Hospital consulting expert weighs in on chargemasters, population health and what's to come in value-based billing

As hospitals and health systems march forward into value-based care systems they must pause and consider their revenue cycles from both a big picture and zoomed-in perspective. In the murky waters between volume and value, here be dragons.

Jon Melling, partner and IT consultant at Pivot Point Consulting, spoke with Becker's Hospital Review about how hospitals are making the transition from fee-for-service to value-based billing.

"The two [systems] are so fundamentally different that you can't just flick a switch and move from one to the other," says Mr. Melling, and hospitals and health systems face a myriad of challenges in bridging the gap.

The percentage reimbursement hospitals are getting now has lessened, having suffered the rise in popularity of high deductible health plans, Mr. Melling says. "And under value-based billing there is likely to be a further decline in the level of revenue accrued," he adds. The onus is on hospitals to find other avenues of revenue to mitigate loss, and successfully manage the health of their patient populations in a cost-effective way.

As healthcare moves away from a break-fix system, hospitals need to be increasingly proactive in how they manage, track and understand the populations they serve. "Providing the most economic, highest quality care possible is about making the right interventions at the right times to prevent health issues from occuring, or catching them at the earliest stage of illness," says Mr. Melling.

To successfully manage their patient populations, providers will need to seriously invest in powerful, quality analytics engines as well as market-particular wellness initiatives, such as requiring mammograms and prostate exams for those over a certain age, Mr. Melling adds.

This financial incentive to better identify and manage at-risk populations has sparked new conversations between insurance plans and care providers. "There is and will be a substantially increased amount of crossover between physician groups, payers and hospitals," Mr. Melling told Becker's.

"If you're a provider in a network, you have to work very closely with the payer to make sure you're clear about the parameters and the criteria for care, and come to an agreement about the level of reimbursement for specific conditions, or what the overall payment will be if you are taking on a population," Mr. Melling continues.

As hospitals start to navigate between volume and value, Mr. Melling concluded with three core revenue cycle areas demanding provider attention.

Hospitals will need to pay increased attention to their chargemaster, potentially managing seperate chargemasters where one cannot manage both value-based and fee-for-service charges, Mr. Melling believes. Denials management will continue to be a key indicator of revenue cycle performance, with an increased focus to denial prevention.

And finally, "it surprises me sometimes the level of understanding within organizations surrounding revenue cycle processes," Mr. Melling concludes. Hospitals could benefit greatly from investing in training and educational resources to develop staff who really understand the complexities of today's revenue cycle.

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