6 Steps to Adopting Value-Based Reimbursement Models

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Tips on how to transition to value-based care while juggling fee-for-service models

Breaking away from a fee-for-service (FFS) payment model is one of the greatest challenges that providers currently face. The new value-based reimbursement (VBR) model requires sophisticated, data-driven decision making and widespread changes that require collaboration across provider organizations.

Many would liken the situation to driving a car while trying to change the tires, and the engine and brakes, all at once. In fact, a recent VBR study conducted by McKesson found that 60-78% of providers are not meeting their alternative payment and VBR goals, 31% are still operating exclusively under FFS models and only 48% of providers feel ready for VBR. For the foreseeable future, providers should strike a balance between operating within FFS and VBR.

While the transition is not an easy one, these six steps can be tailored to accommodate the transition and help maximize reimbursement and facilitate success.

Set Goals for Organizational Improvement

It’s important to remember that there is no one-size-fits-all in VBR. It’s best to have a clear understanding of where costs and quality performance are today, and how that compares to national and regional benchmarks, before deploying a value-based payment structure. Once baselines are established, the organization can set goals that align not only with their need for improvement, but also with their organizational mission and culture. From there, initiatives can be defined and prioritized to position the organization for success – you can’t achieve success if you don’t know what it looks like.

Engage Physicians Early

Physician engagement and buy-in are critical for the clinical transformation necessary to be successful in alternative payment models. An important step to securing buy-in is to align on goals and to be transparent about performance measurement. It’s not enough to simply identify the measures to be used – measure calculations and data sources should also be agreed upon. Many physicians do not have experience monitoring cost and quality measures and may be distrustful of results if the methodology is unclear, especially if the results do not align with their perceptions. This can put a strain on the relationship between clinicians and operational leaders and hamper progress.

Additionally, providing real-time or near real-time information about how an organization and individual contributors are performing will both empower physicians and ensure that there is full transparency between physicians, organizational leaders and payers. This sets a positive tone for how all parties can work together so that everyone is successful.

Create an Achievable Plan

Once goals are set, the initiatives required to achieve those goals needs to be identified, prioritized and planned. Many common initiatives, such as improving care coordination, reducing gaps in care, or reducing readmission and complication rates, require information-sharing capabilities that may not be in place initially. Advance planning and preparation is key. Providers should begin by first identifying what their data needs will be based on their goals.

The next step is determining the location of the data and creating a plan to obtain and communicate the data. For example, the data needs and acquisition challenges of an organization that wants claims data to analyze and improve total of cost of care measures will be completely different from the data needs of a primary care organization that wants to improve coordination with behavioral health providers in their community. It all comes down to what a provider wants to accomplish and should map back to organizational goals.

Shore Up Your Current Revenue Cycle Management Process

Before embarking on a change that may involve some level of financial uncertainty, consider shoring up your revenue cycle to make sure that no fee-for-service money is being left on the table. Improving clean-claim rates and charge capture are two ways to accomplish that. Improving coding accuracy will pay dividends under alternative payment models as well, ensuring appropriate risk adjustments are applied. All of these steps will help providers recover lost funds from inefficiencies. These recouped funds can then help offset investments in new capabilities required for VBR.

Understand Your Population

Another early step providers should take is to stratify and analyze their population. Even a basic assessment of high cost, high utilization patients can identify quick wins for improving outcomes and lowering costs. Understanding the patient population will help identify and prioritize improvement initiatives that get to the heart of value-based care.

Don’t Underestimate How Long Stakeholder Alignment Will Take

One of the most common mistakes providers make on the journey to VBR is underestimating the amount of time it takes to align stakeholders. While everyone is in agreement about the goals of improving quality of care while reducing costs — aligning on how to work together, how to measure success and what changes need to be made to create that success is a different matter. The traditional barriers between payers and providers are blurring with the rise of risk-based payment models, changing relationship dynamics and information-sharing needs. Likewise, provider-to-provider collaboration and information sharing is increasingly important, across the continuum of care. It takes time and work to develop the trust framework needed for effective collaboration and information exchange.

Each of these steps on its own is manageable within a reasonable timeline, but trying to complete them all at once presents a huge undertaking. Providers should remember that by approaching every VBR challenge in “bite-size,” manageable steps, the transition will be less daunting. This approach will also protect an organization from the inevitable mistakes that are bound to happen.

Slowing down, planning, setting achievable goals and handling one piece at a time will streamline processes and help make the transition from FFS to VBR go more smoothly.

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About Author

Suzanne Travis
Suzanne Travis

Suzanne Travis is vice president of regulatory strategy for McKesson and serves as chair of the EHR Association (EHRA) delivery system reform work group. She has over 20 years of experience in the health IT industry, in roles spanning product management, consulting and implementation services, product development and support. In her current role, she is focused on the changing dynamics brought about by delivery system reform and how McKesson can best support its customers in the transition to value-based care.

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