Solving Value-Based Reimbursement

Julie SkeenMay 4, 2017

Download Data Sheet

Healthcare costs have risen from 13.8 percent (2001) to 18.2 percent (2016) of the GDP and are projected to reach 19.9 percent in 2025, according to the Centers for Medicare & Medicaid Services (CMS). Healthcare providers and payers, alike, are looking for ways to control costs and one way of doing so is with value-based reimbursement.

The value-based reimbursement model, which reimburses providers based on the value of care they deliver, has changed the way healthcare providers are paid. Traditionally, providers have been paid for each individual service through a fee for service (FFS) model. For each service, regardless of patient outcome, a value is paid to the provider. The FFS model also encourages volume-based treatment, resulting in reactive care rather than whole-health delivery of care.

FFS models are not only costly to payers and patients, but are believed to encourage providers to over-treat patients to generate more income or keep up with lowered reimbursements, rather than prioritize care efficiency and patient health. 

Value-Based Reimbursement 

As the healthcare industry shifts from FFS to Value-Based Reimbursement (VBR) models, providers are being held more accountable. VBR focuses not only on the number of services rendered, but the quality of care, efficiency of care, and the outcome of the patient’s overall health, helping to ensure quality, cost-effective care is provided to the member. The VBR model also holds providers more accountable since it penalizes caregivers for poor outcomes, medical errors, and increased costs.

VBR not only ties payments for healthcare providers to the quality of care provided, but rewards providers for both efficiency and effectiveness. Under certain types of VBR, reimbursements are calculated by using numerous measures of quality and determining the overall health of populations. If providers don’t meet these quality thresholds and contain costs, they’d don’t get paid.

Value-Based Care Models 

Under the umbrella of VBR, CMS has introduced an array of value-based care models requiring payers to have agile and open systems to meet the market demands.

Some examples include bundled payments, where providers are reimbursed based on expected costs for clinically-defined episodes of care. If a provider stays under the expected costs, they will earn more money – like a bonus. However, if they go over the expected costs, their reimbursement is capped and profits are limited, or effectively eliminated.

Another example is the Medicare Shared Savings Program (Shared Savings Program). This method keeps costs down by offering incentives for providers to reduce health care spending for a specific patient population. This method offers providers a percentage of any net savings realized for keeping costs down.

The most prevalent example of a VBR today, though, is Accountable Care Organizations (ACOs). In an ACO program, groups of doctors, hospitals, and other healthcare providers come together voluntarily to give coordinated high quality care to their patients. ACOs often have defined performance standards with risk and reward arrangements.

While there are others, these models have one thing in common beyond transforming how healthcare is delivered – reimbursement becomes especially difficult for payers and providers to execute.

Reimbursement Challenges with Manual Processes

To support value-based reimbursement models, there are several big challenges related to determining quality of care and if the provider has met their quality requirements.

Using the shared savings reimbursement method as an example, we know that CMS publishes a set of measures for different care settings. However, the payer has its own set of measurements it requires from providers. To determine whether the provider has met these requirements, some payers are entering the information manually to calculate the quality score, which is time-consuming and a complete drain on valuable resources. Most of all, it could mean the difference between a provider being paid or not paid.

Then there are data quality issues. Manually inputting data can result in errors, which can impact a provider’s quality score and result in under or overpayment. The provider wouldn’t be happy being underpaid and it would be hard to get repaid for any overpayment conundrum.

And, imagine the time-intensive process of handling financial reconciliation. Here are just a few of the processes one has to consider:

  • Calculation of provider payments for all of the new and emerging reimbursement methodologies
  • Transfer of premiums between partner health plans
  • Tax credit and other subsidies
  • Information transfers between internal departments and external vendors
  • Compliance hurdles
  • Management reporting.

But this entire process does not have to be done manually. There is a solution to streamline the process, reduce costs and provide accurate and timely information across the organization.

A Standout Solution That’s Automated 

Instead of handling VBR manually, payers can implement an automated reconciliation platform. The platform can use advanced analytics and predictive modeling to help determine costs beforehand. The solution should also ensure data quality and accuracy of a provider’s quality score.

In addition, the solution should aggregate and analyze large volumes of data in real-time. This gives organizations the ability to continuously audit and visualize every transaction in their enterprise. This helps eliminate under- or over-billing that can result from providers being underpaid or overpaid. At the same time, payments to providers settle accurately and on time.

To learn more about financial reconciliation, download the datasheet below.

Get Insights

For a deeper dive into this topic, visit our resource center. Here you will find a broad selection of content that represents the compiled wisdom, experience, and advice of our seasoned data experts and thought leaders.

Download Data Sheet