risk adjustment score.
Combining the per-patient, per-month payments in a value-based contract with pay-for-performance bonuses and shared savings programs can lead to higher income and smaller patient panels.
Use your EHR to connect to other care locations, such as specialists and labs, so you can know what kinds of care your patients are getting and where they’re getting it.