Value-Based Reimbursement – Are you prepared?

Rising stacks of coins showing impact of value based reimbursement

Is value-based reimbursement replacing Fee-for-Service (FFS)?  FFS has been the standard in patient care for decades. The focus on revenue cycle best practices was and will continue to be essential. However, under the FFS model, physicians and other healthcare providers, including hospitals, are compensated for services rendered – quantity as opposed to quality.  Fortunately, many healthcare providers have focused on quality anyways!  FFS reimbursement for treatment does not consider patient outcomes or offer incentives for cost-effective and collaborative approaches to treatment.

The move away from FFS and toward value-based care (VBC) or value-based reimbursement (VBR) has been almost two decades in the making. Under value-based reimbursement, the emphasis is on quality over quantity – patient outcomes over profit. The new standard means providers are recognized and compensated financially when patient health improves through evidence-based and collaborative treatment plans. Yet, by the close of 2017, more than half of all physicians still had not made the transition from FFS to VBR.


Why are some physicians reluctant to transition to Value-Based Reimbursement?

According to a 2017 joint VBR study between Humana and the American Academy of Family Physicians, less than nine percent of family physicians agree that quality expectations are easy to meet under VBR models. This is a decrease of 13 percent since 2015. Additionally, only 17 percent of physicians claimed to be extremely familiar with the concept of VBR.

While many physicians and providers continue to grapple with the issue, the Secretary of Health and Human Services (HHS) Alan Azar, in a speech earlier this year at the World Health Congress, discussed the top four goals of value-based healthcare:

  • Maximizing health information technology.
  • Improving price and quality transparency.
  • Creating aggressive new models in Medicare and Medicaid.
  • Removing regulations and burdens that obstruct coordinated care.

HHS’ Centers for Medicaid and Medicare Services then released the draft Fiscal Year 2019 Inpatient Prospective Payment System rule in April, too, which advances Azar’s VBR agenda. Some points include:

  • Requiring hospitals to post their prices on the internet and in a machine-readable format.
  • Eliminating burdensome and dated quality measures that impede coordinated care.
  • Pushing providers reimbursed by Medicare to make their electronic health records interoperable.

The message is clear, and despite uncertainty, it is time for physicians and providers to get on board with value-based reimbursement.


Why was Value-Based Reimbursement mandated?

VBR is a healthcare model in which providers are compensated based on improvements in patient health as opposed to the number of services rendered. This approach, which has been slowly coming to fruition since the George W. Bush administration, was mandated to curb the high cost of healthcare and advance patient outcomes. Rather than treating an ailment, scheduling follow-up appointments, or referring patients to other specialists, VBR suggests a synchronized approach from the beginning – coordination between healthcare providers to focus collectively on the patient, treating offshoots of disease such as a single illness.

The benefits of VBR include:

  • Lower costs for hospitals and clinics through adherence to best practices and improved operating costs.
  • Better patient health outcomes by coordinating well-rounded care between relevant specialists.
  • A more sustainable practice in light of the new mandate and constant changes within the industry.
  • Higher doctor and staff morale when patient health improves and reimbursements rise to meet the positive change.
  • Lower volume due to better proactive treatments and patient management.


Making the transition to Value-Based Reimbursement

The transition from FFS to VBR has been slow, but providers are coming on board. More than half of polled physicians plan to implement or update their IT health infrastructure, and 43 percent intend to hire care coordinators to streamline patient care across multiple specialties, which will help with the transition. It’s time to take a hard look at where you are in this process and confront the mental and logistical barriers, which can include:

  • Difficulty transitioning to VBR when operating daily in an FFS environment.
  • Skepticism that VBR will not improve patient care.
  • Confusing quality measures that make tracking outcomes difficult – getting in the way of receiving earned compensation.
  • Fear of the short-term revenue burn

Here are some best practices to follow during the transition from FFS to VBR:

  • Improving operating costs to compensate for the financial burden.
  • Taking on more patients to increase revenue for the same reason.
  • Making the move gradually – for example, start with IT upgrades that help to share data and make coordinating care easier.
  • Implementing quality measures and setting improvement goals for patient outcomes.
  • Collecting actionable and shareable data as a means of improving patient outcomes and optimizing reimbursement.

As value-based care structures and other mandated compliance models continue to come down the pipe and evolve, physicians, hospitals, and clinics should be working to improve the way data is collected by utilizing healthcare IT, concentrating on patient outcomes, and coordinating services across multiple specialties.

A Practice Assessment may be one of the best initial steps to prepare for a transition to VBR.  More than ever, physicians, hospitals, and other providers are seeking out healthcare consultants to streamline changes, soften transitions, and ensure compliance with the continuously shifting rules and regulations that envelop the healthcare industry. This includes the transition from FFS to VBR. Using consultants is a cost-effective way to identify opportunities for VBR compliance within an existing FFS structure.

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