In January 2015, HHS announced its goal to shift 50 percent of all Medicare provider payments to an alternative payment model by 2018, and there is no question hospitals are moving toward this objective.
In fact, a recent study by McKesson found hospitals and payers project bundled payment will top 17 percent of medical payment in five years.
At the Becker's Hospital Review 2nd Annual CIO/HIT + Revenue Cycle Conference in Chicago, Douglas J. Moeller, MD, medical director with McKesson Health Solutions, provided the following five characteristics of a successful value-based model.
1. Act now. According to McKesson research, only 3 percent of physicians are reimbursed solely on a fee-for-service model, and more than 60 percent of payers are actively working on value-based arrangements. Not all of those are risk-based arrangements, and some are still pay-for-performance with incentives and not penalties. But as providers increasingly consider risk-based arrangements, Dr. Moeller advised them to be very wary of risk-based arrangements where they are asked to manage more risk than they actually control; otherwise, he said the relationship is not fully collaborative.
2. Create a multi-pronged strategic business plan. Dr. Moeller encouraged providers to look for innovative provider partners they can potentially learn from. "Start to work with some of your other provider communities to looking for those better ideas. Those all become key concepts in terms of making things work better," he said. For example, he said a business plan may involve more than financial terms and more than consensus by a single practice within community-based specialists about which quality and outcome measures are relevant to particular episodes.
3. Transform payer relationships. Dr. Moeller also believes payers are more receptive to new ideas than they've ever been. He said the larger the payers are, the more challenging that is, but even the larger ones are becoming more likely to new things. "Payers are starting to be more open to a shared risk, to innovative strategies that are actually piloted in different areas of the country where maybe it's your turn in your community to try to do some stuff," he told audience members at the conference. "Make sure you're clear on what are the payers working on that you could potentially be a pilot for and be innovative about that. That can really make a difference."
4. Re-engineer vendor relationships. Additionally, Dr. Moeller recommended providers look at vendor relationships to assess whether the provider's return on investment on the vendor's tools is helping the provider manage information. He said in the vendor community, and particularly the analytics community, there are many people looking at statistics, so it is important that providers engage in the process. "Think about a one-year deal with a vendor, involving parameters that the provider can revisit and say, 'Did this work?' Then focus on some collaborative options driven by analytics and feedback loops around either quality or cost performance. The measures are repeated frequently enough for the provider to get that feedback and make improvements," explained Dr. Moeller.
5. Focus on patient engagement. More employers are moving to health savings accounts and various risk-sharing or defined contribution rather than defined benefit, and patients are paying more of their healthcare costs. So Dr. Moeller encouraged providers to look at their community, particularly major employers, to say, "Is there a synergy we can create to help people understand how to use their plan correctly?" He said providers should reach out to major employers in their community, especially around wellness, workplace safety and routine health services to be sure employees are using their health benefits programs for optimum benefit.
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