Outcome-Based Reimbursement

outcome based reimbursement_reading glasses on insurance form

A lot is said these days about Outcome-Based Reimbursement in healthcare. But what exactly is that, and how does it work? Let’s take a look.

Five years ago, most of the provisions of the Affordable Care Act came into play, and one of these provisions added outcome-based reimbursement. It is designed to provide incentives for providers to provide quality care to patients in the United States.

The idea of value-based care (a common expression related to outcome-based reimbursement) is not a new concept even in 2014. It was in the talking stages for decades, and now the country is moving away from volume and embracing value. The question is, will it work for you as a healthcare provider? Models already are in place that you can check.

According to the Centers for Medicaid Services (CMS), the goals of value-based care are quality patient care that underscores value. In other words, insurance companies seek to get more for their dollar by insisting on better patient outcomes without redundancy. It works by offering incentives to clinicians who strategize to meet value-based care goals.

The goal for you is to meet the criteria for those incentives without compromising patient care. The key is learning how to do it without interrupting your revenue cycle or exhausting your budget. Thus, making outcome-based reimbursement work for you and your patient population requires study, tenacity, and routine. Revenue Cycle Management Outsourcing may also be a good option to consider.


2019 Implementations for Outcome-Based Reimbursement

The year 2019 showcases an urgency toward implementation and onboarding with a goal of almost full participation over the next five years. It marks the implementation of Advanced Alternative Payment Models (APMs) and the Merit-based Incentive Payment System (MIPS).

APMs are part of the Quality Payment Program that comes with a financial incentive for implementation. By meeting its criteria, your facility is excluded from MIPS reporting.

Also, to meet advanced APMs requirements, you must:

  • Utilize certified electronic health record technology
  • Participate in a model lengthened under the CMS Innovation Center authority or bear significant financial risk.
  • Exceed 25% of fees for professional services or at least deliver 20% of your patient care through APMs during a qualifying period.

MIPS-eligible providers must meet a low-volume threshold, which considers:

  • Allowed billable fees
  • Number of patients who receive services
  • Number of services provided

According to CMS, “Clinicians and groups fall under the low-volume threshold and are exempt from MIPS if they:

  • Bill $90,000 or less in Medicare Part B-allowed charges for covered professional services payable under the Physician Fee Schedule, or
  • Provide covered professional services for 200 or fewer Part B-enrolled individuals, or
  • Provide 200 or fewer covered professional services to Part B-enrolled individuals.”

In the interest of promoting high-quality, patient-centered care and accountability, the Centers for Medicare & Medicaid Services (CMS) and Hospital Quality Alliance (HQA) began publicly reporting 30-day mortality measures for acute myocardial infarction (AMI) and heart failure (HF) in June 2007 and for pneumonia (PN) in June 2008. CMS has since expanded the publicly reported outcome measures to include 30-day readmission for these conditions, complications, and readmission data for hip/knee replacements as well as in-hospital adverse events and mortality. Publicly reporting these measures increases the transparency of hospital care, provides useful information for consumers choosing care, and assists hospitals in their quality improvement efforts.

CMS annually calculates the following categories of outcome measures based on claims and administrative data for public reporting:

  • 30-day risk-standardized readmission measures
  • Acute myocardial infarction
  • Heart failure
  • Pneumonia
  • Hip/Knee
  • AHRQ Patient Safety Indicators (PSIs)
  • PSI 04 – Death among surgical inpatients with serious treatable complications
  • PSI 90 Composite – Complication/patient safety for selected indicators

Finally, in addition to calculating the above measures for public reporting, CMS also conducts annual analyses of its hospital outcome measures to provide greater insight into measure trends and variation. These additional analyses use calculations reported annually on Hospital Compare and are compiled in the reports provided below.

Hospital Performance Reports: Chartbook Series

The CMS Hospital Performance Reports present analyses that provide insight into hospital performance on publicly reported outcome measures for patients with acute myocardial infarction, heart failure, and pneumonia. CMS publicly reports 30-day risk-standardized mortality, complication, and readmission measures for these conditions. These Chartbooks provides new information about recent trends and variation in outcomes by location, hospital characteristics, patient disparities, and cost.

  • Display national trends and distributions of hospital performance on outcomes measures
  • Highlight regional variation in performance on outcomes measures
  • Compare the performance of teaching and non-teaching hospitals
  • Examine the performance of safety-net hospitals, hospitals with high proportions of African-American patients, and hospitals with high proportions of low-income patients
  • Assess trends in hospitalization rates, length of stay, and rates of discharge to skilled nursing facilities
  • Report variation in Medicare payments for treatment for acute myocardial infarction


Outcome-Based Reimbursement: ticking all the boxes

If you break down CMS requirements further, you get a better understanding of what is expected. To receive reimbursement, you must be aware of or concentrate on the following and carefully document:

  • Posting prices on the internet if you’re a hospital, and making sure the prices are in a machine-readable format
  • An awareness that meaningless barriers that do not contribute to coordinated care are disappearing
  • Recognizing the move is toward making electronic health records exchangeable and useful

When you understand the benefits and the reasons that dictated the goal, you get a better idea of how to comply with the requirements. The benefits of outcome-based reimbursement include:

  • Lower clinician costs
  • Better outcomes through the elimination of coordinated-care barriers
  • Goal-oriented care that considers the patient

For outcome-based reimbursement to work for your facility, you must take measures to lower costs initially to balance the up-front costs of the transition. That can be achieved through increasing your patient population, budgeting IT upgrades, analyzing quality over quantity measurements, and studying outcome data as it stands.

CMS encourages more providers to make the transition by the close of 2019. After you have evaluated what needs to be done to meet requirements, you must tick the boxes that verify implemented quality measures.  These include:

  • Improving your data-analytic capabilities
  • Implementing population health-management initiatives
  • Reworking electronic health record fields to document value-based care measurements
  • Adopting a quality plan that reduces redundant healthcare


Step-by-Step Preparation

The first step is preparing your hospital or clinic for value-based care so you can earn outcome-based reimbursement.

  • Step 1: Evaluate your patients to learn where you could have reduced billings across several months or even up to one year. For example, you might find that patient A had blood work done in January at your facility and that it was redundant because it was ordered by another provider as a result of poor coordination with other clinicians. Perhaps you’ll discover that a diagnosis that took four appointments could have been sorted out with one comprehensive and collaborative effort between you and another specialist. Remember that the new reality means insurance companies do not reimburse based on the number of tests, procedures, and workups you use. It also means that you provide a predictable outcome based on a few steps instead of several. And, remember that the key to doing that right means not compromising patient care or disrupting your revenue cycle.
  • Step 2: According to Institute for Health Technology Transformation, “Risk-taking organizations use historical costs based on claims data in figuring out how much they’re likely to spend, given the health risks of their population. What most healthcare organizations lack, however, is the ability to calculate the costs of care delivery at a granular level.”  In other words, you have to look at costs, weigh risks, and make the right decisions when making the transition from volume to value. You also must weigh that against your revenue cycle and possible disruptions that may occur during the transition. That step especially requires expert input and analytics from professionals who have a rounded understanding of the transitions and how they relate to costs and revenue.
  • Step 3: Technology is a crucial component of outcome reimbursement models, and providers need the right IT to record and report value-based care strategies accurately, especially when no uniform methods have been put into play.  Those technologies are not cheap, and most programs are customized, meaning you have to know what you need in your IT recording and reporting software to purchase a customized program. That is why many healthcare providers contract with third-party consultants.
  • Step 4 Collaboration between providers is key, but so is collaboration between payers and clinicians.


Let Outcome-Based Reimbursement Work for You

According to a 2016 article, Mayo Clinic relies on innovative strategies to meet reimbursement requirements. For example, during certain surgeries, specifically for cancer, surgeons work with pathology to determine whether clean margins have been met during resection. Doing that while surgery is underway eliminates the additional cost of another surgery later. According to the article, Mayo’s approach means 96% of patients will not require repeat surgery.

According to a comprehensive survey, 80% of payers report enhanced quality care under value-based models, 64% claimed enhancements in provider relationships, and more than 70% reported improved patient engagement.

Exceptional medical cost savings, which generally come into play following the transition and when preparing for your transition is carefully orchestrated, already illustrate that almost 70% of payers are investing in hiring to support their expansions.

When patient outcomes improve, they also motivate staff and raise clinic morale. By concentrating on the triple aim, you also can make value-based care work for you and your staff. The triple aim looks at:

  • Enhanced patient experience
  • Optimized population health goals
  • Reduction in healthcare costs

Those goals, incidentally, run parallel with goals set forward in reimbursement models.


The IT Conundrum

According to a new survey, the biggest issue for IT professionals is using patient data advantageously during the transition to an outcome-reimbursement model. The second major issue is poor electronic health record inoperability.

The ever-changing landscape of healthcare in America means IT professionals must also be compliance experts and trained to change the technology they use based on current reporting rules. It is no longer enough simply to understand servers and data protection.

That is why so many providers collaborate with third-party vendors. A good healthcare consulting firm has expertise when it comes to:

  • Bringing IT up-to-task routinely to meet new requirements
  • Leveraging the right IT data to explore and understand the patient population
  • Managing transitions through technology and analog
  • Using the best electronic health record technology to meet reporting standards
  • Managing transitions without compromising revenue cycles
  • Budgeting for transitions

Having every box ticked is especially important during reporting periods for programs such as APMs and MIPS.


The transition to Outcome-Based Reimbursement

It is not easy making the transition without disrupting your revenue cycle, staff, patient care, and budget. Often, we see trial and error before collaborating with clinics and hospitals. The reality is that you can tick four boxes, forget the fifth, and discover that your efforts did not bring reimbursement. You were almost there; you almost did everything right.

Another issue is arriving at compliance for reimbursement only to find that the rules have changed, that another regulation has come into play, and that the routine you set for your facility is now obsolete. Changes in U.S. healthcare can make even the most ardent scholar of MIPs regulations uneasy.  Reaching out for temporary consulting assistance may be a good next step!

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